Oakmont and Sunrise Senior Living Embark on New Chapters with Welltower’s Backing

The headline from Welltower’s Q2 2021 earnings call was the record investment pace that the real estate investment trust (REIT) is setting. However, I was most interested in news related to two senior living operators: Sunrise and Oakmont.

  • Under a new joint venture, Welltower expects to roughly double its Oakmont portfolio through the acquisition of new management contracts
  • Oakmont is leveraging the new JV to launch a brand, Ivy Living, and six of the forthcoming Ivy Living buildings previously operated under the Sunrise Villa brand
  • Sunrise is exiting its 46-property U.K. portfolio to focus on North American markets
  • Welltower and Sunrise have partnered on their first acquisition initiative in years, involving a community in the Philadelphia metro area

Oakmont is obviously growing in new directions and appears to be benefiting from an expanded leadership structure and a nimble pandemic response. The company is the first Welltower operating partner to surpass 90% occupancy post-pandemic.

Sunrise, meanwhile, is refocusing under its new CEO, Jack Callison. The U.K. exit and the Sunrise Villa transitions walk back two of the strategic moves made under his predecessor, Chris Winkle, to diversify the portfolio. Streamlining the company could help simplify operations and drive results, but it will be interesting to see how Callison also seeks to grow the business.


A fresh chapter for Oakmont

Oakmont’s growth and occupancy rebound are all the more remarkable considering that in 2017, the Tubbs Fire in California affected four Oakmont communities and burned the 72-bed Oakmont of Villa Capri to the ground. Oakmont then faced a lawsuit related to claims that the company mishandled evacuations during the fire, which the company settled in 2018.

But the wildfire did not slow down Oakmont’s development pipeline, and the company’s capital partners appeared to remain confident.

Between roughly 2018 and 2020, Oakmont opened 11 new communities, bringing its portfolio to 33 communities in California and Nevada. In 2019, Welltower acquired six newly built Oakmont communities for about $297 million. As of January 2020, Oakmont had a 10-property development pipeline in the works.


Along with the portfolio expansion, Oakmont made several key leadership appointments and hires. In the fall of 2019, Oakmont added a VP of sales and marketing for new development, as well as a regional VP of sales and marketing. In early 2020, Matt Stevenson was elevated to become the company’s first COO and Mandy Curtis joined as VP of health services. In April 2020 — amid the early days of the Covid-19 pandemic — Dr. John-Mark Geiss took on the medical director role.

The pandemic demanded that the leaders from sales and marketing and the medical leaders collaborate in new ways. Oakmont went through a “complete transformation” of its sales process to focus less on its highly amenitized buildings and hospitality-driven approach, and more on health, safety and clinical capabilities, Stevenson told SHN. Yet, he also was ready to “get back to selling luxury” as part of the effort to rebuild census coming out of the pandemic, he said earlier this year.

This nimble approach appears to have paid off, as Welltower CEO Shankh Mitra touted Oakmont as the first operator to exceed 90% occupancy in the current environment.

And Welltower is not the only capital provider to view Oakmont as a strong operator coming out of Covid-19. Private equity firm Harrison Street in June 2021 announced the $1.2 billion acquisition of 24 Oakmont communities, buying 12 from Healthpeak and 12 from Gallaher Companies.

Oakmont had made another important hire back in August 2020, when Kevin Tyler — a former Green Street analyst and Welltower vice president — became CFO and chief investment officer. Part of his brief was to help lead the company’s growth strategy and identify investment opportunities.

That strategy now is becoming clearer, with the new Welltower JV and the decision to launch the Ivy Living brand by assuming the management of several existing communities. The effort began with Welltower and Oakmont acquiring a community dubbed Ivy Park at Otay Ranch.

Oakmont has not disclosed many details of its strategy or what will differentiate the new brand, but a press release about the Welltower JV stated: “Ivy Park is the first of Oakmont’s new brand, Ivy Living, which builds upon decades of operational excellence providing Oakmont the flexibility to pursue opportunities that have a different built environment.”

