Businessmen Sergey Vershinin and Gurjeet Singh are the two brains behind the upcoming Hornell Assisted Living project in a designated Opportunity Zone in New York, which won the audience’s America’s Most Impactful Project award.
Vershinin and Singh shed more light on their project in an interview with Opportunity Zone Magazine.
What are your professional backgrounds?
SERGEY: I have a PhD in law and a Master of Law degrees. I switched to business later and in the last 10 years or so, I’ve been working as a businessperson. I have several companies with a yearly revenue of more than $50 million; I also own a chain of gas stations with my own brand. Now, I’m developing assisted living projects.
GURJEET: I did my master's in engineering. I served in the Indian army’s corps of engineers for 21 years where I headed major defense projects, some secret and some not so secret. I've done constructions of buildings at high altitude and in deep deserts. After leaving the army, I have been in the finance business for the past 25 years; I have a finance company, a real estate company and an insurance company.
What can you tell us about your project that won America's Most Impactful Project award?
SERGEY: We are purchasing a former hospital in the city of Hornell, New York, to turn it into an assisted living facility. That facility is going to have about 200 rooms for assisted living and about 100 rooms for special nursing care. The total investment for the project is $20 million, $10 million of which is going into acquisition of property, and the rest $10 million is going into remodeling, converging and renovation of the property.
GURJEET: Baby boomers are getting old and there is a dire need of assisted living care facilities in the country. It's the silver tsunami on the horizon. There's a huge shortage, and we thought it is the best opportunity…we are going to have both sides of things, high end facility as well as middle or lower, and people who can be taken care through Medicare, and all that. This is the community which is highly ignored, and they really need it.
What do you hope to achieve with your project?
GURJEET: Our goal is to take care of the older people who really need help…it is going to be a business cum charity. The goal is to create an impact in the community.
SERGEY: The project in Hornell, New York, is just the first step. We are working right now on several facilities. Our plan is to establish a national chain of such facilities, in every state, or at least in the big cities across the whole country.
What does it mean for you to win the ATP award? And how did the participation in the competition help you help with your capital raise?
SERGEY: We hope our win will bring a lot of attention to our project, and it will show investors the importance of our project. A group of people and judges nominated our project as the best for social community impact. This will help us to raise money for our project and to bring attention to the next steps we are planning for the future.
What is the timeline for development and completion of your project?
SERGEY: Our goal is to complete everything within one year and start operations.
GURJEET: 2022 will be the year for collection of money, project plan approvals and everything. We may even open at the end of one year in a phased manner. Maybe, in phase one, we open with 50 beds and then in phase two, we open another 50. As far as the investors are concerned, we are promising them results or returns in the 25th month.
When and why did your company get involved in the OZ industry?
SERGEY: I’ve been following the OZ industry since the law was being enacted, which I thought was very interesting in how it helps a company to improve neighborhoods, which is usually not the best outcome desired by most developments…now we are just starting our own project here, and we hope that it will do good.
GURJEET: The reason for OZ is that it's a win-win situation for the backward areas to develop, and for the investors to have basically the tax advantages…every dot gets connected so beautifully…Sergey pushed me into it, we attended a conference in Colorado and later our minds started glowing with many ideas on how to take it to the next level and set up a chain of assisted living facilities all over the country.
What can you tell us about your company and the services you offer?
SERGEY: We are based in Los Angeles, California, and in the city of West Hills. We have a background in business and development, setting up new brands etc. We have our own source of funds, which is more than enough to cover the whole (current) project. But since we are not looking at only one project, but we're looking to build a big chain all over the country, we are looking for investors to become our partners.
GURJEET: I have three corporations of my own in finance, real estate, and insurance, Napa Finance (Group) is my company's name and I've been licensed for over 20 years while being based in Los Angeles. But for this project, we have created a company registered in New York, and for every new project, we will set up a new corporation in that state.
How much have you raised to date in your OZ fund?
SERGEY: We already have several investors waiting for the final documents, and they are ready to transfer the first raising money, but for now, we are just at a starting point.
GURJEET: At this moment, even if we raise zero dollars, we are okay, because we have our own resources. Plus, the bank is ready to lend us, but we are interested to have more equity participation because our goal is to set up a chain and set up a system…the building that we have in escrow is worth at least $40 million today whereas we created a deal for $10 million. And the moment we run this show, we are almost going to double up the whole value within two to three years; 20 million will become at least $40 million to $50 million in year, in third year.
What was the impact of the pandemic on your business strategy?
GURJEET: We are taking the pandemic very seriously, which is going to be there in many, many different forms. In fact, one of the most affected areas were assisted living during the pandemic and that is our main concern. The pandemic was an incentive and reason we got into it is because old facilities cannot change everything inside the system, and that is why we are setting up new systems.
SERGEY: The pandemic was one of the reasons we wanted to create new level facilities, which is going to help older people become more protected.
What are some current trends you're seeing in the oz market that might have an impact on your project?
GURJEET: Most OZ projects are apartment buildings, commercial spaces or hotels that are purely focused on making profits and pulling in the tax money, capital gains, whereas our project not only helps investors in investing capital gains, but there is a human touch that is about taking care of seniors who really need the care. In terms of impact, our project is unique.
SERGEY: I just wish Opportunity Zones are going to be extended for a longer time because it has a timeframe of six years right now. The extension will help us in our future projects, to expand faster and deploy. What's happening right now in OZ is that there is a lot of capital gains, especially in 2021 when the stock market was booming. Many investors are looking for good projects to invest in and to offset their capital gain with a new good investment project.
How important do you think the opportunity zones are for accomplishing goals in distressed areas?
SERGEY: Many areas benefit a lot by being an opportunity zone since it's attractive for the investors and it’s attractive for the development. It brings serious benefits in different ways like more work and more jobs. For example, in just one of our facilities, we will create 100 jobs.
What are your top business goals for 2022?
SERGEY: For 2022, our top business goal is our project, to get it done, raise the money with the investors and make all necessary improvements to the building and start operating next year. We are also working to acquire several different facilities, and hopefully in 2022, we can bring several good projects for the investors to consider, not only this one but several other facilities in the different states of the U.S. …We have another facility in Portland, Oregon, which we are finalizing the deal on right now.
GURJEET: We want to get this project done as fast as possible and start earning revenue. We are excited to do this project…this land is not just in an OZ, but in an USDA zone which can lend up to 90% for projects like ours, so as I’ve said our goals are to have investors on board, become our partners for the long haul. We want to expand one project per year as per our business plan.
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