Senior Living News Wire

Builder confidence has gone down in the 55+ housing market for single-family homes, falling three points to 12 compared to the same period last year, according to the lastest National Association of Home Builders’ (NAHB) 55+ Housing Market Index.

“The current state of the economy continues to affect buyers in the 55+ housing market,” said NAHB Chairman Bob Nielsen in a statement. “The market remains weak given the many uncertainties people face in this economy. While potential buyers exist, they are hesitant to commit to buying a new home as they are concerned about selling their existing home at a fair price, due to low appraisals, an abundance of foreclosures and tighter mortgage lending criteria.”

The declining sentiment is based on current sales, prospective buyer traffic and anticipated six-month sales for the 55+ single-family market, says the NAHB; a number greater than 50 indicates that more builders view conditions as good than poor.

Index components included present sales dropping four points to 11; expected sales (six months into the future) dropping nine points to 15; and traffic of prospective buyers rising two points, to 11.

Although 55+ single-family homes are getting lessening votes of confidence, 55+ multifamily rentals remain the strongest segment of the 55+ housing market, says NAHB, with the index measuring present demand rising 12 points to 40, and the index measuring future demand up 10 points to 42. Plus, current and future production indices for 55+ multifamily rental units also jumped 11 points in the third quarter to 25, and from 10 points to 26, respectively, compared to last year.

“Multifamily rental units continue to be the bright spot in the 55+ housing market,” said NAHB Chief Economist David Crowe. “However, with demand currently running ahead of production, as it has been for several quarters now, the risk of a shortage of rental units in select markets in the future looms larger as builders continue to have trouble obtaining credit to finance new construction.”

Go here for the full 55+ HMI tables.

Written by Alyssa Gerace

Social media’s pervasive grip can be seen everywhere, and with business professionals joining LinkedIn at a rate of two members per second, it’s providing opportunity for those involved in seniors housing to use networking sites as a platform for announcing and discussing business transactions.

A number of senior housing industry trade groups have emerged on LinkedIn that host forums for notices of available properties and funding, and facilitate discussion of recent, upcoming, or sought-after transactions.

Seniors Housing Transactions, started by senior associate Ben Firestone of the National Senior Housing Group at Marcus & Millichap, is one such group.

It serves as a networking platform for owners, operators, managers, investors, mortgage lenders, prospective owners, appraisers, and financial intermediaries in the seniors housing industry, says Firestone, with recent discussions including an operator seeking mortgage debt outside of agency financing; a portfolio of Assisted Living and Memory are facilities in Wisconsin for sale; and a confidentiality agreement contemplating new inventory offerings from an investment advisory firm.

And recently, this group passed the 500-member milestone, making it one of the largest among similar groups like Senior Assisted Living Sales, Marketing & Operations Professionals; Senior Care Acquisitions and Financing; Seniors Housing and Healthcare Real Estate; and The Senior Housing Investors Forum.

As business interaction becomes more and more instantaneous, market participants seek both to gather and to provide more salient information which can be instantly accessed online, says Firestone.

“Clearly, at 500+ members, the already-established market for seniors housing finance and transactions continues to evolve in the direction of social media,” he commented. “Top executives from REITs, banks, national and regional operators form the core members of Seniors Housing Transaction, and evidence of these members finding the group to be beneficial lies in the active discussion board.”

Written by Alyssa Gerace

Senior housing construction starts have nosedived 53% since the 2008 housing market crash, according to the National Investment Center for the Seniors Housing & Care Industry (NIC), and even though demand is growing, lucrative opportunities for developers are dwindling as “hot spots” around the country turn lukewarm.

“Hot spots are the places where there’s high occupancy and low barriers to build,” says Larry Rouvelas, who co-founded Senior Housing Analytics along with Phil Downey.

However, these “hot spot” metropolitan areas with high occupancy levels often turn into a developer’s playground, says Downey, and many places with the best opportunities have already been developed.

