The SeniorCare Investor, March 2024

Many have mentioned that 2024 presents a unique buying opportunity for investors with deep pockets (or great capital connections). But what exactly does that mean? And is it true, with where values stand for all types and qualities of properties?

See article at right

Can REITs Do It All?

REITs may be poised to have an active year as buyers in 2024. But Welltower is far and away the biggest player on the stage, and it would be difficult for any other REIT to supplant them at number one. But the others should get more aggressive in their buying strategies.

See article at right

The “Buying Opportunity” of 2024

Investors Have Cited the Opportunity, But What Is Behind It?

Much is being made about the fantastic buying opportunity in 2024 within the seniors housing and care M&A market. But what is behind that phrase that was mentioned in several earnings calls last month?

First, we have to cover where values are, and likely will be this year. Discounts abounded in the 2023 M&A market, according to the justpublished 29th Edition of The Senior Care Acquisition Report. Average prices dropped in each sector, year over year. Assisted living registered the steepest decline in average price, falling 26% to $145,400 per unit. Independent living communities sold on average for $196,200 per unit in 2023, or 24% lower than the record set in 2022 of $259,400 per unit. Skilled nursing facilities also fell from record-heights, averaging $97,700 per bed in 2023, which is down 14.5% from $114,200 per bed in 2022.

Can REITs Do It All?

Can REITs Take the Lead as Buyers in 2024?

So, here we are, exactly 48 months after the word was spread at the NIC Spring Conference in San Diego about COVID-19, where we all laughed at doing elbow bumps to greet our colleagues. Most everyone was clueless about what was about to happen, and no one was prepared, but too many people were overconfident. Not anymore.

No one can predict the future, but our guess is that the seniors housing and care business will be forever changed as a result of the pandemic. However, the pandemic is just one part of the change puzzle. For a decade or so, there were “voices” that said the long-awaited baby boomers would change the seniors housing business, but in ways unknown. What was being built from 2000 on (forget about before 2000) would not be appealing to the boomers. Unfortunately. Even some of the top people in the industry building them admitted that these new communities were not going to be appealing when the big demographic wave finally hits,

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But these are the averages for the facilities sold throughout the year, not necessarily an exact measure of how values fell for properties, apples to apples. In each sector, sales of struggling facilities made up a greater share of deals, and sales of high-quality, well performing properties were less numerous. That shift alone contributed to the decline in average value, year over year. And the shift tanked the median price for each sector, to $108,000 per unit for assisted living (the lowest median price per unit since 2010), to $150,800 per unit for independent living (the lowest since 2018), and to $70,000 per bed for skilled nursing facilities (also the lowest since 2018). Buyers attracted to that kind of low basis should perk up.

But The Senior Care Acquisition Report further breaks out the data for stabilized versus non-stabilized facilities,

by property age, size and type, and by quality, and their change in average values, year over year. For the assisted living and independent living sectors, quality referred to “A,” “B” and “C” communities, determined by a combination of their age, size and location.

For assisted living properties, all quality levels saw a drop in average price, year over year. However, “A” properties fell the furthest, by 18% year over year to the lowest average ever recorded for the “A” cohort, at least since we started separating out the markets. It is true that the top-tier of properties had further to fall. And there were fewer very-high-priced sales (above $350,000 per unit, for instance) that normally elevate the average. But the cohort of “A” properties sold in 2023 reported worse performance compared with sold “A” properties in the previous year, sometimes stressed and unable to cover debt service. Those operating details are available in the Report. The struggling “A” communities could end up being the hottest acquisition targets in 2024, with bidding wars erupting for the right properties.

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Meanwhile, the average price per unit for “B” properties fell 13.5% year over year, from $127,000 per unit in 2022 to $109,800 per unit in 2023. “C” properties measured a more modest 10% decline from $73,100 per unit to $65,800 per unit. That is the lowest level recorded for “B” properties since we have started tracking that market, and the floor value for “C” properties cannot be much lower.

These latter two categories will naturally make up most of the value-add, opportunistic acquisitions in 2024, but many value-add “A” transactions will still make a lot of sense (that relative drop in value should appeal to many investors, after all). It must be said that the future for many “C” properties may not lie in private pay seniors housing, but rather in alternative uses like Medicaidwaiver assisted living, behavioral health or affordable senior apartments. So a number of those properties would not necessarily be valued for their senior care potential.

All three categories also registered increases in their average cap rate in 2023, but for the actual values, see the Report. It was a consensus among the panelists on

our recent webinar, 2023 M&A Valuations and 2024 Predictions, which included Brad Clousing of Senior Living Investment Brokerage, Tracy Maziek of Oxford Finance and James Scribner of Scribner Capital, that there would be no serious movement in cap rates in 2024. (Click here to watch the full discussion). Borrowing costs may just not fall enough, despite a couple of expected decreases in interest rates from the Federal Reserve. But we will refrain from any definitive statements on this matter.

Nonetheless, higher cap rates should keep a number of buyers interested in making acquisitions and possibly attract capital in search of higher yields from outside of the industry. And for the non-cap rate deals, the low perunit or per-bed basis should continue to be appealing to opportunistic buyers. After all, for properties losing money that sold in 2023, skilled nursing averaged $62,300 per bed, while assisted living averaged $85,100 per unit. Buyers will need that sort of margin for error to make capital improvements, stabilize operations and deal with any fundamental weaknesses of the community or surrounding market that may have led to the operational losses in the first place.

In addition to the lower values for property types of nearly every age, size, type and quality, M&A activity should be sustained, if not grow, because of narrower bid-ask spreads. As 2023 progressed, sellers were not necessarily happier with the prices being bid for their assets, but they grew more realistic with them. That was a major contributing factor to the growing number of transactions announced and closed throughout the year, and it should continue into 2024.

