The Mandate
A regional senior-living operator with prior HUD 232 deliveries in the Mid-Atlantic engaged Feasibility Study Consultant to prepare a third-party feasibility study supporting a HUD 232 financing request for a project located in Lancaster County, Pennsylvania. Total project capitalization fell within the $10M-$25M band. The capital provider, a HUD 232 LEAN-program FHA lender, required documentation consistent with current program review standards. The analytical question put to the team: Could Lancaster MSA 75+ population growth support 72 licensed beds at the proposed private-pay rate against 89% market occupancy.
Engagement Scope
- Primary market area defined as a 10-mile drive-time
- Comparable supply set of 12 properties
- Demand model framework: 75-plus household and acuity-mix build-up
- Financial projection horizon: 10 years
- Site inspection completed; operator interviews where applicable
- Primary data collection through field reconnaissance and third-party market data
Methodology Applied
Primary Market Area
The PMA was defined as a 10-mile drive-time from the subject site, calibrated to the demand catchment behavior typical of senior living assets in Pennsylvania. The boundary captured the population, employment, and competitive supply base relevant to the subject's operating thesis.
Supply and Demand Reconciliation
The comparable supply set comprised 12 properties operating within the PMA or in directly substitutable submarkets. Demand was modeled using a 75-plus household and acuity-mix build-up approach over a 10 years horizon. The reconciliation tested whether incremental supply, including the subject, could be absorbed within the projection window without compromising stabilized occupancy assumptions.
Capture Rate Calibration
The subject's capture rate was calibrated against the absorption capacity of the PMA. The analysis concluded that PMA absorption capacity exceeded subject build-out by a factor of 2 across the projection window, with a stabilized capture rate of 4.2%.
Exhibit 1: Comparable Supply Set, Pennsylvania PMA
[Table or chart rendered in delivered report.]
Exhibit 2: Demand Projection Summary, 10 years Horizon
[Table or chart rendered in delivered report.]
Exhibit 3: Subject Capture Rate vs. PMA Absorption Capacity
[Table or chart rendered in delivered report.]
Analytical Conclusions
- Drive-time PMA contained 11,800 households age 75-plus with sustained annual growth.
- Comparable assisted living and memory care properties operated at 89% occupancy with private-pay rates supporting the underwriting.
- Subject projected 18-month lease-up to 90% occupancy with a 78% private-pay payor mix.
- Stabilized aggregate DSCR cleared the HUD 232 LEAN-program threshold.
Deliverable
The delivered report ran 158 pages with 37 exhibits distributed across nine analytical sections, plus appendices documenting comparable supply data, demographic inputs, and financial projection assumptions. The document was prepared to the documentation standards of the HUD 232 LEAN-program FHA lender. The corresponding HUD 232 review framework guided exhibit selection and supporting documentation.