MIDTERM TAKE HOME EXAM
FT. MYERS ELDERCARE (CASE NO. 9-898-041)

1. Has Dana done a good job researching his options?

While Dana did not consider the site potential of other property types, he did a good job researching his options for eldercare facilities. His analysis included regional analysis (comparing other cities and counties to Fort Myers), population trends, Fort Myers healthcare statistics, industry and competitor analysis (by viewing a consultant report), financing alternatives and financial analysis. Together, the information provided a thorough overview of his options within eldercare.

2. How do congregate care and assisted living facilities differ?

They differ in client profiles, ownership, elder decision …show more content…
Table 3 below provides more details on the development budget.

Table 3:

Assuming the potential gross income outlined in Tables 4 and 5 and the financing costs outlined in Table 6, the operating income statement using conventional and tax-exempt debt is summarized in Table 7.

Table 4: Annual Rent PGI - Conventional Financing

Table 5: Annual Rent PGI - Tax Free Financing

Table 6: Financing Alternatives

Table 7: Income Statement

The initial returns on cost for the conventional debt option is 11.22% while the initial returns on cost for the tax free debt option is 10.25%. The initial returns on equity for the conventional debt option is 17.86% while the initial returns on equity for the tax free debt option is 43.99%. Table 8 below provides more details on the initial returns.

Table 8:

5. Which option should you choose and why? If you choose an equity partner, who would you choose and why?

I would choose the tax free dept option because it would require a smaller equity commitment, hence providing a larger return on equity. If I were to choose an equity partner, a friend or family member with experience in the assisted living option would be ideal since they would bring industry experience to help operate and manage the facility, and I would trust that the partnership would be a long term investment