Retirement home plans $78 million expansion
December 23, 2009 by Al Harris
The boomers are getting older, and the retirement communities are getting bigger.
Last week Covenant Woods, a continuing care retirement community in Mechanicsville, announced plans for a $78 million expansion. This would be the community’s second expansion since opening in 2001.
“We’ve done some research over the past three years, and we see a need in the market for additional long-term care,” said Beth Richardson, director of marketing for Covenant Woods. “The statistics look like the baby boom generation will prefer this type of community, where you have a maintenance-free lifestyle.”
Continuing care facilities differ from traditional nursing homes in that residents move in while they are still able to live independently. The units aren’t dormitory style rooms, but more like apartments. And Covenant Woods has cottages with living rooms and fireplaces. As the residents’ needs change, they receive more specialized care.
And they are willing to pay a premium. A single person pays an entrance fee of $173,000, while residents moving in to the largest units pay nearly $500,000. Then there is a monthly fee that ranges from about $2,500 to $4,300. The payments include rent, meals and health care.
Demand is high. Richardson said there is a waiting list of about 100 people waiting for specific apartments. Six units are available now. About 250 seniors live in the community. The new expansion, which will be called The Lodge, makes room for an estimated 150 more residences. It will also add additional community spaces.
“It looks like a good time to build,” said Richardson.
Richardson said they will use bonds to fund the project. The bonds will be paid back as new residents buy into the project.
“We will be working in the next year to interest people in the expansion and put a 10 percent deposit down on the unit they select,” said Richardson.
Once they reach 70 percent occupancy they will start construction, which is expected sometime in 2010, she said.
Covenant Woods is using W.M. Jordan for pre-construction pricing, but a construction firm hasn’t been selected.
So that’s where our $6k goes each month. My mom is in the nursing care unit there and I have to say Cov. Woods is an amazing place. They really do give good, compassionate care. But it is already huge. I’ve gotten lost once or twice roaming the halls. How much bigger can it get?
Covenant looks like a great place. Average nursing home rates across the country are over $6500 per month. That is just the average. Your community looks like a great value even for the South. Great nursing homes with compassionate resident focused care are hard to find. While I understand family members sometimes think a large part of their monthly fees would go to something like an expansion. That is rarely the case. The nursing home operation on a CCRC campus has very slim profit margins if any. The remainder of the campus generally subsidizes this care area.
Secondly, for senior living campuses to remain viable; growth, innovation and constant improvement are key. We are beginning to see the first glimpses of baby boomers at our community and their expectations are very high. I think you should be proud that Covenant provides excellent care and is committed to their mission to serve more seniors in a quality way. It looks like they have been pheonomenally successful and it would be easy to sit on their laurels and get comfortable. Be glad your management team is progressive and looking to future viability. Financing and building projects are no fun. If you have experienced one, you have to love seniors to undertake another. Communities who don’t have this progressive approach, seem to stagnate and become dated. This situation leads to occupancy challenges and problems attracting high quality staff. Occupancy challenges can lead to much higher rate increases to cover fixed costs.
I think you probably made a great choice and a great investment. Kudos to your mom for raising a smart kid who cares for her mom!