Costs associated with the Manhattan assisted living / memory care community high-rise being built in conjunction with Maplewood Senior Living have increased $35 million to $285 million in part due to the purchase of air rights that will allow the building to be larger, Omega Healthcare Investors Chief Corporate Development Officer Steven Insoft said Monday.
The project, named Inspir Carnegie Hill and being constructed at Second Avenue and 93rd Street, originally was announced as a 23-story, 215,000-square-foot building with 215 units.
Simply put, air rights regulations allow one building owner to sell unused space above his or her building to another company, enabling the second party to build an edifice with more floors than originally planned and authorized for.
Another factor in the cost increase, Insoft said during the real estate investment trust’s second-quarter earnings call, is incremental accrued rent, resulting from a partial option buyout that Omega exercised in January for $50 million, related to 13 Maplewood properties.
“Prior to the partial option buyout, our tenant, Maplewood, was paying rent currently on the land value of the project,” Insoft said. “Our conviction around expanding the project and our investment was supported by other market comps strengthening since our original underwriting. The increase in project size will not have an impact on the timing of the opening, and furthermore, our anticipated yield will remain the same as our lease payments rise proportionally with cost.”
The building still is expected to open in the second half of 2019, he said.
At the end of the second quarter, Insoft said, Omega’s senior housing portfolio totaled $1.5 billion of investments in the United States and United Kingdom, with Maplewood being a big factor in the United States. Omega’s portfolio now includes 120 assisted living, independent living and memory care assets in the United States and United Kingdom, he said.
Omega has a total of 923 facilities of all types in its portfolio, and they are spread across 67 third-party operators and located within 40 states and the United Kingdom, Omega Chief Operating Officer Dan Booth said during the call.
For more coverage of the Omega call, see “Omega optimistic about new payment model as it looks beyond Orianna” in our sister publication, McKnight’s Long-Term Care News.