COVER STORY, SEPTEMBER 2009

LASALLE GROUP RETURNS TO ITS ROOTS IN CHICAGO
The LaSalle Group returns to the Chicago market with the development of three senior living facilities.
Kevin Jeselnik

The LaSalle Group, a developer and manager of specialized memory care senior living facilities across the country, expanding its product line into the Chicago market was like coming home. Because, in fact, the company has come home after spending many years establishing its credentials in the Dallas-Fort Worth market. The company was founded in 1990 in the Chicago area, with a focus on multifamily apartment development. In 1998, LaSalle, which was founded by Melvin Warren Jr., followed its research and the country’s shifting demographics into the assisted living sector. Partnering with Jane Anderson, a registered nurse, the company changed directions and focused on creating uniquely designed buildings catered to memory care patients.

The first Autumn Leaves facility opened in Arlington, Texas, in 2000. In the decade since, The LaSalle Group has developed numerous facilities based on the Autumn Leaves prototype. In the Chicago metro area, there are currently three facilities in operation, with two more in some stage of development. According to The LaSalle Group president, Mitchell Warren, the move to Chicago was precipitated by the region’s aging population and the favorable supply/demand conditions, which have left the suburban market primed for senior housing development.

“The Chicago market is a very good one for what we do,” Warren says. “With the baby boomers getting older, the need for this product is growing very quickly.”

The company has a single prototype in the Autumn Leaves concept that it tailors to all of its primarily suburban sites. It is a standalone, secure memory care facility totaling approximately 45 beds. The prototype design allows The LaSalle Group to develop and operate its properties with an efficiency that many medical facilities cannot manage.

“It enables us to be efficient in all respects, from the way we operate to the way we build,” Warren explains. “Because it is a large 25,000-square-foot facility, with 10,000 square feet of enclosed outdoor space, it is a suburban model, which is why a large, well-connected market like Chicago is good for us.”

The three Chicago facilities are currently in operation are located in Orland Park, Vernon Hills and Crystal Lake, Illinois. The latest project is in Vernon Hills, which opened in fall of last year, and the facility has reached 50 percent occupancy already. The property in Crystal Lake has reached 75 percent occupancy, after experiencing a slow period due to some unexpected competition in the market. Two additional projects are under development in Oswego and St. Charles, Illinois.

The building design is a significant selling point for LaSalle, as the firm has added a lot of touches that illustrate the facilities’ sole focus on memory care. Instead of being just a wing in a larger assisted living facility, Autumn Leaves offer residents bedrooms in designated neighborhoods that are identified by color and theme, which helps stimulate their memory. Each facility also has many common areas, including living rooms, dining rooms, game rooms, a courtyard and green rooms.

Now that the company has established itself back in the Chicago market, expansion plans are under way. After initially forecasting greater growth in 2009, Warren acknowledges that the economy has forced the company to scale back its plans. “In 2009, we are expanding at the same rate as 2008,” he says. “Our original plan called for greater expansion, and I think in 2010 we will pick it back up again.

“The toughest part of the process now is development of new product,” Warren explains. “It’s really tough from just one aspect — the debt side. Even though our product is sound, our track record is sound and our current facilities are leasing well —even with all of those factors — it is still a lot more work to get loans.”

Lenders are looking for more equity in every deal, which hasn’t actually been a challenge for LaSalle. “From the equity side, people are really looking for sound investments, so we have actually never been stronger in terms of investor interest,” Warren notes. “Even so, we are definitely having to change terms that we normally wouldn’t, and negotiate a little where we wouldn’t in the past, in order to get loans done.”

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