Philanthropy Home Conversion Programs

2. LSS Move-In Resources
Questions?
Concerns?

3. LSS Move-In Resources
Questions?
Concerns?

4. NON-PROFIT Multi-Site Senior Living Organization Profile
2012 LZ 100: Lutheran Senior Services
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• LZ 100 #: 9 Headquarters Location: Missouri, St. Louis
• Year Founded: 1858 Senior Living Founded: 1906
• Total Units (as of 12/31/11): 3,203
– 1,579 ILUs
– 717 ALUs
– 907 NCBs
• Classification: Primary: Bi-state Secondary: Metropolitan
• Total # of Communities: 11 # of CCRCs: 9
# of Accredited Organizations: 0
• Debt Rating: Yes Fitch: BBB+ S&P: N/A
• Affordable Housing: 6 Locations, 392 Units
• Managed Housing: 3 Locations, 208 Units
• Practices: Rapid growth began in the mid-1990s with the identification of a radius within which they desired to
grow. Also identified goal for growth: rating must be maintained through growth. Denominational affiliation
important but identical faith-based orgs not required; willing to consider similar faith-based organizations.
1st Community opened in 1906
2nd Community opened in 1929
3rd Community opened in 1967
Source: 2012 LeadingAge Ziegler 100 Publication (data as of 12/31/11)

5. NON-PROFIT Multi-Site Senior Living Organization Profile
2012 LZ 100: Lutheran Senior Services
Lutheran Senior Services
St. Louis, Missouri
www.lssliving.org
5
Source: 2012 LeadingAge Ziegler 100 Publication (data as of 12/31/11)

6. NON-PROFIT Multi-Site Senior Living Organization Profile
2012 LZ 100: Lutheran Senior Services
Breeze Park,
St. Charles, MO
Meramec Bluffs,
Ballwin, MO
Hidden Lake,
St. Louis, MO
Heisinger Bluffs,
Jefferson City, MO
Richmond Terrace,
St. Louis, MO
St. Joseph’s Home,
Jefferson City, MO
Concordia Village,
Springfield, IL
Lenoir Woods,
Columbia, MO
Meridian Village,
Glen Carbon, IL
Lutheran Hillside Village,
Peoria, IL
Laclede Groves,
St. Louis, MO
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Source: 2012 LeadingAge Ziegler 100 Publication (data as of 12/31/11)

7. Our presentation today will focus on our
Home Conversion Program…essentially
allowing our prospective residents to use
their home to fund a gift annuity.
The Home Conversion Program

8.  The prospect’s house is used to fund a gift
annuity.
 The value of the funding for their gift annuity is
based upon an appraisal.
 The annuity payout rate is based upon the ACGA
recommended rates with some adjustments.
 The prospect/donor is provided with a
convenient means to dispose of their house with
certainty regarding timing, future cash flow and
tax benefits.
Overview of Program

9.  By 2008, Marketing realized that older adults
were experiencing a “mental paralysis” in
regard to making the decision to move to our
communities.
 Caused by the new economics of decreasing
retirement savings and decline of the real
estate market.
 Goal was to find a way for prospective
residents to become actual residents.
The Home Conversion Program

10.  The Resident gets to make the move they
wanted when they wanted.
 We have increased occupancy.
 We receive valuable funding for our
Benevolent Care Programs.
The Home Conversion Program has exceeded
our greatest expectations.
The Win Win Win Proposition

11. Lutheran Senior Services
Some Interesting Facts
about the LSS Home
Conversion Program.

12. Summary of Program
 Have accepted 130 homes into
the program started 4 years ago.
 Of these, we have sold 110, with
an average realization of 83.7%,
ranging from 37% to 117%.
 The average time from gift to
closed sale has been 172 days,
ranging from 32 to 510.

13. Summary of Program
 The appraised value of these homes
totals nearly $22 million, averaging
$167,000.
 Values have ranged from $27,000 to
$445,000.
 New residents from program generate
$3.4M annual revenue.
 Have included all types of single family
dwellings, vacation homes, and a
couple of investment properties.

14. Summary of Program
 Properties have come from 12 states.
 15% of the properties are from
outside our market areas.
 LSS had historically maintained
occupancy in the 93% – 94% range
prior to 2008.
 Since 2008 occupancy reached a low
of 88.1%.
 Now back to 93% – 94% system wide.

15.  Marketing Department
 Move-In Resources
 Stewardship
 Finance, and Governance Support
The Home Conversion Team

16. Home Conversion Team
The biggest obstacle to
moving into our communities is
the home and the stuff.
Our Move-In Resources
Team helps with the House
and stuff issues.
Our Stewardship team helps
prospects evaluate financial
options.

17. The Challenge
The biggest challenge has been
getting everyone on the team to
trust everyone.
Initially, it was hard for
Marketing to let Stewardship
have access to their prospects.

18. Marketing
Our Sales Counselors make
sure that all prospects are
aware of our Moving Assistance
Program, as well as the Home
Conversion Program.
This is very low key, but do
reinforce the programs when the
home is the primary obstacle.