For there to be a massive buying opportunity in 2024, there obviously needs to be many properties put up for sale. Aside from the normal retirements of mom & pops, funds reaching the end of their lives, receivership sales and the normal paring back of properties in institutional owners’ portfolios, there are hundreds of properties with maturing debt whose owners will likely prefer an M&A event rather than refinance their property at worse terms. That is especially true if the community is losing money or needs a major capital injection to stabilize. And in some cases, there may not be a reasonable lender to refinance the property. Also, if values will not be materially better in

2024, or even 2025, then it may be best to sell now and take what the market gives for your property.

Billions of dollars in debt are coming due in the seniors housing and care industry in 2024 and 2025, with lenders less in the mood to extend terms or renegotiate. It has been about four years of intense operational difficulties and patience from lenders, after all. Time has to be up for the non-performers. Massive maturities in other industries could limit the lending potential of banks and financial institutions with exposure elsewhere, like office and retail. Also, any portfolio challenges at Fannie Mae and Freddie Mac would not bode well for either agency diving headfirst into the refinancing environment in 2024, especially for deals that come with some risk. When they do, leverage will be down and spreads will be up, in all likelihood. All the more reason to turn to the M&A markets for an exit for the ones not covering debt service.

So, who can take advantage of the buying opportunity? Regional owner/operators demonstrated that they were highly motivated to build scale in 2023 to better absorb the higher expenses brought on by high inflation and staffing scarcity. We’ve heard a lot about the dry powder on the sidelines from private equity firms, but few rumblings have come from that cohort.

Rather, the REITs may be the best positioned, with their scale, low cost of capital, hordes of cash from years of divestments, strong stock values and pressure to acquire. We know Welltower (NYSE: WELL) is gung-hoe, but what about the rest? For that, return to page 1 and check out the other lead story, “Can REITs Do It All?”

SKILLED NURSING ACQUISITIONS

The challenging nature of the lending environment has made HUD debt assumptions very appealing to buyers, as those loans feature fixed interest rates that may not be available again to borrowers for years. As such, a portfolio of six skilled nursing facilities in California was finally sold in multiple phases, with the two last facilities closing after the completion of HUD debt assumption and state regulatory approvals. The facilities sold for

$154 million in total, and while the combined beds were not disclosed, pricing was reportedly strong on a per-bed basis and possibly a record for any portfolio SNF deal in the state, again on a per-bed basis. Gideon Orion of Walker & Dunlop facilitated the sale, his third over $150 million closed in the last 12 months.

Located in Southern California, the facilities were on the older side (typical of the state), having been built from the 1960s to the 1980s. But the outgoing operator, a legacy family operator with a strong reputation, kept the physical plants well maintained, with little deferred maintenance. Operations were strong, too, with good CMS quality metrics, a 20% Medicare census and stabilized occupancy in the mid-90% range.

With timing constraints due to regulatory changes in mid-2023 for the state of California, Orion was able to facilitate the transaction with the combination of a regional investor in healthcare real estate, in partnership with a publicly traded REIT. A well-regarded healthcare provider known to the regional investor and REIT

established a new 15-year master lease with two, 5-year extension options to secure the deal.

In another transaction involving attractive, assumable HUD debt, Blueprint was engaged in the divestment of two value-add skilled nursing facilities in east Texas. These facilities, located just 15 minutes apart, total 320 beds. Despite experiencing historical lows in census as well as staffing challenges, the facilities were showing signs of improvement and were trending back towards their historically achieved stabilized levels. Additionally, the existing HUD loan had an interest rate of 2.90% and a remaining term of over 25 years.

Giancarlo Riso, Amy Sitzman and Ryan Chase of Blueprint handled the transaction, procuring five competitive offers. The selected buyer was a regional owner/operator with a strong certainty of execution.

Also in east Texas, Nick Stahler and Austin Diamond of The Knapp-Stahler Group at Marcus & Millichap sold an 85+ bed facility to a regional owner/operator that was

selected for its proven track record and ability to close “all cash” in an expedited time frame. The facility had historically struggled with occupancy (it was in the mid50% range at the time of closing), and rising expenses due to inflation created further challenges. There was clearly room for improvement in those areas, plus in the payor mix and in additional revenue via enrollment in the QIPP, so multiple offers were presented to the seller, a single-asset owner/operator. The purchase price was not disclosed.

Also from the Knapp-Stahler Group, Andy Van Zee and Justin Knapp closed the sale of a 100-bed skilled nursing facility in Des Moines, Iowa. This top-tier facility boasted a five-star rating from CMS, a strong quality mix, stable occupancy and positive cash flow with one of the highest Medicaid rates in the state. With those qualities, we imagine the facility commanded top-dollar on the market, and it apparently set a strong price-per-bed comp within the submarket.

The seller, a local owner/developer/operator, ultimately selected Chicago-based investment firm Birchwood Healthcare Partners as the buyer. Birchwood stood out due to its operational experience in Iowa and its desire to grow in the Des Moines market. The transaction was one of the first few CHOWs completed under Iowa’s new administrative rules.

Lastly, in a deal that has yet to happen, Evans Senior Investments was hired to run a court-appointed sale of two skilled nursing facilities in Pennsylvania, with the sale hearing scheduled (in person and via Zoom) for March 15, 2024, at 10AM Eastern.

