By expanding the number of private rooms for its Johanson Wing, life plan community Smith Village is serving the wants of the community on Chicago’s South Side, which includes the CEO’s parents.

A $23 million modernization of the 30-year-old building includes a three-story,10,204-square-foot tower at the south end of the structure, featuring a therapy gym on the first floor and dining rooms on the second and third floors. Finished six months ahead of schedule, the project capped off a 15-year, $74 million transformation of the larger campus.

CEO Kevin McGee grew up in the working-class Irish neighborhood where Smith Village is located. His parents both reside in the community, his mother in independent living and his father in skilled nursing. They were among the community members and residents who offered their input about how Smith Village should go about the modernization project. Focus groups established the project’s blueprint, McGee says.

“Overwhelmingly, people wanted private rooms in skilled care,” he says. “Hospitals started doing it, so that became the expectation from the community.”

The new Johanson Wing has 66 private rooms and six semiprivate rooms (which are divided by a wall) for skilled nursing residents and short-term rehabilitation patients. Michael Martin, managing partner of RLPS Architects in Lancaster, PA, says that a dedicated entrance and “front door” to the health center is an integral part of the redesign because “previous access to the wing was from the independent living community’s main entrance that went through a labyrinth of corridors.”

A dedicated physical therapy area is adjacent to the main lobby, with access from the new entrance as well as the private rehab resident rooms on the first floor.

The rooms for short-stay rehab care patients have been modified to include bathrooms with fully accessible, European-style showers, allowing people to stay in their rooms for bathing.

The upper floors for skilled nursing residents feature a contemporary dining venue and new living and gathering rooms. Renovations for both upper floors include the circulation spaces, common areas and resident rooms. The footprint of the first floor was larger than the upper floors, providing the opportunity to expand the volume in a portion of the therapy gym.

Bruce Springsteen once asked, “Does this bus stop at 82nd Street?” The song was about New York, but it also applies to Lawrence, MA, home to the Mary Immaculate Health/Care Services and its innovative new memory care unit. 

The Bus Stop has become a popular meeting place for cognitively challenged residents, and even though the bus never comes, the stop has an important purpose, says Rebecca Alfonso, program director for memory care.

“It’s a popular people-watching spot, like a porch,” she says. “It also serves as a place for reminiscing, like, ‘What bus number did you take to work?’ After a while, it becomes a natural way to say, ‘Let’s go get a drink while we wait.’”

The “bus stop” is one component of a design theme that follows the Alzheimer’s Association Habilitation Therapy Program, which creates a world patterned after residents’ earlier lives. The $500,000 project features similar elements such as a meeting tree, post office, memory garden and quiet room.

The 41-unit memory care center is part of a comprehensive eldercare campus.The project took about two years to complete, MIHCS CEO Jeanne Leydon says.

“We did a lot of the work ourselves,” she says. “We had volunteers to paint, build closets and shelving.”

Leydon credits retired Maintenance Director John Raymond with creative vision on elements such as the “back porch.” Residents can sit on a couch or in glider chairs to view a landscape mural beyond a handmade porch railing. 

Aesthetic and functional details are paramount in the décor, designed to enable “wayfinding” for residents, whereas furnishing materials promote safety. Three neighborhood styles are based on resident demographics and area history — stucco represents the Latinx population, clapboard represents the working class and brick is reminiscent of the town’s factory past.

Each neighborhood is designed in a specific color that assists residents in navigating their way back “home.” Light fixtures, color-coded doors and mail slots are part of each resident’s entrance, for instant recognition. Flooring is tactile, skid-resistant and has a cushioned underlayer to prevent injuries.

As a dementia specialist, Alfonso carefully researched the environmental aspects of the design to create “a positive and relaxed” atmosphere. Working with a design committee, she and the group determined which materials offered the most resident protection.

The center’s holistic approach is a radical departure from conventional methods, Leydon says.

