Welltower Continues Seniors Housing Spending Spree with $1.3B in Acquisitions, Two New Developments with Kisco

by Jeff Shaw

TOLDEO, Ohio — Welltower Inc. (NYSE: WELL), a Toldeo-based REIT and the largest owner of seniors housing in the United States, has extended its 2021 spending spree by agreeing to acquire four seniors housing portfolios for a combined total of $1.3 billion.

Welltower has invested $5.6 billion in acquisitions and developments since October 2020. Highlights include the acquisition of 86 Holiday Retirement communities for $1.6 billion and the acquisition of 22 properties in Ohio and Illinois totaling over 1,000 units.

“Since pivoting to offense 13 months ago, Welltower is pleased to have executed on its value-driven investment thesis, largely through granular and off-market transactions completed at a significant discount to estimated replacement cost,” says Shankh Mitra, Welltower’s CEO and CIO.

“We have recently observed a meaningful uptick in potential investment opportunities as the level of motivation from various sellers has risen, coinciding with further industry disruption due to the Delta variant and challenging labor environment,” says Mitra.

The four portfolios comprise:

  • The $580 million acquisition of eight rental and six entrance-fee communities in “attractive markets across the United States,” including Bellevue, Wash.; Data Point, Calif.; and Alexandria, Va. Watermark Retirement Communities will operate the communities under a RIDEA agreement. Welltower estimates the price represents a 40 percent discount to replacement cost.
  • The $475 million acquisition of nine Class A, private-pay communities. Further details on these properties were not disclosed.
  • The $172 million acquisition of five Class A communities across the Mid-Atlantic and Southeastern United States. The assets were recently developed, and the current undisclosed operator will be retained “under a highly incentivized contract.”
  • The $119 million acquisition of three properties in “fast-growing micro-markets in the Midwest.” The average age of the communities is two years. New Perspective will operate the assets under a RIDEA contract.

Concurrently with the acquisition announcement, Welltower also released details of a long-term strategic partnership with Kisco Senior Living. The joint venture has already broken ground on two new seniors housing communities: The Carnegie at Washingtonian Center in Gaithersburg, Md, and Phase II of The Cardinal at North Hills in Raleigh, N.C.

Welltower and Kisco’s first project, The Cardinal, has maintained occupancy above 95 percent over the past five years and returned to full occupancy in September 2021.

“We are excited to formally announce this long-term strategic partnership alongside the ground-breaking of The Carnegie and Phase II of The Cardinal, which exemplify Welltower and Kisco’s focus on developing premier communities with first class amenities and care in an inspirational environment,” says Mitra.

The Carnegie will feature up to seven stories with 302 independent living, assisted living and memory care residences. Kisco will develop and operate the community under a RIDEA management agreement. The property is scheduled to open in spring 2024.

Phase Two of The Cardinal is an 18-story tower with 191 residences, positioned as a luxury senior living community, which is scheduled to welcome residents in the spring of 2023. This tower phase of The Cardinal features five custom penthouse apartments on the top floor and the third floor is designated as a club level with concierge services and access to an outdoor courtyard area.

The total investment amount of the two projects will exceed $325 million, according to Welltower.

“The Carnegie and Cardinal will be signature communities,” says Andy Kohlberg, president and CEO of Kisco Senior Living. “Welltower’s cutting-edge data analytics platform, combined with Kisco’s focus on the resident experience, will create a powerful platform to expand our existing partnership and improve the health and wellness of our residents.”

Welltower and Kisco’s existing joint-venture projects have already surpassed pre-COVID occupancy levels, reaching 97 percent in September.

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