naples, florida

NAPLES, FLORIDA
EXCLUSIVELY LISTED BY:
FLORIDA BROKER OF RECORD:
JOSIAH BYRNES
STEVE ARNOLD
+1.719.243.6569
[email protected]
AZ License #: SA637220000
Florida’s Realty, LLC
FL License #: SL3233199
SINGLE-TENANT FEE SIMPLE NNN INVESTMENT
BRAND NEW 15-YEAR LEASE TERM
ANNUAL RENTAL ESCALATIONS
NEWLY RENOVATED
CONFIDENTIALITY
The information contained herein is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Embree Group and should not be made available to any other person
or entity without the written consent of Embree Group (the Embree Group collectively refers to Embree Capital Markets Group, Inc., Embree Asset Group, Inc., Embree Healthcare Group, Inc., and Embree
Construction Group, Inc.). This Brochure has been prepared to provide summary information to prospective investors and to establish a preliminary level of interest in establishing an investment relationship
with Embree, which may or may not include the sale or purchase of any specific property referenced herein. Several Embree Group employees are licensed real estate agents and brokers in various states.
The subject property is currently under construction and photos shown herein are representative only. The information contained herein is not a substitute for a thorough due diligence investigation. Embree
Group has supplied information in this Brochure from sources we believe are reliable; however, all potential Buyers and Investors must take appropriate measures to investigate and verify the income and
expenses for any specific property, the future projected financial performance of any specific property, the size and square footage of any specific property and its improvements, the presence or absence of
contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any
tenant or any tenant’s plans or intentions to continue its occupancy of any specific property.
Embree Group reserves the right to withdraw this solicitation at any time without prior notice. The information contained herein is based upon sources deemed to reliable, but the accuracy of the information
is not guaranteed, nor should the information contained herein be considered all inclusive. Statements contained herein which involve matters of opinion, whether or not identified to be that only, are not
representations of fact. The price and terms of this offering may be subject to change at any time.
CONTENTS
2
3
INVESTMENT DETAILS
6
MARKET OVERVIEW
12
LOCATION OVERVIEW
4
TENANT OVERVIEW
9
DUE DILIGENCE
15
DEMOGRAPHICS
5
FINANCIAL OVERVIEW
10
PROPERTY PHOTOGRAPHS
16
CONTACT
MEMORY CARE AMERICA \\ NAPLES, FLORIDA \\ EMBREE CAPITAL MARKETS GROUP
INVESTMENT SUMMARY
ASSET CLASS
ANNUAL RENT
INVESTMENT DETAILS
Healthcare (Senior Housing)
$514,500
CAPITALIZATION RATE
BEST OFFER
PURCHASE PRICE
BEST OFFER
EST. COMMENCEMENT
PRIMARY LEASE TERM
LEASE TYPE
At Close of Escrow
15 Years
Absolute NNN
LEASE ESCALATIONS
2.0% Annual
RENEWAL OPTIONS
Three 5-Year Options
LOCATION
2626 Goodlette Frank Road, Naples, Florida 34103
TENANT
MCA Naples, LLC
GUARANTORS
Memory Care America, LLC; Trident Healthcare Properties I, LP;
plus two high-net-worth individual guarantors
BUILDING SIZE
Approximately 35,707 square feet
LAND SIZE
CONSTRUCTION TYPE
Approximately 2.9 acres
Institutional, stucco façade, barrel tile roof
OFFERING OVERVIEW
Memory Care of Naples is a 50-unit, 54-bed memory care community operating under an assisted
living facility license, located in Naples, Florida, an upscale community in Collier County on the Gulf
of Mexico. Located just north of downtown Naples, the 2.9-acre property is bordered by the
Wilderness Country Club on the north and east and an upscale Professional Park adjoining to the
south. To the west are community and neighborhood shopping centers and single family homes.
The site has good visibility and accessibility with complementary supporting services and amenities
in close proximity.
AREA DESCRIPTION
Interior Hallway—Resident Wing
3
Often referred to as the crown jewel of Southwest Florida, in addition to being named as one of the
top retirement destinations in the U.S by major publications, Naples has also been named as a “Top
10 Beach Town” and “Top 10 Art Town” making it exceedingly attractive for the adult children and
families of retirees. Easily accessible via Interstate 75, the community is served by both a regional
and international airport. Memory Care of Naples is located near four hospitals in Naples, two of
which are a part of NCH Healthcare System and the other two hospitals are a part of the Physicians
Regional Healthcare System. Between the two facilities, there are 681 combined beds supported
by an alliance of over 630 physicians.
