Senior living nonprofit Mather is poised to break ground on its senior living highrise project near Washington, D.C. thanks to newly announced financing.
Through syndication led by The Huntington National Bank, Mather has secured $300 million in construction financing for The Mather, its forthcoming life plan community in Tysons, Virginia. Evanston, Illinois-based Mather also operates senior living communities in the greater Chicago market and in Tucson, Arizona.
The $500 million development in Tysons is a 50-50 equity partnership between Mather and Illinois-based real estate investment manager Westminster Capital. The project is also being funded through equity from Mather and Westminster and a 10-year taxable green bond issuance through Mather Foundation, which is loaning $70m to the project.
Lenders and bond investors offered also showed interest in the project, according to Mather President and CEO Mary Leary. In fact, both the project’s construction loan and taxable bonds were oversubscribed, meaning the project’s group of lenders offered up more money than Mather was asking. That is notable given the fact that the pandemic and its challenges froze solid many capital sources in 2020.
“At the end of the day, it’s a very exciting, successful financing, which hopefully bodes well for other providers,” Leary told Senior Housing News.
But securing the financing was not easy, she added. The project first started to come together in 2017, but it wasn’t until early 2020 — just before the Covid-19 pandemic — that Mather issued a request for proposals for financing it.
“The timing couldn’t have been more challenging,” Leary said. “Many banks went to the sidelines during the early days of the pandemic.”
Faced with financing challenges, Mather and Westminster considered single-source, non-recourse financing options, but none panned out given the project’s size and scope. So Mather went back to some of the construction lenders it had established relationships with in the past, and ended up garnering significant interest from Huntington and other capital providers.
“As we shared our story, we ended up being very successful and attracting a significant number of national and regional banks to participate in a syndicated loan,” Leary said.
What stood out to lenders was the D.C. area’s number of age- and income-qualified households, and that Mather has had strong pre-sales for the community with 84% of the first phase already reserved, according to Leary.
By late September, Mather had closed on its $300 million construction loan. All in all, the process took about a year longer than Mather initially anticipated, according to Leary. The project cost also ticked up in cost by about $20 million due to the delay.
Mather encountered many lenders who were risk-averse and wanted providers to have more skin in the game, so to speak. That is why Mather ultimately pursued a taxable bond issuance — its first-ever, according to Leary. Also notable is the fact that the bond issuance is designated as “green” due to the Mather project’s LEED Gold precertification.
“In the past we’ve always pursued short term construction loans which are paid off with first-generation entrance fees,” Leary said. “We received an A+ bond rating from Standard and Poor’s, which is a very positive rating.”
Looking ahead, Leary believes The Mather is well-positioned to see demand from older adults in and around the area. And she is pleased that the nonprofit is gaining a new foothold in a region that is only becoming more competitive with time.
“It is a deep market and in years past it has been underserved,” Leary said. “We feel that we are uniquely positioned.”
As designed, the project will include two residential towers — one with 186 apartment homes and another with 114 — built in two construction phases.
Units are slated to come with features such as hardwood floors, quartz waterfall countertops and digital shower controls.
The two buildings are planned to be connected at their third through fifth floors, and the project also includes amenities such as a fitness center, spa, indoor pool, multiple restaurants, outdoor terraces, art studio, ground-floor space for retail and a community center for people 50 years of age or older.
Entrance fee pricing ranges from $650,000 to about $4.4 million, with 90% of that total refundable to a resident or their estate. Should a resident bring their significant other, there is an additional $66,000 entrance fee. Monthly fees for residents start at about $3,500 for a Type B health services plan and $4,750 for a life care plan.
With all of its financing in place and Whiting-Turner Contracting Company in tow as general contractor, Mather expects to start vertical construction on the project’s first phase in the first quarter of 2022. Construction of the second phase will likely start about a year later, with opening dates expected in Q1 2024 for the first phase and potentially later that year for the second.
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