Case Study: Summer Vista Assisted Living Community, Pensacola, FL

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Property Overview and Description

Summer Vista Assisted Living Community is a 4-star rated assisted living facility located at 3450 Wimbledon Drive, Pensacola, Florida, in the Ferry Pass/Northeast Pensacola submarket. The property consists of a two-story building with approximately 74,872 square feet of gross building area on a 3.59-acre site. It was constructed in 2016 with masonry construction and houses roughly ninety to one hundred licensed assisted living units (typical for a facility of this size). The community offers assisted living and memory care services in a suburban setting. On-site parking is provided via surface lots, and the facility has a “Car-Dependent” Walk Score of 12 (reflecting the suburban location).

In terms of recent ownership history, the property was acquired in April 2021 for $4.745 million (approximately $63 per square foot). This sale was recorded as an investment transaction. Notably, the county’s 2024 tax assessment values the property at $8.405 million, which is about 177% of the last sale price, indicating a significant appreciation or a previously below-market sale price. Real estate taxes in 2023 were roughly $1.90 per square foot of building area, amounting to about $136k annually in property tax expense (as detailed in the financials). Overall, Summer Vista is a modern senior living community with substantial building size and a strong location in the Pensacola market.

Revenue Streams in Assisted Living Operations

Assisted living facilities generate revenue through multiple streams, primarily derived from residents’ fees. In the case of Summer Vista, the financial statements reflect several typical revenue categories:

• Base Rent (Room & Board): The cornerstone of revenue is the monthly base rent each resident pays for housing, which often includes basic services like lodging, meals, and housekeeping. Summer Vista’s gross potential rent(the maximum rent if fully occupied) was about $5.59 million in 2023, up from $4.36 million in 2021. This growth reflects not only rental rate increases but also the occupancy rise (discussed below). With minimal vacancy by 2023 (only ~$77.5k in rent loss, <1.5% of potential), the effective rental income was nearly fully realized. This indicates that base rents comprised the majority of the community’s revenue by 2022–2023.

• Care Services and Medical Fees: Assisted living residents often pay additional fees for personal care, medication management, or nursing services depending on their needs. In Summer Vista’s financials, there is no large separate line item labeled “Nursing” or “Medical Income” in the actual results (those lines were blank), suggesting that care fees may have been bundled into overall rent or reported within “other income.” The underwriting projections had anticipated about $93.7k in nursing/medical income in early estimates, but actual reporting consolidated most revenue into rent and other ancillary income. Essentially, any fees for assistance with activities of daily living or memory care services are likely embedded in the primary revenue or captured under other income categories.

• Other Ancillary Income: This encompasses all non-rental revenue, such as community fees (one-time move-in fees), resident service fees (e.g. laundry, transportation, salon services), guest meals, and any miscellaneous charges. Summer Vista shows a significant “Other Income” of $470,363 in 2023 (about 8% of total revenue) and similar figures in prior years. This likely includes care level fees and ancillary services billed to residents. There is also a minor “Meals Income” line (e.g. $611 in 2022), which suggests nominal revenue from guest meal sales or separate meal charges, but generally meals for residents are part of the base package. In summary, the financials confirm that base rent (room and board) is the primary revenue driver, while ancillary services and fees provide a meaningful secondary income stream for the community.

Operating Expenses Analysis

Operating an assisted living community is expense-intensive, with costs required to care for residents and maintain the facility. Summer Vista’s financial statements detail all major operating expense categories, which we analyze below. Overall, total operating expenses were $4.00 million in 2023, up from $3.36 million in 2021 as the facility scaled up to full occupancy. The expense profile and trends are typical for a senior living property:

• Payroll & Benefits: By far the largest expense category, reflecting caregiving staff (nurses, aides), administrative staff, and benefits. In 2023, payroll and benefits totaled $2.30 million, representing over half of all operating costs. This grew from $1.72 million in 2021 as staffing levels and wages increased to support higher occupancy. Labor is a critical cost in assisted living, as a high staff-to-resident ratio is needed for quality care.