A photograph in the press release shows that Ivy Park is the community formerly known as Sienna at Otay Ranch, which opened in late 2018 and was developed by Douglas Wilson Companies in partnership with Healthpeak and Milestone Retirement Communities. At its opening, the building consisted of 85 assisted living apartments and 26 memory care units.

Oakmont’s website also displays six other Ivy Park communities “coming in August” — and photos of these communities indicate that they currently all are operating under the Sunrise Villa brand.

The Sunrise Villa brand originated through Sunrise’s 2017 acquisition of seven properties, all of them offering assisted living and early-stage memory care services. The communities are woven into their neighborhoods within urban areas, and each location has communal gathering spaces such as family-style dining rooms and outdoor amenities like gardens and patios, SHN reported.

While these buildings are well-amenitized and well-located, their older vintage differentiates them from Oakmont’s luxurious ground-up developments. The new Ivy Living brand is a play that other senior living providers are also making through the creation of sub-brands, and one that could help diversify Oakmont, which charges some of the highest rents and has some of the highest acuity residents in the Welltower portfolio.

Oakmont’s leadership was not available to speak with me for this column, and after the Welltower JV and the Ivy brand were first announced, they indicated that they would have more information to share in the near future. In the meantime, it appears that the company made wise decisions in building out its team, operated strongly through 2020 and is emerging from the pandemic with a strategy to grow in new directions.

Sunrise simplifies

Sunrise did not respond to my inquiries about the future of the Sunrise Villa brand, but the company clearly is re-focusing under Callison.

Under his predecessor, Chris Winkle, Sunrise expanded its U.K. presence with the acquisition of Gracewell Healthcare and also started the Sunrise Villa brand. These moves were part of a diversification strategy; while Sunrise was well-known for having a homogenous portfolio of “mansion”-style communities, Winkle believed that multi-brand portfolios would be the future for Sunrise and for senior living at large.

Winkle might have been correct in that assessment, judging by the proliferation of multi-brand plays in the space, including from Oakmont. But the homogeneous nature of Sunrise’s large portfolio — numbering more than 260 U.S. communities — historically was seen as a strength, enabling efficient operations and a strong brand identity.

Callison might be looking to reduce complexity and maximize the efficiencies across the more standardized communities as the company rebuilds occupancy. At 176 properties, Sunrise is by far the largest operator in Welltower’s SHO portfolio, and Q2 2021 occupancy in the portfolio as a whole stood at 81% on a same-store basis.

Welltower — which holds a 34% ownership stake in Sunrise — is “encouraged” by the direction that Callison is setting, Mitra said on the Q2 2021 earnings call.

“Jack is refocusing the organization as a premier senior living brand in North America,” he said.

The decision to do an acquisition with Sunrise is a vote of confidence and an indication that the operator is not just in disposition mode. Indeed, Callison cited several avenues for growth in the press release announcing the U.K. exit.

“We will drive value through our robust ground-up development pipeline, the redevelopment of existing communities, the continued lease up of our newly opened communities, and the strategic acquisition of new management contracts,” he said.

On the development front, Sunrise recently opened communities in Virginia, Massachusetts and Florida, and has a pipeline of eight communities slated to open by early 2022.

Going forward, I think it will be particularly interesting to see how much more growth Sunrise pursues through acquisition, and whether the company eventually returns to a multi-brand strategy to serve different market segments.

Sunrise’s majority owner, Revera, is open to a “strategic relook” at a multi-brand strategy, Revera CEO Tom Wellner told me shortly before Callison was named as CEO. And Revera is seeing the potential for further U.S. investments through Sunrise as well as “other opportunities,” Wellner noted.

What seems clear is that Callison has hit reset on certain aspects of Sunrise’s strategy, and seems aligned with the company’s ownership on setting a revised course going forward. Where that course takes Sunrise will be one of the stories to unfold in senior living’s post-pandemic era.

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