Despite a tumultuous credit environment, Boston-based Hebrew SeniorLife closed on the sale of $457 million in tax-exempt bonds in late December to fund a new continuing-care retirement community (CCRC). The 256-residence NewBridge on the Charles is located in Dedham, Mass.

According to Hebrew SeniorLife president and CEO Len Fishman, he and his lenders were able to close the deal because they began negotiating terms before the crunch. But the transaction’s successful completion also is a measure of the strength of Hebrew SeniorLife as a nonprofit developer of seniors housing, adds Fishman.

It helps to be able to float tax-exempt bonds, Fishman says, but he also posits that nonprofit developers have strengths that go deeper because its “profit” can go into developing connections between the properties and the rest of the community. Not vague or touchy-feely connections, but physical infrastructure such as the Rashi Jewish Day School that will be an integral part of the NewBridge on the Charles campus, he says.


Fishman predicts that such connections will be an increasingly important aspect of seniors housing in the future because of demand among a burgeoning elderly population. National Real Estate Investor recently spoke with Fishman about the industry’s prospects and the role of nonprofit developers such as Hebrew SeniorLife, which owns seven seniors housing complexes in greater Boston with about 3,500 residents.

NREI: What’s ahead for the industry?

Fishman: We’re going to continue to see conventional seniors housing built much the way apartments are built, but an important new trend can be summed up in a two-word quote from E.M. Forester: “only connect.” That is, there’s going to be more seniors housing that’s connected to other places and activities in any number of ways. For example, as part of the overall campus at NewBridge on the Charles, we’re currently building a school — grades K-8 — connected to the housing. We weren’t sure how seniors would react to this plan, but it turned out that they’re excited about volunteering as teaching or library assistants, or tutors.

That’s one kind of connection, but I also think we’re going to see more seniors housing building in urban areas, and more vertical properties — housing embedded in a community, as opposed to isolated in the suburbs.

NREI: Doesn’t urban seniors housing — and building connections, for that matter — represent a more expensive development proposition?

Fishman: Costs are significantly higher, if you’re putting a property in a desirable urban area. That stands to reason, and for a nonprofit at least, that’s one reason government support is critical, especially if any of those units are going to be affordable. But building for a sense of community also makes for a more successful property.

In Brookline, Mass., we bought three buildings that represented about half of the affordable seniors housing in the city, and which now form the Center Communities of Brookline. We paid $42 million for the buildings, and another $10 million to renovate them, because they’d merely been apartment buildings for seniors, with little common space or activity area.

For us, the whole point of seniors housing is to build community, so we created such common areas as a community room, beauty salon, coffee shop, fitness room, library, an office for a nurse practitioner, and an outdoor terrace. The vacancy rate of the properties before the redevelopment was about 12%, but afterward it went down to under 1%.

The non-profit model is better suited for this kind of development. A for-profit might see the benefit to seniors in offering such amenities, but except in the most upscale developments they aren’t going to include them because of cost. You certainly won’t get many community-connecting features in a property that’s a mix of affordable and market-rate units — 60% affordable and 40% are market rate, in the case of the Center Communities of Brookline.

NREI: Can non-profit seniors housing developers reasonably expect much help from the government?

Fishman: What we’re not getting enough of, as an industry, is affordable seniors housing support by the federal government, which abdicated its leadership in that arena more than 20 years ago. In the early ’80s, we were producing about 30,000 units of Section 8 housing a year. Now it’s less than 10,000, and about that many expire every year. I hope that will change in the new administration.

Affordability reduces the revenue you have to defray development costs, and that’s why you need government support. If it’s done right, it’s actually cost-effective for the government. With good services and amenities, even very frail elders can live in a CCRC. The average age in our seniors housing is 86. As many as 20% of our residents would need to be in a long-term care setting, if there weren’t the kind of rich support system that we provide.

From the point for view of the government, it’s much less expensive to support a frail elderly person in subsidized housing than in long-term care. It’s also good for communities because seniors can make a real contribution as volunteers in schools and hospitals, just to name a few places.