“If you look at performance statistics, some seem to be performing at a higher level, and they seem to present more opportunity,” he says. “That always seems to coincide with a higher level of challenge, finding developable sites at an affordable price. It’s a classic situation, low barrier markets seem to disproportionately attract high volumes of development.”

In terms of high levels of construction activity, current “hot spots” include Chicago, Ill., New York City, NY, San Francisco and Los Angeles, Ca., Dallas, Tex., Minneapolis, Minn., St. Louis, Mo., and Phoenix, Ariz., but that corresponds to those being large markets with bigger populations, says Chuck Harry, director of research and analysis at NIC, not necessarily because they are low barrier.

However, new “hot spots” may crop up around the country as the population ages; U.S. Census data predicts that nearly 20% of Americans will be aged 65 or older by 2030.

“Generally, [developers] are looking for areas where there’s solid demand, level of occupancy rates, and ability to demand appropriate level of rent,” Harry says.

Areas that are attracting less attention but present opportunities for development because of a relatively low barrier to entry include Nashville, Tenn., Orlando and Dublin, Fla., Lancaster, Pa., and Bridgeport, Conn. Each of the cities has seen construction increase in renovation and ground-up development, according to Senior Housing Analytics‘ compilation of NIC data.

“As our industry matures, the opportunities to add supply are still there, but developers need to be more discriminating and more focused in terms of how you isolate those opportunities,” says Downey.

Senior housing construction starts have been hanging at a cyclical low for the past few quarters, says Harry. This, in turn, is putting pressure on occupancy rates, causing them to increase slightly.

And, since annual inventory growth has dropped to 1.1% in the second quarter of 2011, down from 2.1% the previous year, according to NIC data, it’s likely occupancy levels will continue to rise through the next year.

As greater numbers of older Americans head toward retirement and beyond, the need for new construction will eventually reach a tipping point.

“We don’t anticipate a boom, per se, over the next four quarters,” says Chuck Harry, NIC. “At this point, we’re not looking at that. Given the demand, we’d expect there will be an increase in the current rate of construction, in the future. Time will tell when that is.”

Written by Alyssa Gerace

With the recession dragging on, the senior housing market has experienced a significant slump. New construction starts have dropped by 53% since the 2008 crash, and now make up just over 1% annually of the senior housing inventory, according to the National Investment Center for the Seniors Housing & Care Industry (NIC).

At the same time, however, demand for such housing is expected to increase radically over the next few years as baby boomers reach retirement age.

The Boomers are Coming

“We have started to see that demand for retirement and assisted-living housing [is] now outstripping supply,” said Sampada D’silva, senior vice president of underwriting/acquisitions with Cambridge Realty Capital Companies.

n the second quarter of 2011, the NIC reports that the annual inventory growth for seniors housing was 1.1%, down from 1.3% in the first quarter of 2011 and 2.1% in the second quarter of 2010. According to the NIC, this is the lowest level seen in the current market cycle.

Occupancy rates dropped during the recession, standing at about 88% currently. NIC researchers expect those rates to soon begin inching up, putting pressure on a marketplace that just isn’t creating enough new housing.

“More and more of the unoccupied units will be filled,” said Chuck Harry, director of research and analysis with the NIC. “There will be an increase in the level of demand.”

Finding the Funds

This dilemma is due in part to the difficulty builders and developers have had in securing financing for planned or ongoing projects.

“Many developers and builders had projects in the pipeline that have not been started because of the economic downturn,” explained Bill Kauffman, a senior research analyst with the NIC.

For senior housing construction projects to succeed, they need a combination of solid financing and good business planning, and the fact is, not all projects meet these criteria.

“Not every senior housing project can succeed in today’s economy,” said D’silva. “Successful senior housing projects require a combination of strong balance sheets and extensive operating experience. Most of the developers are small- to mid-size regional experienced owner/operators who are familiar with their local markets and have a track record of successfully operating the facilities.”

Cutbacks in federal subsidies for housing through the Department Housing and Urban Development’s programs combined with a difficult market have created a perfect storm in which housing for seniors has suffered.

