Seniors Housing Business

FEB-MAR 2018

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

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42 Seniors Housing Business n February-March 2018 Landreville presented two sce- narios at LeadingAge: bank financ- ing could be less than 3 percent interest for 10 years, which would require 25 to 30 percent equity, or financing through bonds that have not been rated by a rating agency at 5 percent to 6 percent interest for 35 years with 5 to 10 percent equity down. Landreville says non-rated bonds, which would not be assigned an investment grade, are attractive because they permit higher leverage in financing and improve equity returns. He adds most financing models would depend on whether tax reform eliminates private activity bonds. • Defining a housing product that is a hybrid of independent living and assisted living — Some experts say assisted living itself is a barrier to providing affordable options for the middle-income demographic because compliance with manda- tory building and operating regu- lations is costly. Consequently, sev- eral providers are experimenting with an independent living model that incorporates health services in creative ways. Demographics overwhelm Each of these topics is part of a changing dialogue about senior care and living. The unprec- edented groundswell of demand expected from aging Baby Boom- ers is leading the urgent need for this change. By the time all Baby Boomers turn 65 in 2030, 18 percent of the U.S. population will be at least 65 years old or older, according to Pew Research. "We have never seen this kind of population anomaly before," says Landreville. Seniors are coming in sheer numbers, and they will not be as prepared financially as their par- ents were. Several studies have concluded How technology, design create affordability Operators such as Bloomfield, N.J.-based Juniper Communi- ties are exploring how to harness technology as a foundation for a middle-market operating model. Connect4Life is a program Juni- per is currently applying at all its assisted living communities that could hold promise for an afford- ably priced seniors community brand. An electronic platform links dis- parate services such as therapy, primary care, pharmacy and lab services to share information so the provider can apply a holistic approach for each resident. If a resi- dent falls and needs physical therapy, for example, all other parties can be supportive of any actions or follow-up needed. A staff member Juniper refers to as a "medical concierge" facilitates the whole process. Chuck Hastings, Juniper's vice president of finance and business development, says the com- pany is actively searching for a site or an existing building to convert to independent living and then develop and apply a service package based on Connect4Life. "You could attract a much younger, healthier popu- lation," says Hastings. "Then as they age in place, residents have access to services such as a nurse prac- titioner, home care, pharmacy, meals, activities, etc." "Most of these things could be done virtually to help keep costs down," continues Hastings. "Tech- nology is really going to change things for the affordable market." "The Longevity Economy," a report published in September 2016 by AARP, says that harnessing tech- nology, specifically Internet of Things (IoT), will be essential in shaping the future of healthcare, includ- ing coordinating care services and improving clini- cal workflows, or enhancing smart home technology to support ambient assisted living. IoT refers to the network that enables home sys- tems such as heating and air conditioning or elec- tronic appliances, vehicles and more to exchange data. "Seen in the context of IoT, the challenge of pro- viding high-quality healthcare at a lower cost becomes a major market opportunity, with venture capitalists reportedly investing $18 billion in start- up healthcare businesses in 2015 — a 350 percent increase from 2010," states the report. In addition to technology, design will play an important role in developing and operating afford- able seniors housing. By example, new senior communities are cropping up in retail-focused, mixed-used developments. Janet Reynolds, principal at BCT, a Baltimore-based archi- tectural firm, has been working toward integrating senior living with other uses rather than building standalone projects in greenfields. "When we brought this conversation to a lot of retail REITs, even up to three years ago, they didn't want to hear anything about it, so we stopped the conversation," says Reynolds. "In the past year, those same clients have started coming back and saying, 'Tell me more about senior living.'" Reynolds says she's not only seeing the retailers starting conversations with seniors housing devel- opers. She's also seeing seniors housing clients who are actively looking for sites vacated by big-box chains. In general, seniors housing clients are seeking sites that have more amenities that are outside but immediately adjacent to the communities they're developing, especially for assisted living. This would enable new projects to be smaller and more efficient in design because they would essentially share amenities with their commercial neighbors. "The larger challenge for developers is in what they're willing to rethink in their communities," she says. "So, while it varies in every market and every project, if you could take out, say, 5,000 square feet, at $200 per square foot, that's a million dollars. It involves thinking in a bigger perspective about how you can reduce the overall square footage, which might require reducing services or programs." The tweaks would need to be subtle. For example, Reynolds says BCT has been examining a design option that would build a demonstration kitchen into an activity space instead of a full dining area. "That would reduce the overall square footage for the program without reducing the quality of the experience you're giving your resident. The differ- ence between low income versus moderate income — your teachers and your firefighters — is there's still an expectation on the level of service they're going to want." — Lynn Peisner Chuck Hastings Juniper Communities Gardant Management Solutions opened Hellenic Senior Living of Indianapolis in January. The $23 million development is for seniors who need financial assistance.

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