philanthropy home conversion programs
TRANSCRIPT
LSS Move-In Resources
Questions?
Concerns?
LSS Move-In Resources
Questions?
Concerns?
NON-PROFIT Multi-Site Senior Living Organization Profile2012 LZ 100: Lutheran Senior Services
4
• LZ 100 #: 9 Headquarters Location: Missouri, St. Louis
• Year Founded: 1858 Senior Living Founded: 1906
• Total Units (as of 12/31/11): 3,203– 1,579 ILUs– 717 ALUs– 907 NCBs
• Classification: Primary: Bi-state Secondary: Metropolitan
• Total # of Communities: 11 # of CCRCs: 9# of Accredited Organizations: 0
• Debt Rating: Yes Fitch: BBB+ S&P: N/A
• Affordable Housing: 6 Locations, 392 Units• Managed Housing: 3 Locations, 208 Units
• Practices: Rapid growth began in the mid-1990s with the identification of a radius within which they desired to grow. Also identified goal for growth: rating must be maintained through growth. Denominational affiliation important but identical faith-based orgs not required; willing to consider similar faith-based organizations.
1st Community opened in 19062nd Community opened in 19293rd Community opened in 1967
Source: 2012 LeadingAge Ziegler 100 Publication (data as of 12/31/11)
NON-PROFIT Multi-Site Senior Living Organization Profile2012 LZ 100: Lutheran Senior Services
Lutheran Senior ServicesSt. Louis, Missouriwww.lssliving.org
5Source: 2012 LeadingAge Ziegler 100 Publication (data as of 12/31/11)
NON-PROFIT Multi-Site Senior Living Organization Profile2012 LZ 100: Lutheran Senior Services
Breeze Park,St. Charles, MO
Meramec Bluffs,Ballwin, MO
Hidden Lake,St. Louis, MO
Heisinger Bluffs,Jefferson City, MO
Richmond Terrace,St. Louis, MO
St. Joseph’s Home,Jefferson City, MO
Concordia Village,Springfield, IL
Lenoir Woods,Columbia, MO
Meridian Village,Glen Carbon, IL
Lutheran Hillside Village,Peoria, IL
Laclede Groves,St. Louis, MO
6Source: 2012 LeadingAge Ziegler 100 Publication (data as of 12/31/11)
Our presentation today will focus on our Home Conversion Program…essentially allowing our prospective residents to use their home to fund a gift annuity.
The Home Conversion Program
The prospect’s house is used to fund a gift annuity.
The value of the funding for their gift annuity is based upon an appraisal.
The annuity payout rate is based upon the ACGA recommended rates with some adjustments.
The prospect/donor is provided with a convenient means to dispose of their house with certainty regarding timing, future cash flow and tax benefits.
Overview of Program
By 2008, Marketing realized that older adults were experiencing a “mental paralysis” in regard to making the decision to move to our communities.
Caused by the new economics of decreasing retirement savings and decline of the real estate market.
Goal was to find a way for prospective residents to become actual residents.
The Home Conversion Program
The Resident gets to make the move they wanted when they wanted.
We have increased occupancy.
We receive valuable funding for our Benevolent Care Programs.
The Home Conversion Program has exceeded our greatest expectations.
The Win Win Win Proposition
Lutheran Senior Services
Some Interesting Facts
about the LSS Home
Conversion Program.
Summary of Program
Have accepted 130 homes into the program started 4 years ago.
Of these, we have sold 110, with an average realization of 83.7%, ranging from 37% to 117%.
The average time from gift to closed sale has been 172 days, ranging from 32 to 510.
Summary of Program
The appraised value of these homes totals nearly $22 million, averaging $167,000.
Values have ranged from $27,000 to $445,000.
New residents from program generate $3.4M annual revenue.
Have included all types of single family dwellings, vacation homes, and a couple of investment properties.
Summary of Program
Properties have come from 12 states.
15% of the properties are from outside our market areas.
LSS had historically maintained occupancy in the 93% – 94% range prior to 2008.
Since 2008 occupancy reached a low of 88.1%.
Now back to 93% – 94% system wide.
Marketing Department
Move-In Resources
Stewardship
Finance, and Governance Support
The Home Conversion Team
Home Conversion Team
The biggest obstacle to
moving into our communities is
the home and the stuff.
Our Move-In Resources
Team helps with the House
and stuff issues.
Our Stewardship team helps
prospects evaluate financial
options.
The Challenge
The biggest challenge has been
getting everyone on the team to
trust everyone.
Initially, it was hard for
Marketing to let Stewardship
have access to their prospects.
Marketing
Our Sales Counselors make
sure that all prospects are
aware of our Moving Assistance
Program, as well as the Home
Conversion Program.
