A new developer and owner is joining the growing ranks of hospitality veterans seeking similar success in senior living through a combination of prudent ground-up development, targeted acquisitions and partnerships with growing operators.
Dallas-based Journey Capital owns two communities, has another two in development, and is expected to break ground on four more in 2020, Co-founder and Managing Partner Narayan Patel told Senior Housing News. Future projects include two planned for college campuses, although Patel declined to share further details on these plans.
He and his partner, Anand Patel, began exploring the senior housing space at the advice of relatives who were looking to enter the space. Having grown up managing hotels, the Patels — who met while studying at Southern Methodist University a decade ago — were sold on pursuing senior housing as an asset class after touring their first community and finding the synergies senior housing shares with hospitality.
“We were blown away. The sticks and bones [associated with hospitality] were there, along with the added care component,” Narayan Patel said.
Prior to pivoting to senior housing, the Patels worked for a Dallas-based real estate firm — Narayan as an associate, Anand as an analyst — as it grew in scale to over $1 billion in assets and partnerships with major hotel brands.
Journey Capital believes it can capitalize on Dallas’ favorable population demographics. The Dallas-Fort Worth metropolitan area gained over 1 million new residents from 2010 to 2018, and gained more residents in 2018 than any metropolitan area in the country, according to U.S. Census Bureau data. The metro’s over-65 demographic accounts for 10.7% of the total population. Furthermore, the area is home to 24 Fortune 500 companies, with several relocating to the area from the West Coast, Anand Patel told SHN.
But Dallas, like many metros, is contending with a rash of new senior housing construction, with 3,222 new units in the pipeline, according to data from the National Investment Center for Seniors Housing & Care (NIC) analyzed by real estate services firm Marcus & Millichap.
The Patels are confident that modest growth and due diligence in market selection will be key to Journey Capital’s future growth. Beyond 2020, the goal is to break ground on two new projects a year over the next five years, Anand Patel told SHN.
“We don’t have a big REIT or major investors behind us [pressured to deploy] capital. We can raise capital as needed,” he said.
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Journey Capital is forging relationships with young operators in growth mode. Its two communities currently online are operated by Fort Worth-based Civitas Senior Living, and Journey Capital is also partnering with a newer operator, New Braunfels, Texas-based SilverPoint Senior Living.
Journey Capital’s development pipeline includes two assisted living and memory care communities on college campuses, ranging between 65 and 82 units, along with cottages. Its future communities will range between 65 and 72 units each, ranging between independent living, assisted living and memory care.
The Patels believe a patient approach, and their hospitality experience, will allow Journey Capital to gain a foothold in a market teeming with new supply.
“Hospitality is a nice segue to senior living. The communities we want to build are ones we would want to place our parents in,” Anand Patel said.