MEMORY CARE AMERICA \\ NAPLES, FLORIDA \\ EMBREE CAPITAL MARKETS GROUP
TENANT OVERVIEW
PROPERTY & FACILITY DESCRIPTION
Memory Care of Naples is currently owned and operated by Memory Care America, LLC (MCA). MCA
owns and operates Memory Care Senior Living facilities in the southeast and Texas. In 2014, MCA
purchased the existing assisted living facility located in Naples, FL . MCA’s interest is to focus its efforts on
operations and offer the property to investors . Naples, FL is a strong market that would be accretive to
the Company operations and equity investors by creating an immediate revenue stream and supporting
the Company’s de novo business strategy.
>> Memory Care America, LLC (“MCA”), based in Nashville, Tennessee, was formed in July 2012
to develop, acquire, and operate freestanding memory care assisted living units dedicated
solely to residents with Alzheimer’s and other forms of dementia.
>> MCA dedicates 100% of its resources, research, and staff to the ownership and operation of
specialized memory care facilities within the assisted living industry.
>> The MCA ownership and management team is led by an experienced group of senior
healthcare professionals with successful track records in founding, growing, and exiting
multiple start-up healthcare ventures.
OPPORTUNITY/STRATEGIC RATIONALE
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Since the MCA purchase, renovations of all common areas, hallways, entrance foyer (including security
doors), resident rooms and bathrooms, dining hall, roof and basic maintenance problem areas have been
accomplished. The remaining resident rooms (13) will be completed once vacated by current residents.
Memory Care of Naples is an attractive one story stucco veneer building with a barrel tile roof, in keeping
with traditional south Florida architecture, and contains 35,707 gross square feet of space. It was
constructed in 1997 and initially occupied in early 1998. The building has four residential wings extending
from a central core which contains the main lobby, administrative offices, kitchen and group dining area,
a private dining room, two sitting/TV lounges, one sunroom, a library, an activities room, a beauty salon
and other common areas and public spaces. Also located in the central core is a Physical Therapy room
providing a convenient and important in-house service for the residents of Memory Care of Naples.
A third-party company operates the Physical Therapy service as an outpatient facility and leases the space
for $1,000 per month.
The opportunity for investors is to acquire a completely renovated real estate asset that provides a physician-designed Memory Care program, with additional licensed care services not
available at other competitive Naples communities.
The facility is licensed for 54 memory care/assisted living resident beds and is currently operating as 50
units. All resident living units feature a private bathroom with a shower. Each resident bedroom and living
area has emergency pull chord stations monitored at the central nursing station and smoke detectors
hard-wired to the alarm system monitoring with the fire department.
In summary, we believe this is a relatively low-risk opportunity for a real estate investor to gain
entry into a proven senior living growth market where the MCA platform can have the greatest
impact, simultaneously providing strong and immediate support to its business model and
excellent growth potential for its investment value.
The square footage for Memory Care of Naples units is in the comparable to high range as related to
those of competitors in the Memory Care sector of the Naples market. The majority of units were
originally designed by the architects to accommodate two residents in a semi-private setting, but for
market advantage Memory Care of Naples utilizes only two units in that manner.
MEMORY CARE AMERICA \\ NAPLES, FLORIDA \\ EMBREE CAPITAL MARKETS GROUP
FACILITY LICENSURE
FINANCIAL SUMMARY
Memory Care of Naples holds three separate operating licenses:
The tenant has prepared a twelve month income statement for the purpose of the proposed valuation. The EBITDA for the existing assisted living operations for year end 2012 was $214,850 and
for 2013 was $199,703. The occupancy rate as of year-end 2014 was approximately 83% and
current occupancy for the five months of 2015 averages 87%.
(1)
Standard Assisted Living License
(2)
Extended Congregate Care License (ECC)
(3)
Limited Nursing Service (LNS)
These are the highest levels of licensing available for assisted living facilities in Florida and give the
facility flexibility to provide assistance with daily living and specific congregate care services. These
services were particularly important with the conversion to the Memory Care platform for residents
with Alzheimer’s and dementia and has allowed MCA not only to continue these higher levels of
service, but to increase incremental revenue from the services performed.
* Above occupancy room rates include rooms that were unavailable due to renovations – this
resulted in a lower occupancy rate.
* As of May 31st, the occupancy rate was 93%. Three rooms are being renovated. If the three
unavailable rooms are excluded, the facility currently has a 100% occupancy rate.
Memory Care of Naples began a $1,300,000+ renovations project in the spring of 2014. Nearly
every interior area was addressed, as well as some critical exterior and mechanical needs.
