A Florida-based senior living developer is investing heavily in the market with five new senior living campus that will add more than 700 units to its existing portfolio.
Discovery Senior Living, headquartered in Bonita Springs, Fla., recently partnered with private equity group Kayne Anderson Real Estate Advisors for joint venture ownership and management of portfolios in Texas and Florida, with potential to grow the partnership through new development.
Discovery has a five-community, approximately $200 million pipeline of projects underway in Florida: a 120-unit assisted living community in Naples, a 126-unit assisted living community in Sarasota Bay, a 120-unit assisted living community in Palm Beach Gardens, a 120-unit assisted living community in Tampa, and a 216-unit community in Grand Haven that will have 140 independent living apartments.
None are CCRCs, but the goal is to make continuum of care campuses, any many are located near healthcare facilities and hospitals. At this point, Discovery is finding assisted living construction financing to be more readily available than for independent living, but has purchased land adjacent to many of its assisted living projects to pursue independent living expansions.
“Over the last six to seven years it’s been really difficult for the CCRC market to expand or grow, just because of trying to get financing, and also because people and their wealth embedded in their homes, and they weren’t able to extrapolate it,” says CEO Thomas Harrison of Discovery’s rental strategy. “Adult children, the decision makers, are typically pretty reluctant to get involved in forfeiture programs.”
Making the decision to move into any sort of retirement community is difficult, he says, but it can be an even harder sell when an entrance fee is involved. “The thing seniors are scared of the most is outliving their ability to afford the lifestyle they’re used to,” he says.
Because of Discovery’s 25-year history, the company has been able to stabilize expenses and find economies of scale for food and other services.
“In almost every market [we’re in] we can offer residents three-year rent protection locks,” says Harrison. “Once they’re in a community, they don’t want to be forced to move again, and we’ve been able to take an objection off the table by providing rent locks.”
Harrison describes Discovery as “affordable luxury” communities with the average rent for independent living typically ranging between $2,000-3,000 a month, depending on the market.
“Together with having a physician in or communities, we own our own healthcare company, Discovery and home, and believe that by being proactive and having those services available we can keep residents healthier and happier for a longer period,” he says.
For the average Discovery assisted living community with about 120 units, the estimated cost is about $35-40 million from start to finish, says Harrison, putting their current pipeline value around $200 million.
While it’s likely Kayne Anderson will be involved in the new communities going forward, Harrison says, the private equity group is not investing in the development at this point.
“We retain ownership—we don’t just build and sell,” he says. “We may bring in a joint venture partner, but the goal is to design, develop, and then own and manage.”
Written by Alyssa Gerace