Aging baby boomers are attracted to urban centers, but meeting the demand for downtown senior living is not easy. Two operators, Mather LifeWays and Watermark Retirement Communities, are getting in on the action but taking different approaches to offering senior housing in the city.
Evanston, Illinois-based Mather LifeWays is making its first foray on the East Coast, planning to build two high-rise towers near Washington, D.C. Meanwhile, Tucson, Arizona-based Watermark is repurposing an existing, historic building in Brooklyn.
The two providers are both betting that seniors will line up to live in amenity-rich communities embedded in walkable neighborhoods with easy access to all that major metros have to offer—and they could be creating templates that other organizations look to emulate as more older adults seek city living in the coming years.
A first for Mather
Mather LifeWays is making its play with an upcoming $400 million, 668,435-square-foot senior living community that’s set to open in Tysons, Virginia, in 2022.
The Evanston, Illinois-based senior living provider—which, a few years ago, worked with LeadingAge to coin the term “Life Plan Community”—currently operates three senior living properties nationwide: a life plan community in Evanston, an independent living community in Wilmette, Illinois, and a life plan community in Tucson, Arizona.
The Washington, D.C.-area community, notably, will be the brand’s first property on the East Coast. The location made a lot of sense to Mather, CEO Mary Leary told Senior Housing News.
As a company, Mather has long been drawn to “well-educated, urban markets” that are also highly walkable, Leary explained. So, when it came time to select a location for its newest community, “D.C. was at the top of [its] list.”
Mather plans to branch out in its community design in Tysons, as well.
“Mather LifeWays does not have a cookie-cutter approach when it comes to new communities,” Leary noted.
The new Tysons community will be a high-rise, comprising two towers—one that’s 18 stories tall and one that’s 27 stories tall—with 300 independent living units, 78 assisted living units, skilled nursing beds and memory support. The property will also include more than 18,000 square feet of restaurant and retail space.
“It would be fantastic to get a boutique grocer in there,” Leary said. “Either that, or possibly some new restaurants.”
Leary may get her wish, as a major national grocery chain has already reached out to Mather about the space, she told SHN.
Opening a community near D.C. will have its challenges, and Mather knows it’s going to have to compete against nearby residential options for older residents.
“We have to make sure the experience that’s provided will be very different, both from what you’d get at a high-end condo as well as what you’d get at a typical retirement community,” Leary said.
The project is expected to be a 50/50 joint venture partnership between Mather and a for-profit equity partner, the identity of which Mather hopes to announce in early 2018.
“Even though Mather LifeWays is a not-for-profit organization, the project will be a for-profit life plan community,” Leary explained.
Accordingly, Mather will take the lead on the development, the presales and ongoing management, and the community will provide financial returns back to Mather, she said.
Stars align for Watermark
Farther up the Eastern Seaboard, New York City is another urban market where well-established senior living operators and investors are creating some new highrise senior living options.
Most recently, Watermark and private equity investor Kayne Anderson Real Estate Advisors (KAREA) announced that they are partnering to turn a historic 16-story building in Brooklyn Heights into senior living.
Unlike the Mather project in Tysons and the two senior living developments underway in Manhattan, this project is an adaptive reuse. It’s rare in a high-density urban area, particularly New York City, to find a building that fits the bill for this type of endeavor, Watermark Chairman David Freshwater told SHN.
“Because real estate is so precious and expensive, few buildings have extra space for common areas,” he said. “We do need common areas and kitchens, and to retrofit a buiding to get all of that in, it’s hard to make a conversion work.”
The Brooklyn Heights building is the rare exception. That’s because it previously was owned by the Jehovah’s Witnesses and was used in part as a residence for the organization’s many volunteers. Its kitchen was turning out upward of 1,000 meals a day, and the building boasts 50,000 square feet of common space and larger-than-average individual units. One floor had been a medical wing with a clinic space and infirmary for sick volunteers.
So, the building lends itself naturally to being renovated for senior living, complete with multiple dining venues, yoga and fitness studios, an indoor pool, library and other features, Freshwater said. The former medical wing will be a “natural conversion” to memory care. The remainder of the building is slated to be a mix of independent living and assisted living.
Total renovation costs are estimated to be about $70 million, according to Freshwater. The purchase of the building ran to about $200 million and the capital stack is rounded out with about $30 million in reserves and to cover other costs. Watermark has less than a 5% ownership stake.
The building’s location in Brooklyn Heights, right across the East River from Manhattan, also appears to be ideal. Market research revealed that average rents in the neighborhood are nearly identical to those on Manhattan’s Upper West Side, Freshwater said. With that in mind, Watermark and KAREA plan to peg rents at a level they feel is conservative. Memory care rents are projected to be about 20% to 25% lower than the $20,000-a-month memory care rate planned for the NYC building being developed by real estate investment trust Welltower (NYSE: HCN), to be operated by Sunrise Senior Living.
Moreover, thanks to zoning laws, most nearby buildings are low-rise or mid-rise, keeping the neighborhood “human scale,” replete with brownstones, front yards and green spots, Freshwater noted. And it means there will be great views of the Manhattan skyline from the Watermark at Brooklyn Heights, as the senior living highrise will be called. It is projected to open within two to three years.
This is not the only project that Watermark and KAREA are working on together—they have teamed on eight ventures and are working on two more currently. But this one is special, given all the pieces that fell into place.
“The stars aligned in terms of the opportunity,” Freshwater said. “Now, we just have to execute.”
Written by Mary Kate Nelson and Tim Mullaney
Companies featured in this article:
Kayne Anderson Real Estate Advisors, Mather LifeWays, Watermark Retirement Communities