“Regional banks, who have been the traditional source of construction financing for the senior housing industry, aren’t lending to the level that they were prior to the credit crisis,” explained D’silva. “HUD 232 health care loans remain popular, but the agency has been swamped with orders. The senior housing industry may have a supply problem in the coming years unless the credit markets thaw and new construction commences.”

Some analysts say the biggest concern in the senior housing market is the lack of affordable options for seniors with limited incomes.

“There is certainly not enough senior housing for lower income seniors,” said Sloan Bentley, president of Seniority, Inc., a retirement community management company. “I believe in the value of senior housing, and I’m concerned about this problem. It’s going to be very challenging. People with lower incomes are going to need places to live.”

While demand is growing for senior housing, supply has dwindled as a result of the housing market collapse, so the companies who have stuck with development are poised to benefit from the housing needs of America’s aging population, a New York Times article reports.

Most of these developers are small- to mid-size regional operations that are familiar with their local markets, had a strong portfolio before the crash in 2008, and have been able to persuade banks to keep financing development, says the NY Times.

Senior housing supplies have gone from a surplus, at the height of the housing boom, to a shortage, following the market bust. The number of Americans aged 65 or older is expected to double to 71 million by 2030, and many of those seniors will need care as they age.

“It’s a great time to develop senior housing,” the NY Times quoted Marilynn K. Duker, the president of Brightview Senior Living, as saying. “As long as we can continue to get capital and have the ability to afford it, it’s an opportunity and there isn’t a lot of competition.”

New construction starts in senior housing have dropped by 53% since the housing market crash and now make up barely more than 1% of the senior housing inventory each year, according data from the National Investment Center for the Seniors Housing and Care Industry, the NY Times reports.

The article provides information on some companies who are developing assisted living facilities, and the experiences they’ve had in terms of financing in the past few years.

Go here to read the full article.

Written by Alyssa Gerace

A Madison man is embroiled in a fraud case involving selling property he had put up as collateral for another project he was working on, according to a criminal complaint document from the state of Wisconsin.

Robert Niebauer, the former president of Professional Realty and Development Corp., has been charged with three counts of transferring encumbered property, after he allegedly sold three portions of a senior housing development located in Dubuque, Iowa, which he had previously provided as collateral to get $2.4 million in loans for his Richmond Terrace project, located in Appleton.

The case dates back to early 2005, when, in a bid to get funds for the struggling Richmond Terrace project, Niebauer pledged eight limited liability corporations (LLCs) from Angelus Retirement Community in Dubuque, worth $300,000 each, as collateral to two investors. Each investor gave Niebauer $1.2 million, for a total of $2.4 million, with an annual interest of 20%.

At some point, Niebauer sold off two of the LLCs, using the $600,000 in proceeds to pay off part of his collateral. In the next couple of months, he allegedly sold off more LLCs, but did not put all of the proceeds toward paying back the investors, going against the terms of his collateral agreement.

The terms of the purchase agreements for transferring membership interest to the buyers provided that Niebauer, as the seller, owned 100% of the outstanding membership interests in the LLCs, “free and clear of all liens, security interests, restrictions,” etc.

The three investors say they would not have invested in the LLCs had they been fully aware of Niebauer’s financial situation or the encumbrance on the property; they each allegedly lost up to $300,000. Niebauer declared personal bankruptcy in 2007, and his firm filed for Chapter 7 bankruptcy two years later, in August 2009.

Each individual charge is a Class E felony, with a potential penalty of 15 years in prison, or a $50,000 fine, or both. Niebauer is scheduled to appear in court on Sept. 28.

View the criminal complaint document here.

Written by Alyssa Gerace

Hammes Company, a health-care property developer, is planning a $1.6 billion campus located in Henderson, Nev. that will include senior living and health care facilities.

Hammes will be designing the integrated “health village,” called Union Village, along with partner HKS, Inc. It will replace a 64-year-old Rose de Lima campus, currently operated by St. Rose Dominican Hospitals.