Lessons learned

1. The Alzheimer’s Association Habilitation Therapy Program is a progressive method for creating a safe and comforting environment for cognitively challenged residents.
2. Using volunteers for tasks such as painting and carpentry is an effective way to save money.
3. Safe materials such as tactile, cushioned flooring are worth the extra expense, to ensure resident safety.

David Tate, chief strategy officer for Reliant Rehab, says that rehab indeed is becoming more associated with senior living. “It is common for senior living operators to promote the availability of on-site therapy services,” he adds.

“Whether in a small skilled nursing unit, memory care unit or in a dedicated outpatient therapy gym, therapy services are increasingly available to senior living residents,” Tate says. “For senior living communities without dedicated therapy space, an approved therapy facility may offer ‘off-premises’ services in a patient’s room. Home health is another provider commonly offering therapy services to residents of senior living communities.”

Although short-term rehab infrastructure may not be universal in senior living yet, Tate says it is more commonplace to see senior living communities with dedicated therapy gyms that occupy prominent locations and can be accessed by residents and potential residents.

“Short-term rehabilitation provides senior living residents an opportunity to receive therapy services in an ideal environment for restoring optimal functional abilities,” he says. 

Rockland Berg, architect and principal with the Dallas-based architectural firm three, has witnessed the needs-related shift and rehab migration trend over the course of decades. If skilled nursing has owned the rehab component, it is because the facilities have a more clinical focus — and image — than senior living, he says.

“Skilled nursing in the past seemed to be a competitor for the hospital environment, but that fundamentally changed about 10 to 15 years ago as hospitals needed to shed patients as required by new regulations.”

Even so, post-acute care and senior living are evolving in their identities, approaches to care and overall environments and are gaining more influence over public policy, so the migration of rehab into assisted living is a natural result of that evolution, Berg says.

“We’re seeing operators getting more creative with licensing regulators so that they can provide better care in less restrictive environments,” he says.

Franklin Park spared no expense in the dining experience at properties in South Central Texas. Its newest community in Alamo Heights is no exception. Upon walking through the spacious lobby, visitors view an entryway that features a grand staircase reminiscent of a historic San Antonio estate.

With room for 117 independent living and 64 assisted living residents, Alamo Heights is the fifth Franklin Park community in the San Antonio area, a district that CEO Luke Classen concedes has become highly competitive. Attracting prospective residents requires a truly distinctive feature, and he believes Crescendo is it.

Offered through FLIK Hospitality Group, Crescendo is a food service program designed to elevate resident dining beyond the ordinary, says FLIK Division President Jack Silk.

“Today, elevated experiences with a restaurant-style approach are a must,” he says. “High-quality, white-glove service from the dining staff is no longer ‘nice to have,’ but a ‘need to have’ to remain competitive.”

Crescendo — an exclusive program for Franklin Park — is named after a musical term because its designers want to create “a symphony for the senses” with its special meals. Classen reasons that if décor’s purpose is to provide a sensory experience, then food service also should be a critical part of that environment.

“We know that dining is not what most companies dedicate extra resources to, so to beat the competition, we focused on the sensory experience of dining — what does the resident see, taste, smell and hear?” he says. “Food is the common denominator of all our services. If we get the food right, the rest falls into place.”

Professional chefs prepare the gourmet-level meals, and FLIK’s team of food service experts includes nutritionists and clinicians familiar with the special dietary requirements of each resident. FLIK’s food philosophy is to make all meals from scratch, sourcing sustainable ingredients from local purveyors, with “nothing out of a box or can,” Silk says. 

“This is a food-first approach. We operate restaurants inside senior living communities,” he adds.

Prevention and early intervention are the best way to head off potential wounds, rashes, infections, inflammation and other skin disorders, and this approach requires only a dose of common sense, along with TLC.

The American Academy of Dermatology has issued a list of guidelines designed to keep residents’ skin healthy, thus maintaining their quality of life.

One of the biggest culprits in dermal disorders is dry, irritated skin. Heat and humidity are prime causes of skin irritation, which can lead to shear and, ultimately, pressure ulcers and wounds. SPF 30+ sunscreen offers protection from the sun’s radioactive rays. Broad-spectrum sunscreen provides protection from both UVA and UVB rays.

