Gulfstream Seniors Partners I, LLC (“GSPI”, in formation) is a limited liability partnership with a primary focus on the conversion of distressed hotel properties to long term Memory Care only and combined Assisted Living and Memory Care resident facilities. Our model is to rehabilitate prequalified existing hotel properties, based on complying with each state’s Assisted Living & Memory Care licensing requirements, spa resort interior designs, open to the local community wellness center, organic gardens, and performing arts center. The facilities operation and design will emphasize an innovative approach to senior care that focuses on the complete wellbeing of its seniors. Creating a new paradigm shift in resident and influencer experience, resident and employee nurturing operational culture, distinctive market differentiators, that support our stated goal of 100% occupancy with a waiting list. These are the key elements in sustaining a marketing edge in sales in most high-barrier-to-entry markets on the west coast and strategically selected national markets.
Research indicates demand for Memory Care only properties will steady rise over the next 20 + years. Dementia and Alzheimer’s demand exists, but only smaller sites of between 17 to 30 beds are available, we will offer state-of-the-art memory care only resident facilities. The Memory Care housing market separates from the other seniors living classifications (IL independent living, AL assisted living, NC nursing care) based on the immediacy in need to provide care once learning about a family member diagnosis of Dementia or Alzheimer’s disease. The seniors living sectors, is a non-institutional, fractured industry that underserves demand in many key regions within the US. According to U.S. Department of Housing estimates, there will be need for 18 million units in 2036 yet today, only about 50,000 units are currently provided. Much of the existing supply is not optimally as designed to provide quality memory care services, and at cost more effective than in a person’s own home.
Memory care is largely a non-discretionary need based decision, and not subject to overall economic cycles like senior’s apartments and Independent Living (IL). To meet demand in middle markets, affordable Memory Care only and Assisted Living/Memory Care can only be provided through remodeling of existing facilities and the conversion of compatibly designed and zoned properties. Distressed hotels, office buildings, retail strip centers and light industrial buildings will be the future of filling this need and demand.
Select hotel designs compliment Memory Care and Assisted Living in the continuum of elder-care services. We’re identifying markets, neighborhoods, and existing properties in compatibly zoned areas to convert to innovative facilities serving the local needs of Assisted Living & Memory Care.
The demand for Memory Care only is nationwide and the GSPI model is entirely scalable. Extensive design consideration has been given to the prototypical floor plan to maximize local market absorption to ensure feasibility in midlevel rental rate markets. Our model targets 72 beds ranging in rooms numbering between 45 to 85 based on shared and private occupancy. This model is based on 3 story existing hotel structures.
Our conversions in most cases will only require a change in conditional use permit (CUP) but we are not deterred by locations where rezoning is required. Our facilities as outlined above are not controversial developments, reducing the existing parking ratios from 1.2 to .35 average as they generate minimal vehicle traffic due to the fact that all our resident’s mental conditions disqualify them from maintaining a registered state driver’s licenses.
Site redevelopment is a key component of our strategy as in many high demand markets where little to no raw land exists. Fortunately, we can remodel and convert many types of buildings, even including offices, retail and light industrial facilities, to suit our purpose. While we expect to acquire most properties on an all-cash basis, landowners can also contribute their property on a project-based joint venture.
We have assembled a uniquely qualified team of experienced managing partners, consultants, and strategic alliance partners with key experienced partners in long-term positions for project success. Our architects are the leading innovators in senior Assisted Living & Memory Care design and are involved in the development of key building codes for numerous facilities on a nationwide basis. Our on-site management are seasoned, multi-complex operators that do not operate direct competitive facilities. GSPI will have ultimate overall investment responsibility including preliminary feasibility analysis, acquisition, entitlements, construction budget & management, rehabilitation execution, capital stack formation, asset management, and operational management supervision. The principals of GSPI have over 100 years of development experience.
Select property acquisition for operational revenue stabilization will vary depending on the location, size and scope of rehabilitation, market penetration in sales and extent of either the re-purposing or complete redevelopment, but should generally be achieved within 18–24 months. Once properties reach an economic occupancy of 85% for 90 days, long-term permanent financing is available at attractive interest rates and LTV ratios. (averaging 50% LTV) The long-term financing is expected to return much, if not all of the initial invested capital investment or cost, while still allowing the property to generate attractive positive cash flow and original equity can be reinvested in new properties accelerating investor returns.
The key factors to accelerating and sustaining cash flow is the focus on employee profit sharing programs, no vacancy strategies and shared unit demand increasing the number of occupants from 1 bed to 2 beds per unit. Based on these key factors NOI will double with minimal cost at all levels within the operational budget.
The principals of GSPI will co-invest (10% minimum) with each limited partnership to ensure alignment of investment objectives, and the investment structure delivers a combination of current income and long-term capital gain. Investment targets include an 8% preferred, cumulative return on invested equity, including the possible return of most or all invested capital base on permanent financing at 85% occupancy.
Return on costs (ROC) is a common metric for new development feasibility. Our preliminary underwriting on a sample project targets a ROC of 13 to 15% which compares favorably with other new developments such as apartments & hotels which are commonly built to a 6% ROC today in high-demand, comparable markets.