aigner - master planning process - making your community...

June 2015

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ANNUAL MEETINGJune (8) 9‐11, 2015Semiahmoo Resort, Blaine

The Master Planning Process Making your Community the

Best it Can Be

Torsten Hirche, President & CEO, PRCN

Paul Aigner, Vice President of Development, PRCN

DeAnne Clune, Corporate Marketing Director, PRCN

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Agenda

I. PRCN Overview

II. Master Planning Overview, Process and Key Considerations

III. Progress Report and Next Steps

• Founded as Presbyterian Ministries, Inc. (PMI) by the Seattle Presbyterian Synod in 1956

• Built Park Shore in Madison Park in 1962• Purchased Exeter House in 1962• Severed direct legal ties with Presbyterian Church in 1996• Name change from PMI to PRCN in 2000• Opened Skyline in 2009• Affiliation with Fred Lind Manor in 2014• 4 campuses in the Seattle area now serving over 800

residents• PRCN providing third party development, management

and consulting services starting in late 2014• GSI Research joined PRCN family in 2015

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I. PRCN Overview

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• Type B CCRC in Madison Park

• Opened in 1963

• 15 floors on the shore of Lake Washington

• 113 IL, 30 AL, 28 SNF

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• Rental Community

• Building opened as the Exeter Hotel in 1926

• Community opened in 1963

• 10 floors

• 82 IL, 26 AL

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• Type A Life Care CCRC

• Opened in 2009

• 26 Floors

• 199 IL

• 76 AL/MC

• 34 SNF

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• Rental Community

• Opened in 1945 as Baptist Rest Home

• 1988 new 4 story building

• 82 IL/AL units

Operational Baseline

• Occupancy & Marketing: Vacancies, wait lists & pipeline challenges

• Aged and fatigued buildings: decades‐old infrastructure and exterior/interior

• Some existing contract options: consumer, financial challenges

• Product & amenities: lack of common amenities, undesirable unit mix, unit size, unit amenities

• Pricing challenges: Entrance Fees and/or Monthly Fees

• Operations: staffing, programs challenges

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Financial Baseline

• PRCN portfolio: Key Performance Indicators lagging behind benchmarks in CARF‐CCAC (75th Percentile), State of Senior Housing (Upper Quartile):– Net Operating Margin: ranging from (5%)‐40%– Days Cash on Hand: ranging from 91‐220– Debt Service Coverage: ranging from 1.6‐3.9– Cash to Long‐term Debt: ranging from 5.41% to 36.67%

• Legal & Capital Structure with PRCN as single member parent:– Exeter House and ParkShore are operating divisions of PRCN:

existing debt of 15MM for group– Skyline separate LLC: existing debt of 112MM– FLM separate 501(c)3 : HUD loan of 3.5MM

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II. Master Planning Overview, Key Considerations and Process

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Why We Master Plan

• Address operational and financial challenges

• Changing consumer and demographics needs

• Holistic and comprehensive look at family of communities and how we can benefit each other

• Build a better and stronger senior living system

• Create platform for regional and national expansion of mission

• Build culture around innovation, customer focus and operational excellence

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What is Master Planning?

“Process of planning and implementation to improve a community through a long‐range plan that balances and harmonizes all elements of consumer preferences, competitive environment, operational and financials requirements in the context of vision and mission of the organization.”

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Master Planning Key Considerations

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• Experienced Project Lead• Team of Experts• External/Internal Drivers• Product Life Cycle• Structured Master Planning Process• Involve all Stakeholders

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Project Lead

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Paul Aigner – Project Manager & Facilitator • Architectural background• Owners Rep/Project Management firm specializing

in Senior Housing• Over 20 years development and master planning

experience• SVP with Covenant Solutions, development arm of

Covenant Retirement Communities• Strong West Coast and Seattle experience• Heads up new community development

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Team of Experts

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• Comprehensive Selection Process• Team:

• Architect ‐ Perkins Eastman/Sage• Market Research – GSI Research• Financial Analyst – PRCN/Covenant• Physical Plant Assessment – ACG• PRCN Executive Team