Cleansers are effective in keeping skin moist, but antibacterial and deodorant soaps and body washes actually can dry the skin. Warm baths and showers are preferable to hot ones, followed by application of fragrance-free moisturizer.

“Because moisturizer works by trapping water in the skin, it needs to be applied within five minutes of taking a shower or bath,” the AAD recommends.

Sunburn and melasma are two conditions caused by direct sun exposure. Because many senior living communities are located in sunbelt locations and have ample outdoor areas, the risk for sunburn and melasma (gray-brown skin patches) is high — especially in residents.

The AAD recommends avoiding direct sun and that residents sit in shaded areas. A wide-brimmed hat, sunglasses, long sleeves and pants should be worn, when possible.

Apply enough sunscreen to cover all exposed skin. Most adults need about one ounce to fully cover the body.

Important areas to cover include tops of feet, neck, ears and top of the head. When outdoors, sunscreen should be reapplied every two hours.

Prickly heat, or heat rash, can be a painful condition caused by blocked sweat glands. Because the sweat cannot get out, it builds up under the skin, causing a rash and tiny, itchy bumps.

Increasingly, senior living operators are recognizing rehab’s potential for meeting the needs and desires of residents while also making it an important source of income.

David Tate, chief strategy officer for Reliant Rehab, says rehab is indeed becoming more associated with senior living.

“It is common for senior living operators to promote the availability of onsite therapy services,” he says. “Whether in a small skilled nursing unit, memory care unit or in a dedicated outpatient therapy gym, therapy services are increasingly available to senior living residents. For senior living communities without dedicated therapy space, an approved therapy facility may offer ‘off-premises’ services in a patient’s room. Home health is another provider commonly offering therapy services to residents of senior living communities.”

Although short-term rehab infrastructure may not yet be universal in senior living, Tate says it is more commonplace to see senior living communities with dedicated therapy gyms that occupy prominent locations and can be accessed by residents and potential residents.

“Short-term rehabilitation provides senior living residents an opportunity to receive therapy services in an ideal environment for restoring optimal functional abilities,” Tate says. “While the convenience of onsite outpatient therapy is a definite plus, the more important advantage is receiving functional rehabilitation services in the actual home environment.”

The clinical dynamic

Rockland Berg, architect and principal with the Dallas-based architectural firm three, has witnessed the acuity shift and rehab migration trend over the course of decades. 

“Today, we’re seeing operators getting more creative with licensing regulators, so that they can provide better care in less restrictive environments,” he says. “I think certain states are no longer requiring skilled nursing as part of the continuum, such as Arizona, I believe, and that will continue to change the dynamic.”

Nevertheless, senior living is a different care setting and faces an alternate process of adopting rehab.

The Overland Property Group puts a capital “B” on boutique for its new community in Leawood, KS, The Boutique Retirement Club at Ironhorse. Also referred to as The Fairways of Ironhorse, the independent living community aims to be a pre-eminent luxury living center in metropolitan Kansas City.

Not only does the new community focus on elegance and ornate details, it also incorporates 21st- century technology to provide a new level of service for its upscale residents. Overland Property Group jointly owns BRC at Ironhorse with partner Midwest Health and promotes the new community’s “stunning architecture and environment, dining run by professional restaurateurs and staff dedicated to a new high end for boutique retirement.”

From a design perspective, each space is intended to convey luxury, comfort and a refined aesthetic, says Steven Fox, director of marketing for Overland Property Group.

“The textures, materials and furnishings are all the finest available and attention to detail is evident in every space,” Fox says. “Each space is complemented by fine art, curated by the Eva Reynolds Fine Art Gallery, and the community is also home to their satellite gallery space.  Both local and nationally recognized artists are represented.”