Built in the 1980s and renovated in the 1990s, the facilities up for sale include Beacon Ridge, a 118-bed skilled nursing facility in Indiana, Pennsylvania, and The Patriot, a 100-bed SNF and 76-unit personal care/ independent living community, together licensed to run as a CCRC, in Somerset, Pennsylvania. Both were losing money. There is also a 92-unit personal care community in Johnstown that has been closed, but is still included in the sale. The previous operator, Senior Choice, Inc. (the debtor and debtor-in-possession), with the Bank

of Oklahoma, N.A. as the indenture trustee, filed for bankruptcy on February 8, 2024, to sell the assets free and clear of all liens, claims, interests and encumbrances.

Qualified bids may be for one or more of the facilities, with the initial bid for Beacon Ridge set at $4.2 million, for The Patriot at $750,000, and for the shuttered community at $50,000, all subject to higher and better bids. Qualified bids should be submitted by March 13, 2024, and accompanied by a 10% good faith deposit. For more information, click here

SENIORS HOUSING ACQUISITIONS

As many of you know, since the onset of inflation and rising interest rates, large portfolio acquisitions have been in short supply in the seniors housing market. This was because there were few sellers of large portfolios who would take a haircut on pricing, and there were few lenders who would want to fund a billion-dollar deal. Well, it took the largest healthcare REIT to break this deal logjam.

Welltower (NYSE: WELL) announced its planned acquisition of 25 purpose-built active adult communities with nearly 3,000 units mostly in the Pacific Northwest. These are all managed by Affinity Living Communities, which will continue to manage them for Welltower. The purchase price is $969 million, or nearly $248,000 per unit. The transaction will be funded by cash on hand and the assumption of approximately $523 million of debt with an average interest rate of 3.8% and a nineyear weighted average maturity. How sweet is that, since it may be several years before a borrower can see that rate again, if ever. The average age of the communities is less than eight years. Welltower plans to form a long-term partnership with Affinity to develop more communities.

The Affinity communities have an average monthly rent of $2,100 and an average length of stay of nearly four years, which provides for stable cash flow. The portfolio operating margin is close to 60%. These are all some of the reasons why active adult has become so popular with investors. Without knowing the occupancy, but with the average rate and approximate operating margin known,

we estimate the cap rate to be under 5%, not taking into account the below market interest rate on the assumed debt. Remember, Welltower has an industry-low dividend yield of just 2.8%.

WELL also announced its fourth quarter results, and its SHOP portfolio continues to do well. Year-over-year same community occupancy increased by 330 basis points, the operating margin increased by 290 basis points, and same-community revenues increased by 9.75%. Not too shabby. In the fourth quarter, the REIT completed $3.0 billion in pro rata gross investments, including acquisitions, loans and development funding. For the full year 2023, they completed $5.9 billion in pro rata gross investments. No slowdown in M&A activity for Welltower.

There is no question that the operating environment, and investing environment, has been tough on REITs. Most have spent the past two years adjusting their portfolios, either selling properties that were not performing and had little likelihood of getting back on track, or switching out operators to new ones that had a better chance of succeeding. Often, it was both, including working on their capital structures.

LTC Properties (NYSE: LTC), with one of the smallest market caps ($1.3 billion) among the healthcare REITs, but also one of the most stable management teams, has worked on all three issues. Last year and the fourth quarter represented moves and changes that may put the REIT into a better position for growth, if they can find the right investment opportunities.

First, they repositioned, re-leased or sold the 35 assisted living communities that had been leased to Brookdale Senior Living (NYSE: BKD). Brookdale signed a new lease for 17 of them, with new tenants and sales for the remaining 18. All said, LTC will be generating about $500,000 more income than before with these changes, which was good, and surprising news.

But the most positive news in its latest earnings report was that it appears most, if not all, of the problems that arose during the pandemic are in the rearview mirror. And, they have begun to de-lever, which will also put them in

a better position for growth, whether by acquisitions or debt and mezzanine financings. Last year was a big year for the REIT with $262 million in new investments.

One of the last remaining troubled portfolios, with 12 properties in five states operated by ALG Senior, is concluding its restructuring. Two were sold in 2023, five are expected to be sold this year for $1.6 million. One facility in Texas was sold last year and another is expected to be closed and both will be sold for alternative uses.

These were obviously old and not in attractive rural markets. The remaining Texas facility is being transitioned to a new operator, and the Georgia and South Carolina facilities were leased to a new operator for LTC effective December 31. The rent for the first six months will be zero, after which they will negotiate the rent. LTC has agreed to provide $906,000 in capex financing and $240,000 for a working capital note at 8.25%.

Another publicly traded REIT engaged Nick Stahler, Justin Knapp and Chad Mundy of the Knapp-Stahler Group at Marcus & Millichap to divest a stand-alone memory care community in the Bay Area of California. Built in 1945 and renovated in 2009, the community comprises 22 units and underwent several management changes in the last few years, struggling to maintain profitability.

After a confidential marketing process, the team procured several offers from local and regional owner/operators. There were two rounds of bidding, with the winning bidder selected due to its existing operations in the submarket and its capital stack. The purchase price was $4.5 million, or $204,500 per unit.

In a separate seniors housing portfolio transaction, Blueprint facilitated the sale of five seniors housing communities in multiple cities throughout South Carolina on behalf of a court-appointed receiver and at the direction of the lender. Built in the late-1990s, these five communities comprise 334 assisted living and memory care units. Brooks Blackmon, Ryan Chase and Lauren Nagle handled the transaction and procured multiple offers from a series of owner/operators along the East Coast. The ultimate buyer of this regional cluster of assets

with value-add upside was Spring Oak, a family office based in New Jersey.

Blueprint was also engaged in the divestment of a seniors housing community in Abilene, Kansas. Blueprint previously worked with the seller in a separate 2023 transaction involving a similar Kansas asset.