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Mission

Deferred Capital Needs

Resident Expectations

Contract Types/EFCompetition

Market/New Consumer

Construction CostsHousing Values

Economic Environment

Levels of Care

Existing Debt

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Product Life Cycle

Introduction Growth Maturity Decline

Pro

duct

Sal

es

Structured Master Planning Process

• Three step process• Session I – Project Information• Session II – Project Analysis• Session III – Project ConsensusNotes: Each campus will take about 6 months to complete MP Goal is to complete MP for all our campuses in 2015

calendar year Implementation of MP will be based on the financial

analysis, debt structuring and project prioritization

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Session I – Project InformationPreparation and Homework required:o History and Culture ‐ campuso SWOT – campus o Marketing Overview – campus: review all units, square

footages, occupancies, vacancy durationo Market Research – competition, # of age income

qualified, penetration rates o Physical Plant Assessmento Entitlement and Zoningo Resident Satisfaction Surveyso Financial Dashboard – Determine Debt Capacity

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Session II– Project Analysis

• Develop possible repositioning scenariosProgram‐ including new business linesProduct‐ renovation or expansion

• Refine scenarios with a potential phasing plan

• Develop Conceptual Financial Model (CFM) to determine potential ROI, DSCR and DCOH

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Session III – Project Consensus

• Review/refine assumptions of agreed upon scenarios with validated cost estimates

• Prioritize projects with timelines

• Create 10‐year financial model

• Strategic Finance Plan

• Plan Implementation

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Involve all Stakeholders

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• Involved throughout Master Planning process/sessions :• PRCN Executive Team• Community Executive Director• Department Directors• Resident Representatives • Board Members

• Communications Plan for larger scale communication after consensus is reached• All team members• All residents

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Progress Report and Next Steps

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Session I Highlights – Market Research

• Overlap of PRCN Communities

• 43% of Park Shore Residents are from within three miles

• Another 11% from 3‐5 Miles

• One‐third of residents are from the immediate zip codes: 98112 and 98105

• PRCN and Seattle markets generally have significant outside fill –

• Park Shore: 28% from out‐of‐state

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Madison Park NeighborhoodUpscale Residential, Walkable

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Lake Location and Views

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Growth is in the Younger AgesSEATTLE ZIP CODES ONLY

Households: % Change 2014‐2019

• Age 65‐7439% increase

• Age 75+ 11% increase

50,443

76,118

103,112

42,344 36,573

43,628

16,615 21,228 20,685

0

20,000

40,000

60,000

80,000

100,000

120,000

Y 2000 Y 2014 Y 2019

65‐74

75‐84

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Competition

73 Existing Communities (Including the East Side)

• 13 CCRCs or Look‐Alikes

• 6,490 Independent units – 94%– Less than half have kitchens

• 495 Congregate units – 93%

• 1,193 Assisted Living units –92%

• 609 Memory Care units – 89%

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Competition

• Most new product is Assisted Living with Memory Care

• New or expanded CCRCs in surrounding areas

• Multiple “branded” assisted living providers offering multiple communities within the Seattle market:

– Aegis– ERA– Emeritus/Brookdale– Merrill Gardens

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• Seattle Is highly penetrated with inventory especially higher priced product

• Majority of inventory is older and probably serving medium priced market

• Market and penetration differences between Seattle and East Side


SUMMARY1. Growth is in the younger

segments

2. City growth of young in technology sector

3. Significant growth in non‐age restricted high rise towers with large number of units

4. Lower ages correlated with high income points

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Park Shores Session I ‐ SWOT

STRENGTHS

• Location

• Lake

• Views

• Established CCRC

• Madison Park neighborhood highly walkable

WEAKNESSES• 50+ year old Building• Landlocked. No room for expansion?

• Old and tired exterior and interior

• Vacancy ‐ $8M in lost EF• Loss of Monthly Fees $750K/YR

• Parking

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Park Shores Session I – SWOT

OPPORTUNITIES• Wellness Programs/Fitness

• Purchase Land, Buildings for expansion

• More Dining Options

• Change Contract Services

• Memory Support

• Lake Access

• Attract a younger senior

THREATS• Competition

• Building Age

• Age of Resident Population ‐ 88

• Not enough SNF & AL/MC for Future Needs

• Not Enough Amenities to Attract Future Residents

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Session I– Physical Plant

Seismic Report• Building has stood the test of

time ‐ over 50 years with no significant damage

• Will maintain building life safety performance similar in magnitude to past events