The foyer is designed to be spacious and airy, the Belle Elegant Dining Room is designed for fine dining and overlooks the patio and putting green, while the Reckless Wine Bar is a club-like space that encourages conversation over drinks. Other features include an indoor salt-water pool, full-service salon and spa, theater, art room, heated underground garage and dog park.

A wellness studio features advanced equipment from senior living fitness provider HUR USA. Along with stationary bikes and elliptical equipment, the wellness studio offers yoga, tai chi and other therapy options provided by a staff physical trainer and in-house therapists.

In keeping with the equine-themed brand, the inspiration for the dining room, wine bar and other formally named spaces comes from famous horses.

21st-century tech

Beyond the aesthetics, BRC at Ironhorse partnered with senior living digital communications firm Touchtown to build an information technology infrastructure that includes a customized app to connect residents with their community.

“Older adults enjoy the convenience and connection technology offers as much as anyone,” says Lindsay Evans, Touchtown’s director of product management. “The BRC team recognized that and has over-delivered on the wants and needs of their residents in every way, including through the app.”

The app can be downloaded for use and is accessible through the voice-activated Alexa system so residents can orally ask for community information. Digital signs throughout the community and an in-suite TV channel also keep residents informed.

To manage and maintain the IT infrastructure, the community has its own tech support department at residents’ disposal. Having that help “makes it easier to learn and be more comfortable with all the technology in the community,” Evans says.

Situated on 13 acres, the 186,000-square-foot community has 91 independent living, 44 assisted living and 24 memory care apartments. The property is part of Texas A&M University’s healthcare expansion zone, congruent to the Traditions golf course and the Atlas Lake and Hotel Center.

“This location supports a true resort lifestyle as well as two-way learning experiences for residents and TAMU students,” says Chris Sullivan, principal for New York-based C.C. Sullivan. “The community is expected to attract the interest of retiring faculty and alumni.”

Opened in 2018, Parc at Tradition was designed “with a sense of discovery in mind,” Sullivan says. “The winding entrance drive reveals the building frontage through an unfolding arrival sequence. Framed within the overall natural hill country context, a manicured landscape welcomes guests to a front porch verandah and porte-cochere.”

The lobby is intentionally activated by its close proximity to the spacious living room with a foundational fireplace, which in turn flows into a bar. Both rooms boast scenic views through full-height windows. These spaces lead onto a picturesque porch and event space with a tree-lined backyard.

Integral to the community design are elements that are central to life at the community, including a wellness center, salon, arts studio, media library and lounge.

These spaces also connect to the outdoors and nature through indoor-outdoor shared living areas as well as interior design and architecture styles inspired by the rustic environment, Sullivan says.

‘Trilogy’ of life

Rocky Berg, principal and partner with the Dallas-based architectural firm three, says Parc at Traditions offers a “trilogy” of lifestyle benefits, with its close association to Texas A&M, the golf course “country club” atmosphere and location within the university’s health sciences corridor.

The design is “definitely not cookie cutter,” Berg says.

“The project is unique in that it is carved into the landscape. The expansive soils have a lot of swell and clay, so it required special engineering for the foundation to do structured slabs,” Berg adds.

Opened in April, The Langford at College Station is a tribute to Ernest Langford, known as “the father of College Station,” who served as the city’s mayor for 23 years and as the head of Texas A&M’s architecture department.

With interior design by Spellman Brady & Co. of St. Louis, the 215,000-square-foot community’s light-filled spaces feature a combination of rustic flavor and timeless elegance for residents that live in the 72 independent living, 24 assisted living and 18 memory support units. Native Texan Matthew Currie, who serves as regional vice president and executive director of The Langford, is amazed at how well the property captures the spirit and beauty of his home state and honors its namesake’s legacy.

“Ernest Langford is the longest-running mayor of College Station and has buildings on campus named for him,” Currie says. “We have met with the Langford family and they said our organization shares their values. The Langfords are stewards of the land, and we are stewards of our residents. We do our best to be cognizant of that.”