The village will include a 214-bed St. Rose de Lima hospital, a cancer hospital, a long-term acute care and rehabilitation facility, a skilled nursing facility, a proton therapy center, a wellness center, medical office buildings, education and research space, and a continuing care retirement community (CCRC) for up to 1,500 active seniors.

The CCRC, UnionPlace, will offer residents amenities such as a clubhouse with dining facilities, retail space, a hotel and conference center, restaurants, a theater, athletic club, food court, and child development center.

“With UnionVillage, we have a rare opportunity to participate in the creation of a groundbreaking concept that integrates comprehensive health and wellness capabilities with retail, entertainment and cultural amenities, as well as ‘smart’ senior and residential communities,” said Bill Foulkes, Hammes Company Senior Manager.

The Henderson area is in need of better-quality outpatient, acute and post-acute health care and senior living services due to its demographics, said President and COO of Hammes Rich Galling.

The construction will generate 17,000 direct, indirect, and construction jobs, with more than $8 billion in payroll and income tax, and $1.5 billion in property and sales tax.

Union Village was approved to purchase the 171-acre site from the city in June for $11.6 million, and will close on the acquisition later in the year once the city completes required improvements. Construction will commence when the village obtains permanent financing, and Hammes will oversee site preparation and infrastructure improvements.

Written by Alyssa Gerace

The United States’ 1.2 million public housing units need an estimated $25.6 billion for large scale repairs, including public senior housing units, says a recent Department of Housing and Urban Development study.

The study, titled “Capital Needs in the Public Housing Program,” updates an analysis from 1998 to estimate the current capital needs in U.S. public housing, including housing for seniors.

“The new capital needs estimate far exceeds our annual budget for these repairs and illustrates why America needs a long-term strategy to address the loss of thousands of public housing units annually,” said HUD Secretary Shaun Donovan. “At a time when budget deficits require the Federal government to tighten its belt, many of the nation’s public housing units are buckling under a severe backlog in capital needs.  Public housing owners are forced to make tough choices between repairing roofs and replacing plumbing—or worse, demolishing units altogether—because there simply isn’t enough money to go around.”

The existing capital needs for senior developments is substantially lower than for family developments at an average of $11,646 and $22,190 respectively. Both types of housing are in need, however, at a time when funding is short and uncertainty exists for publicly financed projects.

For senior housing, accrual costs are lower than in family developments, and life cycles are shorter for many systems in family developments because of higher wear and tear, according to the study.

View the report.

Written by Elizabeth Ecker

Affiliates of BRIDGE announced the grand opening of Armstrong Place, an affordable housing development is San Francisco, CA last week.

Over $41 million was invested in the project, which includes 116 units for seniors as well as 7,600 square feet of commercial space, community services and retail shops. Twenty-three of the apartments are set aside for formerly homeless seniors participating in San Francisco’s Direct Access to Housing program. These residents are eligible for intensive social services provided by the Providence Foundation of San Francisco, which will enable them to transition to independent living.

The grand opening represents the culmination of many years of effort by the city, community and development team to bring about the successful redevelopment of several underutilized warehouses as new housing and retail.

“Pairing the senior apartments with a family community helps prevent the seniors from feeling isolated,” said Cynthia A. Parker, President and CEO of BRIDGE Housing. “And Armstrong Townhomes provides opportunities for families to stay in San Francisco, in a neighborhood with access to transit, shopping and parks.”

The project also includes 124 affordable town-homes for first-time homebuyers, which range in price from $175,000 to $345,000 and are affordable to households earning 60 to 100 percent of area median income.

Financing for the development was provided by the California Department of Housing and Community Development; the San Francisco Redevelopment Agency; Bank of America (townhomes); U.S. Department of Housing and Urban Development (senior); Wells Fargo Bank (senior); Federal Home Loan Bank (senior); Enterprise Community Investment (senior); and Enterprise Green Communities (senior).

Both properties were designed by David Baker + Partners. Nibbi Brothers, Inc., was the general contractor for Armstrong Place Senior, and James E. Roberts-Obayashi Corporation was the general contractor for Armstrong Townhomes.

