Welltower to Transition 89 Holiday Properties to New Operators

by Jeff Shaw

TOLEDO, Ohio — Welltower (NYSE: WELL), a Toledo-based REIT that is the largest owner of seniors housing in the country, has announced plans to transition a portfolio of 89 Holiday by Atria properties to new operators.

Welltower acquired the bulk of the properties in 2021 as part of Atria Senior Living’s acquisition of former independent living giant Holiday Retirement, which at the time represented the seventh-largest seniors housing operator buying the third-largest. The American Seniors Housing Association, which tracks the 50 largest U.S. owners and operators of seniors housing annually, reports that the combined company was the second-largest operator in the country with 348 properties totaling 42,501 units as of June 1, 2023.

Welltower has already transitioned 27 of the properties, with Sagora Senior Living taking on 14 properties in Texas and the South and StoryPoint Senior Living taking on 13 communities in the Midwest. The other transitions, scheduled for the third quarter of this year, include six assets in the Plains region to Arrow Senior Living Management, 20 to Cogir Senior Living in the Pacific Northwest, 23 to Discovery Senior Living in California and Florida, and 13 to QSL Management in the Southeast.

Although it was not specifically cited as the reason for the transition, Welltower did note in its investor presentation that the bulk of the portfolio is currently less than 80 percent occupied. The average occupancy industry-wide for independent living was 87.1 percent in the first quarter of this year, according to the National Investment Center for Seniors Housing & Care (NIC).

The reason Welltower provided for the transitions is that they will “create strong geographic density with best-in-class regional operating partners across the U.S. that have a proven track record in markets where the properties are located.” Welltower calculates that, should the new operators bring the properties up to pre-COVID occupancy and profit margins, there is the potential of a $47 million increase in net operating income (NOI) at the properties.

The transitions bring Welltower’s partnership with Cogir to 45 communities in the United States. The companies also partner on several properties in Canada — Welltower purchased a dozen in Canada from Cogir for $639 million in October. Welltower’s relationship with StoryPoint now spans 94 communities, and QSL and Welltower now partner on 25 communities.

Welltower also included a series of case studies in its investor presentation, showing its “regional densification strategy” where it focuses more on regional operators with a presence in each area than on national operators. 

The company specifically analyzed The Ivy at Hawaii Kai, an independent living property in Honolulu that Welltower previously transitioned from Atria to Oakmont Senior Living in December 2022. Since that transition was made, occupancy has improved from 76 percent to 82 percent while NOI margin has increased from 22 percent to 32 percent.

Welltower’s stock price opened at $102.86 per share immediately following the news release this morning, up from $76.09 per share one year ago.

— Jeff Shaw

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