The Health Care M&A Monthly: College Amenities Attract Seniors -
Campus Continuum Tweaks Retirement Community Model
University-based retirement communities aren’t a particularly new idea, but Campus Continuum, based in Newton, Massachusetts, has tweaked the model. Unlike a traditional CCRC, including those in a university setting or even near a golf course, the Campus Continuum program has no health care component. Even more importantly, its projects are specifically targeted to people 55 years of age and up who might be decades away from making a decision about a CCRC and, as "younger seniors," are most interested in the lifestyle amenities that a college or university setting provides.
"Today, we need to recognize more than one category of senior," suggests Dave Carlen, a director on Campus Continuum’s board. "The senior years are likely to span 40 years or more and involve as many changes as a person’s first 40 years. We’re not blind to the later years but, instead, are focusing on the inception of the senior years" — an important distinction.
"And while we always make a point of differentiating our projects from CCRCs [see sidebar], adds Gerard Badler, founder and managing director, "we see the programs as complementary. For example, we seek alliances with local health care providers, including CCRCs, that are located near our projects so that our residents can make a smooth transition, either temporarily or permanently, when they need those kinds of services."
The role of Campus Continuum
Campus Continuum identifies academic institutions interested in setting up onsite senior housing, conceptualizes the projects by conducting feasibility surveys among likely residents, and then becomes the institution’s liaison with the real estate developer, the buyers, and, on an ongoing basis, the residents.
"We survey to get a sense of whether the particular project will attract enough people in that location," explains Carlen. "Initial results indicate that we’re not likely to draw buyers from the local community — at least not immediately — although we’re not convinced that’s always true." Surveys are sent to alumni, faculty, staff, and the children and parents of those groups, as well as unaffiliated individuals who are likely to be interested.
"Once we determine a viable level of interest, we craft the RFP for real estate developers, screen the responses, and recommend one to the university," he continues. "We then work very closely with both the real estate developer and the institution. Our job is to make the process go smoothly and to ensure that what gets built will attract active seniors who want to associate with the school."
Seniors then buy a home in a university-affiliated community just as they might buy condos in a senior community built around a golf course. Campus Continuum markets the homes, develops a waiting list for resales, and ensures that the amenities provided by the school match the interests of the residents on both an initial and an ongoing basis. "The whole idea of this program is to enable people to connect with the school and retain an active association," Carlen adds. "Essentially, we become the liaison between the community and the college to make sure the tie-in remains productive." Campus Continuum will also work with the university’s development office to encourage donations and bequests.
The role of the real estate developer
A developer involved in a Campus Continuum project is most likely a traditional, for-profit condo developer, who either purchases available land from the university or owns suitable land nearby. Public institutions often find selling state-owned property difficult. In that case, the development may involve a long-term ground lease.
In any event, the developer handles all financing for and construction of the project. Special funding may be available in some cases due to the uniqueness of the development, but that would vary from state to state.
"A local developer usually has the most experience with the local permitting and building requirements, which is why we split the tasks this way," says Carlen. "By the time the developer gets involved, we will have fleshed out all the details, so that it becomes a fairly straightforward real estate development project."
The role of the university
Retirement communities affiliated with institutions of higher learning not only expand the school’s mission but also increase its fundraising opportunities — on both a short- and long-term basis. "Every college that we’ve approached sees community involvement as an important part of its mission," says Carlen. "This type of project also provides various revenue streams." For example:
1. Land sale. While no capital investment is required, institutions with suitable land to contribute can sell or lease land to the developer. The proceeds go directly into the school’s endowment fund, a simple trade of land for cash, with no tax implications for the not-for-profit entity.
2. Usage fees. The university collects usage fees, bundled into the monthly condo maintenance fee, for the lifestyle amenities it provides — such as access to classes, the library, sporting events, performances, seminars, fitness facilities, business services, and more.
3. Donations. By affiliating with an active, involved senior community, the college or university broadens its base of targeted donors and, thereby, provides a long-term opportunity for future gifts and bequests.
Handling the details, alleviating the fears
By facilitating the project from concept through completion and continuing to manage the amenity aspects on an ongoing basis, Campus Continuum helps the parties — college, developer, and buyers — get together, assures quality, and alleviates any fears about success.
"Many colleges and universities have thought about this type of project but don’t know how to get to the next step," says Carlen. "We develop a strategic plan, help them find a site, identify the right developer, determine the lifestyle amenities, and handle all the marketing. We think that makes the difference between getting the project done successfully and not getting it done at all."
A number of senior people at the institution must still devote a fair amount of time to the project to approve and oversee all the details. After all, it’s the school’s name and reputation that are on the line.