With the U.S. government urging companies to be more green and energy efficient, Health Care REIT’s Tallahassee Memorial Cancer Center accomplished this goal by receiving LEED® Silver certification for its environmental concessions.

LEED®, or Leadership in Energy and Environmental Design, is the U.S. Green Building Council’s program for the design, construction and operation of high performance green buildings. The USGBC says that by using less energy, LEED®-certified buildings save money for families, businesses and taxpayers; reduce greenhouse gas emissions; and contribute to a healthier environment for residents, workers and the larger community. Certification levels for new buildings are gained by the construction amassing points in a variety of categories, including energy and water efficiency and reduction.

The newly finished cancer center, which utilized construction materials containing recycled content, got Silver-level certification for its projected efficiencies that include significant water saving and reduction as well as more efficient energy use, among other features.

“Health Care REIT’s LEED® certification demonstrates tremendous green building leadership,” said Rick Fedrizzi, President, CEO and Founding Chair of USGBC. “The urgency of USGBC’s mission has challenged the industry to move faster and reach further than ever before. Health Care REIT serves as a prime example of just how much we can accomplish.”

Tallahasee Memorial HealthCare says they focus on providing a healing and supportive environment for cancer patients and their families, and the green nature of this latest construction is in line with the company’s priorities.

“Our commitment to energy and sustainable development is part of Health Care REIT’s strategy to own the highest quality buildings while meeting the needs of our business and the environment,” said George L. Chapman, Chairman, Chief Executive Officer and President of Health Care REIT. “Our energy management program provides value to our tenants, health systems, operators and our shareholders. It is an integral part of our business strategy and we expect to continue to make sustainable investments.”

Health Care REIT says it is also seeking LEED® certification for some of its other buildings and construction projects.

View Health Care REIT’s press release about the certification here.

Written by Alyssa Gerace

National Real Estate Investor is reporting that operating incentives in the form of cash are helping to align owners and operators of senior housing.

The article cites the announcement from Emeritus that it plans to take full ownership of 24 assisted living buildings it jointly owns with Blackstone Real Estate Advisors for $99 million.

Under the joint venture agreement, Emeritus earns an increasing share of investment returns as building operations improve and foreshadows a much bigger transaction involving Blackstone and Emeritus.

The partners, along with several other parties, purchased the bankrupt Sunwest portfolio of 134 assisted living buildings last August for $1.3 billion. The deal also includes operating incentives.

“The structure of the joint venture has been an incentive for us to improve operations,” says Rob Bateman, CFO at Seattle-based Emeritus. “It’s a win-win for all parties.”

Senior housing is well suited to incentives because the facilities serve as operating businesses, enabling a deft manager to significantly improve returns.

“It’s very wise to align the interests of the operator and the lead capital provider,” says Kathryn Sweeney, principal at Great Point Investors, a real estate investment management firm in Boston.

Read the rest at the link below.

Cash Incentives Help Drive $99 Million Buyout of Blackstone Portfolio

Speaking at the American Health Care Association and National Center for Assisted Living Independent Owner Leadership Conference in New Orleans, Jeffrey Davis, chairman of Cambridge Realty Capital said that finding capital for senior housing projects remains a challenge.

“Even though the capital markets have improved considerably, the community banks that funded a lot of senior housing projects in the past are not the reliable funding source they once were,” he said.  ”HUD and to a lesser extent, Fannie Mae and Freddie Mac have attempted to step into the funding breach, and other lenders are testing the waters as well.”

Obtaining financing through HUD’s 232 program continues to pose challenges from a speed standpoint.  The agency’s LEAN program was supposed to help move files through underwriting faster but sources tell SHN it can still take anywhere from 10 to 12 months to get a commitment on a property.

As far as bridge loans and term lending with commercial banks, things are still strained according to Davis.  Most banks are not courting new customers and are heavily dependent on relationships already in place, either directly with borrowers or through intermediaries representing clients.

