(Bloomberg) -- The largest single-site, not-for-profit retirement community in the US is selling municipal bonds to finance an expansion, less than two years after Hurricane Ian caused as much as $85 million of damages.  

Fort Myers, Florida-based Shell Point Retirement Community plans to borrow about $260 million to build a new tower with independent-living units, plus a 152,000 square-foot “town center” facility. The new community center will also be a hurricane-grade shelter, said Burke Rainey, Shell Point’s chief financial officer. 

Retirement communities with land to build are adding independent-living units “because that’s what’s driving their businesses right now, higher occupancies, for which they generally receive an entrance fee,” Richard Scanlon, senior managing director at B.C. Ziegler and Company, said.

Senior-living operators have recently picked up borrowing to upgrade or expand their facilities. Though the sector has faced increased pressure due to staffing shortages and higher costs for labor, insurance, supplies and construction, facilities hoping to attract more residents are moving to keep amenities up-to-date.

Those that include more affluent residents, like Shell Point, have greater flexibility to pass along costs.  Located alongside the Caloosahatchee River, Shell Point currently has 1,334 independent living, 356 assisted living units and 180 skilled nursing beds. It includes amenities like an 18-hole golf course and a 44,000 square-foot performing arts center. 

The new development, dubbed Vista Cay, will add 58 more units in the waterfront part of its existing complex. With more than half the population in the area already over the age of 65, “we need to add units in order to be able to meet that demand and care for additional residents,” Rainey said, adding that the upcoming addition is already about 70% presold.

The new residences will expand Shell Point’s offerings and bring them more in line with some of its environs, Rainey said. The median property value in neighboring Fort Myers beach, for example, is $538,600, compared with $292,000 statewide, according to the US Census Bureau. 

S&P Global Ratings cited Shell Point’s “solid business position and the robust demand for independent living units” in a March note affirming its BBB+ rating on Shell Point’s outstanding debt, and called its forecast of at least 96% occupancy rates reasonable. 

Independent-living entrance fees at Shell Point currently range from $176,000 for a studio to almost $1.6 million for a three-bedroom single-family house, with monthly maintenance of $2,145 all the way up to $8,275. The new units will range from about $1.2 million for two-bedrooms to almost $2.5 million for a three bedroom, three-and-a-half bath penthouse that carries a monthly maintenance fee of $10,235, according to preliminary materials prepared for the proposed bond sale. 

The first section of bonds will be issued by the Lee County Industrial Development Authority in about a month, followed by a second deal for the community center around October, according to B.C. Ziegler’s Scanlon. Shell Point has $96 million in outstanding municipal bond debt, according to data compiled by Bloomberg. The last time it borrowed money was a year before Hurricane Ian.

Ian barreled through Florida’s southwest coast in 2022 shredding the Fort Myers area, including nearby Sanibel and Captiva islands. The storm cost Shell Point $30 million to $35 million out-of-pocket, according to Rainey. But because of its strong cash flow, the complex got a “head start” on rebuilding over peers that had to wait for insurance money or government relief, he said. 

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The storm dumped five feet of water on parts of the complex and prompted the evacuation of 250 units, though most residents were able to shelter on campus. Even before the pandemic, Shell Point has been elevating buildings, placing them over parking facilities, as part of its long-term plan to stormproof its complex, Rainey said. 

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