Good assist

Executive Summary
Company. Omega Communities Industry. Senior housing Key. Creative developers can find opportunities on the Gulf Coast.

James Taylor Jr. is in Fort Myers to look for a good church with a fast-growing congregation, but it's not for his own spiritual need.

Taylor is in charge of development and operations for Omega Communities, one of the most creative developers of senior housing in the region. He's looking for churches to partner on assisted-living and memory care facilities throughout the region, including a $30 million project in Fort Myers.

Omega has big plans: The Birmingham, Ala.,-based developer of senior housing is developing three assisted-living facilities on the Gulf Coast, and it's planning to build as many as a dozen in total from Tampa to Orlando and south to Naples. “We're building a pipeline up and down I-75,” Taylor says.

Taylor is striking deals with religious organizations that lets churches share in the profits of the enterprise in return for some promotion and goodwill, all without jeopardizing the religious groups' nonprofit status. Although churches are obvious partners, Taylor says other groups of like-minded people such as veterans or unions could also become partners in future deals.

But that's not the only creative strategy Omega is using. To finance the projects, the firm is turning to a program to grant visas to foreigners who invest at least $500,000 to $1 million in a U.S. business and create at least 10 jobs. Foreign investors from as far away as China will finance as much as one-third of each Omega project under this program, Taylor says.

In addition to its capital partner, New York City-based Brevet Capital Management, Taylor says Omega has successfully sold tax-exempt bonds to investors.

For example, broker-dealer HJ Sims underwrote $24.5 million worth of tax-exempt bonds with a rate of 8.25% to build an assisted-living facility called the Springs of South Biscayne in North Port last year. In another deal last year, it sold $21.6 million of bonds for a project in Sarasota called the Fountains of Hope.

Big expansion plans
A relative newcomer to the senior-housing industry, Omega Communities is making a big push into Southwest Florida. “The I-75 strategy is critical to what we want to do,” says Taylor.
Recently, Taylor was in Fort Myers to review details for a $30 million assisted-living facility to be called Cypress Point on nine acres near the intersection of Daniels Parkway and Six Mile Cypress Parkway. Initially, the group plans to build 135 assisted-living and memory care apartments in three separate buildings near the Minnesota Twins spring training stadium.

Taylor also was in Fort Myers to finalize the details of an agreement with a local church. But, unlike other projects, the land in Fort Myers doesn't belong to a religious group. “We partner with large, dynamic churches,” Taylor says.

For example, at the Fountains of Hope on Wendell Kent Road in Sarasota, the 106-apartment senior housing project leased land from The Church of Hope, which has 4,000 members. About 750 of those members are age 70 or older, and Omega expects many of them to be renters, bond-offering documents show.

In return for $1 a year lease of 10 acres for 60 years, the church will receive about 25% of the project's surplus cash, according to the bond offering. In return, the church also agrees to promote the facility to its members, provide ministry services to the residents and allow Omega to use the church's name in marketing materials.

In North Port, at The Springs of South Biscayne, Omega acquired land adjacent to the 3,000-member South Biscayne Church, but it entered into a similar agreement whereby it will pay it 10% of surplus cash in return for marketing and promotion. “Each deal is unique,” Taylor says.

The deals are carefully structured so they don't jeopardize the group's nonprofit tax status. “The church has no financial obligation,” says Taylor, who says Omega's profit sharing with a church is akin to a tithe.

Omega's growth-by-association won't be limited to churches, either. “We're looking at a veteran-specific project,” Taylor hints. Unions could be partners, too.

Besides current locations in North Port, Sarasota and Fort Myers, Omega is scouting sites in the Tampa Bay area, including two in St. Petersburg. The east coast of the state is saturated with assisted-living facilities, but Taylor says there are as many as eight people waiting for every one assisted-living bed on the Gulf Coast.

Other retirement-destination states are on its radar, too, including Arkansas and Texas. “We're going to do 50 of these over the next 10 to 12 years,” Taylor says.

China connection
Although it's been successful with bond deals, each new project will have about one-third of the financing from foreign sources under a U.S. government sanctioned investor-visa program called the EB-5 visa.

In return for a visa to live and work in the U.S., a foreigner must invest at least $1 million in a U.S. company that will create at least 10 jobs. In some economically depressed areas, the requirement is halved at $500,000. Each Omega project will have about 20 foreign investors through the EB-5 visa program, Taylor says.

The appeal of the U.S. visa program is that foreigners are more interested in placing their money in a safe country such as the U.S. and obtaining visas than they are in making above-market returns. Typically, Taylor says foreign investors expect 3% to 5% interest on their investment for a fixed period, say five or six years.

The U.S. investor-visa program recently got a boost from its northern neighbor, too. “Canada shut their program down,” Taylor says, diverting prospects to the U.S.
In 2013, with the help of law firm Greenberg Traurig, the U.S. Citizenship and Immigration Service approved Omega as a “regional center” in 19 counties from Tampa to West Palm Beach and south to Miami as well as Puerto Rico. The government sets aside EB-5 visas for regional centers like Omega's, of which there are about 800 around the country. Taylor estimates only 150 regional centers are actively prospecting for investors.

One of the challenges is that it can take time for foreign investors to be approved for the program, but Omega is building a network of prospects, particularly in China with Victor Nee, a member of its board. “The U.S.C.I.S. has become so much easier to work with,” says Taylor.