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Merrill Gardens
Defying Conventional Wisdom: A Mixed-Use Intergenerational
Housing Success Story
Billy Pettit, Vice President
Merrill Gardens
Merrill Gardens
Snapshot
I. Who We Are
II. The Projecta. Vision
b. Capitalization
III. Success Stories:a. Development challenges
b. Financial & operational
c. Community
d. Emergence of a new concept
Merrill Gardens
Who We Are
• 19-Year History in Senior Housing Industry• 6th Largest Private Owner/Operator• 57 Acquisitions (5,825 Units) • 23 Developments (2,644 Units)• Vertically Integrated & Scalable Platform• Emerging Mixed-Use Portfolio (1,600+ units)
Merrill Gardens
Awards• 2008 Best Proposed Active
Adult/Retirement Community– Winner of the Gold Award by
the National Active Retirement Association
• 2010 ULI Awards for Excellence Finalist– One of seventeen finalists
from over 170 projects throughout North and South America. The only senior housing community to be recognized as a finalist.
Merrill Gardens
Vision: Create a Unique Product Directed at Specific Seniors
Source: ProMatura Group, LLC
Merrill Gardens
SITE
UNIVERSITY VILLAGE SHOPPING CENTERUNIVERSITY OF WASHINGTONDOWNTOWN SEATTLE
Merrill Gardens
Mixed Use Development
• Primary Focus was Senior Housing• Apartments:
– Natural progression from senior housing
– Multiple options available: market rate, age-restricted, students
– Strong market fundamentals
• Retail: “If you build it, they will come”– Lost all but one tenant due to recession
– Shifted focus to local businesses with established relationships in the community
– Bonus: Located one block from University Village, the largest destination center in the region
Merrill Gardens
The University – an Intergenerational Campus
Merrill Gardens
Merrill Gardens
Project Statistics
• 2.5 Acre Site• 226 Total Units
– 123 IL/AL Units
– 103 Market-Rate Apartments
• 22,500 Square Feet of Retail Space• $71 Million Total Cost• $55 Million Tax-Exempt Financing
Merrill Gardens
Capitalization
• Equity:– Joint Venture with Existing Development Partner
– Private Placement in 2006• $53.5 Million Raise
• 8 Property Portfolio
• Debt:– Tax Exempt Financing through WSHFC
– 20% Set Aside Units @ 50% AMI
– 78% LTC
– Nonrecourse
– All-In Rate 1.24%!!!
Merrill Gardens
Intergenerational Living:• Shared Courtyard• Social Events• Greenhouse and Gardening• Bocce Court• Walking Path for Exercise• Outdoor Dining
Merrill Gardens
Intergenerational Living
• Wii Bowling Leagues• Movie Night in the Courtyard• Combined Happy Hours• Pep Rallies• Dining Room Open to all Residents• Concierge Services for Apartments
Merrill Gardens
Success: Development
• 6-Parcel Assemblage • Condo Building Holdout• 3 Different Sets of Zoning Guidelines• Existing Creek Running through Site• SDOT Right of Way• Grade Change • NIMBY-ism
Merrill Gardens
Success: Financial & Operational
• Who would have thought?− Opened in Height of Recession: April 2009
− Recessionary Impacts were Very Real• Concessions
• Lease-Up
• Two + Years Later…− Occupancy:
• Senior Housing: 99%+
• Apartments: 99%+
• Retail: 100%
− Distributions on par with underwriting
Merrill Gardens
Revenue by Component (TTM) Current Revenue % of TotalMerrill Gardens - 69.8% $ 5,471,693 69.8%The Corydon - Apartment - 20.3% $ 1,590,591 20.3%The Corydon - Retail - 9.9% $ 773,780 9.9%
Total $ 7,836,064 100.0%
Merrill Gardens
Occupancy Metrics
Sources: NMHC; Dupre and Scott; NIC MAP; US Census
57.3%
95.9% 98.8%82.8% 85.9% 86.3%87.2% 87.4% 87.7%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
YE 2009 YE 2010 Q2 2011
Merrill Gardens at The UniversitySenior Housing Comparative Occupancy Trends
MG @ University* Seattle -Majority IL Industry
89.8%
96.2%98.6%
94.0%96.4% 96.5%
87.7% 88.4%91.1%
80.0%
85.0%
90.0%
95.0%
100.0%
YE 2009 YE 2010 Q2 2011
The CorydonMultifamily Comparative Occupancy Trends
The Corydon* Seattle Metro Industry* Properties opened April 2009
Merrill Gardens
• Case Study for Intergenerational Living– Student, Resident & Team Member
• Fundraising• Community Events• UWAA Relationship• Retail Focused on Local Operators
Success: Community
Merrill Gardens
Success: Business Model
• Complementary Uses are Important• Diversified Returns within a Single Asset• Scalability Across Markets• Concept Primed for Specific Markets• Experienced Operators are Imperative
Merrill Gardens
Lessons Learned
• The Concept Works; Performance Speaks for Itself• Sister Project in Kirkland, WA• Seniors Like Keg Parties, Too!
• Unfortunately, We're Not Perfect...– Less-than-Ideal Parking Access for Retail
– Operational Challenges of Shared Services
– Lots of Patience and Apologies
Merrill Gardens
Questions