But as senior living continues to take cues from the hospitality sector, a new senior housing entrant says a “city club” rather than a “resort model” approach are more in line with what today and tomorrow’s affluent boomer are seeking.
Providence, R.I.-based Affinitas Life, a niche boutique senior housing developer and owner/operator that launched in the fourth quarter of 2014, is kicking off a $50 million funding campaign for the first of a proposed pipeline of senior housing developments.
Affinitas Life’s executive team is comprised of leaders from the senior housing, hospitality, health care, insurance, finance, development and other industries “to offer an alternative fresh approach to the industry,” says Anthony Santiago, CEO and co-founder of Affinitas Life, whose own background includes more than 25 years experience as a real estate equity and investment executive.
“This isn’t your parent’s retirement community,” Santiago says, noting they are targeting seniors in the 10% wealth and income category who desire that 1% lifestyle. “It is where the Ritz-Carlton meets Disney World for seasoned adults. With $8 trillion of wealth being transferred to the Baby Boomer generation over their lifetimes the opportunity is significant.”
The opportunity in senior housing has been drawing an increasing number of new operators/owners and developers to the space, along with new private equity funds and groups, insurance companies and more, says Beth Mace, chief economist at the National Investment Center for Seniors Housing & Care (NIC).
While NIC does not track data related to new entrants, the sector “is hot,” she says, noting that it has favorable supply and demand fundamentals.
“One of the reasons it’s favorable is it generates solid investment returns,” she says. “During the Great Recession, we saw that senior housing was a recession-resilient property type.”
Approach To Funding
This month Affinitas Life will begin a funding dialogue with the company’s private placement memorandum (PPM) and other potential sources to raise $50 million for acquisition and redevelopment costs for its first development.
The company aims to redevelop properties with historical significance within an urban environment, and is currently eyeing two assets in the New England market.
“We have measured and taken out of our clubs the dining line item, and have a memory care unit, medical suite commercial condo sale, and a fee-based membership fee akin to a country club, that’s able to achieve double digit compounded annual returns,” Santiago says.
Beginning in April the company will start with its speculative due diligence, and then move to the entitlement process, implementing the company’s redevelopment plan.
“Our strategy will be to develop our first five assets in any MSA within the United States, and eventually globally,” he says. “Once we’ve broken ground and reached stabilization at 75% of absorption, we’ll pivot to our next two relatively quickly and then finally our scale asset.”
Affinitas Life expects its hybrid capital source will be comprised of venture capital, real-estate investment groups and other sources.
“There’s a lot of non-traditional funding in development these days,” he says. “We’d like to tap that facet of the investment space, but we also don’t believe our capital source will come from only one direction.”
The Affinitas Life Model
Affinitas Life residents, or members, purchase a property in the community and pay a monthly membership, which covers staffing and utility costs for county club-level services. In addition, the model allows for the presence of independently owned and operated medical services, and an Affinitas Life-run medical concierge service for members.
Each Affinitas Life community, or club, will feature five designated areas within the club to foster wellness, academia, business, the arts and medical research.
The Affinitas Center for Health & Wellness is where medical condominium suites will be available to physician practices.
Based out of this center will also be a medical concierge program, in which Affinitas Life ambassadors will be available to assist members with health care decision-making and navigation. The ambassadors will be medically trained professionals who can help multiple doctors coordinate care.
Another center, the Affinitas Center for Intellectual Pursuits, aims to foster interactions between city club members and higher education faculty.
“These relationships with higher-education institutions will be a real two-way dialogue, between university resources and our members’ life experiences,” he says. “We perceive our obligation is to serve the boomer’s hunger for continued learning, personal development and discovery.”
Also recognizing the desire of a growing number of older Americans to continue working in retirement, the Affinitas Center for Business Development & Philanthropy will provide business operations space, as well as private conference spaces.
A gallery and performance center, the Affinitas Center for Culture & Arts, will cater to members who are “collectors of art, benefactors of arts and curious learners or experimenters,” Santiago says.
A Center for Medical Analytics
The insights these centers generate around engagement and measurable positive impact will be cultivated at the Affinitas Center for Research and Analytics (ACRA), which is a proprietary and patent-pending medical analytic resource.
“Using health and demographic data to derive meaningful insights, ACRA offers pathways to impact and improve the way senior health is managed,” Santiago says. “Senior living programs designed to improve health are often supported on the promise of improvement, but lack a clear means to assess efficacy.”
The ACRA was developed through the medical practice of Affinitas Life Chief Medical Officer Dr. Steven Fuller, and will also provide “community health profiles” to assisted living operators who provide the center with the de-identified health information of residents, Fuller says.
“The better you understand residents’ health, the better you can manage it,” he says.
Written by Cassandra Dowell