Is this a development model that works?

Siena PSD is a partnership between Siena Senior Living and Pacific Summit Development and they have found what they think is a unique niche in the hot hot hot senior living development market.  

Here is what it looks like

They have locked-up (through purchase, purchase options or conditional purchase agreements), as of this writing, more than 20 senior living development sites in California, Texas, Arizona and one in Iowa.  You can see the current list here. With legal control of these sites, they have embarked on the process of obtaining the entitlements for those properties. Their final step is to make a marriage between, operators, owners, capital providers and management companies.  They have some of these entities in-place, but are primarily looking for that last bit of “at risk” capital.

Some Specifics

  • The planned developments are upscale communities that include a mix of independent living, assisted living and memory care.
  • Project sizes range from a low of 40 memory care beds up to close to 200 residents, but with a typical size of just under 100 residents/units.
  • Some of the projects have full/development/construction funding committed by a core group REIT’s and Private Equity Funds.
  • Irwin Partners Architects is doing the architectural work for all of the projects.
  • They are very flexible in terms of what kind of a deal they will work.  They can stay in the deal or step-out depending on the specifics of the offer.

What I Don’t Know . . .

I don’t know exactly how they went about the process of selecting the specific market areas.  There are some that look really terrific and some I would have some doubts about. Though they may very well have great market data that would prove me wrong, and as one of my blog partners pointed out; even if the market doesn’t look so hot, it may be a problem with the product being offered in the marketplace and not with the market itself. I also don’t know what kind of premium they are charging for securing these sites.  There is no doubt that going through the entitlement process has significant value to an operator both in terms of carry costs and the risk of getting the entitlements. I don’t know how operators or investors will view this opportunity. If you are an investor, operator or capital provider it would be interesting to hear your thoughts.  If you have taken a look at any of these projects what’s your impression:

  • Good sites?
  • Good markets?
  • Good value?
  • How much is that entitlement risk and time worth?

Finally I do believe there some gems here.  If you are looking to jump start your senior housing development you can get the details on these projects from Don Pitarre at  [email protected]   Steve Moran