SBA 504 Assisted Living Feasibility Study Case Study: Assisted Living and Memory Care New Build in Fort Collins, Colorado

A 72-unit purpose-built community, 48 assisted living units and a 24-unit secured memory care wing, on a 4.90-acre Harmony Corridor parcel in Fort Collins, financed under SBA 504 as a special purpose property operated by a new business. Total project cost of $30,307,000, debt service coverage of 1.26x at stabilization in Year 3 and 1.48x in Year 5, and a written determination of feasible, with the borrower contribution sized at 33.5 percent because the SBA minimum of 20 percent does not cover the debt at this cost basis.

Model study prepared by MMCG Invest | Michal Mohelsky, J.D., FMVA | October 1, 2026

MMCG concludes that the proposed 72-unit assisted living and memory care community at 3733 E Harmony Road in Fort Collins, Colorado is feasible under an SBA 504 structure of 50 percent bank first lien, a $5,000,000 CDC debenture and a borrower contribution of 33.5 percent, with a financial reserve of $3,400,000 funded at closing to carry construction-period interest and the lease-up shortfall through the second operating year. The Project reaches 1.26x debt service coverage at a stabilized occupancy of 90 percent in Year 3 and 1.48x in Year 5 as rents escalate ahead of expenses. The SBA minimum contribution of 20 percent for a special purpose property operated by a new business produces coverage of only 1.05x at stabilization at this cost basis, so the study sizes the borrower's equity to the coverage the lender requires rather than to the program floor; the bank's first lien is held at the 50 percent minimum and the debenture at its $5,000,000 ceiling. The determination is conditioned on two items that public sources could not close: a City of Fort Collins zoning verification letter confirming that a long-term care facility is a permitted use in the HC district on this parcel under Type 2 review, and a negotiated land price at or below the $3,500,000 underwriting basis, against an asking price of $4,850,000 on a parcel that has been marketed since December 2019. At the asking price the Project still covers at 1.22x in Year 3, so the second condition protects the equity, not the determination.

This is an MMCG model study: a complete feasibility analysis performed on a real, publicly marketed parcel using public data, prepared to show lenders and borrowers how MMCG underwrites an SBA 504 assisted living and memory care new build. It is not a client engagement, MMCG has no relationship with the landowner or the listing broker, and the analysis does not represent an offer, an appraisal or a recommendation to buy the parcel. Figures drawn from government sources, operator websites and the listing are identified as such. Figures labeled MMCG assumption are underwriting inputs set by MMCG from industry benchmarks, and items that could not be verified from a primary source at the study date are listed in the Conditions and Limitations section rather than estimated silently. In particular, the licensed capacity and published rates of the six competitors named below, the Larimer County population aged 75 and over and 85 and over from the American Community Survey, the City of Fort Collins plant investment and capital expansion fees, and the consolidated mill levy for the parcel were not confirmed from their primary sources at the study date and are carried as stated allowances.

The Project will operate as a licensed assisted living residence with a secured memory care wing on the 4.90-acre parcel at 3733 E Harmony Road, on the south side of the Harmony Corridor between Ziegler Road and Interstate 25 in southeast Fort Collins, Larimer County, Colorado. The physical program comprises a two-story, 58,400 SF wood-frame building over a slab with masonry veneer, holding 48 assisted living apartments (24 studios of 380 SF, 18 one-bedroom units of 520 SF and 6 two-bedroom units of 720 SF) in the main building and 24 memory care studios of 330 SF in a single-story secured wing with its own dining room, activity room, enclosed courtyard and staff station, together with a commercial kitchen, a main dining room seating 60, a bistro, a wellness clinic with two exam rooms, a salon, a theater and activity rooms, a fitness room, administrative offices, laundry and housekeeping, 72 surface parking spaces, a covered porte-cochere and a community bus. The community will operate 24 hours a day with a staff of 54 full-time equivalents, including an executive director, a registered nurse director of nursing, three licensed practical nurses, 24 resident care aides across three shifts, a dedicated memory care program director, dining, housekeeping, maintenance, activities, sales and business office staff. The borrower will hold the land and building in a real estate holding company that leases the facility to an affiliated operating company, the eligible passive company and operating company structure SBA permits for 504 projects, with the operating company holding the Colorado Department of Public Health and Environment assisted living residence license and the secure environment designation for the memory care wing. The Project is positioned as the newest Class A assisted living and memory care community on the Harmony Corridor, a submarket whose senior housing stock attracted a $104.45 million institutional purchase of two Fort Collins senior communities in December 2025, with a private-pay rate schedule of $6,250 to $7,900 per month for base rent by unit type, care levels of $600 to $1,800 per month, and an all-inclusive memory care rate of $9,100 per month at opening.