• Property Insurance: Insurance expenses were $266,979 in 2023, up from ~$196k in 2021, likely due to rising insurance premiums industry-wide and ensuring adequate liability coverage for a healthcare facility. Insurance covers property hazard insurance, liability coverage for resident care, and other risk management for the community.

• Property Taxes: Real estate taxes amounted to $136,421 in 2023 (about 3% of revenue). This expense fluctuated slightly (it was $141k in 2021) due to changes in assessed value and millage rates. The 2024 assessed value of $8.4M suggests a tax rate in the ~1.6% range. Taxes are a relatively smaller expense line but important for net income as they are fixed obligations.

• Utilities: Utilities (electricity, water, gas, etc.) were about $195,894 in 2023, up from $196k in 2021 (essentially flat, indicating stable consumption and rates). Given the 74k SF facility operating 24/7, utilities are a notable cost (around 3–4% of revenue) covering climate control, lighting, laundry, etc.

• Repairs & Maintenance: Facilities maintenance was $201,264 in 2023, up from $131k in 2021. As the building ages and occupancy is high, R&M costs rose to address routine wear-and-tear, equipment upkeep, and property repairs. This includes everything from HVAC servicing to appliance replacement and housekeeping supplies.

• Management Fees: The community incurs management or asset management fees paid to an operator or management company. In 2023 this was $299,084, roughly 5% of effective gross income – a typical market rate. The fee may be based on revenue and covers corporate oversight, branding, and back-office support provided by the management company. (Notably, 2024’s half-year shows $208k, indicating an increase, possibly due to higher revenue run-rate or a fee structure change.)

• General & Administrative: Administrative expenses (office supplies, telecommunication, software, licenses, staff training, etc.) were $189,139 in 2023.. This category remained relatively stable (around $165–197k annually from 2021–2023) and covers the overhead of operating the facility beyond direct care.

• Marketing & Advertising: To maintain high occupancy, the operator spent $139,827 on marketing in 2023, which is slightly down from the peak of $166k in 2022. Early in lease-up (and during pandemic recovery), marketing was higher to attract residents, but it normalized as occupancy reached capacity. These costs include advertising, referral agency fees, and community outreach events.

• Professional Fees: This includes accounting, legal, consulting, and other professional services. The expense was very low in 2023 (~$3k) after a higher spend of $61k in 2022. The spike in 2022 could be related to one-time consulting or legal costs (perhaps related to the change in ownership or compliance costs), while 2023 had minimal outside professional service needs.

• Housekeeping & Meal Expenses: Some operating costs are directly tied to resident services. Housekeeping (Room expense) was negligible as a separate line in 2023 (only $69) – likely these costs were included in payroll or other categories. Food and Kitchen expenses were $220,232 in 2023, covering raw food, kitchen supplies, and dining operations. This increased slightly from 2021 as more residents were being served, but economies of scale keep meal costs fairly consistent per resident.

• Other Expenses: Minor miscellaneous expenses and any ground lease. In Summer Vista’s case, there was no ground rent (the land is owned fee-simple), and “other” expenses were minimal.

Overall, the operating expense ratio improved from 76% of income in 2021 to about 67% in 2023, meaning that a greater share of revenue is now turning into profit as the property reached stabilization. This is a positive trend indicating effective cost management and the benefits of higher occupancy spreading fixed costs. Major expense increases (payroll, insurance, maintenance) were largely offset by revenue growth. The careful control of expenses, especially after stabilization, has contributed to a stronger net operating income, as detailed next.

Loan Structure and DSCR Analysis

The Summer Vista property is encumbered by a long-term commercial loan originated on March 1, 2020. The loan’s original principal was $16,575,000, which remains the current balance (indicating interest-only payments so far, with no principal paydown). Key aspects of the loan structure include:

• Loan-to-Value (LTV): At origination, the loan represented 65% LTV based on an appraisal valuing the property at $25,500,000 in January 2020. This relatively moderate leverage suggests lenders viewed it as a stabilized asset with substantial borrower equity or implied value (noting that the purchase price in 2021 was much lower, the appraisal likely reflected the value as a stabilized, income-producing property).

