It is sometimes said that the senior living industry is a decade or two behind the multifamily industry — but Welltower COO John Burkart believes you can turn back the clock even further and still compare the two.
“[Welltower CEO Shankh Mitra], when I originally spoke with him, he said, ‘it’s kind of like 20 years behind the apartments,’” Burkart said Tuesday during the Citi 2022 Global Property CEO Conference. “And I think I mentioned to him shortly after I started, ‘I think it’s more like 1970.’”
Burkart said he often works with operating partners who excel at the care they provide residents, and then aids them in other aspects of the business that “are really not their forte.”
As was the case for apartment companies in the 1970s, Burkart sees many aspects of the business beyond care that can be made better or modernized over time, including technology.
“What they’re doing with care, the care is great,” he said. “When you talk about the other aspects of the business — the marketing, the value proposition, the asset management — the opportunities are huge, truly huge.”
Burkart, who joined Toledo, Ohio-based Welltower last July as COO, is a veteran of the multifamily world who witnessed the sector modernize firsthand. He previously spent 25 years at multifamily real estate investment trust (REIT) Essex Property Trust (NYSE: ESS), where he worked as senior executive vice president and COO and helped develop the REIT’s revenue management platform among other optimization initiatives.
And he is bringing his experience in that world to the senior housing space, particularly in the way Welltower works in alignment with its operators , all of which now operate under its RIDEA 3.0 structure.
“It is really no different than fee management multifamily, [but] it’s a fundamentally different contract than what people are used to from the past where they had much, much more control,” Burkart said.
To that end, Welltower’s leaders are constantly evaluating the company’s portfolio for opportunities to improve it, including through operator transitions where they make sense, according to CEO Shankh Mitra.
“Alignment of interest is a very, very big thing for us,” he said. “Our point is not that we want to win at the expense of new, our simple point is that we want to sink or swim together.”
The company also plans to further leverage its data analytics platform to aid operators and help drive results in the future.
Welltower has deployed about $6.8 billion since October, 2020, with $1.2 billion of that occurring since the beginning of the first quarter of 2022. Most recently, the company put $548 million toward the acquisition of 33 communities, expanding its relationship with StoryPoint Senior Living.
“We’re still buying significantly below replacement costs,” Mitra said. “That’s where the best risk-adjusted returns are.”