Marketing and Sales Strategy

The pre-opening campaign begins twelve months before certificate of occupancy with a sales director and a leasing coordinator working from a model suite in leased office space on Harmony Road, building a reservation list against a refundable deposit so that the community opens with a founders' cohort already placed. Referral development concentrates on the discharge planners at the two Fort Collins hospitals, the geriatric and neurology practices along Harmony Road and Lemay Avenue, the home health agencies serving Larimer County, and the elder law and financial planning professionals who advise adult children on senior care. Digital acquisition runs through search advertising on assisted living and memory care terms for Fort Collins, Loveland, Windsor and Timnath, with a cost-per-move-in budget set in the marketing line. The memory care wing is marketed to the adult children of residents aging in place at the independent living communities in the corridor, who are the most reliable source of memory care placements in a market of this kind. Retention runs through the care-level ladder, which keeps residents in place as acuity rises rather than discharging them to skilled nursing.

Amenities

The subject is a 4.90-acre parcel at 3733 E Harmony Road marketed on LoopNet (listing 18015795) at an asking price of $4,850,000, or $989,796 per acre, and zoned HC, Harmony Corridor, under the City of Fort Collins Land Use Code. The listing has been active since December 2019, a marketing period of nearly seven years, and the study underwrites a negotiated price of $3,500,000 (MMCG assumption) with the asking price carried as a sensitivity case. The parcel fronts Harmony Road, the principal east-west arterial of southeast Fort Collins, between the Harmony Road retail and office corridor to the west and the Interstate 25 interchange to the east, and it sits within the trade area of the Front Range Village and Harmony Commons retail centers, the Poudre Valley Hospital Harmony Campus medical offices, and the residential subdivisions of southeast Fort Collins, Timnath and Windsor. The site is flat, served by City of Fort Collins water, wastewater, electric and stormwater utilities, and large enough to accommodate the 58,400 SF two-story building, the single-story memory care wing, the secured courtyard, 72 parking spaces, the bus loop and a landscaped setback from Harmony Road at a floor area ratio of 0.27.

The site size is more than the program requires. A 72-unit community of this kind fits on 3.5 to 4.0 acres, and the balance of the parcel is modeled as open space and future expansion rather than as a second phase, because the Harmony Corridor's secondary-use rules and the Type 2 review process do not favor speculative phasing. The 4.90 acres carry the full land cost in the project budget.

The City of Fort Collins Land Use Code lists long-term care facility as a primary use requiring Type 2 review, which is review and decision by the Planning and Zoning Commission after a neighborhood meeting, in thirteen zone districts, and Article 7 defines intermediate health care or assisted living facility within the long-term care family of definitions. Whether the HC column of the Division 4.2 use table lists long-term care facility as a permitted use was not confirmed at the study date, and the City's Ordinance No. 100, 2020 placed the Harmony Corridor district among the zones subject to City Council review for additions of permitted uses. The determination is therefore conditioned on a zoning verification letter from the City confirming that a long-term care facility is permitted on the parcel under Type 2 review, or on an addition of permitted use if it is not. The entitlement schedule carries nine months from submittal to Planning and Zoning Commission approval, consistent with the Type 2 process, with a further three months for final plan and building permit, and the project schedule carries 16 months of construction after permit.

The parcel is served by Fort Collins Utilities for water, wastewater and electric service. Fort Collins charges water and wastewater plant investment fees at the meter and the City levies capital expansion fees for transportation, parks, fire and police on new nonresidential construction; neither schedule was pulled for the study date, and the budget carries a combined allowance of $940,000 for utility connections, plant investment and capital expansion fees (MMCG assumption), which should be replaced with the Utilities' written fee estimate at the design development stage.

Colorado assesses commercial improved property at 25 percent of actual value for tax year 2026 and most other nonresidential property, including vacant commercial land, at 26 percent, under the rates confirmed by county assessors across the Front Range. On a stabilized actual value of $24,000,000 the assessed value is $6,000,000, and the study applies a consolidated levy of 93.3 mills (MMCG allowance; the Larimer County, City of Fort Collins, Poudre School District and special district levies for the parcel were not pulled) for a Year 3 property tax of $560,000, or $7,778 per unit. The levy should be confirmed from the Larimer County Treasurer's statement for the parcel before the lender's final sizing.

