New EB-5 developer hits the ground running in California

Al Rattan, a real estate developer with over 30 years of experience building residential, commercial, industrial, office, health care and senior care properties, is jumping back into the seniors housing market with his company, Continental East Development (CED). Founded in 2009, CED has already developed a number of retail, office, and medical properties, but started to take a look at seniors housing in 2011. Having already developed and operated an independent/assisted living community in Anaheim Hills, California (before selling it at full occupancy), Mr. Rattan plans to utilize large amounts of EB-5 equity (up to 60% of the development cost) raised through his USA Continental Regional Center subsidiary in building three new senior living communities in California, with more to come.

CED’s first community, a 94-unit AL/MC community in Rancho Belago, opened in October 2014, and has so far filled over 70% of its 60 AL units and 34 MC units (slightly ahead of the 18-month expected lease-up schedule). The project ended up costing approximately $16.5 million, or $175,500 per unit, which was financed with $5.5 million of EB-5 equity and the rest developer’s equity. An additional 44 AL units may be built on the property, which could cost about $8.66 million, or $196,800 per unit. Monthly rents start at $2,795 for an AL studio, then go up to $3,295 for an AL one-bedroom unit, $5,500 for an AL two-bedroom, $3,000 for a shared MC unit and $4,000 for a private MC unit. CED’s management affiliate, Renaissance Village Inc., operates the community, and will operate the rest of the growing portfolio.

Up next, CED is developing a $40.2 million property with 98 AL units, 42 MC units and 50 skilled nursing beds, in Murrieta. The project broke ground last year and will be built in three phases, starting with the AL (to open in Summer 2016) then the MC, with a combined cost of $25.9 million, or $185,000 per unit, and ending with the skilled nursing building, to cost $14.3 million, or $286,700 per bed. To finance the first two phases, CED received $13 million in EB-5 equity and a $12 million construction loan from First Bank, with an interest rate of 4% plus 90-day LIBOR, the loan officer for which was Rich Sutton. Finally, the third property, in Indio, is expected to break ground later in 2016. The first two phases of 101 AL units and 42 MC units will cost $27.9 million, or $195,000 per unit, while the third phase of 50 skilled nursing beds should cost approximately $10.2 million, or $205,000 per bed. A fourth phase of IL villas is in the works too. Around 60% of the project will be funded with EB-5 equity and the remaining portion will come from developer’s equity and other traditional financing sources. Looking to the future, CED plans to stay in California and is actively seeking locations.

 

 

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