• Interest Rate and Type: The loan carries a fixed interest rate of 3.86%. This low rate locked in during early 2020 provides inexpensive debt service for the term. The fixed-rate nature eliminates interest rate volatility risk for the borrower.

• Term and Amortization: It has a 10-year term, maturing on March 1, 2030, with a balloon maturity (the outstanding principal due at maturity). The amortization schedule is 370 months (approximately 30 years) which indicates the loan was structured with payments as if a 30-year amortization, but because the term is only 10 years, a large balance will remain due at maturity (unless refinanced or paid off). Importantly, the loan was structured with a partial interest-only period – as of mid-2025, there were 10 months of interest-only payments remainingbefore amortization begins. During the interest-only phase, the borrower pays only interest each month, which keeps the debt service lower and cash flow higher.

• Debt Service and Payment Terms: Debt service is paid monthly. With interest-only currently, the annual debt service was about $648,681 (interest payments) as of 2023. Once principal amortization starts (after the IO period), the monthly payments will increase to include principal, which will raise the annual debt service requirement. The fixed interest and long amortization, however, help keep those payments relatively manageable. There is no indication of any interest rate resets or covenants in the provided data; the loan appears to be a conventional fixed-rate commercial mortgage (possibly a CMBS loan, given the data source).

• Debt Service Coverage Ratio (DSCR): The DSCR, a critical underwriting metric, measures NOI relative to debt obligations. In 2023, NOI was $1.975 million and annual debt service was ~$0.649 million, yielding a DSCR of 3.05×. This is a very strong coverage ratio, meaning the property’s net operating income is more than three times the debt service. Lenders and investors typically require DSCRs around 1.3–1.5× for senior living assets; Summer Vista’s performance is well above that threshold, indicating a substantial cash flow cushion. Even on a net cash flow basis (after capital reserves), the DSCR was roughly 3.0× in 2023.

It’s worth noting the DSCR trend over time: in 2021, DSCR was about 1.63×, when the property was still stabilizing occupancy, but it improved to 2.47× in 2022 and over 3× by 2023 as NOI grew (while debt service remained interest-only and constant). This trajectory shows the improving risk profile of the asset from the lender’s perspective. Looking forward, even when amortization commences (in 2026), the DSCR is expected to remain healthy, although it will likely decline somewhat from the 3.0× level unless NOI increases further, because adding principal payments will raise the debt service. However, given the current occupancy near 98% and consistent profitability, the property is generating substantial cash flow above debt requirements. The loan structure, with its fixed low rate and interest-only period, has undoubtedly helped the owners maximize cash flow in the early years of the loan term, supporting the strong DSCR figures.

Performance Metrics and Historical Trends (2021–2024)

The financial performance of Summer Vista has improved markedly from 2021 through the Year-To-Date (YTD) 2024 period. Key performance metrics such as occupancy, revenue, net operating income (NOI), and net cash flow (NCF) have all trended positively, reflecting a successful lease-up and stable operations. Below is a summary of the property’s performance metrics over the last few years:

Metric	2021	2022	2023	2024 YTD<sup>1</sup>
Occupancy Rate (Avg %)	89%	99%	98%	98%
Effective Gross Income (EGI)	$4.419 M	$5.264 M	$5.982 M	$3.117 M
Operating Expenses	$3.359 M	$3.660 M	$4.006 M	$2.094 M
Net Operating Income (NOI)	$1.060 M	$1.604 M	$1.976 M	$1.023 M
NOI Margin (NOI/EGI)	24%	30%	33%	33%
Net Cash Flow (after CapEx)	$1.060 M	$1.577 M	$1.949 M	$1.010 M
DSCR (NOI basis)	1.63×	2.47×	3.05×	3.15×<sup>2</sup>

¹2024 YTD reflects the first 6 months of 2024 (financials through June 30, 2024).²2024 YTD DSCR is shown on an annualized basis (the actual DSCR for the half-year NOI of $1.023M is 3.15×, essentially the same trend as 2023).

