Atria to Acquire Holiday Retirement as Welltower Buys 86 Properties for $1.6B

Atria Senior Living is acquiring the management services business of Holiday Retirement, while Welltower (NYSE: WELL) is buying the 86 properties that Holiday owned and self-managed. Welltower’s acquisition is valued at $1.58 billion.

The deal represents the combination of two senior living heavyweights: Winter Park, Florida-based independent living giant Holiday, which ranked no. 3 in Argentum’s 2020 Largest Providers Report; and Louisville, Kentucky-based Atria Senior Living, which took the no. 7 spot.

Another key detail in the plan is the fact that Toledo, Ohio-based real estate investment trust (REIT) Welltower is investing $1.58 billion to acquire all 86 of Holiday’s owned and self-managed properties, which is closing simultaneously to Atria’s acquisition.


The seller is private equity giant Fortress Investment Group (NYSE: FIG), which owns Holiday Retirement and the 86 properties now going to Welltower. Atria did not disclose its acquisition price of Holiday Retirement’s management business. Holiday’s management team, including CEO Lilly Donohue, will remain in place.

About two months ago, Welltower CEO Shankh Mitra placed a phone call to Atria CEO John Moore — who was at a wedding at the time — and that started the ball rolling toward completing this transaction on a rapid timeframe. The deal will provide a platform for Atria and Welltower to continue making inroads into senior living at a more middle-market price point, and will infuse capital to help drive further innovation within Holiday, leaders of the three organizations told Senior Housing News.

When Atria’s acquisition of Holiday closes, the combined company is expected to serve 45,000 residents and employ about 19,000 people while managing 447 communities across 45 states and seven Canadian provinces. That would represent the country’s second-largest senior living operator under the most recent Argentum report.


‘Landmark transaction’

Leaders with Atria and Holiday share a vision in creating middle-market senior housing at scale, and CEO John Moore believes the two companies share many synergies they can leverage together. But in the immediate aftermath of the deal, the two companies will still largely operate as they had before.

“Holiday has an operating team on the ground that has shown itself to perform very well through the pandemic and coming out of the pandemic,” Moore told Senior Housing News. “Job one is going to be continuing to support that.”

Holiday manages about 240 communities, including the 86 included in the sale to Welltower. But the company’s relationships with its other community owners won’t substantially change with Atria’s acquisition, Moore added.

Welltower CEO Shankh Mitra said that he considered the deal a “landmark transaction” for the company.

“There’s a tremendous amount of strong alignment here between the operators and owners,” Mitra told SHN. “And you will see how we take this timeless design and incredible physical plant to its next stage.”

The portfolio of the 86 to-be-acquired Holiday properties consists of 80 nearly identical independent living communities and six combination independent living and assisted living communities. Welltower plans to invest about $1.5 million to $2 million per community on capital expenditures and improvements to help the communities meet existing needs and position them to best compete in their markets.

Welltower also expects to undertake “larger-scale” refurbishment and redevelopment projects at 10 of the properties. In some cases, that might involve adding new units, such as independent living cottages.

Overall, the acquisition price represents a pricetag of $152,000 per unit, representing a discount to estimated replacement cost in excess of 30%, according to Welltower.

Holiday’s Donohue said the company is working with Atria and Welltower on many different ideas to upgrade the portfolio.

“We are going to … think through things like, does design fit the ability for our operators to take care of them?” Donohue told SHN. “We’re going to be smart about opening up potential parts of our communities to the outside community, so are there ways to add additional revenue sources?”

The communities will operate under a “RIDEA 3.0” structure, a concept that has been honed over the years, according to Mitra.

“It’s very simple to describe: we sink and swim together,” Mitra said.

On a practical level, this means substantial promote opportunities for the management team, if they achieve certain long-term financial metrics.

“The achievement of such hurdles would imply significant growth in underlying property level performance, resulting in a nominal yield in excess of 9% to Welltower and a net economic yield in excess of 8% to Welltower after capital expenditures and payment of the promote,” according to Welltower’s press release announcing the transaction.

The leaders of Welltower, Atria and Holiday all see substantial upside as the Holiday portfolio recovers from pandemic-related occupancy losses. As of June 20, occupancy stood at 76.3%, and census has increased over 270 basis points since bottoming out in March 2021, according to Welltower’s press release.

Building on existing relationships

Although Welltower and Atria are upgrading their relationship with one another, this is not the first time the two companies have collaborated on senior housing projects. One recent example of that is in New Jersey, where Atria and Welltower (NYSE: WELL) have joined a project alongside multifamily developer AvalonBay Communities and Pulte Homes to convert an office complex in West Windsor Township into a mixed-use development with senior housing.

Atria has also worked with former Holiday properties before. The company assumed operations of two portfolios previously managed by Holiday: a 29-property portfolio in Canada in 2014 and a 21-property portfolio owned by New Senior Investment Group Inc (NYSE: SNR) in April 2021.

In fact, the deal highlights connections across the senior living industry in other ways as well. Chicago-based real estate investment trust Ventas (NYSE: VTR) is a partial owner of Atria, along with Fremont Group and members of the management team.

“Everybody’s excited about this transaction,” Moore said.

Although the acquisition of Holiday by Atria won’t result in many immediate changes for the combined company, Moore sees opportunities to more closely align with one another over several different phases. For example, Atria expects to bring its technology to Holiday’s operations, which includes its  proprietary staffing optimization, digital marketing and CRM software, Glennis

Atria also has in-house marketing and technology capabilities that could reduce the new company’s dependence on referral sources while boosting organic lead generation.

Leaders with the two companies also are thinking about how they will brand their communities, though that is a discussion to be had later down the road. Atria has embarked on a strategy to create a multi-brand portfolio, and is rebranding the Holiday communities acquired from New Senior under the Atria Retirement banner.

“Once we settle on the vision and what we want to stand for, there’s certainly going to be work around the branding,” Donohue said.

The big-picture goal is clear and one that Mitra, Donohue and Moore intend to push for quickly, and together: to create a platform of middle-market senior housing communities to meet the financial needs of the incoming generation of seniors.

“Senior housing at an affordable price is a very, very difficult problem to solve,” Mitra said. “We have been looking at it for a long time and we think this combination [of companies], this trio, has the best shot.”

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