Areas renovated:
FINANCIAL CONSIDERATIONS
- Resident Rooms
The Company operates on a private pay model and is, therefore, not dependent upon
government or other agencies for its unit rental payments. This reduces the reimbursement
risk and processing costs associated with many senior living facilities that utilize government
reimbursement programs. Because the facilities are designed and operated for private pay
residents, the Company selects markets with supporting financial demographics for its de
novo development projects. For example, the Company focuses on markets that have unmet
bed needs among a demographic of individuals whose ages exceed 65 years and who have
annual household incomes in excess of $75,000. This demographic sector is traditionally able to
afford the average base rental fee of $5,800 per month for units in the Company’s facilities.
- Library
5
- Entry Foyer and Lobby
- Corridors and Hallways
- Dining Hall
- Roof repairs
- Security and Communication System
- Furnishings
- (All Resident Rooms will be renovated as assisted living residents vacate rooms)
MEMORY CARE AMERICA \\ NAPLES, FLORIDA \\ EMBREE CAPITAL MARKETS GROUP
MARKET NEED AND COMPETITIVE ANALYSIS
SUMMARY OF THE TRANSACTION
The December 2012 MDS and MCA Market Studies revealed that there are sixteen (16)
communities that offer assisted living, Memory Care or both in the Naples primary market area,
defined as an eight (8) mile radius surrounding the Windsor Place community. Of the sixteen (16)
total assisted living facilities, there are eight (8) facilities that offer some services for residents with
Alzheimer’s and other forms of dementia in the market, but only four (4) of those are stand-alone,
purpose-built Memory Care facilities. Four of the eight total facilities currently offering some type
of Memory Care services have wait lists, one is expanding and one additional facility (on the
campus of a Continuing Care Retirement Community) is in the development planning stages and
expected to open in 2015. Approximately 80% of the unit absorption for Windsor Place is currently
from residents within the primary market area and 20% from tertiary markets, including the
remainder of Collier County, other areas of Florida and some in-migration from out of the state.
The proposed transaction is a sale-leaseback, whereby a qualified purchaser will acquire 100% of
the fee simple interest in the subject property and Memory Care America will leaseback the facility on a long-term, triple-net basis with annual rental escalations. The transaction will consist of
substantially all of the real estate assets. In light of the revenue growth prospects through the
facility conversion to Memory Care, the relevant demographic growth expectations of the primary and secondary market, and the increasing value of real estate coupled with the increasing cost
of construction as a barrier to entry, this transaction will be accretive to investors.
The MDS report concluded that, “based on the results of the market feasibility/due diligence
analysis and our experience in evaluating successful Senior housing communities, it is our specific
opinion that there appears to be sufficient size and depth of the age and income qualified market
to support a conversion to a freestanding Memory Care community”. Their analysis model
assumed that by using the two qualifying income screens of over $85,000 and over $95,000, their
(stated) conservative estimate of the monthly rental rates that could be supported in the facility
would be $5,420 and $6,055, respectively.
Recent improvement in the home equity market will also increase the number of prospective
residents qualified to afford this type of Memory Care facility, over and above the market depth
described in the MDS December 2012 report. The Florida Board of Realtors recently reported that
median home values increased in value by over 14% statewide in April 2013 versus April 2012.
6
MEMORY CARE AMERICA \\ NAPLES, FLORIDA \\ EMBREE CAPITAL MARKETS GROUP
Resident Room
MARKET DEMAND-CAPTURE RATE MODEL
7
MEMORY CARE AMERICA \\ NAPLES, FLORIDA \\ EMBREE CAPITAL MARKETS GROUP
MCA NAPLES OPERATING BUDGET 2015
8
MEMORY CARE AMERICA \\ NAPLES, FLORIDA \\ EMBREE CAPITAL MARKETS GROUP
MARKET DUE DILIGENCE ASPECTS ASSESSED
DILIGENCE ISSUES
MCA has focused on the following key issues during the due diligence process:
MCA received a Property Condition Needs Assessment Report performed by EBI Consulting, a
nationally recognized engineering and consulting firm, completed in late 2010. The report was
required by Heartland Bank as a condition to refinance with a HUD loan and concluded that the
property, superstructure, and stucco facades were sound and in good condition. In December
2012, prior to the execution of the APA, MCA contracted with Todd Mullins and Associates, a Nashville, TN based engineering consulting firm, to perform a follow-up assessment on our behalf. TMA
concluded that there were some repairs and cosmetic improvements that should be considered,
but that the basic structure of the building and systems were sound. These repair notations were
provided to the Seller and the significant items have either been addressed or will be addressed
prior to closing. The HUD loan provisions require reserves to be maintained for the normal replacement of major structural and roof systems, equipment, HVAC systems, floor and window coverings
and other repairs. The unused reserve accounts are on deposit with the lender and have been
transferred to MCA at closing, at Seller’s cost, for any significant repairs that were not completed as
of closing.
