Welltower has “a number of plans” to bring “next-generation” senior living communities to densely populated metropolitan areas with aging populations, CEO Tom DeRosa said Tuesday during the real estate investment trust’s third-quarter earnings call.
One such community, in Manhattan, will be Sunrise at East 56, which participants in Welltower’s Dec. 4 Investor Day will be able to tour, DeRosa said, although he did not specifically name the property. The building is expected to open in late 2019 or early 2020, he said.
Welltower and international real estate firm Hines broke ground earlier this year on what was described as a 16-story, 130,000-square-foot tower. The building will be Midtown Manhattan’s first purpose-built assisted living and memory care community, according to the REIT.
“I think there is demand for a next-generation of senior living product in major metro areas,” DeRosa said Tuesday. “You take a city like New York, which is made up of many villages that are densely populated [and] that have an aging population — there is room for lots of senior housing properties to be brought to this market.
“But I would say it’s a next-gen product,” he continued. “I don’t see any of the product in a market like New York today being sufficient to meet the needs of the upper end of this population. I am going to tell you, I’ve dealt with it myself personally. And there really are no options on the island of Manhattan today.”
The current availability of assisted living in Manhattan is five times less than the national average, and there are only 70 fully licensed memory care beds in Manhattan, Welltower said in a presentation prepared for the third quarter and posted on its website.
One analyst participating in the earnings call referred to, but did not name, a recently announced $3 billion joint venture between Atria Senior Living and Related Companies through which two to three luxury senior living communities are expected to be developed and operated in urban areas over the next five years.
“I am just curious if that sort of activity was already contemplated in your development plans when thinking about your focus on urban markets in particular over the next several years,” the analyst said to DeRosa.
“That announcement … clearly validates a thesis that we’ve been articulating for a few years” about the need for such senior housing, the CEO answered.
During the Ventas third-quarter earnings call on Friday, CEO Debra Cafaro also said her REIT is “firmly establishing our leadership in the high-end senior living Manhattan market” with the impending purchase of a former Brookdale Senior Living independent living community, Brookdale Battery Park, for $194 million.
‘Encouraged’ by occupancy uptick in memory care properties acquired in ProMedica deal
Occupancy has increased even before planned capital expenditures have begun in HCR ManorCare memory care communities acquired in a July deal with ProMedica Health System, Welltower’s senior vice president of investments, Shankh Mitra, told analysts on the call.
Welltower is “encouraged” by the development related to the communities operated under the Arden Courts name, Mitra said. He said it was too early to share occupancy statistics or the reasons behind the increase.
Welltower acquired the assets of ManorCare landlord Quality Care Properties in July after ProMedica acquired the operations of ManorCare. A new 80/20 joint venture between Welltower and ProMedica subsequently leased 218 ManorCare properties to ProMedica for 15 years.
The deal, Mitra said, “will create extraordinary value for our shareholders in the long term from this transaction, perhaps even more than what we anticipated.”
ProMedica and ManorCare leadership “now expects higher synergies than we expected previously,” he said. ProMedica President and CEO Randy Oostra and ManorCare President and CEO Steve Cavanaugh will detail those synergies at Welltower’s Investor Day, he added.
