A Dual-Track Strategy for Maximum Impact
How We Build
Elysian Shores operates on two parallel tracks: rapid hotel and motel conversions that put people in housing within months, and a flagship downtown office tower conversion that creates a scalable, high-capacity model for the future. Both tracks share a common mission: acquire distressed properties below replacement cost, convert them into dignified permanent supportive housing, and stabilize operations with government-backed revenue.
Adaptive Reuse in Action
TRACK 1: HOTEL AND MOTEL RAPID CONVERSIONS
Our fastest path to impact. We acquire distressed hotels and motels with 50 or more rooms across California, renovate them into permanent supportive housing, and convert 1 to 5 percent of rooms into on-site service spaces for security, mental health counseling, recovery support, job training, and healthcare coordination.
Service Allocation Model: For every 100 rooms, 1 to 5 rooms (1% to 5%) are converted into dedicated supportive service spaces. A 100-room conversion yields 95 to 99 residential units plus dedicated spaces for:
- Security office and 24/7 front desk operations
- Mental health counseling and crisis intervention room
- Recovery support and peer meeting space
- Job training and workforce development center
- Healthcare coordination and telehealth clinic
TRACK 2: DOWNTOWN OFFICE TOWER FLAGSHIP CONVERSION
Our long-term vision. San Diego's downtown office vacancy has reached historic highs, with towers selling at 50 to 70 percent below peak value. We are targeting a Class B/C office tower of 150,000 to 250,000 square feet for conversion into 200 or more units of permanent supportive housing with dedicated service floors for mental health, recovery, job training, healthcare, and community gathering.
Why Now?
- California hotel and motel owners face rising costs, declining tourism revenue, and deferred maintenance, creating a buyer's market for conversion-ready properties
- Downtown office properties are selling at 50 to 70 percent below peak value with vacancy rates at historic highs
- California's Homekey+ program provides non-repayable capital grants covering 43 to 57 percent of total development cost
- The One Big Beautiful Bill Act (2025) permanently restored 100% bonus depreciation, creating powerful tax incentives for investors
- Strong state policies enable streamlined approvals: AB 1490 (ministerial approval, CEQA exempt), SB 330 (project vesting), and Homekey+ operational subsidy
- ESSH can acquire at $87,000 to $200,000 per door versus $675,000+ replacement cost for new construction
$87K to $200K
Per Door Acquisition Cost
21
Properties in Active Pipeline
50+
Minimum Room Target Per Property
$675K+
CA New Build Replacement Cost
(What We Avoid)
CA New Build Replacement Cost (What We Avoid)
Elysian Shores operates each property as a 501(c)(3) nonprofit with a diversified, government-backed revenue model. Resident rents are supported through SSI/SSP benefits and Section 8 Project-Based Vouchers. On-site services, including case management, mental health care, and housing stability support, are funded through CalAIM's Enhanced Care Management (ECM) and Housing Tenancy and Sustaining Services (HTSS) contracts with Medi-Cal Managed Care Plans.
Beginning July 2026, the Behavioral Health Services Act (BHSA) will require California counties to dedicate 30% of behavioral health funds to housing interventions, creating an additional revenue stream. This blended model reduces reliance on perpetual philanthropy and creates a scalable, self-sustaining platform.
INVESTOR OPPORTUNITY
ESSH offers a compelling impact investment thesis for mission-aligned capital. Our hotel/motel track targets 15 to 20 percent blended IRR for equity investors through a combination of cash flow, 100% bonus depreciation (permanently restored under the 2025 OBBBA), 4% LIHTC credits, and Opportunity Zone deferral where applicable.
Affordable housing consistently outperforms: 5.7% NOI growth annually versus 0.7% for market-rate, with 2.7% vacancy versus 7.6% for Class A properties. Government cost savings from permanent supportive housing average $12,000 to $16,000 per person per year, making this model both a financial and social return engine.
Hotel/Motel Track
$17M to $20M per 100-room conversion, 50 to 60% funded by Homekey+ grants
Tower Track
$65M to $130M, 200+ units, layered with LIHTC, bonus depreciation equity, and grants
Legislation
AB 1490, SB 330, Homekey+ (ministerial approval, CEQA exempt for 100% lower-income adaptive reuse)
Revenue
Philanthropy + CalAIM (ECM/HTSS) + earned on-site services