A relative newcomer to the senior housing space is making headway with nearly 10 projects in its mega church-model pipeline thanks to assembling a team of senior housing industry mainstays.
Omega Communities, LLC was founded by Pat Trammell, Jr., the chairman and CEO, around three years ago. The concept for each senior living community project includes an “affinity agreement” with a church partner that has upwards of 3,000 members.
Communities are built on land owned by or leased from a church, with affinity agreements structured on an individual basis, says COO James Taylor.
Omega Communities’ first assisted living and memory care community recently began construction in Florida, with another expected to break ground this year, five more sites picked throughout Florida, and two projects in underwriting stages in Puerto Rico.
The communities—all of which are expected to consist primarily of assisted living and memory care, although some will also have independent living based on market demand—are owned under the Omega Communities banner and operated by Des Moines, Iowa-based LCS.
The rest of the Omega Communities team includes HJ Sims for finance; Lawson Group Architects for design, Gilbane Building Company for construction, and CliftonLarsonAllen for market and feasibility studies.
“All of these people have some relationship or involvement at different levels with senior housing,” Taylor says. “No one else [in the senior housing industry] has all these players as one unit [on their team].” The team also provides certain guarantees of performance on both the construction and operational side, Taylor says, making them “true partners” and not just third-party players.
Each church alliance can include ministering to community residents or volunteer opportunities for church members, although market studies for where to locate Omega’s projects don’t factor in the church’s tangible or intangible contributions.
While the agreement includes Omega sharing a portion of future profits with the church—similar to a tithe, Taylor says—it’s not officially part of the for-profit company. Rather, the church is a partner through a “strategic alliance.”
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“We have extensive networks throughout various church groups, whether nondenominational, Methodist, Baptist, etc.,” he says. “It makes it easy for us to build a pipeline, because we’re talking about 5,000-6,000 churches throughout the U.S. that would fit most of our criteria. We’re able to pick and choose the highest quality [ones] that meet most of our criteria.”
The plan right now is for four to six projects a year, Taylor says. So far, Omega Capital has closed on financing for the Springs of South Biscayne in North Port, Fla., which recently broke ground. Its next project, Foundations of Hope, is expected to break ground by the end of June, and one more project may break ground in 2014.
“Pat is intent on having a model that’s both scalable and reproducible,” Taylor says of Trammell.
Plans for the pipeline call for each community to contain between 95-100 assisted living units and 30-40 memory care beds. If there’s market demand for independent living in a specific location, that may be included. Each community has an estimated price tag of $25-30 million, so the current 9-property pipeline will cost between about $200-250 million to develop.
Orix bought the bonds to finance the first community in North Port, with the financing arranged by HJ Sims.
“Our relationship with them is very solid,” Taylor says. “We maintain a good working relationship with Orix.”
While the company is focusing primarily on Florida and Puerto Rico at this point, there are other states where Omega Communities sees opportunities, according to Taylor, including in Arkansas. “We have enough to keep us busy for the next couple years,” he says.
Written by Alyssa Gerace