Seniors Housing Business

AUG-SEP 2018

Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.

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26 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2018 $1.8B over Your investment goals are our top priority. With signifi cant knowledge in investment sales, debt and equity fi nancing and loan servicing, we have the best people in the industry to provide the right opportunities, capital solutions and prompt advice for your seniors housing and healthcare assets. Achieve your investment ambitions by partnering with us. us.jll.com/seniorshousing *2017 seniors housing and healthcare transaction volume. © 2018 Jones Lang LaSalle IP, Inc. All rights reserved. Agency/GSE lending and loan servicing are performed by Jones Lang LaSalle Multifamily, LLC, a wholly owned indirect subsidiary of Jones Lang LaSalle Incorporated. Loans made or arranged in California are done so in accordance with a California Financing Law license. of seniors housing in the United States, according to the Ameri- can Seniors Housing Association (ASHA). As of June 1, 2018, Holi- day operated 263 properties and 31,862 units nationwide. "I grew up out of the hospital- ity industry," says Kaplan. "After a few years in finance, I worked at Senior Lifestyle Corp., my fam- ily's business that started over 30 years ago as a primarily indepen- dent living company. I always look at every opportunity and think of how I can introduce independent living." "If you offer a continuum of care it's more marketable for a consumer," continues Kaplan. "Residents know they can move in when they're more active and independent. Then, if they decline, they don't have to relocate. They can stay in an environment where they're comfortable." Kaplan says Solera intentionally seeks sites "closer to the action," such as the core of downtowns, which appeal to a younger, active, independent senior. "It doesn't have to necessarily be walkable to retail, but it has to be an area that's vibrant and suit- able for multifamily," says Kaplan. "It can't be 10 miles away from the city center where people are put out to pasture. That's not what people want in an independent living environment." LCS specializes in large- campus continuing care retire- ment communities (CCRCs) that span the continuum of care with a minimum of 100 total units. For the company's new develop- ments, independent living will be the "anchor" and represent the lion's share of units in new developments. "We believe that the Silver Tsu- nami is much more interested in independent living and focused on health and wellness [than previous generations]," says Laffey. Charter Senior Living, an Illi- nois-based owner and operator of 13 communities, approaches all development opportunities with independent living foremost in mind, according to Keven Ben- nema, the company's president and CEO. All properties currently in Charter's development pipe- line are committing to a signifi- cant number of independent living units. "Most market studies we do are showing stronger demand for independent living, but most of the overdevelopment is in assisted living and memory care," says Bennema. "The development is coming too soon. It's premature." Capital: The Great Equalizer In theory, smart underwrit- ing by the lenders and investors should prevent overdevelopment from happening. If the sector is developing too much, the num- bers should raise a red flag among those with the money that seniors housing is a bad investment. "Capital is the great equalizer. Lenders and capital partners need to focus on who the developer is and its experience," says McEl- wee. "Perhaps the new develop- ers without experience won't have access to capital, and their build- ings won't be built. In that sce- nario, overdevelopment may not become as significant an issue." What concerns Bennema, how- ever, is that the traditional rela- tionship between lenders and bor- rowers has been turned upside down. Capital sources want to be involved in seniors housing and will deploy funds into the sector whether the timing is right or not. Lenders and investors should not "do a deal just to do a deal." "One of my greatest fears is we have so much capital out there right now that needs to be deployed," says Bennema. "It's like the capital is driving the development, without a lot of con- sideration to the seniors not com- ing for another 10 years." Although capital continues Solera Senior Living is building Solera Cherry Creek, a 96-unit assisted living and memory care community in Denver. The community is scheduled to open in 2019.

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