Senior Housing and Assisted Living

Construction is underway on the $20.4 million, 89,000 project for Senior Living at Cambridge Heights facility in St. Louis, Missouri. Cambridge Heights will feature 117 one- and two-bedroom apartments designed for older adults and be comprised of apartments ranging in size from 504-618 square feet for a one-bedroom apartment and 837 square feet for a two-bedroom apartment.  The development will contain 75 public housing apartments, 36 apartments to receive project-based Section 8 assistance (nine of those are also Missouri Housing Finance Agency Home Investment Partnership Act apartments and eight are also Affordable Housing Assistance Payment apartments) and six Low Income Housing Tax Credit-only apartments. The facility also includes a common outdoor green space and approximately 51 private parking spaces.

KAI Design & Build is the architect, general contractor and mechanical/electrical/plumbing engineer for the project and expects the project to be completed in January 2011.  Financing for the three-story building was secured through the Missouri Housing Development Commission, St. Louis Housing Authority, Enterprise Bank & Trust and Business Bank of St. Louis, and the U.S. Department of Housing and Urban Development. St. Louis-based McCormack Baron Salazar is the project’s developer.

“This capstone to the redevelopment of the former Cochran Gardens public housing site will meet an important need in the community to provide affordable, quality senior living and will serve to replace an obsolete and isolating tower building with a sustainable, universally-designed, low-rise facility,” said Vince Bennett, Executive Vice-President of McCormack Baron Salazar. “This development will also further the dramatic transformation of this community started with the Cochran Gardens HOPE VI and will support the revitalization efforts in the Columbus Square neighborhood.”

Skilled Healthcare Group, Inc. (NYSE: SKH) announced its Q1 2010 earnings this week and the acquisition of substantially all the assets of five Medicare-certified hospice companies and three Medicare-certified home health companies.  SKH showed total consolidated revenue for the quarter ended March 31, 2010 was $189.3 million, compared to total consolidated revenue of $188.1 million in the first quarter of 2009 and $188.4 million in the fourth quarter of 2009 and net income for Q1 2010 totaled $8.9 million, compared to $10.0 million for the first quarter of 2009.

“Our first quarter results demonstrate improving operating metrics in several key areas. First, our occupancy rate increased to 83.8 percent, or 70 basis points, over the fourth quarter of 2009 as the affiliates increased average daily census by 140 patients. Second, our skilled mix improved by 90 basis points to 23.0 percent as compared to the fourth quarter of 2009. Additionally, the percentage of Medicare days in the upper nine RUG categories reached an all-time high of 46.4 percent. With a continuous focus on high quality of care, these improving operating metrics illustrate the success of initiatives implemented in 2009 to mitigate risk from the challenging economic and competitive environment,” said Boyd Hendrickson, Chairman and Chief Executive Officer.

As part of the acquisition of the five hospice and three home health companies, SKH will enter into a fee-based management agreement for another home health company and be granted an option to acquire substantially all of the assets of such other company. The hospice and home health companies collectively have operations in Idaho, Montana, Nevada and Arizona.  Total consideration of the transactions is approximately $62 million consisting of approximately $43 million in cash with the remainder in the form of certain deferred payments payable over a three to five year period. The cash portion of the purchase price will be funded primarily from Skilled Healthcare’s senior credit facilities.

Boyd Hendrickson, Chairman and CEO, noted, “We are very excited about this transaction which comes with strong cash flow, a successful operating platform, a solid management team and higher than Company average EBITDA margins. Additionally, it expands our business lines into home health care and further expands our hospice platform. This lateral diversification expands our footprint to three additional states; thereby, diversifying our revenue stream both geographically and by sector.”

As the economic recovery picks up steam, home improvement spending is projected to increase as homeowners look to improve their homes with smaller improvements rather than trading locations.  According to the Leading Indicator of Remodeling Activity (LIRA) released this month by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, home improvement spending will recover and annual spending for remodeling will accelerate with nearly 5% growth for 2010.  As home prices start to moderate, home sales begin growing and the employment outlook improving, homeowners will focus on remodeling vs. buying until prices begin to appreciate and unemployment begins to drop.

“The gradual recovery in the broader economy should encourage more remodeling spending by homeowners,” says Nicolas P. Retsinas, director of the Joint Center for Housing Studies. “This year could produce the first annual spending increase for the industry since 2006.”

