A company new to the senior housing space is set to bring a 400-unit independent living community to the historically busy Atlanta market—and to transform a building that’s publicly been called both “iconic” and an “eyesore” in the process.
Atlanta-based Peacock Partnership—a holding company for architectural design, construction and development firms specializing in health care projects—has recently acquired the 14-story former Presidential Hotel in Atlanta, with plans to convert the building into a private-pay, market-rate independent living community. The purchase, closed by Greystone Brown Real Estate Advisors, represents Peacock Partnership’s first time owning senior housing, and the firm intends to hold onto the asset for the long term, Dean Peacock, managing principal at Peacock Partnership, told Senior Housing News.
Complicating matters, however, is the fact that the building is both well-known and divisive in the Atlanta region.
“It’s an iconic eyesore at the moment,” Peacock said. “Hopefully we’ll be able to preserve the iconic portion and the eyesore will go away.”
Atlanta’s independent living opportunity
At first glance, the decision to bring more senior housing units to the Atlanta market may seem misguided.
Atlanta, after all, was named the third-busiest city for senior housing development in April 2017, according to the National Investment Center for Seniors Housing & Care (NIC), and health care real estate investment trusts (REITs) Ventas Inc. (NYSE: VTR) and Welltower (NYSE: WELL) have called out the city within the past 18 months as a hotbed of new senior housing construction and a place of occupancy weakness, respectively.
Still, Peacock believes that opportunity still exists in the market for new supply.
“In the Atlanta market … we’ve certainly had a tremendous amount of senior product development,” Peacock said. “From our perspective, Atlanta’s got plenty of assisted living, and even memory care, but we feel like there’s still a bit of opportunity in independent living.”
To fulfill that perceived need, Peacock plans to strip the existing 14-story Presidential tower “completely down to its structure and start rebuilding from there,” Peacock explained. The existing tower is structurally sound, and tearing it down would have been cost-prohibitive, he added.
Peacock also plans to build a brand new 12-story tower next to the existing structure, to bring the total number of independent living units on the property to 400.
The firm is currently evaluating potential senior housing operators for the project.
“We’re being very picky and choosy as we move forward on that front,” Peacock said.
The company hopes to start construction on the $70 million project at the end of the fourth quarter of 2018, and it’s expected to last about 18 months, Peacock said.
An ‘iconic eyesore’
The former Presidential Hotel has quite a reputation in the Atlanta area, and it’s a mix of good (“iconic”) and bad (unattractive.)
“Part of the reason why it’s called ‘iconic’ is that it’s in a prevalent position within the city,” Peacock explained. Essentially, the building is visible from an interchange that regularly has “tremendous car traffic.”
At the same time, the building has long been vacant, and it’s been vandalized as a result.
“You can see broken windows … it’s falling apart, so to speak,” Peacock said.
The task of transforming a site that may be well-known for unfortunate reasons is not new to senior housing owners. In 2016, The Engel Burman Group, The Northwind Group and Harrison Street Real Estate Capital LLC bought a 15-story building in Manhattan that had been in the news when a two-year-old girl died after being struck by debris that dropped from the building’s facade in May 2015.
The new owners of the property—which they planned to convert into senior housing—knew that there would be challenges associated with their project, given the circumstances. But they didn’t perceive the issue as insurmountable.
“It’s an opportunity to change the reputation, to fix it,” Harrison Street Real Estate Capital CEO Christopher Merrill told Senior Housing News in late 2016. “I think you have to have professional management, you have to have good policies and procedures in place … bring in the right people. The residents will see change.”
Similarly, the opportunity to purchase the former Presidential Hotel was too good to pass up, according to Peacock.
“Because of the existing structure that’s there, and its location generally—and certainly its drive-by appeal—it makes perfect sense for us to redevelop this project,” Peacock said.
Written by Mary Kate Nelson