The News & Observer (Raleigh, N.C.) David Bracken column

Feb. 27--The Cardinal, the long delayed retirement community planned for Raleigh'sNorth Hills, appears to be moving forward.

Kisco Senior Living, the California-based developer that took over the project from Kane Realty and Drucker & Falk, expects to begin grading and other site preparation in the coming days. Construction will begin once the state Department of Insurance issues the project a preliminary certificate, the third step in a four-step process that must be completed before it can open.

Mitch Brown, Kisco's chief development officer, said he expects the certificate to be issued fairly shortly.

By the end of this month, Brown said, Kisco expects that about 100 people will have put down deposits for The Cardinal's 165 independent living units. The project also will include 60 units for assisted living, nursing care and memory care for residents suffering from dementia or Alzheimer's.

The Cardinal will be a continuing care retirement community, or CCRC. The communities offer a range of medical services -- skilled nursing, assisted living, independent living -- that let residents stay in one place as their needs change. The state regulates CCRCs to ensure that residents are receiving proper care and to make sure the projects are financially sound.

The industry struggled during the recession, in large part because of the downturn in the housing market. Many CCRC residents finance the move by selling their home.

Tied to housing

Brown said the housing recovery over the past 18 months has helped boost demand.

"The strength of the housing market is a big indicator for us as well as the job market because a lot of adult children participate in this decision," he said. "Those two things in Raleigh are both doing really well -- a lot better than other parts of the country and some other markets we're in. Raleigh is one of our best markets."

Kisco also operates Magnolia Glen and the Abbotswood at Stonehenge retirement communities in Raleigh and Woodland Terrace in Cary. The Cardinal is a joint venture between Kisco and Health Care REIT, an Ohio real estate investment trust that had been Kane Realty's financing partner on the original deal.

Health Care REIT owns a 6-acre parcel on the east side of Six Forks Road adjacent to the Park & Market apartments, and has the right-of-first-refusal on a 1.5-acre adjacent parcel.

The Cardinal would be the second CCRC to be built in North Carolina since 2008.

SearStone, a 169-unit community in Cary, opened in November. Fifty-six percent of its units are occupied, and SearStone expects to be at 90 percent by the end of the year, said Morgan Lamphere, the community's sales and marketing director.

The Cardinal will also face competition from The Cypress, a CCRC in North Raleigh that has sold all of its initial 205 units and has room to expand. The Cypress, which has about 100 people on a waiting list for units, has received approval from the Department of Insurance to begin taking reservations for its next phase, which will include 57 two-bedroom homes.

Different models

The Cardinal, SearStone and The Cypress represent three financial models that are popular in the industry. SearStone requires residents to pay a minimum entrance fee of $250,000, plus monthly fees for ongoing services. The Cypress uses an equity model: residents own their unit and then pay a monthly fee for contracted services.

The Cardinal will be a rental model. To secure a residency, a resident has to put up two months of rent and service fees. The average deposit at The Cardinal is between $9,000 and $10,000, Brown said.

Although The Cardinal will require a lower initial investment from residents, they won't receive any equity in return.

Kisco is counting on the appeal of The Cardinal's location within North Hills, which will put residents within walking distance of retail shops, restaurants and a grocery store. Brown said the company is building other communities in similar locations around the country.

"We believe it's where our future customer wants to be, in the midst of a setting like this where they can literally walk out their front door and have all the benefits of North Hills right at their fingertips," he said.

Bracken: 919-829-4548 or [email protected]; Twitter: @brackendavid

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