When a hotel in downtown Fort Myers, Florida is lying vacant for almost 10 years, what do you do with it? Convert it to seniors housing of course! At least, that is the plan of The MacFarlane Group, a developer of residential housing in Fort Myers who is looking to make its first move into seniors housing (who isn’t these days?). The reason behind the hotel’s vacancy is rooted in a one family’s dysfunction, who, when the family patriarch passed away, couldn’t agree on what to do about the property. Meanwhile, the empty hotel took up valuable acreage in downtown Fort Myers, much to city officials’ chagrin.
So, MacFarlane stepped in last year to buy the property, which it eventually did in January 2015 for $11.5 million. The developer already had their plans to convert the building to a 323-unit independent living community approved, and construction is slated to begin soon. The total development cost is approximately $30 million, making the all-in cost about $41.5 million, or $128,500 per unit (which is about $45,000 under the average for like-communities built in Florida in the last two years).
Daniel Lisser of Walker & Dunlop arranged an $11 million acquisition bridge loan with a rate in the high single digits and a one-year term of interest-only payments. ACRES Capital, a commercial real estate bridge lender formed late last year by former Arbor Realty Trust people, provided the loan after the original lender dropped out of the deal. Walker & Dunlop is currently looking for construction debt as well, most likely coming from a regional bank. MacFarlane has not decided on an operator yet, but they have time since the conversion is scheduled to take between a year and 18 months to complete. Walker & Dunlop, with its strong relationship with MacFarlane, will also look to take the loan to agency.