Abilene Place was built in the early 1990s and was well maintained by current ownership, including a recent $400,000 capex investment. The community comprises 58 assisted living and memory care units across one story. We presume this was a former Enlivant property. Amy Sitzman, Giancarlo Riso and Kory Buzin handled the transaction. Blueprint procured multiple offers from active buyers for this sale, with a Kansas-based owner/operator that demonstrated a strong certainty of execution ultimately selected.

Sitzman, Riso and Kyle Hallion of Blueprint were additionally brought on in the divestment of a purposebuilt seniors housing community in Kennesaw, Georgia.

The community was built in 1999 and comprises 37 AL and MC units (another Enlivant property, we suspect). Blueprint marketed the opportunity alongside 16+ seniors housing communities spread throughout the Southeast, Midwest and Mid-Atlantic, targeting individual, regional and portfolio-specific buyers. The ultimate buyer was chosen for its demonstrated history of execution certainty. That always helps these days. The transaction closed on time at the originally agreed-upon price.

In a swift transaction, Blueprint’s Connor Doherty, Ryan Kelly and Dan Mahoney closed the sale of a CCRC in Richmond Heights, Ohio (Cleveland area), just 55 days from offer acceptance to closing. That fast track, helped by the buyer paying all cash, got the deal completed before year-end, enabling the new owner to benefit from Ohio’s improved reimbursement environment. The property, Richmond Heights Place, may need that, as it was losing money at the time of the sale.

Nearly 25 years old, the 138-unit community was

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previously owned by a West Coast-based owner/operator that was making a strategic exit. A well capitalized private owner/operator looking to increase its scale in the Midwest ended up as the buyer, for an undisclosed price.

Blueprint’s Behavioral Healthcare team, including Andrew Sfreddo, Shane Harmon and Gunnar Raney (plus Doherty and Kelly on this deal), advised an owner in the sale of an existing seniors housing/memory care community in Indianapolis, Indiana, to be converted to an inpatient residential substance use disorder clinic. The asset was underwritten as both seniors housing and a behavioral healthcare conversion candidate. There was strong initial interest within the first few weeks of marketing and the buyer ultimately selected has an existing footprint within the state. The buyer also intends to deploy significant capital improvement into the asset.

Throughout 2023, most of the divested seniors housing communities have been older vintage assets with operational challenges. That is largely because potential sellers with Class-A communities refused to sell due to the low property valuations in the market and because their properties were generally in a better operating position to survive another year, push through substantial resident rate increases, stave off lender demands for an M&A event, and hopefully command a higher price in a year or two.

Nevertheless, not all could (or chose to) delay a sale, and a few more Class-A transactions closed at the start of 2024. Blueprint was engaged by a national developer/ investor in its divestment of a value-add, but newer vintage, Class-A community in Lake Worth Beach, Florida. As part of a broader portfolio review, the ownership group decided to divest to de-lever and conserve liquidity within the fund that held this community.

Built in 2019, this community comprises more than 110 assisted living and memory care units. While the community never stabilized, it did experience positive lease-up momentum in 2022 and early 2023 and was around breakeven at marketing launch. Alex Florea, Kyle Hallion, Brooks Blackmon and Kory Buzin handled the transaction. Regional and national owner/operators, regionally-focused investors and national private equity

investors all submitted offers. Ultimately, the seller elected to prioritize execution certainty and chose Capital Senior Ventures. No purchase price was disclosed.

JLL Capital Markets facilitated the sale of three Class-A seniors housing communities in Wildwood, Town & Country, and Kansas City, Missouri. These assets were acquired by a joint venture of Artemis Real Estate Partners, Scarp Ridge Capital Partners and Arrow Senior Living. JLL represented the seller and procured the buyer, led by Scarp Ridge and capitalized by Artemis, while Arrow will take over operations of the communities. This acquisition marks the first for the venture.

Built between 2016 and 2018, the communities comprise 252 units of private pay assisted living and memory care. The Wildwood and Town & Country communities are each three-story AL/MC communities with 81 and 86 units, respectively. Burlington Creek is a two-story, 85-unit AL/ MC community that sits on six acres. Jay Wagner, Rick Swartz and Jim Dooley of JLL handled the transaction.

JLL also arranged the sale of a seniors housing community within the Boston MSA. JLL represented the seller, Blue Moon Capital Partners , and procured the buyer, a public REIT. LCB Senior Living, the in-place operator, will continue to manage the community. Built in 2017, The Residence at Orchard Grove has 80 independent living, assisted living and memory care units in Shrewsbury, Massachusetts. Wagner, Swartz, Dooley and Aaron Rosenzweig of JLL handled the transaction.

CBRE Capital Markets completed the sale and financing of a high-quality independent living and assisted living community in the Atlanta, Georgia MSA. The community, Arbor Terrace Peachtree City, comprises 146 units in Peachtree City and includes a host of amenities. The buyer was GEM Realty Capital, a Chicago-based real estate investment company with over $6 billion in assets under management. John Sweeny, Aron Will and Garrett Sacco represented the seller. Will and Michael Cregan also arranged an acquisition loan via CBRE’s Freddie Mac Optigo lending platform.

Scribner Capital and its institutional capital partner announced their involvement in the purchase of The

Village at Keizer Ridge in Keizer, Oregon. The acquiring joint venture also included Foundry Commercial and its affiliated operating partner, Cascadia Senior Living. The transaction marks Scribner’s fourth transaction with Foundry and second with Cascadia. This also marks the 15th seniors housing equity investment by Scribner to go along with three debt investments.

