|
In today's investment climate, senior housing is an attractive option, but only if projected returns compensate for
<br />the risk. Unlike general occupancy apartments, assisted living properties have inherent financial risks and require a higher
<br />expected reward. Among these financial risks is: a) Occupancy — unexpected deaths or a health epidemic can devastate
<br />occupancy; b) Regulatory Risk — State and Federal government agencies may impose greater reporting, staffing or other
<br />requirements. They may also halt or reduce the critical Medicaid reimbursements; c) New Competition — with a defined
<br />market segment (elderly seniors w/ health needs), new competition in the market would greatly impact occupancy and/or
<br />prevent the growth of rental revenue. Finally, traditional lending sources typically include the requirement for the
<br />individual investors to personally guarantee the mortgage debt, adding more financial risk if the property does not
<br />perform.
<br />Given the numerous risks associated with assisted living properties, today's investor expects a projected annual
<br />average rate of return between 8% and 10% to be attractive. Many investors also evaluate their expected return by
<br />considering the profit or proceeds in the event of a future sale. This return metric (referred to as internal rate of return
<br />"IRR") is expected to exceed 18% in order to attract risk capital.
<br />Statement of Public Purposes:
<br />The public benefit of the proposed development is the creation of affordable rental housing for low-income
<br />seniors in Ramsey and the Greater Anoka County Area. The proposed, 102-unit senior living community will offer
<br />affordable, high -quality housing options for low-income seniors by providing a range of cost-effective housing options.
<br />The development will ensure that 20% of the rental housing units will be reserved exclusively for seniors whose
<br />household income is 50% or less of the AMI.
<br />In addition to meeting critical affordable housing needs, this development will offer a variety of employment
<br />opportunities ranging from housekeeping, resident care, food service, property maintenance and health care
<br />administration. It is estimated that this new development, when complete, will create 40 new local jobs, or 30+/- full-time
<br />equivalent positions paying somewhere between $40,000-$80,000/year depending on the position.
<br />By providing seniors with an affordable and supportive place to live locally, this community will allow long-time
<br />residents to remain close to family, friends, and familiar surroundings, ultimately enhancing quality of life and community
<br />stability.
<br />Description of the Project:
<br />The proposed improvements consist of 78 assisted living (AL) units and 24 memory care (MC), for a
<br />total of 102 apartment units contained in two connected wood -framed buildings. Structures include a two-story AL
<br />apartment building with 89,792 +/- square feet connected to a one-story MC facility with 20,246+/- square feet. (The mix
<br />of studio, one -bedroom and two -bedroom unit plans will be determined as we complete the building design phase.) Other
<br />areas of the AL building will consist of administrative offices, community dining room, commercial kitchen, storage,
<br />spacious lobby with concierge desk, multipurpose lounge area for activities and gatherings, fully equipped fitness room
<br />with programming, a beauty salon, a grand bath spa, restrooms and elevators. The MC building, which is connected to the
<br />AL and located on one level, consists of 24 studio units, grand bath spa, laundry, restrooms, serving kitchen, activity
<br />space, and resident dining area. Exterior features include covered/screened patio, walking trails, secured patio with
<br />pergola and porte-cochere, along with parking for 95 cars (6 AL tuck under stalls, 74 AL surface stalls plus 15 MC
<br />surface stalls), all situated on 4.14 +/- acres.
<br />This community will be professionally managed by Lifespark, an industry leader in senior care for
<br />over 20 years, and is headquartered in St. Louis Park, MN. Lifespark has developed an innovative "Complete Senior
<br />Health" model that transforms the lives of seniors by enabling them to "Age Magnificently". Lifespark has been
<br />recognized for its exceptional award -winning workplace culture, achieving Minneapolis -Saint Paul Business Journal's
<br />Best Places to Work three times, and Star Tribune's Meaningful Award. They have also earned Top USA rankings three
<br />times, and in 2021 ranked as the #1 Healthcare Workplace for Top USA.
<br />Page 2 of 4
<br />
|