20.  This team is prepared to assist prospects with
the home sale, including stuff.
 Marketing offers their services to all
prospects, and reinforces when they perceive
it is one of the primary objections.
 The following are excerpts from the
presentation we give at our marketing
lunches.
LSS Move-In Resources

21. LSS Move-In Resources
Our LSS Move-in
Resource Team is
here to help when
you are “ready” to
make a move or
"thinking” about
making a move.

22. I Am Not Ready to Move Yet
 These services used to be
provided only to our firm
depositors.
 We now understand that
the Home and the Stuff are
the biggest reasons folks
are “not ready to move”.

23.  We used to fight the emotional attachment to
the Home.
 Residents did not want to give up an
appreciating asset and convert to an Entrance
Fee that not only did not appreciate, but they
did not get 100% of it back.
 The imputed interest on Entrance Fees provides
a very attractive investment today. There has
never been a better time to sell an Entrance Fee
Product.
New Paradigm

24. LSS Move-In Resources
Questions?
Concerns?

25.  This team is prepared to assist prospects with
evaluating their various financial options.
 Both Marketing and Move-In Resources make
certain that prospects are aware of these
services, and reinforces when they perceive it
would be particularly helpful.
 The following are excerpts from the
presentation we give at our marketing
lunches.
Stewardship

26. Lutheran Senior Services
 Stable: 154 years of excellence
 Careful financial management:
mission-driven /MO-IL/extensive capital reserves
 Successful: 9th largest nonprofit
multi-site senior living organization
 Highly Regarded: Investment
grade Fitch rating
 Advantage for You: Options!

27. Goal: Find Financial Option
That Fits You Best
EVERYONE IS UNIQUE
 Assets
 Income
 Long Term Care Protection
 Value placed on simplifying

28. Getting To Know You
 Visit confidentially.
 Review your personal financial
situation.
 Options presented in writing.
 Mull over numbers on your
timetable.
 Questions always welcome.
 Be a good steward of your
resources.

29. Related Concepts
 Entrance Fees
 Entrance Fee Refunds
 Monthly Service Fees

30. Entrance Fee Options Expanded
1) 95% Refundable Entrance Fee
2) 50% Refundable Entrance Fee
3) NEW Reduced Entrance Fee
Based on age(s)
40% to 65% reduction
4) NEW Minimum Entrance Fee
$5,000

31. Entrance Fee Bridge Loan
 Low interest rate, currently at
5%.
 No hassles, simple one page
agreement.
 6 month term, renewable if
needed.

32. HOME CONVERSION PROGRAM
Increasingly Popular
 Trade your house to LSS at its certified
appraised value.
 For income that lasts as long as you do.
 Move as soon as you wish.
 Simple process converts your house to
immediate income and ends all
homeowner expenses.
 You transfer all of the risks associated
with selling your house to LSS.
 We provide certainty.

33. Alternative To Realtor
Avoids:
 Risk/stress that house will not sell in a
reasonable amount of time.
 Risk/stress that house will not sell at an
acceptable price.
 Fixing and staging house.
 Cost of realtor fee, maintenance, repairs,
inspection, closing, etc.
 Hassles of showing your house while
preparing to move.

34. Creates New Income For Life
 Based on independent, certified
appraisal and your age(s)
 Attractive, fixed rate
 Substantially tax-free income plus
large charitable deduction
 Continues for life of survivor
 Most people use to lower their
monthly service fee

35. How LSS Looks at Program
 We recognize that we are assuming
some risk.
 We started the program hoping we
would realize 85% of appraised value
as we turned the homes.
 So we discount the American Council
on Gift Annuities recommended rates
by 15%, more in some cases.
 The value of the funding of the gift
annuity is established by a certified
appraisal.

36. Who Uses this Program?
 Prospects not interested in leaving a
legacy to children.
 Houses located out of region.
 House is not a significant portion of
their assets.
 Difficult houses.
 Prospects that value the tax benefits.
 Prospects that are not up to the
emotional challenge/risk of the home
sale process.

37. Why Do This?
 Favorable tax-advantaged income
is nice, but rarely the motivator.
 Tax savings from the charitable
deduction is nice, but not the
motivator.
 Philanthropy feels good after the
fact, but is not the motivator.
 The Home Conversion Program
offers a way to get from Point A to
Point B with the …
most peace of mind!

38.  Marketing needs to work closely with your
Stewardship Team to make this work.
 Should be combined with a comprehensive
program to assist residents sell their houses
on their own. You need to be the expert.
 You have to be prepared to move the houses
that are donated. Follow the advice from
your team in point #2.
Take Away Points

39.  The primary goal of this program is to improve
occupancy.
 We do not convey the message that the Home
Conversion is the best financial option for the
resident, but rather that in certain
circumstances, it is the preferable option.
 There are differences in how accounting and
stewardship record these gifts that you must
be prepared to discuss with your stakeholders.
Take Away Points