The primary market area is the Larimer County urban core: Fort Collins, Loveland, Timnath, Windsor's Larimer County portion and Wellington, which lie within a 20-minute drive of the subject and share the Harmony Road and Interstate 25 access.

Source: U.S. Census Bureau, QuickFacts, Vintage 2025 estimates and ACS 2020 to 2024.

The county's 65 and over share of 19.8 percent sits above the national figure, and the city's lower 12.8 percent reflects the Colorado State University student population rather than a shortage of older residents; the county figure is the one that governs assisted living demand. The population aged 75 and over and 85 and over was not pulled from ACS table B01001 at the study date. MMCG estimates the county's 75 and over population at roughly 30,000 and its 85 and over population at roughly 8,100 from the age structure of comparable Front Range counties (MMCG estimate), and both figures must be replaced with the B01001 counts and the Colorado State Demography Office 2030 projection before the lender relies on the demand model. Larimer County's median household income of $93,765 and a Front Range home equity base that is among the highest in the Mountain West support a private-pay market at the subject's rate schedule.

The need- and income-qualified demand for assisted living is estimated from the 75 and over population, the share needing assistance with two or more activities of daily living or living with a dementia diagnosis, and the share with income or assets sufficient to pay the subject's rate for a typical two-year stay.

The subject's stabilized census of 65 residents represents 1.6 to 1.7 percent of the need- and income-qualified base, before the adult-child draw from outside the county that the Harmony Road and Interstate 25 access supports. The market's existing licensed supply, its current penetration and the pipeline are carried in the Competitive Supply section and reconciled to the demand base there; the CDPHE licensed capacity figures required to state current penetration precisely were not confirmed at the study date and are a disclosed limitation.

MMCG identified six assisted living and memory care communities serving the Fort Collins primary market area. The operator and the care levels marketed are taken from each operator's own website; the licensed capacity from the Colorado Department of Public Health and Environment assisted living residence records and the published monthly rates from each operator's website were not confirmed at the study date and are listed in the Conditions and Limitations section.

Competitor Number 1 MorningStar Assisted Living and Memory Care of Fort Collins This community is located in Fort Collins, CO and is operated by MorningStar Senior Living, which markets assisted living and memory care at the property. Licensed capacity and published rates were not confirmed at the study date.

Competitor Number 2 The Gardens at Collinwood This community is located in Fort Collins, CO and is operated by Columbine Health Systems, a Northern Colorado operator with a continuum that includes skilled nursing. It markets assisted living and memory care. Licensed capacity and published rates were not confirmed at the study date.

Competitor Number 3 New Mercer Commons This community is located in Fort Collins, CO and is operated by Columbine Health Systems. It markets assisted living and memory care. Licensed capacity and published rates were not confirmed at the study date.

Competitor Number 4 Brookdale Fort Collins This community is located in Fort Collins, CO and is operated by Brookdale Senior Living, the largest U.S. operator. It markets assisted living and memory care. Licensed capacity and published rates were not confirmed at the study date.

Competitor Number 5 Aspens at Fort Collins This community is located in Fort Collins, CO and markets assisted living and memory care. Operator, licensed capacity and published rates were not confirmed at the study date.

Competitor Number 6 MacKenzie Place Fort Collins This community is located in Fort Collins, CO and is operated by Leisure Care. It markets independent living, assisted living and memory care on a single campus. Licensed capacity and published rates were not confirmed at the study date.

The market is institutional. The December 2025 purchase of two Fort Collins senior communities by a Morgan Stanley fund for $104.45 million, reported by BizWest, places the Harmony Corridor in the acquisition set of national capital, and a new purpose-built community competes against professionally managed supply rather than against small operators. No assisted living or memory care community under construction or approved in Fort Collins since 2024 was identified in public records at the study date; the City's development review log should be checked for the condition precedent. Statewide, Colorado's assisted living occupancy tracks the national Primary Market figure of 88.4 percent in the second quarter of 2026, and the subject's stabilization at 90 percent assumes a submarket at or modestly above that level, which the pipeline census supports.

