Leaders with Welltower (NYSE: WELL) have shared progress and new improvement plans for the company’s legacy Holiday Retirement portfolio, now operating under the brand name Holiday by Atria.
In 2021, Welltower bought 86 properties that Holiday Retirement formerly owned and self-managed in conjunction with Atria’s acquisition of the company’s management services. At the time, the Toledo, Ohio-based REIT had planned to invest about $1.5 million to $2 million per community.
Now, leaders with Welltower have outlined specifics that show the scope of the portfolio’s CapEx investment — and demonstrate how, in theory, it could be substantially or totally paid for using only savings and revenue found within one former Holiday community in the portfolio.
Welltower outlined a case study of its Hawaii Kai property in Honolulu, which was formerly managed by Holiday. The REIT tasked Oakmont Senior Living with management of the community, and the operator was able to find significant cost savings and revenue opportunities doing so.
The case study showed that at acquisition Hawaii Kai reported a 75.6% census, with the potential for that to rise to 95% with an estimated net operating income margin of 45.2%.
Through that, Welltower projected a net value creation at the property of $158.7 million, or about $1.8 million per 86 properties in the Holiday portfolio.
“Net value creation from one property has the potential to fund CapEx for the entire portfolio,” the business update states.
With nearly identical layouts and an operating structure of properties will allow for “seamless value-add initiatives” across its portfolio.
The case study, Welltower said, allowed to bucket the former Holiday portfolio into four different areas with each receiving a different level of CapEx investment, as 20 properties were identified to be in “well above-average markets with limited competition and could benefit from the highest level of renovation.”
“Based on this analysis, Welltower underwrote the higher priority CapEx investments to generate 13%-17% ROI,” the company wrote in the business update.
Welltower also reported its senior housing operating portfolio saw its second consecutive quarter of 20% same-store net operating income (NOI) growth over the last two quarters. The company’s first-quarter earnings call is slated to take place Wednesday morning.