Among the tributes are seven wall-mounted plaques that tell the Langford story, while flourishes of Texas A&M’s school colors provide an element of school spirit within the community. Photographs of local scenery by David Langford, Ernest’s grandson, as well as custom glass creations are showcased.

Operated by Methodist Retirement Communities, the genesis of the $40.3 million new construction project started in 2014-15, when the organization conducted focus groups among church members and residents at other Methodist communities to get ideas about what they thought the new community should have. That feedback helped shape the features of The Langford, Currie says.

“They didn’t want long hallways. They wanted a smaller building but larger apartments with connectivity to all the amenities, and we were able to provide that,” he says. Based on RLPS Architects’ design concepts, The Langford has six apartments per floor, whereas other facilities could have 30 within the same space, Currie says.

Focus group input also is responsible for the installation of individual balconies that can seat up to 10 people and an outdoor courtyard for football watching in Aggie-crazy College Station.

Some lenders, such as Mark Meyers of Walker & Dunlop, are downright bullish.

“There has never been a better time to be a beneficiary of the capital stack provided through various means in our industry,” says Meyers, managing director. “The maturation of operators, property types and services, along with the science of identifying optimal sites and developing successful properties, along with the maturation of the seniors housing capital markets, results in a powerful opportunity.”

In this environment, the onus is on operators to demonstrate their mettle for those who hold the purse strings for new projects, whether new greenfield developments or extensive renovations of existing buildings. Showing solid fiscal and occupancy numbers should get the interest of investors, says Anders Pesavento, vice president of capital markets for Ryan Companies US.

“We feel the market is currently strong for finding accretive financing for the right projects,” he says. “Lenders want to know who the sponsor is and, more importantly, who the operator is. We continue to talk with new lenders – both traditional banks and debt funds – that want to get into the space and have capital allocated for senior living projects.”

Likewise, Jeff Sands, managing principal and general counsel for HJ Sims, agrees that senior living projects are still generating interest, although it depends on the purpose.

“Acquisitions and renovations are still attracting money. There has been a decline in debt and equity for new development,” he says. “For those new projects being financed, the key to success is the strength and track record of the owner/operator.”

Because a strong track record is essential to attract investors’ cash, operators need to exert discipline in several areas, Meyers says.

“It demands a keen eye on properly positioning the property in the market, effectively maintaining and renovating each property and offering the right mix of pricing and services for a given market,” he says. “It also requires a keen eye on new competitors entering the market, or ones who are repositioning through renovations or development. Too many operators have wandered far afield from their base of expertise, and they have tried to become experts across too broad a spectrum and too many markets.”

Conner Girdley, director for Lancaster Pollard, asserts that because senior living is an operator-driven business, it makes sense that capital would be available to those with good track records.

“Yet it is more challenging for developers that do not have an operating platform or existing relationship with an operator,” he adds. “Third-party managers have stepped in to provide operational expertise, but finding financing for new developments is more challenging when the manager does not have an ownership stake and may walk away from the project with little consequence.”

Low rates favorable

After a year of hiking interest rates, the Federal Reserve has reversed course, which presents new opportunities in the marketplace, says Scott Thurm, chief credit officer of FHA lending for Greystone.

“With interest rates being so low again, it makes a lot of sense for investors to capture equity to renovate properties or capitalize an expansion of their portfolio,” he says. “As an example for one client that has limited capital to expand their holdings, we are exploring the option for them to first come in as an operator with the potential to buy the assets in the future. And we have helped other clients find equity sources or mezzanine loans to fill gaps or capitalize their equity.”

To be sure, property investors should be taking advantage of the current low rate environment to invest in renovating and modernizing older buildings, or in some cases, building a replacement facility, Thurm says.

“The low rates can also help with affordability and reimbursement rate uncertainty in the future,” he says. “I also think figuring out how to deliver more services to independent living facilities – or even in the home – will be imperative for the future demand that is rapidly becoming a reality.”

Aaron Rulnick, managing principal for HJ Sims, says a strong bond market has helped keep rates at near-historic lows. The situation has been driven by two related factors – cash inflows into the bond funds and limited supply of tax-exempt bonds being issued.

