We create value for investors through two components: real estate and operations. Each of these pieces, standing alone, has proven to be profitable and give assisted living and Alzheimer's care properties a unique resiliency combining the benefits of real estate investment with the strength of the healthcare field. This resiliency was evident during the real estate downturn of 2008-2010 when seniors housing outperformed other commercial real estate property types in terms of investment returns, rent growth and loan performance. In fact, seniors housing and care properties is the only real estate asset class that managed to increase rent growth during 2009. The NCREIF Property Index (NPI) had a cumulative total investment return of 57% from 2Q03 through 2Q10, while the senior housing properties within NCREIF’s database (which are not included in the NPI) experienced a cumulative total investment return of 176% during the same time period. In comparison, apartments in the NPI cumulatively returned 46% between 2Q03 and 2Q10.
McFarlin Group takes a conservative approach to economic modeling, using proprietary software and modeling written and developed by McFarlin Group. Through our modeling and disciplined approach to planning, we are able to assess and determine underserved markets. Uncovering these top market opportunities, mitigating risk and capitalizing on the highest potential financial return in the least amount of time is our focus. McFarlin Group believes the most compelling opportunity in the seniors housing space is to develop cost-effective, assisted living with memory care facilities. We focus on developing high acuity senior services and housing (need-driven) and building a product that is affordable to each specific market (i.e. Hyatt Place not a Ritz Carlton).
As we look to the future, we are very encouraged as our formula is working. Orchard Park of McKinney, which opened in May 2011, is 95% occupied after just 9 months. Our approach allows us to develop a new product and enter each market at a lower price point than our competition which creates a competitive advantage for our facilities. In addition, we believe that because our services are cost-effective and need-driven, it will continue to be resistant to economic downturns and we will continue to benefit from other key demographic trends in the industry including the increase in the number of seniors, the increasing incidence rate of Alzheimer's as seniors live healthier, longer and the increase in number of seniors looking for care outside of their family.