Build in Broken Arrow

At the beginning of this year, we wrote about the rise of seniors housing construction in the Tulsa, Oklahoma area, with four projects scheduled to open in the second half of 2015, representing a total investment of over $35 million. Indeed, according to NIC MAP data, the construction vs. inventory ratio for assisted living in the MSA is over 30%, one of the highest for any MSA in the country. Well, we have to add one more to the books, as Prevarian Senior Living just broke ground on a 105-unit assisted living/memory care community in Broken Arrow, Oklahoma. Prevarian, a private equity investor, is partnering with an affiliate of St. John Medical Center Hospital, on whose campus the community is being built. The property will operate under a long-term ground lease from the affiliate and will be managed by Life Care Services. With 73 assisted living units and 32 memory care units, the project is expected to be completed in November 2016. RED Capital Group closed a $17.2 million five-year balance sheet loan to help fund development. The loan came out to 75% loan-to-cost, so we can estimate a project cost of $22.9 million, or $218,400 per unit. For a state that averages about $161,900 per unit to build senior living communities (according to our data), that is on high side. But considering that Life Care Services senior living properties average $226,000 per unit to build (according to revealed development costs since 2014), that seems about normal.