Why Related Cos.’ CareMax Investment Raises Intriguing Possibilities for Atria and Middle-Market Senior Living

Three years after forging a $3 billion development joint venture with Atria Senior Living, real estate giant The Related Cos. has now deepened its involvement in the older adult health care market.

Last week, New York City-based Related announced an investment in CareMax, a company that provides primary care, specialty care and coordinated services to older adults.

Senior living owners, operators and other industry stakeholders should pay attention to Related’s move for several reasons:

  • It further accelerates the expansion of senior-focused health centers supported by Medicare Advantage
  • I believe the play has interesting potential for Atria and the middle market
  • The new partnership highlights that lines are blurring between real estate and health care services

A rising model for senior care

About six months ago, CareMax entered into a definitive agreement to go public via a $614 million SPAC merger, which would fuel the company’s growth.

Now, expansion plans have been further accelerated through the Related partnership, as the real estate company is working with CareMax on the development of new health centers.

The centers are the main setting through which CareMax delivers and coordinates primary care, specialty care and wraparound services to its members, many of whom are enrolled in Medicare Advantage plans with benefits tailored to CareMax’s offerings.


Three health center projects involving Related and CareMax are already underway. CareMax believes new openings can ramp up to 35 centers in 2024, with the pace increasing in subsequent years.

The vision is to create CareMax clinics within or close to affordable housing buildings, including some of Related’s buildings that have a high concentration of older residents.

This strategy shows that the real estate company appreciates the potential benefits of adding a health care component to senior housing, even for younger and more independent older adults.

It’s a move that active adult developers in particular should heed. During our recent Active Adult Virtual Summit, we heard concerns from several panelists that developers are too cavalier about what will happen as their residents age in place. Related is seeing that occur across the affordable housing space already, which spurred this initiative with CareMax.

Active adult developers might be hoping that residents move out as they age and their health care needs increase, but technology and home care might combine to enable aging in place for long periods of time. Real estate firms might be shrewd to forge health care partnerships to maintain residents’ wellbeing as long as possible, and — as Related did by investing directly in CareMax — finding ways to get the most financial upside from doing so, even beyond increasing length of stay.

The CareMax investment is also another signal that a new breed of health care providers could be playing an ever-larger role in supporting senior housing communities. CareMax is one of several companies with similar approaches to providing more coordinated care to older adults through purpose-built health centers, Medicare Advantage partnerships and technology platforms.

Others, including Oak Street Health and Cano Health, also have recently gone public through IPOs or SPAC deals, and intend to use the tremendous capital they have raised to supercharge their growth. Senior living partnerships could be part of their expansion plans; Cano Health Founder and CEO Dr. Marlow Hernandez is participating in SHN+ TALKS next week to discuss the potential he sees in this area.

Related has no plans to co-locate CareMax clinics and Atria communities, Related Executive Vice President Bryan Cho told me. But CareMax’s leaders are open to working more closely with some types of senior living providers, and I think there is the potential for interesting future collaborations among Related, CareMax and Atria, or other senior living operators.

That said, I do understand why Cho was emphatic in telling me, “The CareMax and Atria businesses are totally different — really nothing to do with each other.”

Through their JV, Atria and Related are creating senior living communities in some of the most affluent urban markets in the United States, including near Related’s Manhattan mega-development, Hudson Yards. CareMax serves a very different consumer base; the company is focused on lower-income consumers who struggle with access to high-quality, affordable health care.

But consider that Atria is not solely focused on the luxury market. The company just made a major investment to increase its reach into the middle market by acquiring the management business of independent living giant Holiday Retirement.

It seems to me that a CareMax partnership could be a way for Atria’s Holiday communities to support the health and wellness of residents, potentially winning more move-ins and extending length of stay. It’s a proposition that theoretically makes sense to CareMax’s leaders.

“It’s not just low-income people who need access, middle-income people need access [to care and services],” CareMax Executive Chairman Richard Barasch told me. “There’s a great need all the way up the middle class … that’s the reason Medicare Advantage is growing so fast.”

And the evidence shows that CareMax’s approach to coordinated care improves outcomes across patient demographics.

“I think our model demonstrates that it works for anybody; when we think about our hospitalization rates — E.R. visits per 1,000 [people] — when we compare them to the national average, and that includes middle-class, upper-class, our patients are still 66% less likely to go to the hospital,” CareMax CEO Carlos de Solo told me.

Related is not currently involved in Atria’s middle-market strategy, but at the least, it seems to me that Related can connect Atria and CareMax, and I ponder deeper involvement in the future.

Out of the 70,000+ units of rental apartment homes in Related’s portfolio, 10% provide middle-market workforce housing. Furthermore, Cho estimates that 20% to 25% of Related’s 50,000 affordable units are either age-restricted housing or a naturally occurring retirement community (NORC).

As the population continues to age in the coming years, I wonder about the potential to convert some of these multifamily buildings to independent living or another version of retirement housing under an Atria brand, with the real estate under Related’s ownership or a different ownership group — perhaps Welltower (NYSE: WELL), which is a partner on some of the Atria-Related projects, now owns 86 Holiday buildings, and is also making a big push into the the middle-market, lower-acuity senior housing space. Welltower’s initiative with Clover Management and Geisinger Health’s 65 Forward clinics sounds very similar to what CareMax might be able to offer residents of independent living communities.

In addition, Related is one of the largest developers of 80/20 mixed-income housing in a number of the largest U.S. metro markets, and its project with Atria in Cupertino, California, is slated to be 20% affordable units. If CareMax becomes interested in expanding its model to serve higher-income as well as lower-income older adults, these types of projects strike me as potential testing grounds.

Finally, developing middle-market senior living from the ground-up is a difficult proposition, particularly given current high labor and materials costs. But groups like Clover are pursuing development at this price point, and Related’s scale and its expertise across different market segments I think make it a potential ground-up developer of middle-market senior housing as well.

Clearly, Related is well aware that the older adult market is growing quickly across the board.

“The senior population is swelling over the course of the next decade, and we’re feeling it, obviously, in our luxury portfolio, but we’re also feeling it in the rest of society, too,” Cho said.

Furthermore, the Atria JV and the CareMax initiative both stem from Related’s “efforts to be a more innovative leader in health care,” according to Cho.

As these efforts at health care innovation continue in the years ahead, I would not surprised to see Related expand on its partnership with Atria, or forge new partnerships with other providers, in order to be a driving force in additional segments of the senior living market.

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