The subject's opening rate schedule is set from the Colorado market and the Larimer County income profile. The CareScout 2025 Cost of Care Survey places the Colorado median for an assisted living community at $6,584 per month, above the national median of $6,200, and the subject's base rent of $6,250 for a studio, $7,050 for a one-bedroom and $7,900 for a two-bedroom brackets the state median with a Class A premium for the one-bedroom and two-bedroom plans. Care levels of $600 to $1,800 per month are charged on an assessed scale and average $975 across the assisted living census, for a blended assisted living revenue per occupied unit of $7,925 per month at opening. Memory care is all-inclusive at $9,100 per month at opening, a premium of 15 percent over the blended assisted living figure and roughly 38 percent over the state's assisted living median, consistent with the 25 to 30 percent memory care premium observed nationally against base assisted living rates. Rates escalate 4.5 percent per year, below NIC's in-place actual rate growth of 5.3 percent year over year as of June 2026, and the Year 3 blended rates are $8,654 for assisted living and $9,937 for memory care.

The Colorado alternative care facility Medicaid per diem for the elderly, blind and disabled waiver outside the Denver metro is $103.72 per day, or about $3,155 per month, which is well below the subject's cost of care and the community is modeled at 100 percent private pay. A long-term care insurance and Veterans Aid and Attendance mix is embedded in the private-pay census rather than modeled separately.

The Project opens with a founders' cohort from the pre-opening reservation program and leases up over 29 months to a stabilized occupancy of 90 percent, the ceiling USDA applies to Community Facilities projections and the level at which Fannie Mae and Freddie Mac fund permanent debt after 90 days of sustained occupancy.

Other income, which comprises community fees of $4,500 on each move-in, second-occupant fees, guest meals, beauty salon and ancillary charges, is carried at $130,000 in Year 1 rising to $262,000 in Year 5. Year 1 average occupancy of 48 percent corresponds to roughly 65 percent at month 12; Year 2 average occupancy of 82 percent corresponds to roughly 89 percent at month 24.

Location: 3733 E Harmony Road, Fort Collins, CO 80528 Size in SF (Gross): 58,400

Source: Marshall & Swift CoreLogic, MMCG

Total project cost of $420,931 per unit sits above CBRE's July 2026 national benchmark of $388,830 per unit because the land cost of $48,611 per unit exceeds the $16,000 to $36,600 per unit site cost range in that survey; hard cost of $353 per square foot falls inside the $281 to $358 range for mid-level assisted living and below the $365 to $454 range for high-level assisted living and memory care, which reflects the wood-frame two-story construction and a memory care wing that is secured rather than custom. The financial reserve of $3,400,000 is sized to cover construction-period interest of about $705,000 on the bank's first lien over a 16-month build and the lease-up shortfall of $2,401,098 in Year 1 and $170,116 in Year 2, a total requirement of $3,276,609 with a margin of about $123,000.

Loan Assumptions

The CDC debenture is capped at the $5,000,000 program maximum for a standard 504 project, which on a $30.3 million project is 16.5 percent rather than the 30 percent a smaller project would carry; the bank's first lien is held at the 50 percent minimum, and the borrower's equity absorbs the difference. The 33.5 percent equity is above the 20 percent SBA minimum because coverage requires it: at 20 percent equity the bank lien rises to $19,245,600, annual debt service to $2,038,912 and Year 3 coverage falls to 1.05x.

Assisted living facilities are eligible SBA businesses where they are licensed as nursing homes or assisted living facilities and provide healthcare or medical services. The operating company will hold a CDPHE assisted living residence license with a secure environment designation for the memory care wing and will employ a registered nurse director of nursing and licensed practical nurses on site, which satisfies the SOP's test of a licensed business providing healthcare services. The real estate is held by an eligible passive company and leased to the operating company.

Nursing homes, including assisted living facilities, are on SBA's list of special purpose properties. Under 13 CFR 120.910, the minimum borrower contribution for a limited or single purpose building is 15 percent, rising to 20 percent when the business has operated for two years or less. The borrower is a new business, the minimum is 20 percent, and the structure carries 33.5 percent for the coverage reason stated above. The going concern appraisal will be prepared by a certified general appraiser with the four equivalent special use appraisals in the last 36 months that the SOP requires, with value allocated across real estate, furniture and equipment, and intangible business value, and the study's Year 3 stabilized cash flow is the income that appraisal will capitalize.

Under 13 CFR 120.131, the borrower must occupy at least 60 percent of a new building; the operating company occupies 100 percent of the rentable area, since every resident unit and common space is the operating business's own premises.

SBA's job opportunity standard, effective for loans approved on or after October 1, 2025, is one job per $95,000 of debenture. The $5,000,000 debenture requires 52.6 jobs, and the Project's 54 full-time equivalents at stabilization satisfy the standard on job count alone without recourse to a community development goal.