“The lack of balance between supply and demand has shifted with a surge of issuance, which often happens towards the end of the year,” he says. “As the market tries to absorb the flush in issuance, there has been an upward pressure on interest rates. Appetite from commercial banks has also been robust during the year.”

As the spread between short-term and long-term rates narrowed in the early part of the year, many providers shifted towards long-term financing, Rulnick says. 

“Given recent action by the Federal Reserve to reduce interest rates, bank financing has become more attractive,” he says. “Despite this draw towards commercial banks, the increasingly complex bank regulatory environment has challenged their ability to be competitive in new construction financing by placing and increasing equity requirements for project finance.”

Project, mix preferences

Trends in project types and population mix historically have driven new developments, with investors showing interest in particular building models and resident types. With maturation of senior living, the financial community has gotten more savvy and creative with the types of projects they support, Pesavento says.

“Both project types are attractive, but only if you can assume the underwriting is based on realistic assumptions supported by real market data,” he says. “Urban projects are something we are looking at but are mindful of. Type 1 construction, commonly found in high-rise buildings, and Group 1 occupancies require higher rents to support the cost, and not all markets have the right demographics and incomes to support this, so you need to be careful and do your homework.”

Melissa Messina, senior vice president for HJ Sims, says: “Greenfield projects are less of a focus by financiers, though greenfield development still has limited sources of capital. Lenders, underwriters and investors are looking to the market surrounding the project and how deeply those markets are penetrated by existing products.”

Good sites are becoming more difficult to find and developers are having to be more creative, Girdley says, adding, “We have seen an increase in financing requests for mixed use developments, repurposing of existing buildings and developments on university and hospital campuses.”

Population mix has been centered around assisted living and memory care, a decision influenced by the amount of product that is coming into the market, Rulnick says.

“There has been very little development of skilled nursing in recent years as efforts have shifted towards replacement facilities, renovation, downsizing of skilled nursing offerings and repositioning skilled nursing with private units and short-term rehab,” he says.

Fannie, Freddie & HUD

Determining the right type of financing depends on property type, age, investment horizon, investor profile and risk tolerance. Based on those criteria, many operators select government-sponsored enterprise financing, such as Fannie Mae, Freddie Mac or HUD. These agencies have underwritten the bulk of long-term care financing over the past decade.

“After taking some time to re-group this summer following higher than expected loan volume through the first half of the year and regulatory uncertainly, Fannie and Freddie now have a clear mandate from the Federal Housing Finance Agency through the end of 2020,” says Russell Dey, vice president for Walker & Dunlop. 

“The senior housing asset class dovetails well with Fannie and Freddie’s mission. In the permanent financing segment of the market for stabilized assets, Fannie and Freddie continue to offer very competitive loan terms for experienced owners and operators. HUD also remains an important part of the seniors housing and skilled nursing debt capital markets, having closed $3.7 billion in total loans through their latest physical year. With its fully amortizing, 35-year loan terms, HUD arguably offers the most compelling financing option for long term holders of both assisted living and skilled nursing properties.”

HUD predominately is active in the refinancing of existing facilities, most notably for “bridge-to-HUD” transactions, and for the purchase of existing properties, says Anthony Luzzi, president of Sims Mortgage Funding. 

“Approximately 10 percent of HUD’s loan volume from 2016 to 2018 was for new construction projects, substantial rehabilitation of existing structures, or additions or renovations to existing properties with HUD-insured loans,” Luzzi says. “HUD is still clearly a major player in the refinancing space but has been modestly active for development deals.” 

Geography lesson

The Sunbelt has seen the most senior living development activity over the past couple decades, and although states in the South and West continue to be a focus, other regions, such as New England, mid-Atlantic and Midwest, also are seeing significant growth, Sands says.

“Seniors in these areas are either aging-in-place or returning to their hometown from retirement areas to be with family,” he says.

Ryan Companies also is very interested in the upper Midwest, Pesavento says.