The Remodeling Futures Program, initiated by the Joint Center for Housing Studies in 1995, is a comprehensive study of the factors influencing the growth and changing characteristics of housing renovation and repair activity in the United States. The Program seeks to produce a better understanding of the home improvement industry and its relationship to the broader residential construction industry.

Have you retired early or are you contemplating the implications of such a move?  The percentage of large firms providing workers with retiree coverage has dropped from 66 percent in 1988 to 31 percent in 2008. This week, the U.S. Department of Health and Human Services issued regulations establishing the Early Retiree Reinsurance Program in the Affordable Care Act.  This temporary program will make it easier for employers to provide coverage for early retirees and eligible employers can apply for the program through the Department of Health and Human Services.

Rising costs have made it hard for employers to provide quality, affordable health insurance for workers and retirees,” said Health and Human Services Secretary Kathleen Sebelius.  “As a result, many Americans who retire before they are eligible for Medicare are worried about losing health insurance coverage through their former employers, putting them at risk of losing their life savings due to medical costs. This new program will provide much-needed relief so that employers can provide more retirees with quality, affordable insurance, starting this year.”

The Affordable Care Act includes $5 billion in financial assistance to employers to help them maintain coverage for early retirees age 55 and older who are not yet eligible for Medicare.  The program will end in 2014, when Americans will be able to choose from additional coverage options through the health insurance exchanges.

“The Early Retiree Reinsurance Program will invest $5 billion in financial assistance for employer health plans offered to early retirees. Lasting until the new health care exchanges created by health insurance reform law are up and running, this initiative will provide premium relief for employers while increasing access to high-quality medical coverage. As the President of the Business Roundtable said: ‘The Early Retiree Reinsurance Program reduces costs and allows many of our member companies to continue providing this critical coverage’ to retirees, and their families,”  said House Speaker Nancy Pelosi.

Both self-funded and insured plans can apply, including plans sponsored by private entities, state and local governments, nonprofits, religious entities, unions, and other employers.  Applications for the program can be accessed at the end of June.

Early Retiree Reinsurance Program Fact Sheet

If you want to learn more about how this new benefit could affect you and your company or your family member who is considering early retirement, tune into the next Affordable Care Act web chat at healthreform.gov.

Secretary Sebelius and Department of Commerce Secretary Gary Locke will host a web chat on the new Early Retiree Reinsurance Program Wednesday, May 5, at 11:30 A.M. EDT at www.healthreform.gov

WASHINGTON, May 4 /PRNewswire-USNewswire/ –  issued the following statement today on the President’s announcement on the implementation of the Early Retiree Reinsurance Program:

“Today’s announcement is good for our employers and good for America’s early retirees. Americans deserve access to quality, affordable health insurance at every age and every stage of life – and employers deserve the financial relief to do right by their employees while competing in the global marketplace.

“In recent years, the skyrocketing costs of health care have forced employers to choose between staying competitive and providing their workers and retirees with quality health coverage. In the last two decades alone, the portion of large firms covering retired employees has dropped by more than half – leaving those too young for Medicare without access to the affordable care they need.

“Congressional Republicans calling for repeal would deny America’s businesses this critical help. They want to deny early retirees the peace of mind they deserve and the ability to access quality health care. Once again, they are standing up for special interests opposed to reform and standing in the way of progress for Main Street. And we must not let those playing politics drown out the needs of America’s businesses and our middle class.”

Foster Pointe Senior Homes, a 61-unit three story affordable senior development located in the Brooklyn Centre neighborhood on Cleveland’s west side, announced that it will be ready for occupancy mid-summer 2010.  Brooklyn Centre is a walkable neighborhood with a number of parks including the renowned Cleveland Metroparks Zoo and the Ohio and Erie Canal Towpath Trail. The community’s units boast one and two-bedroom efficient floor plans that connect kitchen and living room areas to create a large, open living space, with all floor plans providing a breakfast bar.  Foster Pointe includes numerous environmentally friendly development features, including upgraded insulation, energy efficient windows, Energy Star appliances and an advanced light package.  Foster Pointe exceeds the Enterprise Green Community Program Standards, a national standard for green and environmentally healthy affordable housing.

