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18C — April 29 - May 12, 2016 — Spring Preview — M id A tlantic
Real Estate Journal
S enior H ousing By Robert Gaines, Colliers International|Philadelphia The path to investing in a seniors housing community
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of life illnesses. Alzheimer’s or dementia dis- eases will affect 33% of those seniors needing specialized assistance and will require further supervision 1 . Cur- rently, less than 4 million beds in independent living, assisted living and skilled nursing are available to support these persons, according to the Al- zheimer’s Association 1 . This industry is expected to con- tinue to grow significantly over the next 35 years 2 , thereby creating a demand that can- not be met. There are four main meth- ods to invest in the senior
housing industry. The invest- ment or return is dependent upon the risk. 1. Investing in a public com- pany that specifically operates within the senior housing industry. This involves the lowest amount of risk 2. Investing in a Real Estate Investment Trust (REIT) that invests its capital in the senior housing industry. 3. Investing in a private eq- uity group that owns several senior housing facilities. 4. Investing in a specific fa- cility as a land owner or with the operator, or both. This method involves the highest
he development of a seniors housing com- munity for Indepen-
amount of risk. When developing a seniors housing community, it is criti- cal to research the particular location of the proposed facil- ity to determine if the market can afford, and support, an- other successful facility. Once a location has been determined, the following pro- cess should be implemented. 1) Determine the primary marketing area for the com- munity based on the density of population of those who are financially qualified. 2) Market to the adult chil- dren because they are involved in the decisionmaking process.
3) The number of finan- cially qualified adult children should be twice the number of financially qualified prosective residents. 4) Perform a definitive anal- ysis of the proposed facility’s competition to determine the number and type of beds/units that should be built for a suc- cessful operation. 5) Solicit a financially cred- itable and operationally suc- cessful health care operator to manage the facility. Having an effective health care operator is as important to the success of the facility as is having the legal right to build the facility. 6) Obtain the required per- mits for a special exception to build a seniors housing community. These may vary depending on the county. Re- quirements to obtain a permit include: > A rough development plan > A conceptual plan of the exterior and interior of the facility >Public community meet- ings explaining the need for such a community and how it will affect the neighborhood > A public hearing before a representative of the county government who will approve the use and grant the special exception 7) Maintain a current con- ceptual plan. Health care operators will have plans of buildings that they favor. Therefore, conceptual draw- ings that are produced to get the county’s approval will not be wasted because the ap- proval establishes a right and a general footprint for building purposes. 8) Determine various finan- cial structures of development in which the health care opera- tor can participate. > Purchase the land and develop the property > Joint venture the devel- opment and building with the land owner and lease the building from the joint ven- ture. > Request the land owner construct the building and lease the building from the land owner. > Joint venture the develop- ment and the building and the health care operation. 9) Use professionals in the senior housing industry who know the health care opera- tors and the future needs. 10) Determine the return on continued on page 20C
dent Living and Assisted Living with M e m o r y Care i s in g r e a t d e - mand across t h e c o u n - try. Today, nationally,
Robert Gaines
there are 54 million people over the age of 65; eventually, half will require specialized assistance with daily living activities to serious medical management for chronic end
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