[Updated] Welltower Transitioning 89 Holiday by Atria Communities to 6 Operators

Welltower has announced it is transitioning 89 senior living communities managed by Atria to six other operators that include Arrow Senior Living, Cogir, Discovery Senior Living, QSL, Sagora and StoryPoint.

As of June 3, Welltower had transitioned 27 of the 89 properties, with plans to transition the rest in the third quarter of the year.

“The transitions will create strong geographic density with best-in-class regional operating partners across the U.S. that have a proven track record in markets where the properties are located,” the Toledo, Ohio-based real estate investment trust (REIT) wrote in a business update Monday morning.


In 2021, Welltower acquired 86 former Holiday properties that the company owned and managed in an acquisition valued at $1.58 billion. At the same time, Atria acquired the management services of the former operator.

Atria worked with the REIT and reached an agreement “benefiting both parties that allows for the transition of the Welltower Holiday portfolio to their new operators,” according to a statement from the operator.

“We made significant contributions on enhancing operational efficiency, standardizing processes, and executing on an extensive refurbishment initiative across the portfolio. Welltower has determined the right next step for their Holiday communities is for them to be managed under a regional approach with multiple operators,” a representative from Atria told Senior Housing News. “We are committed to supporting the impacted communities, residents, employees, and new operators through the transition process. This agreement allows us to continue to invest in our strong platform and take advantage of the increased demand seniors housing is experiencing.”


Portfolio overview

Welltower has already transitioned 14 properties in Texas and the Southern U.S. to Sagora Senior Living and 13 properties in the Midwest to StoryPoint, according to the REIT’s business update. Those properties have an average occupancy rate of 73% and 74%, respectively.

Arrow Senior Living is picking up six properties in the U.S. plains state region, while Cogir is taking on 20 in the Pacific Northwest. Discovery Senior Living is slated to manage 23 communities in California and Florida, and QSL is set to manage 13 in the U.S. Southeast. The properties carry an average occupancy rate of 84%, 77% and 78%, respectively. All of those transitions are slated to close in the third quarter of the year.

The properties also carry potential net operating income (NOI) upside of “nearly $47 million upon achievement of pre-Covid occupancy and margin [and] $20 million+ of additional upside beyond pre-Covid stabilization if underwritten economics are achieved,” according to Welltower.

The company acquired the properties, composed of about 10,500 units, at a cost basis of about $149,000 per unit, according to Welltower’s business update. The company has so far spent about $85 million in renovations on the portfolio, with more than another $15.7 million to go, according to the document.

All told, the REIT expects to have invested $171,000 per unit once all is said and done, including transition costs and post-transition CapEx.

“[We are] on target to deliver renovated portfolio at all-in basis significantly below replacement cost and comparable transactions,” the REIT’s business update reads. “Portfolio [is] expected to stabilize at an 8%+ yield on Welltower’s all-in.”

Results previously achieved in the portfolio are a case study to the potential upside ahead. The REIT had previously transitioned management of a property in Hawaii from Holiday to Oakmont Senior Living. According to Welltower, the community has the potential to reach 95% occupancy, with NOI margins at 45%; from 76% and 22% at the time of the community’s acquisition.

Strategy built around regional density

With the move to transition the Atria properties, Welltower is also growing its holdings with some of its established operating partners.

Cogir USA is under the transition slated to manage a total of 45 communities for Welltower. Cogir, which has a separate operations business geared for residents north of the U.S. border, is the operator behind Welltower’s operating platform spinning up in parts of Canada, which until last year was known as “Project Transformer.” The two companies began working together in 2018.

The move also brings another established operator, StoryPoint Senior Living, to a total of 94 communities under management with the REIT; and expands operator QSL to 25 Welltower communities in operation. The operators began working with the REIT in 2010 and 2021, respectively.

All three operators, in addition to others, work with the REIT under a strategy of regional density wherein they oversee clusters of communities in certain markets and areas in order to maximize efficiency.

That strategy has yielded good results in the past, according to Welltower.

In 2021, Welltower transitioned management to Cogir of four mostly memory care communities in the Pacific Northwest. That resulted “in substantial NOI margin and occupancy improvement and outsized value creation,” the company noted.

Similarly, the REIT in 2021 and 2022 acquired a portfolio of communities in Ohio and the Southeast, and transitioned them to StoryPoint and QSL, “resulting in significant NOI growth.”

“Greater regional density also allows for an expansion of career growth opportunities for employees and improved retention,” the REIT noted.

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