Physical Plant• 12 year capital expenditure and

Reserve Cost Estimate $5.3M total with cost escalation

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Zoning

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Zoning

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Considerations for Repositioning Park Shore

• Addressing Wish List for younger seniors and changing market • Add Parking• Improve “Curb Appeal”• Increase amenity spaces for Health and Wellness• Increase Choice of Dining Venues• Create Larger Residences• Customize Residential Finishes• Improve Interiors Throughout• Connect with the Waterfront

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IL Apartment Design

• Bigger Apartments –51% were under 600 SF

• More 2 BR• Add Kitchens to apartments

• W/D in Apartment• Full Wi‐fi• Customize Apartment

9th floor (typical)

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DINING

89

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Ideal Floor Layout

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Wellness / Fitness / Spa

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Chapel Floor Pool Alternative

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15th Floor Penthouse Utilization

• Provide New Options for Resident Dining

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Session I Highlights ‐ SWOT

STRENGTHS• Newer high‐end CCRC with

outstanding views

• Great location close to many medical services and hospitals and close to all downtown attractions

• Younger CCRC – average age 78

WEAKNESSES

• Parking

• Low ratio of IL to HC units

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OPPORTUNITIES

• Adjacent Property• Re‐purpose and add

additional common amenities

THREATS

• Downtown Competitors

• Interior finishes will need to be on a replacement schedule

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Session I Highlights – Physical Plant


reserve cost estimate• $1.8M total with cost escalation

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FIRST HILL URBAN CENTER VILLAGE

HR ZONE HIGH RISE

• Residential Use is permitted• Congregate Residences are

permitted

• Base FAR = 8 • All Multi‐family Structures &

enclosed amenity areas are exempt from FAR

• Base Height Limit = 160 ft• Maximum Height Limit = 240

or 300 ft

Zoning and Entitlement Review

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STRENGTHS• Great Downtown Location

• Great location close to many medical services and hospitals and close to all downtown attractions

• Building has “old world charm”• Seattle Landmark• Development Potential

WEAKNESS• Old Building = Old Infrastructure

• Old apartment design

• Lack of quality amenities spaces

• Deferred Maintenance

• Land Locked

• No MC

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OPPORTUNITIES

• Valuable land• Partnership potential• Monthly rental vs EF

THREATS

• Age of Building• Poor Infrastructure• Apartment explosion in downtown – driving rents south

• Potential Public Outcry if Building was ever Demolished

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Session I– Physical Plant

Seismic Report• Building has stood the test of

time ‐ over 50 years with no significant damage

• Will maintain building life safety performance similar in magnitude to past events


Reserve Cost Estimate• $9.5M total with cost escalation• Big ticket items:

• Replace steam system‐ $1.5M

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Zoning / Entitlement Review

FIRST HILL URBAN CENTER VILLAGE

HR ZONE HIGH RISE

• Residential Use is permitted• Congregate Residences are

permitted

• Base FAR = 8 • All Multi-family Structures &

enclosed amenity areas are exempt from FAR

• Base Height Limit = 160 ft• Maximum Height Limit = 240 or

300 ft

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HR ZONE HIGH RISE

• Base Height Limit = 160 ft

• Maximum Height Limit = 240 or 300 ft

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• Kick off Master Planning in July with Session I

• Key considerations will be:

– Market Demand

– Levels of Care

– Financial Feasibility

– Operations

– Location and services

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Global PRCN Master Planning Key Considerations:

• Evaluate operational synergies between our 4 Communities

• Avoid Direct Competition with one Another

• Explore Operational Efficiencies

• Integrate into PRCN Strategic Plan

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Next Steps

• Complete Master Planning sessions for each community and create final plan

• Complete master plan budget and financial, operational models

• Finalize financing options and strategies

• Implementation of master plan (phased)

• Continued communication with all stakeholders throughout the process

Conclusion

• Master Planning is essential to long‐term success of your community

• It is a long‐term strategic process requiring support by a team of experts

• It sets the operational, financial and cultural tone for the future of your organization

• Master planning involves all stakeholders and is a collaborative effort

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ANNUAL MEETING

QUESTIONS?

aigner - master planning process - making your community...

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