Development is booming for many existing senior living operators across the country. One top-10 operator is targeting growth not only across its current product offering, but also in rolling out an entirely new development pipeline aimed at a slightly higher price point.
Two years ago, Senior Lifestyle Corp. began looking into higher-end senior housing development, toying with the idea of offering a new product. This product would soon become known as The Sheridan, a 19- to 26-property pipeline that could top $650 million.
Rolling out over the next few years, the new line of communities targets the upper-middle market for assisted living and memory support services, says Matt Phillips, executive vice president of development for the Chicago-based owner-operator.
There are already 11 Sheridan properties in development or under construction, but Senior Lifestyle will soon be further expanding the brand, with hopes of developing four to five properties a year for the next two to three years.
With each property averaging about $25 million in development costs, the pipeline could range from $475 million to $650 million, with financing from institutional and private equity sources, as well as conventional project-based construction financing, Phillips says.
Locations for the communities currently in development range from Wisconsin and Illinois to Florida, New York and the St. Louis metro area. The first community is expected to open in December 2015.
About $1,000 more expensive per month than Senior Lifestyle’s middle-market product, which costs residents between about $3,000 and $4,000 a month depending on the market, The Sheridan communities will provide residents with higher levels of staffing, more dining options and additional care services, such as in-house therapy.
“One of the challenges, especially in this product type [assisted living and memory care], is the staffing ratios,” Phillips says. “This gives us an opportunity to apply a higher level of services as well as nicer space and units.”
And for the nation’s eighth largest senior living provider, The Sheridan properties also are designed to fill a gap in supply.
“We thought this particular market niche was underserved,” Phillips says. “The market demand is there.”
While Senior Lifestyle has historically grown through both acquisitions and development, the provider’s focus on development for The Sheridan brand is part of a two-pronged approach.
“Acquisitions are opportunistic, but we’re subject to the vagrancies of someone wanting to sell something and, second of all, there’s a lot of people chasing the same assets,” Phillips says. “We do development as a way to control our growth proactively by going out and seeking sites, as distinguished from the acquisitions, which are more difficult to control.”
Written by Emily Study