“We’ve been incorporating green components for several years and that includes Energy Star certification for many of NRP properties. We are attempting to improve the quality of people’s lives and not charge them extra for it,” says Aaron Pechota, Vice President Development, The NRP Group.

What kind of income is necessary to afford a modest rental home?  According to a recent report by the National Low Income Housing Coalition, that number is $18.44 per hour or $38,360 per year.  The report highlights that rents are continuing to rise while wages stay the same or decrease across the country.  The national two-bedroom Fair Market Rent (FMR) is a $959 a month and 74% of metro renters live in an area where having two full-time jobs at the minimum wage would still not allow them to afford the two-bedroom FMR.

Other key findings from the 2010 report include:

·    The two-bedroom Housing Wage topped $20.00 in 10 states: HI, DC, CA, MD, NJ, NY, MA, CT, AK and FL.

·     In 2010, the estimated average wage for renters in the United States is only $14.44, a decline from $14.69 in 2009.

·    At the federal minimum wage of $7.25, a household would have to work 102 hours each week to afford the nation’s average FMR for a two-bedroom home.

·    There is no county in the United States in which a full-time minimum wage worker can afford even a one-bedroom apartment at the FMR.

“Out of Reach 2010 shows once again that prevailing incomes and wages are simply not enough to allow a family to afford a decent home in their community,” said Sheila Crowley, President of the National Low Income Housing Coalition.

“The persistence of high rates of unemployment and under-employment is making it ever more difficult for families to secure decent housing. Unfortunately, the situation is not likely to improve any time soon,” Center for Economic Policy and Research Co-Director Dean Baker said.

“[NLIHC’s] Out of Reach annual report on rental housing affordability shows a growing need to preserve and expand the current stock of affordable rental housing,” House Speaker Nancy Pelosi (D-CA) said. “The hardships faced by many low income renters in an economy recovering from the recession and record foreclosures make this need all the more urgent. We are grateful for NLIHC’s efforts, and we will continue our partnership to ensure that more Americans have better access to decent and affordable rental housing.”

Extensive data for every state, metropolitan area and county in the country are available online, at www.nlihc.org/oor2010/.

Brookdale Senior Living Inc. (NYSE: BKD) announced its financial and operating results for the first quarter of 2010 that shows total revenue for the first quarter was $544.4 million, an increase of $46.5 million, or 9.3%, from the first quarter of 2009.  The increase in revenue was primarily driven by an increase in average monthly revenue per unit, including growing revenues from ancillary services, and an increase in capacity through expansions and acquisitions, while occupancy was flat with the first quarter of 2009.  Some of the operating highlights include:

• Average monthly revenue per unit was $4,386 in the first quarter, an increase of $171, or 4.1%, over the first quarter of 2009.
• Average occupancy for all consolidated communities for the first quarter of 2010 was 86.6%, flat with the first quarter of 2009 and 0.1% lower than the fourth quarter of 2009.
• Excluding expansions and acquisitions from the fourth quarter of 2009 and first quarter of 2010, average occupancy for the first quarter was 86.8%, compared to 87.0% for the fourth quarter of 2009.

For the quarter ended March 31, 2010, Facility Operating Income was $182.0 million, an increase of $9.0 million from the first quarter of 2009, and Adjusted EBITDA was $96.3 million, a $10.4 million increase over the first quarter of 2009.  Cash From Facility Operations was $54.4 million for the first quarter of 2010, or $0.46 per share, and CFFO was $50.2 million for the first quarter of 2009, or $0.49 per share.  Net loss for the first quarter of 2010 was $(14.3) million, or $(0.12) per diluted common share. The loss for the quarter includes non-cash items for depreciation and amortization, non-cash stock-based compensation expense and straight-line lease expense, net of deferred gain amortization.

Bill Sheriff, Brookdale’s CEO, said, "We are very pleased with our first quarter results, which were in line with our expectations. We are starting to see some improving economic signs, although still seeing the impact of the deep recession on our customers. In fact, we ended April at our highest occupancy of the year. Our sales inquiries during the first quarter increased over 9% from the prior year same period and, in our entry fee communities, increased 31% versus the first quarter of 2009. The number of entry fee unit closings was up 40% versus the prior year period. We also saw a decrease in the use of incentives for new residents during the first quarter compared to the fourth quarter."