Built in 2016, Keizer Ridge is a 126-unit assisted living/ memory care community that faced challenges through COVID. Operations were stabilizing, and the community was nearly 90% occupied at the time of closing, which was prior to year-end. Cascadia took over operations upon acquisition. The joint venture buyers intend to make about $800,000 in capital investments. To fund the acquisition, a five-year loan at modest leverage with market institutional terms was provided by Popular Bank Suny Golovinsky was the lead banker on the transaction.

A regional owner/operator that was looking to expand its footprint was selected as the buyer of a seniors housing community in Pleasant Prairie, Wisconsin. Built in 2016, the community comprises 100 assisted living and memory care units. The seller was an undisclosed, East Coast-based private equity firm. Bradley Clousing, Ryan Saul and Jeff Binder of Senior Living Investment Brokerage handled the transaction. There were multiple offers from both regional and national buyers. No other details were disclosed.

TJM Properties acquired two assisted living/memory care communities in Bradenton and Venice, Florida, from a private REIT that purchased the assets as part of a large portfolio. These were TJM’s sixth and seventh assets acquired in the past 12 months. The buyer intends to invest in cosmetic updates for both communities. Brandenton was built in 1989, and the Venice community was constructed in 1998. Together, the assets total 211 units. Clousing and Daniel Geraghty of SLIB handled the transaction. No purchase price was disclosed.

Clousing, Jason Punzel and Jack Anderson of SLIB were brought on by a large, national not-for-profit in its divestment of a seniors housing community in Coon Rapids, Minnesota. The seller was looking to consolidate

its portfolio to focus on core communities. The buyer was a joint venture between an in-state owner and an in-state operator trying to grow its footprint in Minnesota. Built in 1999, The Homestead at Coon Rapids has 53 assisted living and memory care units, with occupancy at 69%. The purchase price and financials were not disclosed.

Sherman & Roylance was engaged by a new player in the seniors housing sector in its divestment of an assisted living/memory care community. The seller is refocusing its efforts on geographic areas closer to its core operations. The buyer, a San Diego-based family office, acquired the community for a purchase price of $8.25 million, or $180,000 per unit.

The multi-phased community, built in 1955 and expanded through 1999, comprises 46 units with 55 beds in Monterey, California, close to Pebble Beach. At the time of closing, it was 60% occupied. Shep Roylance, John Sherman and Chris Minnery handled the transaction.

PruittHealth expanded its footprint after making a seniors housing acquisition in Atlanta, Georgia. Built in 1997, Brighton Gardens of Buckhead is an assisted living/ memory care community with 75 units and 112 beds. At the time of closing, the community was approximately 65% occupied. It will be rebranded as PruittPlace Buckhead, and the buyer intends on renovating the asset in the future. With the addition of this community, PruittHealth now operates 108 senior living communities and health care centers in five states.

Berkadia completed the sale and financing, with Cody Tremper, Mike Garbers, Dave Fasano and Ross Sanders leading the sale on behalf of the seller, Prime Care One Jay Healy closed a $13 million bridge-to-HUD loan with a publicly traded REIT to facilitate the acquisition and refinance of two skilled nursing facilities in the state. The interest-only, fixed-rate bridge loan carries a term of three years and is prepayable at any time.

This transaction comes only several months after PruittHealth was selected as the buyer for Piedmont Healthcare Inc.’s skilled nursing portfolio that included Laurel Park, Piedmont Augusta Extended Care Kentwood

and Augusta Extended Care Westwood. Piedmont exited the skilled nursing sector through the sale.

Brighton Care Group, a growing family-owned operator of senior care facilities run by Roddy and Michael Radnia, is on the M&A move, having just acquired Markham House in Portland, Oregon. Built in 1995, the 54-unit assisted living community was previously owned and operated by Leisure Care and was in need of a turnaround.

However, occupancy gains have already been made, with Brighton taking census from 66% to 80% in the last month (and still climbing). In addition, the Radnia’s have made other improvements, including simplifying processes, updating marketing plans for more local and grassroots lead generation, implementing new technology, updating the exterior and widening its care parameters to accept a wider array of resident acuity. The company is also attempting to introduce a memory care component that would potentially add 20 beds to the community by the end of 2024. Brighton Care Group assumed an existing HUD loan on the property, with a 3.73% interest rate.

The final purchase price was $2.8 million, or $51,850 per unit.

United Properties acquired a senior living community in Champlin, Minnesota, as its third senior community in the immediate area. United now owns/operates seven Amira Choice communities in the Twin Cities and two in Florida. It also owns three Amira active adult communities in the Twin Cities and intends to expand its portfolio in the coming years.

Built in 2002, Champlin Shores comprises independent living, assisted living and memory care units. United intends to update the community in the next three years and rebrand it as Amira Choice Champlin. The selected operator is Ebenezer Senior Living. Blackstone (NYSE: BX) and Brookdale Senior Living purchased the asset in 2017 from Healthpeak Properties (NYSE: PEAK).

With the difficult lending environment, some owner/ operators have gotten creative in the ways they increase their footprint. One such way to expand is through

affiliations (popular among struggling not-for-profit organizations these days), grow through management contracts, or simply merge.

Ziegler was enlisted by Pleasant Spring Communities in its affiliation with HumanGood, California’s largest not-for-profit, faith-based provider of seniors housing services. The decision to select HumanGood was based on its reputation, financial strength and shared values, after considering numerous local, regional and national not-for-profit senior living organizations.

Pleasant Spring operates the Springhouse Senior Living Community and Mount Pleasant Home in Boston, Massachusetts. Constructed in 1992, Springhouse is a seniors housing community with 52 independent living, assisted living and memory care units. Built in 1901 and expanded in 2010, Mount Pleasant is an assisted living community with 60 units, 38 of which are committed as affordable to low-income elders at or below 30% of Boston area annual median income in perpetuity, with seven reserved for formerly homeless seniors. Stephen Johnson, Marie Carlson, Susan McDonough and Ryan Anders of Ziegler handled the transaction.