Occupancy: The property’s occupancy ramp-up is evident. Average occupancy was about 89% in 2021, reflecting that the facility was not yet fully stabilized (possibly due to lease-up or COVID-19 impacts on move-ins). By 2022, occupancy averaged 99%, essentially full capacity. It remained very high at 98% in 2023, and the first half of 2024 also averaged ~98%. This stable high occupancy underscores strong demand and effective marketing/operations, and it directly drove revenue growth. High occupancy is critical in senior living because fixed costs are high; Summer Vista’s ability to sustain ~98–99% occupancy means it is generating near maximum rental income and spreading costs efficiently.

Revenue (EGI): Corresponding to the occupancy gains and some rental rate increases, effective gross income rose from $4.42 million in 2021 to $5.98 million in 2023, a 35% increase. Notably, gross potential rent (if 100% occupied) grew each year (from $4.36M in 2021 to $5.59M in 2023), and vacancy loss shrank from $291k in 2021 to only $77k in 2023, as occupancy improved. Other income also contributed to revenue growth. The revenue trajectory reflects both higher volume of occupied units and likely annual rent escalations or higher care fees captured as the resident mix evolved. The fact that 2024 YTD EGI is $3.117M in just six months indicates the property is on track for another incremental increase if trends hold, potentially exceeding $6.2M for full-year 2024.

Expenses and NOI: While operating expenses increased in absolute terms (from $3.36M in 2021 to $4.00M in 2023), they grew at a lower rate than revenues. The NOI margin improved from 24% in 2021 to 33% in 2023, as the expense ratio dropped to ~67% of EGI. This shows improved operational efficiency as the property reached stabilization. NOI nearly doubled from $1.06M to $1.98M over 2021–2023. The biggest contributors to higher expenses were payroll (due to serving more residents and general wage inflation) and insurance, but some costs (like marketing and professional fees) did not grow or even decreased after initial lease-up. By 2023, the property was operating at a healthy margin for the assisted living industry. The first half of 2024 NOI ($1.023M for 6 months) is in line with 2023’s pace, suggesting that the property is maintaining its earnings level or possibly improving slightly.

Net Cash Flow (NCF): After accounting for capital expenditures/reserves (a reserve of about $26,700 per year for replacements was assumed), the net cash flow in 2023 was $1.95M, up from $1.06M in 2021. Essentially, almost all of NOI translates to cash flow since capital costs are modest (the building is relatively new, so only routine capital replacements have been needed). This strong cash flow is what enables the high DSCR. Even after the debt service of ~$649k, the property’s cash flow after debt service in 2023 was roughly $1.3 million, which is surplus cash available to equity or for reinvestment – a very positive outcome for investors.

Trends: The overall trend from 2021 to 2023 is one of stabilization and strengthening financial performance. 2021 can be viewed as a year of recovery/lease-up with lower occupancy and modest cash flow. 2022 saw a dramatic occupancy jump to essentially full capacity, driving NOI up by 51% year-over-year. 2023 cemented those gains with slight revenue growth and controlled costs, yielding another 23% increase in NOI. By 2023 and into 2024, Summer Vista is a fully stabilized asset with steady high occupancy, growing revenues, and a solidified expense structure, resulting in consistent NOI margins in the low-to-mid 30% range. These performance metrics indicate a low-risk profile for lenders (given the strong DSCR and occupancy) and an attractive ongoing yield for investors.

