Following a blockbuster M&A year for the industry, one senior living provider is still charging forward with acquisitions. Chicago-based owner and operator Enlivant recently announced it closed on two senior housing communities in Georgia, bringing the company’s acquisition total up to 19 communities over the last 15 months.
The company, which primarily owns and operates assisted living and memory care communities, had previously announced its plans to acquire 16 communities in late 2014, with most coming on board with the brand in early 2015. While Enlivant is open to acquiring assets in new markets, the recent slew of acquisitions are designated within markets where the company is already well established, including Arizona, Georgia, Idaho, Iowa, Washington and Oregon.
The addition of the two most recent assets in Georgia, which were acquired for $10 million, underscore the acquisition strategy that has been in play for the last few years, according to CEO Jack Callison.
“Over the last 15 months, the 19 acquisitions have been right in our backyard in states and regions where we already have a meaningful operating presence,” Callison told Senior Housing News. “From a macro perspective, what we’re trying to accomplish is continuing to strategically leverage our many relationships to identify compelling private pay opportunities across the country, predominantly in assisted living or memory care.”
Since the company rebranded in 2013—it was formerly known as Assisted Living Concepts—it has taken significant steps to restructure and refocus, starting with its culture and headquarters. Enlivant has been active in the acquisition market since 2014, snapping up strategic assets within its assisted living focus. The company now operates nearly 200 communities in 19 states, serving roughly 9,000 residents.
“We spent the last three years building out our operating platform, focusing on our culture, and the team we have in place is capable of growing with us,” Callison said. “We love the idea of doubling down in markets that we know intimately.”
An Open Acquisition Pipeline
Heading into the second quarter of 2016, Enlivant is still actively seeking new opportunities for acquisitions, but does not have an established allocation for 2016. That opportunistic viewpoint is due to the company’s close ties with its investment and operating partners. Enlivant works with TPG, a global private investment firm with over $70 billion in its management.
“That’s the beautiful thing about how we operate; we don’t have mandates or thresholds,” Callison said. “If we find compelling opportunities, we have the operating platform to grow through acquisitions.”
When it comes to the current acquisition environment, Callison still sees a fragmented industry largely defined by mom-and-pop shops awaiting their next transition. This fragmentation and individual ownerships offers many opportunities for Enlivant.
“Our focus is consolidation of communities,” Callison explained. “Many are owned by individuals. We think there is a tremendous opportunity for growth. And it’s very much a local business where we have boots on the ground developing relationships—in many cases with people who aren’t even considering selling. But, they care deeply about their legacy. I think Enlivant has built a reputation because of our culture and commitment to quality care that it resonates well with individuals that are really focused on preserving their legacy.”
Last year was marked by positive figures in terms of M&A activity, but operators today are also dealing with rising interest rates and oversupply exposure. Construction rates as a percentage of senior housing inventory across the industry reached an all-time high at the end of last year within assisted living, according to NIC data.
However, Callison doesn’t subscribe much to those mixed oversupply concerns, particularly within Enlivant’s established markets. The owner/operator has a iron-clad approach to its acquisition deals that begins with data, according to Callison. The company analyzes developments that could be competitive within a three-, five- and seven-mile radius to compare market saturation.
“We are very data-driven,” Callison said. “Thats what I attribute much of our early success to. It requires a lot of discipline to take the emotion out of investment and rely heavily on data to guide the initial decision making. It’s easy to see that if you’re data driven, you can do well in acquisitions and not run into supply issues.”
There are also no immediate plans to branch into other asset classes, such as skilled nursing or independent living, which achieved the highest occupancy rates across the industry in end-of-year NIC data.
After finding satisfying demographics and markets that are ripe for opportunity, Enlivant works closely with its partners to acquire a unique asset, bringing its investment team and operating team together to close a deal.
“Then we really get our operators involved,” Callison said. “Operations play a key role in all of our investment decisions. When we present deals for approval, there’s joint buy-in in our operations team with our investment team and everyone is completely bought on to the business plan.”
Written by Amy Baxter