05 Dec Hillman buys into ‘Green House’ senior living project

Tom Hillman said it’s hard to generate sizable returns on real estate investments these days as interest rates remain low and cap rates stay relatively stagnant.

But niche opportunities exist to generate substantial return to investors, Hillman said, and he thinks he’s found one in a new senior living concept.

Hillman has invested an undisclosed amount into a $13.5 million senior living development in St. Charles County called the Cottages of Lake St. Louis. Cottages will be the first Green House development in the state. Green House refers to a non-conventional skilled nursing home style that provides more intimate care — instead of 60 residents all living in one building, they are split into six cottage-style homes that offer individual bedrooms, bathrooms and communal dining and living areas.

“There have been a lot of negative connotations toward skilled nursing facilities and (Green House) is an area that, if you read the tea leaves, there are changing demographics and still a great amount of headroom,” Hillman said.

The Green House model of care has been shown to deliver significant improvements in care and in resident, family and staff satisfaction, according to a 2012 report in Seniors Housing and Care Journal. The cost to run such a development, the report found, would be higher than traditional senior care designs, but given the fact that most people were willing to pay more for the enhanced care, it was possible to provide a high quality of life and care at a net profitability and return on investment comparable to large, traditionally structured nursing facilities.

Hillman invested in the development through a $15 million fund called IronRock Real Estate Investment Fund LP. Three other unidentified investors also pitched in on the deal.

IronRock Investments is a portfolio company of FTL Capital LLC, a private equity investment and management company that Hillman formed in 2001. Jason King is IronRock Investments’ director of real estate. In that role, King locates and evaluates investment opportunities, monitors property and company performance and provides guidance to staff and ownership.

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