Update page

Since our last newsletter report on the land, the Joshua Group has started accepting dredge material from the Back River project and continued to search for financial mechanisms to construct the assisted living facility.

The dredging project had a slow start with the October Nor‘easter, but eventually picked up in December. Material is being delivered in accordance with our operations plan and our surrounding neighbors have been satisfied with the operation to date. So far we have received approximately 5,200 yards of material, which equates to just over $40,000.00 of revenue from the dredging contractor. We expect these funds to be received shortly after the City makes their first payment to the dredger.

Throughout November the Joshua Group engaged Thrivent Financial Services to determine their requirements and conditions to support a construction loan for the assisted living facility. Thrivent reviewed the project’s business plan and cash flow analysis and believed it to be a viable enterprise. However, for Thrivent to provide a loan for the necessary amount, they would have needed to assume all of Gloria Dei Ministries, Inc. and Gloria Dei Lutheran Church mortgages to obtain the necessary level of collateral. Such an arrangement would have removed the liability firewall between the two organizations we have taken great pains to establish. Therefore, we have set the Thrivent option aside and continued to search for a way forward.

In November and December, Pastor Freeborn made overtures to Virginia Lutheran Family Homes, an organization that builds and operates independent living and assisted living housing in the Commonwealth. We met with Lutheran Family Homes on January 12^th to present our Gloria Dei Village concept and determine if it might also satisfy their own strategic mission objectives in Southeast Virginia. They responded favorably in the meeting and have been given all of our CCRC and assisted living financial business projections, market analysis, and construction cost analysis to evaluate. We expect follow on discussions in mid-February regarding the feasibility of partnering with Lutheran Family Homes to achieve both organizations’ objectives.

The Joshua Group has completed initial discussions with eight separate financial investors regarding financing strategies for the Continuing Care Retirement Community (CCRC) at the Village at Gloria Dei. While the recent down turn in the market and continued market uncertainty has made financial lending institutions more cautious, we received positive feedback on the project and many suggestions on how to move forward. Three clear options have emerged.

Option 1: We can continue to pursue a full CCRC concept in phase one, building both independent living units and a medical care facility. Prior to receiving construction funding we would be required to secure down payments reservations for 70% of the independent living units. We are being advised that the current market conditions would require a minimum of 18 to 24 months to secure 70% pre-sale. The marketing expenses to secure 70% pre-sales would be significant. Once construction funding is secured, construction of the independent living units and medical care facility would take another 18 to 24 months to complete.

Option 2: We can build a the medical care facility providing expanded assisted living and wait for the market to stabilize before building independent living units. Building an assisted living facility has no pre-sale requirement and the Peninsula has a shortfall in assisted living facilities. Construction funding could be secured on a quicker timetable than Option 1 and since only one building will be built, the financing can be competed across a broader range of financial institutions, including the local banks in the area which have shown considerable interest in the project.

Option 3: We can put the entire CCRC project on hold waiting for the market to stabilize.

Over the next 30 days, the Joshua Group will be exploring Option 2 in detail and determine financial lender interest and associated lending terms and conditions.