Senior Housing in Arlington

A 60-resident, 5-unit senior housing community to be developed across 15,000 square feet of building footprint on a 1.31-acre site at 1415 N Fielder Road, Arlington, Texas. Total construction cost is estimated at $3,000,000 at $200 per square foot, financed through a $500,000 equity contribution from the senior housing operating partner and $2,500,000 in debt financing, with land contributed by the landowner as equity. The development will incorporate all amenities expected of a premium senior living facility — including landscaped gardens, freestyle outdoor fitness areas, dedicated parking, children's visitation play areas, and a fully engineered drainage system — designed to promote resident dignity, safety, and quality of life within a secure, purpose-built environment.  

Financial Breakdown:  

We deem to divest our shareholding at an Equity Hurdle rate of 17.43% into 100 shares, after considering the latest US Equity Risk Premium, relevant development and liquidity risks, business failure and leverage risks.  

The project generates $1.95 of net present value for every $1.00 of equity invested, after already compensating the LPs at 17.43% per year for 7 years. For potential new co-owners buying shares, the hurdle rate is the discount rate that determines the share price they pay. If they buy a share at $19.5K, they are paying a price that delivers exactly 17.43% annually on their investment. At the end of the 7th year, their equity value should reach $209K, thus multiplying their investment by almost 10.72X.  

The mortgage rate (6.00%) equals the exit cap rate (6.00%). The levered IRR remains 152.10%, indicating that the project's capital appreciation and NOI growth compensate for the negative leverage effect. The levered IRR comfortably exceeds the hurdle rate by a positive Alpha (α) of 134.67%. On the other hand, the unlevered IRR of 56.02% exceeds the 6.00% of mortgage, thus creating a debt yield spread of 50.02%. These are the numbers our financing bank will focus on, and these are very impressive.  

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