Types of Senior Housing - Christopher Place

Senior Housing is made up of different segments

Senior housing is made up of several different segments.

Understanding these segments can help investors decide which type of property suits their objectives. With the exception of free standing nursing homes, Christopher Place anticipates acquiring senior properties which may include, but not be limited to, the following types:

Congregate Living Facilities
(sometimes referred to as senior independent facilities)

Congregate living facilities are primarily apartment buildings which contain a significant amount of common space to accommodate dining, recreation, activities, and other support services for senior citizens. These properties range in size from 50–500 units with an average size of approximately 225 units. Units include studios and one and two bedrooms, ranging in size from 450 square feet to over 1,500 square feet. Residents generally pay a base rent for their housing, which includes a meal program. In addition, a menu of other services is provided at an additional charge. The resident fees for congregate living generally ranges from $1,500 to $4,000 per month depending upon location and services provided. Payment sources for congregate living are generally private pay.

Assisted Living
Assisted living facilities provide a special combination of housing, supportive services, personalized assistance, and health care to their residents in a manner which is designed to respond to individual needs. These facilities offer a lower-cost alternative to skilled nursing facilities for those who do not require intensive nursing care. Industry standards suggest that a person is suitable for an assisted living facility when he or she needs assistance with three or fewer activities of daily living (ADLs) on a daily basis. ADLs are activities such as eating, dressing, walking, bathing, and bathroom use. Assisted Living facilities also provide assistance with instrumental activities of daily living (IADLs), such as shopping, telephone use, and money management. The level of care provided by assisted living facilities has increased in recent years. With an increase in demand for the lower-cost services they provide, assisted living facilities have begun to provide care for an increasing number of physical disabilities, certain non-ambulatory conditions, and early stages of specific diseases, such as Alzheimer’s disease, where intensive medical treatment is not required.

Current industry practice generally is to build freestanding assisted living facilities with an average of between 40 and 100 units, depending on such factors as market forces, site constraints, and program orientation. Current economics place the size of the private living space of a unit in the range of 300 gross square feet for efficiency to 750 square feet for a large one bedroom unit. Units are typically private, allowing residents the same general level of control over their units as residents of a rental apartment would typically have. Common areas on the most recently developed assisted living facilities may total as much as 30 to 40 percent of the gross square footage of a facility. The resident fees for assisted living facilities generally ranges from $1,800 to $4,500 per month depending upon location and services provided. Payment sources for assisted living are generally private pay and private insurance, although some states do provide reimbursement programs for low income recipients.

Skilled Nursing Facilities

In addition to housing, meals, transportation, housekeeping, ADL and IADL care, skilled nursing facilities provide comprehensive nursing and long term care to their residents. Skilled nursing facilities accommodate persons who require varying levels of care. Many skilled nursing facilities are capable of serving residents with intensive needs. Some skilled nursing facilities specialize in certain types of disease care, such as Alzheimer’s or dementia care. The cost of the care provided in skilled nursing facilities is among the most expensive in the senior care segment of the health care industry with rates ranging from $2,800 to $8,000 per month. Because nursing facilities involve medical based business models which are subject to high liability insurance requirements and reliant upon government reimbursement formulas, Christopher Place has chosen not to acquire this type of senior housing unless part of a continuing care retirement community which offers a variety of senior housing types and services.

Continuing Care Retirement Facilities

Sometimes referred to as CCRCs or life care communities, these retirement communities are basically congregate living facilities with assisted living and/or skilled nursing facilities attached or adjacent to their locations. The intent of continuing care retirement communities or life care communities is to provide a continuum of care to the residents. In other words, as residents age and their health care needs increase, they can receive the care they need without having to move away from the community which has become their home. CCRCs typically operate on a fee-for-service basis, and the units are rented on a monthly basis to residents, while life care centers generally charge an entrance fee that is partially refundable and covers the cost of all the residents’ health care related services, plus a monthly maintenance fee.

The information contained in this web site is for educational purposes only and should not be considered an offer to purchase or sell real estate or securities. Such offers are made only by a sponsor’s memorandum, which is always controlling. There are material risks associated with the ownership of real estate. For more complete information on the benefits and risks of an investment in real estate or tenant-in-common exchanges, including charges and expenses, consult the sponsor’s memorandum.

Christopher Place cannot and does not provide advice regarding specific tax consequences. Investors considering an IRC Section 1031 tax-deferred exchange should consult their accountant and/or attorney.