Next, Highmark Senior Living, a Hubbell Realty Co. affiliate that manages six communities with over 290 residents, has taken over management of a portfolio of Edencrest senior living communities spread throughout Iowa. The communities include Edencrest at Beaverdale (built in 2017), Edencrest at Green Meadows (2016), Edencrest at The Legacy (2018), Edencrest at Riverwoods (2014), Edencrest at Siena Hills (2017), Edencrest at Timberline (2023) and Edencrest at Tuscany (2021).

Lastly, in an operator-to-operator merger, Onelife Senior Living , a family-owned developer/operator, and Ally Senior Living, a Texas-based operator, announced they will merge in a deal that will establish a new company in eight states across 19 senior living communities. The companies began merger conversations in 2023.

The new company will retain Onelife’s name and branding, and will be led by partners Dan Williams, previously CEO of Ally, and Zack Falk, previously CEO of Onelife. Williams

will spearhead the operational side of the business while Falk focuses his attention on real estate development and acquisitions. Executive team members from both companies will fill roles in the newly established Onelife Senior Living. Elliott Westerman, previously CFO of Ally, has been named CFO.

The merger creates a company with 19 communities ,nine previously existing Onelife communities and ten formerly operated by Ally. Onelife has recently entered several new markets, including San Jose, California, and Happy Valley, Oregon. The company has plans to acquire approximately five communities in the next 12 to 18 months, and they expect to announce additional projects in that time frame. Onelife also plans to continue offering third-party management services to select owners.

AGENCY LOANS

M&T Realty Capital Corporation announced record 2023 production volume for its Seniors Housing Team. The group is ranked the #1 Fannie Mae DUS Producer for seniors housing and the #2 Freddie Mac seniors housing lender for 2023.

Last year, the seniors housing team financed 32 properties, in 11 states, totaling $575 million in closed loans. Leveraging Fannie Mae, Freddie Mac, FHA and bridge as lending sources, the group financed everything across the continuum from standalone independent living to skilled nursing facilities, ranging in size from 15 units to a 371-unit community.

One of the more notable transactions of the year was a 371-unit seniors housing and healthcare community in Lakewood, Colorado, totaling $105 million in Freddie Mac financing. The refinance provided the borrower with a long-term fixed-rate loan, replacing a floating-rate construction loan. Matthew Henning led the transaction.

The M&T seniors housing team is comprised of Matthew Pipitone, Nick Henning, Nick Gent and Courtney Blusiewicz who, combined, have over 40 years of seniors housing lending experience. The group has worked together for more than eight years. M&T is the only

lender in the top five for both Fannie Mae and Freddie Mac seniors housing lending in 2023. Additionally, they worked closely with the M&T Bank healthcare team to provide additional solutions for M&T Bank clients.

Next, JLL Capital Markets arranged acquisition financing for two AL/MC communities in Iowa on behalf of affiliates of Jaybird Senior Living. Both communities were managed by Jaybird prior to the acquisition. They include Vintage Hills of Indianola and Country Meadow Place, totaling 118 units combined. Vintage Hills comprises 62 units in Indianola, Iowa, and Country Meadow Place is in Mason City, Iowa, with 56 units.

Jeff Lepley and Alex Sheaffer handled the transaction, securing two loans totaling $17.87 million, or $151,000 per unit, representing around 81% of the total purchase price, putting the purchase price above $22.0 million, or $186,000 per unit. One loan was facilitated through a regional bank, while the other went through HUD

JLL also arranged financing for Elk River Senior Living,

a community built in 2018 comprising 108 units of independent living, assisted living and memory care in Elk River, Minnesota. The refinancing, facilitated through HUD, amounts to $18.7 million, or $173,000 per unit.

Jeff Lepley and Alex Sheaffer worked to secure the financing. This financing consolidated five different debt obligations that were associated with the construction of the project. Hearth Development built the community and was the borrower. Marquis Senior Communities operates it.

Aron Will and Adam Mincberg of CBRE teamed up to close a cash-out agency refinance for an independent living community in Costa Mesa, California. Coastal Heights Senior Living was built in 1990 with 148 units about one mile from the Pacific Ocean. Capitol Seniors Housing owned this property in a joint venture with an institutional investor. Integral Senior Living has managed the community over the last several years.

At acquisition in 2016 (see that deal here on LevinPro LTC), the venture acquired a sub-performing asset that

was in need of a refresh. So, they began extensive renovations to bring the community up to commensurate market standards. By doing so, significant value was created by bringing the community to full stabilization through strong and sustained financial and operational performance. Once the renovations were completed, a successful re-leasing occurred and enabled the venture to seek an agency cash-out refinance. CBRE arranged a 10-year floating rate loan with five years of interest only and total loan proceeds of $21.3 million through the Freddie Mac Optigo lending platform.

Finally, Lument closed a $27 million debt placement to assist Mission Senior Living with the construction of a seniors housing community. Mission Senior Living is an owner/operator of seniors housing communities in the western U.S. with six communities totaling 639 units under management.

Located in Durango, Colorado, the community will be known as Mesa Verde Estates. It will total 124 units/129 beds of assisted living and memory care with the unit breakdown being 92 assisted living units and 32 memory care units. The financing structure included a $20.9 million USDA-guaranteed loan provided by a community bank. The structure also includes approximately $6 million of C-PACE proceeds, which Lument sourced from an independent investment firm. Steve McGree, Rob McAdams and Sangjin Na handled the transaction.

