A European real estate investor is entering the U.S. senior living space, partnering with an experienced developer and operator to build and acquire up to 20 communities over the next decade. The venture’s first project is set to break ground later this year.
Warsaw, Poland-based Metropolitan Investment is partnering with Palm Beach Gardens, Florida-based AgeWell Living to create MI Senior Living, with a goal of developing one to two communities a year over the next 10 years, and to acquire another two communities annually during that time frame, Metropolitan Investment CEO Robert Jas told Senior Housing News.
A third partner in MI Senior Living is Royal Ascot Partners, a private equity firm based in Dallas.
The venture is targeting a November groundbreaking for its first project, Tequesta Senior Housing in Tequesta, Florida. The 124-unit community, which will cost between $40 million and $50 million to build, will include 81 independent living units, 25 assisted living units and 25 memory care units.
Capitalizing on U.S. demographic trends
Metropolitan Investment is a new player in U.S. real estate but it has an established track record of success in Europe. The company’s portfolio consists of 31 properties with a cumulative value of $250 million — 90% of it is retail with the balance in alternative assets, mainly student housing.
Metropolitan entered the U.S. market last year, after doing extensive research on every commercial real estate product type, along with population and demographic analysis of major and secondary markets, Jas said.
The firm decided to pursue alternative asset classes including senior housing because the aging boomer population over the next decade is expected to provide the foundation for long-term, sustainable growth over the next decade.
“When we enter a new market, we look for some sort of safe haven and sustained value appreciation over time,” Jas said. “Senior housing is ideal for the investments we want to make.”
AgeWell brings an experienced operator and brand awareness of the senior living space, while Royal Ascot brings private equity and a history of building successful brands such as Frederick’s of Hollywood and Intrepid powerboats to the table.
AgeWell operates seven communities in Georgia, Michigan and Ohio, with another slated to open in Snellville, Georgia next year. The company was impressed by the due diligence Metropolitan did on the U.S. senior living space before committing to invest in it, AgeWell Co-Founder and Chairman Larry Landry told SHN. But what swayed AgeWell was learning that Metropolitan was entering senior living for the right reasons.
“They see it as not just an asset class, but they see it as having a positive impact on people. They really want to create centers for successful aging,” he said. “That’s our philosophy so there was a natural alliance.”
From Royal Ascot’s perspective, Metropolitan’s attention to product quality and their understanding of long-range investment horizons meshed well with is own, Royal Ascot Founder Founder and Managing Partner R. Todd Lazenby told SHN. It will focus on building the MI Senior Living brand in the U.S.
“We don’t look at investing from a three-to-five year perspective, but more a 10-20 year perspective,” he said.
An ambitious growth strategy
The MI Senior Living team expects construction of Tequesta Senior Housing to last 18 months, with the first move-ins expected to arrive in Spring 2021. MI Senior Living is entering an increasingly competitive senior living market in Palm Beach County.
Notably, Belmont Village Senior Living announced a partnership last March with Baptist Health South Florida, the largest health care group in the region, to develop a pipeline of new communities. Belmont Village CEO Patricia Will told SHN this was the first time a health care system is taking an active involvement in developing senior living.
MI Senior Living hopes to leverage AgeWell’s culture platform, Masterpiece Living, to its advantage, Landry told SHN. Landry is chairman and CEO of Masterpiece Living, which has 88 partner communities across the U.S.
“In our enterprise assets owned by AgeWell, it is our philosophy to always include Masterpiece,” he said.
The Tequesta site, as well as MI Senior Living’s future pipeline, aims to capitalize on supply and demand imbalances and the proven track record of the AgeWell-Masterpiece model in its target markets, Lazenby said.
The Tequesta Senior Living site will be the first test. Metropolitan’s research shows there is an untapped demand for independent living in the area, Jas said.
MI Senior Living’s new development pipeline will have a full continuum of care, weighted toward independent living, Landry told SHN. It is looking for opportunities across the Southeast, Texas, Michigan, Ohio, Indiana and Illinois, which has a large Polish population concentrated in Chicago that Lazenby believes can be leveraged for success.
“As we further define our mission, we believe we’ll become a notable player in the space,” he said.
Foreign investors have become more attuned to the opportunities in U.S. senior housing in recent years, highlighted by a spending spree by Chinese wealth funds from 2015 to 2017.
Last year, senior housing acquisitions by Chinese, Hong Kong and Taiwanese interest were virtually nonexistent. But they are not selling, either, opting instead to hold onto their acquisitions in order to study design and operational best practices to bring back to a nascent Chinese senior housing market.
Editor’s Note, Aug. 14, 2018: Senior Housing News received a note from Royal Ascot Partners announcing the firm had exited the joint venture.
“We obviously wish Agewell continued success as it continues construction and management of world class, dynamic senior living communities throughout the country. We additionally wish Metropolitan continued success in its efforts to establish itself in the US marketplace.”