Seniors regroup

By Dick Hughes  

SEPTEMBER 1, 2011 1:44 p.m. (0)

With seniors watching their nest-egg housing values erode and often unable to sell their homes even at depressed prices, many are delaying moving into continuing care retirement communities.

The independent-living component of that business was built on the premise that seniors would use cash from the sale of an appreciating home to buy into a lifestyle of independence with a promise of a continuum of health care for life.             [Continued on page 28]

That model got turned on its head by the Great Recession, the snails-pace recovery of the housing market, even more deterioration of housing values and, indeed, by the prospect that a home will never again be worth what it once was.

Continuing Care Retirement Communities, or CCRCs by acronym, are adjusting to the market reality and trying to convince seniors to do the same.

They are discounting independent-living homes, reducing the buy-in price (and the refund), taking rentals until a house can be sold and in some instances helping stage houses for sale and arranging to defray the cost of utilities, insurance and the like for seniors who move in while their homes sit on the market.

Living with Reality

“We are encouraging seniors to not wait necessarily on their house to sell but go ahead and move in to live the kind of lifestyle they want to live,” said Karen Nichols, executive director of Cascades Verdae in Greenville.

“Many seniors are waiting for the price of their house to go back up, and I am not sure that is going to happen,” she said. “If we were in a place where the prices of homes were escalating like they did in years past, then likewise our rates would increase as well, so it would just be a wash-wash.”

At Rolling Green Village, the occupancy rate was 95 percent through the recession on its 700 residential units, said Ruth Wood, marketing director. One of the advantages Rolling Green has financially, Wood said, is that it does not carry the debt load that recent start-ups have because it has been in existence for 25 years.

In its IRS 990 for 2009, Rolling Green, a nonprofit, reported revenue less expenses of $888,153, up from $325,339 in 2008. It had net assets of $3.8 million.

Health Care, the ‘Shining Star’

Even as occupancy of independent housing lags, the continuing care in assisted living, skilled nursing and dementia or memory units, as they are called, are near or at full capacity and being expanded.

“The long-term care segment is growing dramatically. It will be the shining star in terms of growth and profitability for providers in the next 10 years,” said Katie Huffstetler, communications director for Senior Living Communities of Charlotte.

“The reason for that is we have this huge wave of baby boomers who are aging and who have parents who need health care.”

Senior Living owns Summit Hills of Spartanburg, which it opened more than a decade ago, and Cascades Verdae in Greenville, which opened three years ago. Senior Living purchased Cascades from Banyan Senior Living of Greenville in April 2010.

Like Cascades, The Woodlands at Furman opened just as the housing crash hit in 2008.

With 132 units, all apartments of varying size and cost, occupancy is at about 35 percent, up from 25 percent a year ago. John Spooner, executive vice president of Greystone, the Texas company that manages The Woodlands, said 26 or 27 are scheduled to move in.

“Our health care service is chockablock full, doing great, but the independent living is still dragging with the housing market,” said Spooner, who was in Greenville last week to address a luncheon that attracted 75 prospects to tour the retirement facility.

Cascades Doubles Occupancy

At Cascades, 58 percent of its independent living apartments or cottages are occupied, and Nichols expects between 80 and 90 percent will be occupied by the end of the year.

Nichols said Cascades has doubled overall occupancy to 70 percent in the past 15 months with 58 percent in independent living, 100 percent in assisted living, 94 percent in skilled nursing and 54 percent in memory care. The latter is lagging, she said, because they are still building that program.

Among the selling points of Cascades are its proximity to downtown Greenville and its wellness program with 26 classes a week. “There are not many people doing that. It is a real niche in the industry,” Nichols said.

Housing at Cascades ranges from $152,000 for a small villa apartment to as much as $900,000 for a 2,539-square-foot cottage.  The cost of moving into an apartment at The Woodlands varies from $132,000 to $440,000 depending on the size and refund.

Lowering Upfront Costs

Like other CCRCs across the country, The Woodlands and Senior Living’s Summit Hills and Cascades have reduced entry fees from 90 percent typically to 60 percent of the market value of the dwelling. When the resident leaves the community, the entry fee is refunded.

Residents essentially are buying the lifestyle and not the real estate, said Nichols.

Ownership of the property remains with the company.  At Rolling Green, residents buy and sell their dwellings in conventional property transactions.

Spooner said The Woodlands also has had success with a program giving assistance so people can move in before their house is sold.

He said Woodlands can help properly stage the house, do deferred maintenance and with a limited amount defray such monthly recurring costs as property taxes, maintenance, insurance, utilities and security systems while the house in on the market.

“We’ve done this a lot,” he said.

Spooner’s message to the seniors at the luncheon at Furman’s Younts Center:  spend two hours to tour the Woodlands, confer with sales agents on their financial and lifestyle priorities, ask lots of questions and then go home, find and read their house deed.

“Nowhere in that deed does it say that the house is going to take care of you for life,” he said, adding that Woodlands offers that guarantee.  “There will always be a place for you. If you ever run out of time, you’ll never be asked to leave.”