Feasibility Insights and MMCG’s Role in Assisted Living Analysis

The detailed data from Summer Vista’s operational and financial performance provides valuable insights for feasibility analysis and underwriting in the assisted living sector. MMCG, as a specialist in assisted living feasibility studies, focuses on exactly these kinds of metrics to guide lenders and investors. The Summer Vista case exemplifies how comprehensive data supports sound investment decisions:

• Benchmarking and Feasibility: MMCG would use Summer Vista’s data as a benchmark for similar projects – analyzing how quickly occupancy ramped up, what rental rates were achieved, and how operating costs scaled. In feasibility studies, assumptions about stabilization timing, occupancy levels, and expense loads are critical. The fact that Summer Vista reached ~98% occupancy within a few years and maintained it is a strong positive indicator for market demand in this region. MMCG can compare this against demographic trends (e.g. local senior population growth, income levels) to assess if new developments would likely achieve similar performance.

• Financial Sustainability for Underwriting: For lenders, MMCG examines debt service coverage and cash flow resilience. In this case, the property’s DSCR of 3.0× in 2023 is well above typical requirements, signaling a robust cushion. Through its analysis, MMCG can reassure lenders that even under interest rate increases or moderate downturns (e.g., a temporary occupancy dip), the property would likely continue to cover its debt. This supports financing approval and possibly more favorable loan terms. Additionally, MMCG’s review of the loan structure (interest-only period, amortization schedule) informs stakeholders of refinance or repayment risk at loan maturity; for instance, whether the remaining loan balance in 2030 will be reasonable relative to the property’s projected value and NOI at that time.

• Operational Insight for Investors: MMCG’s expertise in senior housing operations allows it to interpret line-item expenses and revenue subtleties. For an investor or operator, understanding that payroll comprises nearly 60% of expenses and that other income (ancillary fees) contributes ~8% of revenue helps in identifying areas for improvement or concern. MMCG might note that insurance costs spiked and ensure that is accounted for in future budgets, or that marketing spend dropped once occupancy stabilized (implying a mature property needs less advertising spend). These insights support investors in managing the asset post-acquisition to maintain profitability.

• Supporting Investment Decisions: Ultimately, MMCG uses data such as Summer Vista’s historical NOI and NCF trends to project future performance and returns. High occupancy and growing NOI suggest a stable asset, likely to generate reliable cash flows – an attractive proposition for institutional investors looking at senior living properties. The case study data shows that even during challenging periods (e.g., 2020–2021), the property managed to improve its performance, indicating strong operational management. MMCG would highlight such strengths (as well as any potential weaknesses, like the need to sustain staffing levels or upcoming capital expenditures as the facility ages) in its feasibility reports. By doing so, MMCG provides a balanced analysis that helps de-risk investment or lending decisions in the assisted living space.

Conclusion

In conclusion, the Summer Vista Assisted Living Community in Pensacola stands as a successful example of a stabilized assisted living facility. The property’s description and history show a modern, well-located community that has achieved near-full occupancy and solid financial performance in recent years. Its revenue streams are dominated by stable rental income supplemented by care-related fees, while a detailed look at operating expenses demonstrates prudent cost management typical of a well-run senior living operation. The loan analysis reveals a conservatively leveraged asset with excellent coverage ratios, suggesting minimal default risk and strong financial health. Key performance metrics – occupancy near 100%, rising NOI, and ample net cash flow – underscore the asset’s strength and positive trajectory from 2021 through 2024.

For investors and lenders, these findings provide confidence: Summer Vista’s cash flows comfortably support its debt, and its market demand appears robust. The case study illustrates how, with expert analysis from firms like MMCG, the complex details of an assisted living facility’s finances can be translated into a clear picture of feasibility and investment potential. By examining each component – from building specifics and revenue composition to expense drivers and debt structure – MMCG helps stakeholders understand not just what the numbers are, but what they mean for the future performance and viability of the project. In an industry where quality of care must balance with financial sustainability, Summer Vista’s story is a compelling one of achieving both, making it a model case for underwriting and feasibility assessment in the assisted living sector.

June 5, 2025 by a collective of authors at MMCG Invest, LLC, assisted living feasibility study consultants

Source: CMBS, County Assessor