This is very low key, but do
reinforce the programs when the
home is the primary obstacle.
This team is prepared to assist prospects with the home sale, including stuff.
Marketing offers their services to all prospects, and reinforces when they perceive it is one of the primary objections.
The following are excerpts from the presentation we give at our marketing lunches.
LSS Move-In Resources
LSS Move-In Resources
Our LSS Move-in
Resource Team is
here to help when
you are “ready” to
make a move or
"thinking” about
making a move.
I Am Not Ready to Move Yet
These services used to be
provided only to our firm
depositors.
We now understand that
the Home and the Stuff are
the biggest reasons folks
are “not ready to move”.
We used to fight the emotional attachment to the Home.
Residents did not want to give up an appreciating asset and convert to an Entrance Fee that not only did not appreciate, but they did not get 100% of it back.
The imputed interest on Entrance Fees provides a very attractive investment today. There has never been a better time to sell an Entrance Fee Product.
New Paradigm
LSS Move-In Resources
Questions?
Concerns?
This team is prepared to assist prospects with evaluating their various financial options.
Both Marketing and Move-In Resources make certain that prospects are aware of these services, and reinforces when they perceive it would be particularly helpful.
The following are excerpts from the presentation we give at our marketing lunches.
Stewardship
Lutheran Senior Services
Stable: 154 years of excellence
Careful financial management:mission-driven /MO-IL/extensive capital reserves
Successful: 9th largest nonprofit
multi-site senior living organization
Highly Regarded: Investment
grade Fitch rating
Advantage for You: Options!
Goal: Find Financial Option
That Fits You Best
EVERYONE IS UNIQUE
Assets
Income
Long Term Care Protection
Value placed on simplifying
Getting To Know You
Visit confidentially.
Review your personal financial situation.
Options presented in writing.
Mull over numbers on your timetable.
Questions always welcome.
Be a good steward of your resources.
Related Concepts
Entrance Fees
Entrance Fee Refunds
Monthly Service Fees
Entrance Fee Options Expanded
1) 95% Refundable Entrance Fee
2) 50% Refundable Entrance Fee
3) NEW Reduced Entrance Fee
Based on age(s)
40% to 65% reduction
4) NEW Minimum Entrance Fee
$5,000
Entrance Fee Bridge Loan
Low interest rate, currently at
5%.
No hassles, simple one page
agreement.
6 month term, renewable if
needed.
HOME CONVERSION PROGRAM
Increasingly Popular
Trade your house to LSS at its certified
appraised value.
For income that lasts as long as you do.
Move as soon as you wish.
Simple process converts your house to
immediate income and ends all
homeowner expenses.
You transfer all of the risks associated
with selling your house to LSS.
We provide certainty.
Alternative To Realtor
Avoids:
Risk/stress that house will not sell in a
reasonable amount of time.
Risk/stress that house will not sell at an
acceptable price.
Fixing and staging house.
Cost of realtor fee, maintenance, repairs,
inspection, closing, etc.
Hassles of showing your house while
preparing to move.
Creates New Income For Life
Based on independent, certified
appraisal and your age(s)
Attractive, fixed rate
Substantially tax-free income plus
large charitable deduction
Continues for life of survivor
Most people use to lower their
monthly service fee
How LSS Looks at Program
We recognize that we are assuming
some risk.
We started the program hoping we
would realize 85% of appraised value
as we turned the homes.
So we discount the American Council
on Gift Annuities recommended rates
by 15%, more in some cases.
The value of the funding of the gift
annuity is established by a certified
appraisal.
Who Uses this Program?
Prospects not interested in leaving a
legacy to children.
Houses located out of region.
House is not a significant portion of
their assets.
Difficult houses.
Prospects that value the tax benefits.
Prospects that are not up to the
emotional challenge/risk of the home
sale process.
Why Do This?
Favorable tax-advantaged income
is nice, but rarely the motivator.
Tax savings from the charitable
deduction is nice, but not the
motivator.
Philanthropy feels good after the
fact, but is not the motivator.
The Home Conversion Program
offers a way to get from Point A to
Point B with the …
most peace of mind!
Marketing needs to work closely with your Stewardship Team to make this work.
Should be combined with a comprehensive program to assist residents sell their houses on their own. You need to be the expert.
You have to be prepared to move the houses that are donated. Follow the advice from your team in point #2.
Take Away Points
The primary goal of this program is to improve occupancy.
We do not convey the message that the Home Conversion is the best financial option for the resident, but rather that in certain circumstances, it is the preferable option.
There are differences in how accounting and stewardship record these gifts that you must be prepared to discuss with your stakeholders.
Take Away Points