But life insurance companies are beginning to re-enter the senior housing sector, targeting well performing independent living and assisted living facilities. Healthcare REITs and credit companies also have become more active lenders for these properties.

“Ironically, today it seems somewhat easier to put together an institutionally-backed, larger deal than a more typical bread-and-butter opportunity,” he observed.

Read the rest at Origination News here.

The Sun Times is reporting that a former Chicago police station will become part of a senior housing developement for gay seniors.

Located on the Northside, the station was sold to Heart Heartland Housing Inc. for $1.  The nonprofit developer will use the location to create about 90 low income rentals for senior citizens.  According to the article, the project is a final favor for the gay community from Mayor Daley, who leaves office Monday.

Senior housing has been seen as an unmet need among gays, many of whom want to stay in familiar neighborhoods as they age. Housing cannot legally be restricted by sexual orientation, but the project’s location in Boystown means its immediate market is seniors who are gay, lesbian, bisexual or transgendered.

Michael Goldberg, executive director of Heartland Housing, said the design is incomplete but that it “will preserve much of the exterior of the old Town Hall station and some interior features.” The building dates from 1907 and is under consideration for landmark status, which probably would be granted under the deal.

Gay seniors will find home at old Town Hall police station

The MedCottage, a portable, modular dwelling, announced its commerical debut earlier this month with an initial distribution in five U.S. markets.  The 12 by 24 foot dwelling is designed as an alternative to allow familes to provide care for their loved ones on their property as an alternative to long-term care facilities.  Each dwelling unit will have a total of 299 square feet and has features that include various technical and functional design charatcteristics to make aging in place easier.  The final layout was designed by students at the College of Architecture and Urban Studies at Virginia Tech as part of a senior design project.

Courtesy MedCottage

“Since introducing the first prototype 10 months ago, thousands of people around the country have contacted us to tell us we’re on the right track to provide a viable and cost-effective option to age in place,” says the Rev. Kenneth Dupin, founder and CEO of N2Care. “Through extensive feedback and real-life testing we have made numerous changes to take the MedCottage from a vision to marketplace reality.”

In just a year, N2Care, the company behind the MedCottage, received legislative approval in Virginia for property owners to house the structure, created a prototype, began manufacturing and developed a national distribution network.  MedCottages are available through a growing network of distributors with plans to grow nationwide over the next year.  The first MedCottage distributor is VAS Aging Solutions of Salem, Va.

“When we first saw the prototype, we were immediately struck by how the MedCottage can improve the lives of families seeking a better way to care for their loved ones,” said Vickie Robinson, president of VAS. “We were so confident in the product that we decided to become the nation’s first distributor.”

The MedCottage can be purchased or leased and temporarily placed on the care-giving family’s property with features that most hospital and nursing home rooms are denied. Like an RV, it connects to a single-family house’s electrical and water supplies.

The Wall Street Journal is reporting on the boom in senior living facilities across the country.

One of the examples is real estate developer Greg Smith, who purchased a failed nursing home in Connecticut and ended up turning the development into an assisted living facility.  ”I didn’t even know what assisted living was,” Mr. Smith says.

Since then, his company, Maplewood Communities LLC has developed and is operating three assisted-living communities and has three others under development. Moreover, Maplewood also just cut a deal with Aviv REIT Inc., one of the country’s largest landlords of skilled nursing facilities, under which Aviv will provide capital for future growth, initially $60 million.

“We’re talking about getting 15 to 25 communities under our belt,” Mr. Smith says.

Assisted-living housing is growing into a bigger business in the New York region. While development is slow of most commercial property types—like office buildings and retail centers—a number of developers are moving ahead with plans to provide facilities that occupy a middle ground between standard apartment buildings and nursing homes.

Assisted-living tenants typically are elderly people who are generally healthy and can take care of themselves, but the facilities provide services like nurses, aides, dining and memory care. Average rents at Maplewood are $4,700 to $4,900 per month.

Senior Living Sees a Boom