A company with extensive experience in turning around struggling senior living communities is now developing its first property and is pulling together all manner of financing sources in its capital stack. Solutions Advisors, which got its start in 2010 advising senior living communities on management, marketing and sales strategies, has already broken ground on its flagship community in Hamilton, New Jersey. With 96 independent living, 75 assisted living and 24 memory care units, the community is expected to cost a total of $59 million, or about $302,600 per unit, to develop. In addition, 25 of the IL units can be converted to AL down the road, if the need presents itself. To operate the new community, Solutions Advisors will put in place its affiliate, Solvere Senior Living, which already operates four other properties in Pennsylvania, Indiana, Maryland and West Virginia. Solutions Advisors brought in Pike Senior Housing Partners, a Northeast-based general contractor making its first foray into seniors housing development, to be the majority stakeholder in the project, with Solutions Advisors holding a smaller, but significant, stake.
To finance the project, Solutions Advisors turned to James Scribner of RED Capital Partners to arrange a $36.4 million five-year, non-recourse construction loan with a competitive floating interest rate. RED participated the loan out with a partner bank. The project will also be funded with $18 million in EB-5 equity, which will be structured as subordinate debt. Until the EB-5 is approved and placed into escrow, expected in the first quarter of 2016, Fundamental Advisors provided interim bridge/mezzanine financing. Then to round out the capital stack, equity will be provided by Pike, Solutions Advisors and an individual investor.
Site clearing has already started, and the project should take about two years to build.