The CDPHE license is issued on completion and inspection of the building, so the operating company cannot hold its license before certificate of occupancy. The lender's disbursement conditions should require the license as a condition of the final draw and of the conversion from construction to permanent terms, and the schedule carries 60 days between certificate of occupancy and first move-in for the licensing inspection, which is the usual Colorado interval. Colorado does not apply a certificate of need or a need review to assisted living residences; that statement rests on MMCG's practice and was not re-verified from a primary source at the study date.

The Year 3 operating budget at 90 percent occupancy is built from the staffing plan and priced to the Fort Collins-Loveland metropolitan wage file.

Labor is the largest line at 41.7 percent of revenue, inside the range at which the largest public operator runs its labor and leaves a stabilized operating margin of 34.6 percent before management fee, above the roughly 29 to 30 percent at the sector's better-run communities. Wages are set from the May 2025 Fort Collins-Loveland release, in which the healthcare support occupational group earns a mean of $22.04 per hour against $19.62 nationally and healthcare practitioners earn $53.70, with the home health and personal care aide median at $18.58 per hour from the Department of Labor's republication of the same file. The model pays resident care aides $19.50 per hour in assisted living and $20.50 in memory care, licensed practical nurses $31.00, the registered nurse director of nursing $95,000, dining and housekeeping staff $17.50, and carries a 24 percent burden for payroll taxes and benefits; the Colorado minimum wage of $15.16 in 2026 and $15.71 in 2027 is not binding at any position. Wages escalate 3.5 percent per year and overtime and agency coverage are embedded in the labor line at 3 percent of base wages. The Year 1 labor budget is carried at 86 percent of the stabilized figure because the licensing standard and the memory care wing require near-full care staffing from opening regardless of census, which is the structural reason assisted living communities lose money through lease-up.

The Year 1 and Year 2 shortfalls of $2,401,098 and $170,116 are funded from the financial reserve. The Project covers its debt from Year 3 at 1.26x and builds to 1.48x by Year 5 as rents escalate at 4.5 percent against expenses at 3.5 percent, the spread that the sector's in-place rate growth of 5.3 percent year over year has supported through 2026. The stabilized NOI margin of 29.6 to 31.5 percent starts inside and rises above the 28 to 30 percent range the public operators report on stabilized senior housing operating portfolios.

At Year 3 rates, the community's fixed operating cost is $4,565,000 and its variable cost is dietary raw food and the management fee, which move with census and revenue.

The distance between the operating break-even at 61 percent and the debt break-even at 84 percent is the central credit fact of a new assisted living build: the community pays its staff long before it pays its lender. The 1.25x threshold at 89.8 percent occupancy sits almost exactly at the stabilized forecast, which is why the equity is sized above the program minimum and why Year 4 and Year 5 coverage, not Year 3, give the lender its cushion.

The Project holds coverage above 1.0x in every single-factor case except a new competitor that holds the subject to 80 percent occupancy, which reduces Year 3 coverage to 0.83x; that case defines the downside a lender is accepting and is the reason the pipeline census is a condition of the determination. The combined case of lower rates and slower lease-up reduces coverage to 0.86x in Year 3, recovering above 1.0x in Year 4 on the rate escalation. The land price sensitivity shows that the asking price costs about four points of coverage, from 1.26x to 1.22x, and leaves the determination intact.

The determination of feasible is subject to the following conditions precedent:

The following items could not be verified from a primary source at the study date and are disclosed: the HC column of the Land Use Code Division 4.2 use table and the current status of the Harmony Corridor addition-of-permitted-use rule; the Fort Collins Utilities water and wastewater plant investment fees and the City's capital expansion fees for the building; the consolidated mill levy for the parcel; the CDPHE licensed capacity and the operator-published monthly rates for the six named competitors; the May 2025 Fort Collins-Loveland wages for nursing assistants, licensed practical nurses and registered nurses from the BLS data tool; the Larimer County population aged 75 to 84 and 85 and over from ACS table B01001 and the State Demography Office 2030 projection; the current listing status of the parcel; and a primary-source confirmation that Colorado applies no certificate of need or need review to assisted living residences.

This model study applies the methodology described on MMCG's assisted living feasibility study and SBA assisted living feasibility study pages. MMCG prepares assisted living feasibility studies for SBA 504, SBA 7(a), USDA, HUD Section 232 and conventional lenders nationwide, with engagements from $4,900 and delivery in 9 to 16 business days.