CONVENTIONAL LOANS

We have written numerous times of property owners not being tempted into the M&A market lately, due to values being below their expectations for their properties. One of those owners, a local operator in Michigan, decided to refinance its 150-unit independent living community after sale offers came in lower than they desired. Built by the same operator 15 years ago about 15 miles outside of Ann Arbor, the three-story community had experienced a census drop of over 20% since the start of the pandemic. That probably did not help its sale prospects.

So, JD Stettin of Carnegie Capital arranged a refinance totaling $9 million from a syndicate of local credit unions.

The loan came with a five-year term, fixed at 7%, and is open to prepayment at any time without penalty. Then, maybe, five years from now (or sooner than that) we will be in a seller’s market.

Mission Health Communities , a private multi-state operator of senior care facilities, engaged Alec Blanc of Monarch Advisors to source acquisition debt for the purchase of a 78-bed SNF in Topeka, Kansas. The behavioral-focused facility was already operated by Mission (having taken over after the facility entered into receivership), making for a seamless transition. Occupancy hovered between the high-80s and low90s, and the facility was profitable, benefiting from a significant rate increase in Kansas effective July 1, 2023.

Mission Health obtained a $2.1 million senior loan from a local bank to fund the deal. Monarch structured the loan with a five-year, fixed-rate term, priced at the prime rate (8.5%), with a 25-year amortization schedule.

The Portopiccolo Group secured a refinance on 15 of its skilled nursing facilities from a diverse group of lenders, including CIBC Bank USA, which, along with other colenders, provided a $220 million senior secured credit facility. Located in Virginia, the facilities total 1,675 skilled nursing beds and 34 assisted living units. They have been operated by a third-party tenant for several years and boasted strong historical operations.

Occupancy has been approximately 85%, with an EBITDAR margin around 25%. That is strong. In addition to the senior debt, CIBC provided a $13.0 million revolving line of credit to support the ongoing operations of the third-party tenant. The financing was handled on behalf of CIBC by Matthew Tyler and Neal Netzel.

Other lenders provided Portopiccolo with debt, including Northwind Group, a real estate private equity firm and debt fund manager. For the same portfolio of 15 facilities, Northwind’s Healthcare Debt Fund II originated an $85 million mezzanine loan. For another 10 properties totaling 1,245 skilled nursing beds and 152 assisted living units across the Kansas City and St. Louis, Missouri markets, the Fund led the origination of a $20 million mezzanine

loan. CareTrust REIT (NYSE: CTRE) participated with $44.8 million in the mezzanine loans. Jonathan Slusher and Joe Weidt handled the transaction for Northwind.

Starting off 2024 on a positive note, Meridian Capital Group’s Senior Housing and Healthcare Platform, led by Ari Adlerstein and Josh Simpson, closed $375 million in transaction volume for 23 seniors housing and healthcare facilities in the first two months of the year. This activity follows more than $5 billion closed by the platform in 2023. The highlight was the closing of $260 million in debt from a commercial bank for the refinance of 12 skilled nursing facilities totaling 1,512 beds in the Northeast and $78.3 million in acquisition financing from a finance company and mezzanine lender for eight skilled nursing facilities comprising 705 beds in Minnesota.

BWE secured $46.0 million in permanent financing for a Class-A seniors housing community in Cypress, California. Built in 2022, Westmont of Cypress comprises 129 independent living, assisted living and memory care units. That results in about $356,500 per unit of debt. It experienced good lease-up, with occupancy above 95%. Ryan Stoll and Taylor Mokris originated the non-recourse loan on behalf of the borrower from a life insurance company, establishing a new lending relationship between the two in the process. The loan came with a competitive fixed rate and flexible prepayment.

CBRE National Senior Housing arranged a couple of refinances for Class-A assets in major metro areas. The first was closed for Chelsea Senior Living of New City, an 80-unit assisted living/memory care community located 30 miles north of New York City in a high-barrier-to-entry, affluent market. Built in 2021, the community features

56 AL and 24 MC units. It is owned by Capitol Seniors Housing, which brought in Chelsea Senior Living to operate the community. Aron Will and Adam Mincberg of CBRE originated a $21 million bridge loan through Ohana Real Estate Investors, a national debt fund. The loan featured an interest-only term and a floating rate.

Capital Funding Group announced the closing of a $15.36 million bridge loan for the refinancing of a seniors housing community in Seattle, Washington, on behalf of

the joint-venture ownership. Truewood by Merrill, First Hill, is a 98-unit independent living, assisted living and memory care community.

This comes on the heels of the company’s announcement that it executed or arranged more than $1.7 billion in financing across 50 deals in 2023. These financings included 24 healthcare bridge-to-HUD loans, five multifamily bridge loans and 11 HUD loans.

CONSTRUCTION LOANS

Construction starts are low, but developers that begin work on projects now could be well positioned by the time they open, especially if they can refinance their construction debt at a much lower rate.

Meridian Capital Group arranged $13 million in construction financing from a commercial bank for a facility in Colorado, $12.8 million in acquisition financing from a commercial bank for a Virginia property comprised of 30 assisted living, 85 independent living and 21 memory care units, and $9.4 million in financing from an SBA lender for the acquisition of a 120-bed skilled nursing facility in Texas.

JLL Capital Markets arranged $51.1 million in construction financing for an active adult community development in Danville, California. JLL represented the borrowers, Jeff Stone of Diamond Construction Inc. and three high net worth individuals, in securing the financing from a Southern California-based lender. Matt Cimino and Jordan Angel handled the transaction. The development will be comprised of 13 one-bedroom, 29 two-bedroom and eight three-bedroom units, with various amenities. That comes to more than $1.0 million per unit of financing. Construction is expected to be completed in 2025.

