The Bainum family is well-known in this industry. Stewart Bainum Sr. began building nursing homes in the late 1950’s and eventually formed Manor Care, which was known as a leader in the nursing home business, not only for is size but also for the quality of its homes. In the 1980s, the Bainums pioneered the development of specialized memory care in their nursing homes, and after Manor Care’s merger with HCR, the family invested in a new assisted living/memory care development company, Somerford Corp. About three years ago, Stewart Bainum Jr. approached Don Feltman, who had started working for Manor Care in his sophomore year of college, to assemble a team of experienced individuals from all areas of the senior care development spectrum. The newly-formed team of Artis Senior Living has been through a few of the past cycles in the senior care market and know how to develop strategically and responsibly.
Artis currently has 3 communities under construction, one in Boca Raton, Florida, one in Evesham, New Jersey (Philadelphia MSA) and one in Mason, Ohio (Cincinnati MSA) which will be the first to open in January 2015. The company also owns the land at three additional sites where it hopes to start construction in 2015 or early 2016, in Reading, Massachusetts, Mequon, Wisconsin (Milwaukee MSA), and in downtown Chicago, which will be a multi-story, urban community. What is remarkable is that the company currently has a total of 20 projects with site control, include those mentioned above.
There will be a rough prototype for each community, though obviously varying for each site, with 64-72 beds in mostly private rooms. The Evesham community, for example, will feature 68 memory care suites, and will cost $9.7 million, or about $142,000 per unit. Although its focus is on specialized memory care, Artis will build some traditional assisted living and combined assisted living/memory care as well. Currently, Artis Management Group has management contracts at six communities owned by Rittenhouse Senior Living, which is itself owned by Windsor Healthcare. The company plans on using LK Architecture to design all of the communities, and will bring in local or regional contractors to construct them.
Looking to avoid overdeveloped markets, Artis centers on underserved areas with some barriers-to-entry, but CEO Don Feltman stresses the importance of patience in obtaining the sites, with some properties taking over a year to negotiate and acquire. And although he expects there to be competition in practically every location Artis will build, Feltman is confident that the founders’ reputation of quality care of their residents from Manor Care and simply word-of-mouth means the communities should not have a problem filling up.
Because of their years of experience and good relationships with lenders, the founders have a line of lenders in talks to finance the pipeline. So far, the company has largely relied on equity to fund the projects. In the long term, Artis may look to Fannie Mae and HUD to provide some long term financing on the properties once they are stabilized, but will most likely rely on balance sheet financing, as the founders did at Manor Care. With so many projects still in the planning stage, we will have to wait and see how Artis fares in this busy market, but with the financial backing, years of experience, long-term outlook and good reputation, we have to believe the company will be well received.