9
(i)
demographic analysis and market need assessment,
(ii)
ability to increase occupancy, increase rates and grow referrals through the
conversion from the more competitive assisted living sector to MCA’s focused
Memory Care services,
(iii)
ability to expand services through MCA’s proprietary Memory Care Resident
Programs and Care-giver Education Platform,
(iv)
assessing opportunities to form relationships and alliances with local hospital
systems for research,
(v)
confirmation of operating expenses and identification of capital expenditures
required to convert and operate the community solely for Memory Care
residents, and
(vi)
assessing the opportunity to significantly increase the valuation of the
community over a five (5) year period to create a superior investment for our
owners and investors.
It should be noted that the building is located in the 500 Year Flood Plain, not an unusual
circumstance in most coastal cities of Florida. The property is not, however, located in a Special
Flood Hazard Area, but MCA has maintained flood insurance for the property at a cost of
approximately $2,500 per year.
MEMORY CARE AMERICA \\ NAPLES, FLORIDA \\ EMBREE CAPITAL MARKETS GROUP
INTERIOR
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MEMORY CARE AMERICA \\ NAPLES, FLORIDA \\ EMBREE CAPITAL MARKETS GROUP
EXTERIOR
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MEMORY CARE AMERICA \\ NAPLES, FLORIDA \\ EMBREE CAPITAL MARKETS GROUP
STATE CONTEXT
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MEMORY CARE AMERICA \\ NAPLES, FLORIDA \\ EMBREE CAPITAL MARKETS GROUP
AREA CONTEXT
SITE CONTEXT
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MEMORY CARE AMERICA \\ NAPLES, FLORIDA \\ EMBREE CAPITAL MARKETS GROUP
SITE AERIAL
14
MEMORY CARE AMERICA \\ NAPLES, FLORIDA \\ EMBREE CAPITAL MARKETS GROUP
DEMOGRAPHICS
3 MILE
5 MILE
White
3,886
34,871
98,621
107,796
Black
87
1,605
6,048
34,746
99,561
Am. Indian & Alaskan
9
102
386
8.13%
8.21%
Asian
38
490
1,541
20,021
Hawaiian & Pacific Island
1
17
68
Other
50
407
1,132
3 MILE
5 MILE
2020 Projection
4,332
40,541
116,644
2015 Estimate
4,071
37,493
2010 Census
4,073
Growth 2015-2020
6.41%
2015 Population Hispanic Origin
HOUSEHOLDS
433
4,708
1 MILE
3 MILE
5 MILE
2020 Projection
2,054
19,809
53,569
2015 Estimate
1,942
18,376
49,645
2010 Census
1,991
17,248
46,373
Growth 2015 - 2020
5.77%
7.80%
7.90%
Owner Occupied
1,362
13,473
35,981
Renter Occupied
580
4,903
13,665
2015 Average Household Income
$75,235
$100,784
$91,154
2015 Median Household Income
$49,127
$64,213
$57,997
1 MILE
3 MILE
5 MILE
<$25,000
466
3,304
9,699
$25,000 - $50,000
521
4,121
11,928
$50,000 - $75,000
314
2,958
8,838
$75,000 - $100,000
250
2,082
5,320
$100,000 - $125,000
109
1,385
3,546
$125,000 - $150,000
101
893
2,150
$150,000 - $200,000
34
871
2,199
$200,000+
149
2,763
5,966
HOUSEHOLD INCOMES
15
RACE & ETHNICITY
1 MILE
1 MILE
POPULATION
MEMORY CARE AMERICA \\ NAPLES, FLORIDA \\ EMBREE CAPITAL MARKETS GROUP
ORLANDO
195 MILES
MIAMI
FORT LAUDERDALE
FORT MYERS
42 MILES
NAPLES
120 MILES
NAPLES, FLORIDA | OFFERING MEMORANDUM
EXCLUSIVELY LISTED BY
JOSIAH BYRNES
Vice President
Embree Capital Markets Group
+ 1.719.243.6569
[email protected]
ABOUT EMBREE
The Embree Group of Companies provide nationwide turnkey real estate services, specializing in build-to-suit
development, design/build, general construction, program management, and capital markets for specialty retail,
financial, automotive, restaurant, pharmacy, and medical facilities. Embree’s fully integrated, in-house services
allow it to become an extension of the tenant's organization. Since 1979, Embree’s foundation has been built on
developing tailored programs for over 300 national clients. The firm is headquartered near Austin, Texas, with
regional offices located in Arizona, Colorado, and California. Over the past 36 years, Embree’s executive team
has developed, built, or transacted more than 10,000 assets in all 50 states, Canada, and Puerto Rico, with a total
market value in excess of $10 billion.
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