Baptist Health South Florida was exploring entering the senior housing space long before its groundbreaking partnership with Belmont Village Senior Living.
The largest health care group in South Florida reached out to Dallas, Texas-based real estate capital market advisers Holliday Fenoglio Fowler (HFF) two years ago to learn more about senior housing, and to find the right development partner because they saw the growth potential in the space, HFF Senior Director Maurice Habif told Senior Housing News.
“They thought senior housing would be a good way to diversify revenues and open a potential new ancillary business line,” he said.
A two-year search
The health system wanted to leverage its brand recognition in the region, but needed to learn about the inner workings of senior housing. In HFF, Baptist Health found a consultant with a depth of real estate expertise.
“We worked with them in teaching them the nuances of business — how to valuate properties, generating cash flow, the typical unit mix of a senior housing community,” Habif said.
In addition to consulting, HFF ran a year-long request for qualifications (RFQ) process to identify a development partner. Baptist Health wanted to find a partner with experience in South Florida. While there were several that fit the bill, Houston-based Belmont Village stood out almost from the beginning, Habif told SHN.
Near the end of the RFQ process, Baptist Health visited communities of the finalists, and its executive team met with their senior housing counterparts. Again, Belmont Village differentiated itself from the other finalists because its workplace culture was a natural fit for Baptist Health.
“Baptist Health got along from an ideological perspective with Belmont Village,” Habif said. “That drove a lot of the reasons why Baptist selected them eventually as their partner.”
Belmont Village is characterized by maintaining an ownership stake in all its assets, as well as maintaining a relatively flat org chart at both the community and corporate level while fostering internal professional development, co-founder and CEO Patricia Will has told SHN in the past. Will has described her company’s culture at length to Senior Housing News, notably in a 2016 Leadership Series interview.
Laying the foundation for a new development trend
The Baptist Health-Belmont Village JV is the first time a health system is taking an active role in developing senior housing.
The venture announced plans to build a senior housing community in downtown Coral Gables, near the Shops at Merrick Park. Construction is expected to begin in mid-2020 and will be completed within two years.
Baptist Health and Belmont Village are planning a robust South Florida pipeline, in high-quality neighborhoods and areas with high barriers to entry, Habif said.
The success of the venture may lay the foundation for other health systems to partner with senior housing developers in joint ventures. Integration between senior living and health systems is a developing industry trend. Most notably, real estate investment trust Welltower (NYSE: WELL) formed a joint venture with nonprofit health system ProMedica last year to acquire the large portfolio of post-acute and senior living communities formerly operated by HCR ManorCare. Another example is the relationship between Intermountain Healthcare and Summit Vista, the first life plan community in Utah.
One question that still remains unanswered is what services the health system will integrate into a community, and to what extent.
“That is still an ongoing conversation between Baptist Health and Belmont Village,” Habif said.