Welltower (NYSE: WELL) is launching a new “senior apartment” housing brand called welltowerLIVING, geared toward wellness and social connectivity for the 55-plus crowd.
The real estate investment trust (REIT) on Wednesday announced the launch of the product, which also will feature a lower price point than the traditional private-pay senior housing in Welltower’s portfolio.
“This extension of the Welltower brand and product offerings significantly expands the company’s addressable market, from a predominantly 75+ years old, affluent resident base to one which is 55+ years old with a broader economic profile,” Welltower wrote in a press release.
While it’s unusual for a senior housing REIT to put its brand name on buildings, this aspect of the announcement is less important than the fact that Welltower is making a commitment to this new market segment, not only with welltowerLIVING but other partners, Raymond James analyst Jonathan Hughes told Senior Housing News.
The play could prove lucrative given both the size of the aging population and the opportunity for synergies among 55-plus communities and health systems and payers — including ProMedica, Geisinger and Jefferson Health — that are also Welltower partners. The REIT has been actively forging relationships based on the thesis that senior living settings are ideal for effectively managing care for older adults, in order to maintain their wellbeing, extend length of stay, and lower overall costs for insurers. This is the value proposition driving welltowerLIVING.
Welltower’s first three welltowerLIVING properties are located in Las Vegas and total 620 units. The properties — which Welltower acquired and were renovated in 2017 — are planned to operate with lower staffing levels and an annual resident turnover of between 20% and 25%. This, Welltower says, would likely result in operating margins and capital expenditures closer to those seen in the multifamily sector.
Monthly rent for the product type will likely range between $1,000 and $1,200, according to the REIT.
Welltower also plans to use the new brand as a venue where its health system partners can implement clinical programs and care models to improve outcomes and drive down the total cost of care for seniors, including through their participation in the Medicare Advantage program.
“welltowerLIVING was created to provide a safe and accessible environment for aging-in-place,” stated Welltower Chairman and CEO Tom DeRosa in the release. “The integration of physical design, technology and affordable access to products and services that can enhance the social determinants of health will allow Welltower to meet the needs of the rapidly growing population of moderate income, independent seniors that we expect will be increasingly covered by Medicare Advantage programs.”
This is not Welltower’s first investment in a lower-cost, lighter-service senior housing setting.
Last August, the provider brought middle-market independent living company Clover Management into its umbrella in a $343 million joint venture transaction. Welltower has also forged partnerships with two other companies in the 55+ space: Charlotte, North Carolina-based Terwilliger Pappas; and Priya Living, which is based in San Francisco.
Welltower’s senior apartments portfolio currently consists of about 4,500 units in 35 properties spread across 5 states. But that may grow as the company has plans to start three new projects with Pappas and Priya Living this year.
“In both cases, we anticipate that our relationships will provide a multi-billion dollar investment opportunity for Welltower shareholders over the next decade,” Welltower stated in its press releases.
With partnerships like these with Pappas and Priya, Welltower is succeeding in differentiating itself from other capital providers in the health care space, Hughes believes.
“These two relationships – along with countless others with developers and health care systems/providers – are what separate Welltower from others and make them not just a capital provider, but rather a preferred growth partner within the $1 trillion-plus health care real estate sector,” he told SHN.
Bringing down the cost of senior living is a hot industry topic, with providers across the industry racing to find a solution in order to capture the wide swath of middle-income older adults. But the stakes are also high — if nothing changes, more than half of all middle-income older adults won’t be able to afford private-pay senior living by 2029.