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Business Observer Thursday, Jun. 24, 2021 4 months ago

Gulf Coast senior housing projects demonstrating renewed energy as pandemic wanes

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Sarasota's LaVerne and Naples' Goodlette Arms Apartments' renovation are part of a growing trend around the region
by: Kevin McQuaid Commercial Real Estate Editor

The COVID-19 pandemic stalled new senior housing projects nationwide and throughout Florida, but with vaccination rates on the rise and the health crisis abating statewide, developers are now working on new offerings around the Gulf Coast.

In Sarasota, a Chicago-area firm plans to build a complex of roughly 155 units on a tract once slated for residential real estate firm Michael Saunders & Co.’s headquarters. LaVerne, as Integrated Development II’s project will be called, will be the first senior housing project in the city’s downtown core.

And in Naples, a New York company has acquired the Goodlette Arms Apartments and is converting them to affordable senior housing by utilizing tax credits and other alternative financing measures.

“We’re interested in doing a more urban product in many areas, because we’ve come to realize that active seniors today want to be in close proximity to retail and restaurants and other activities,” says Matt Phillips, president and CEO of Integrated Development II, a Chicago company he founded last year after more than 20 years of developing senior living projects for Hyatt Hotels Corp. and Senior Lifestyle Corp. nationwide.

“Downtown Sarasota is a great site for what our customers like.”

Integrated Development II’s seven-story project — named after his mother-in-law, a Longboat Key resident — will be developed at 307 S. Orange Ave.

The roughly $75 million project is being designed to contain 104 assisted living units, 31 independent units and 20 memory care residences, all of which will be rentals.

The property, which had once been the technology center for residential real estate brokerage Michael Saunders & Co. and is owned by Saunders, had more than a decade ago been considered as a future headquarters for the company.

In the years since, however, Saunders has consolidated operations into the ground floor of the Ellis Building on Main Street downtown and into other, existing offices.

In Naples, meanwhile, Fairstead is investing more than $25 million to upgrade the Goodlette Arms Apartments, after buying the four-story complex earlier this year from Full Circle Communities for $59.5 million.

The company intends to renovate the 250-unit development with renovated kitchens, bathrooms, flooring, lighting and heating and air conditioning systems.

The 47-year-old project also is slated to receive a slate of new amenities, including a renovated community center, fitness facility, beauty salon, computer lab and on-site laundry.

Fairstead also intends to add a community garden, outdoor fitness equipment and lighted walking paths to the 950 Goodlette Road North complex.

“It’s easy to build affordable housing on farmland, but in those cases there’s typically no access t the great things a community provides, like public transportation, health care and other infrastructure and entertainment,” says Fairstead Founding Partner Will Blodgett.

“Goodlette Arms will have a lot of great amenities when we’re through, but the greatest amenity will be the community of Naples itself,” he adds. “What a better place to age in place than in Naples, which is one of the nicest communities in the country?”

As part of its redevelopment, Fairstead has pledged to keep Goodlette Arms “affordable” — residents will pay no more than 30% of their income for rent under an existing federal Section 8 program — for the next four decades.

COURTESY PHOTO — New York-based Fairstead is renovating the 250-unit Goodlette Arms Apartments with a $25 million investment in Naples, pledging to maintain its senior housing status through 2062.s

To keep that pledge, Fairstead obtained financing from Berkadia Commercial Mortgage, the Collier County Housing Finance Authority and Regions Bank.

Regions Bank is providing the company with 4% low-income tax credits to underwrite the renovations, Blodgett says.

Fairstead also intends to put energy saving programs into place in Naples to reduce carbon emissions from the facility by at least 30% by the end of 2025.

Back in Sarasota, Phillips is refining LaVerne’s market-based rental rates even as Hoyt Architects finalizes designs for the project, which will contain 135 assisted living units with 20 memory care residences.

Integrated Development II hopes to complete LaVerne sometime in late 2024. Phillips declines to say what he will pay for Saunders’ 1.8-acre site, but MSC Commercial agent Lee DeLieto Sr. had been marketing the land for $10.7 million earlier this year.

Phillips says the company will apply lessons he and colleagues learned developing the Sheridan at Lakewood Ranch for Senior Lifestyle, Classic Residence by Hyatt and in projects such as 850 Lake Shore Drive in Chicago.

There, Integrated Development II converted the historic Lake Shore Athletic Club into 198 luxury apartments with services. The completed project was later sold to an affiliate of JP Morgan & Co. for $140 million.

While at Senior Lifestyle, Phillips and his team — many of whom now work at Integrated Development II — completed 20 projects between 2013 and 2019, according to the company’s website.

“While Sarasota doesn’t yet have any dedicated senior housing in its downtown, in places like Chicago, New York, San Francisco and elsewhere it’s common,” Phillips says. “So we’re not pioneering here, from an industry standpoint.

“And the fact that we’d be the first speaks to the opportunity,” he adds. “We expect demand in that area, with beautiful Laurel Park nearby, to increase.”

Blodgett plans to complete Fairstead’s Goodlette Arms redevelopment in March of next year.

In keeping with many senior housing communities, Fairstead also will offer on-site meals, transportation to doctors’ and other appointments as well as supermarkets, and educational and wellness programs.

Like Integrated Development II, Fairstead brings a wealth of experience to its project in Naples. Since its formation in 2014, Fairstead has acquired or preserved some $4 billion in senior housing units nationwide. Today, the company’s portfolio contains nearly 15,000 units in 18 states, according to its website.

In Florida, the company has acquired eight separate projects over the past 18 months for senior housing, including the June 2020 deal for the 101-unit Gould House in Boca Raton and the October 2020 acquisition of the Federation Davie Apartments, in Davie.

“We love South Florida, there are a lot of things happening and we’re glad to be a part of the senior housing community there,” Blodgett says. “We hope going forward that we can expand on the impact we’re having there.”

 

 

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