Monarch Advisors is on a roll. After sourcing acquisition debt for a SNF in Topeka, Kansas, Alec Blanc has arranged construction financing for the development of a new 105-unit/124-bed senior care property with independent living, assisted living and skilled nursing in Muskegon, Michigan. The sponsor, based in Louisville,

Kentucky, engaged Monarch to source debt totaling $21.6 million, or about 67% of the cost of the project.

Blanc secured a construction/mini-perm loan commitment from a national mortgage bank’s loan participation program with a four-year term and one 12-month extension option. Payments will be interest only at SOFR+3.25% for the three-year construction and lease-up period, followed by a 25-year amortization. The loan also includes recourse from the sponsor. This is Monarch’s third construction loan closing for this client.

BOND FINANCING

Ziegler announced the pricing of a bond series closed for The United Methodist Retirement Homes (UMRH), totaling $67.18 million in Series 2024A and 2024B bonds. UMRH is a North Carolina not-for-profit that owns and operates three CCRCs in the Tarheel State. The three communities consist of a total of 690 independent living units, 28 memory care units, 112 assisted living units and 194 skilled nursing units. Since 2000, UMRH has been managed by Life Care Services.

UMRH, with the assistance of LCS Development as developer, is building 57 new independent living units. Since beginning pre-sales in June 2023, UMRH has successfully pre-sold 53 of the 57 (93%) new independent living units, with 10% deposits.

The Series 2024 bonds consist of two primary tranches of BBB Fitch-rated, public, fixed rate bonds issued through the North Carolina Medical Care Commission. Proceeds of the Series 2024 bonds along with approximately $20 million of equity, will be used to finance the costs of the project, fund a portion of interest during construction and fill-up, and pay certain expenses incurred in connection with the issuance of the Series 2024 bonds.

The Series 2024A Long-Term bonds ($53.905 million) represent the long-term portion of the financing with a final maturity in 2054 using a wrapped debt service structure, resulting in a weighted average maturity of 25.3 years and a blended average yield to maturity of 4.95%.

The Series 2024B Tax Exempt Mandatory Paydown

Securities SM ($13.275 million) represent the short-term portion of the financing that will be repaid with initial entrance fees from the new independent living units. Series 2024B bonds were structured with two sub-series of bonds based upon expected redemption, resulting in a weighted average maturity of 2.0 years with coupons ranging from 3.75% to 4.25% (blended average yield to maturity of 3.97%).

Can REITs Do It All....cont. from pg. 1

later this decade.

Now, we have to add the capital markets crisis, with its lack of liquidity, and its impact on both the acquisition market and development market. All we hear about is how many properties will be coming on the market this year, mostly forced sales, and how the properties will be sold at significant discounts to “replacement” cost. But replacing what? If the community is not going to be in demand with the boomers, then why talk about what it would cost to replace it? Who would want to replace that? Are you listening, Shankh? We have always thought it was more of a financial marketing pitch to investors than anything else, and it does sound good. But we think it is mostly meaningless. Sorry.

The banks are still hesitant to jump into the market in the big way that the market needs them to do, the PE firms still seem to be sitting on the sidelines waiting for some indication that margins and values will return, so that they can make their required return, which is lower than it was five years ago. Besides, PE firms can invest in anything, whether healthcare real estate, other real estate, or anything else that will provide above-market returns.

That basically leaves the healthcare REITs as the go-to buyers. But the REIT market has changed during the three years of the pandemic. The good news is that they are all on the upswing, providing 2024 earnings guidance, which we presume is on the conservative side, and all of them have stabilized with census growing at their tenants, even at Diversified Healthcare Trust (NYSE: DHC).

So, how active have the healthcare REITs been? In 2023, they completed close to $8.0 billion of new investments, but nearly 74% was completed by Welltower (NYSE: WELL). This compares to approximately $5 billion of investments in 2020, with most of that likely agreed to before the full impact of the pandemic was known. But the REITs also divested more than $2 billion in assets in 2023, which was not the high point of asset sales since 2019, which occurred in 2020.

The total assets owned by healthcare REITs (that have senior care investments) now stands at nearly $111 billion, with 40% of that owned by Welltower. The dry powder of these REITs, which includes cash on hand, available lines of credit and some equity ATMs, was $14 billion at the end of 2023, the same as last June, and Welltower has 43% of that. Asset dispositions have been harder to track, but let’s just say there have been nearly $10 billion in the past four years, and Welltower had a share that was more than 40%, followed by Ventas (NYSE: VTR).

We are not trying to stoke Shankh Mitra’s ego, which hardly seems necessary, but Welltower has essentially moved into a class in and of itself. There used to be the Big Three REITs, and then Healthpeak Properties (NYSE: PEAK) downsized considerably when it began to sell off its entire seniors housing and care portfolio (and this was before the pandemic), other than 15 CCRCs with a carrying investment value of $342,000 per unit. Then the third leg of that trio, Ventas, basically stopped growing before and during the pandemic, at least relative to Welltower, but we assume that will begin to change. Both Ventas and Welltower were experiencing census and margin problems with several of their RIDEA managers (RIDEA 1.0) in the several years leading up to the pandemic. Overdevelopment was the reason provided, but we have to assume a certain level of complacency with some operators set in as well.

The total market cap of the healthcare REITs with seniors housing and care investments is just under $100 billion, which we believe is a record, before or after the pandemic. Of that, you guessed it, Welltower has a 53% share, followed by Ventas with 18%. So, we get a little troubled

when we ask, Can REITs do it all? Perhaps the question, at least today, is, Can Welltower do it all? Even though it appears that is the case, averaging over $5 billion in new investments annually over the past three years, the next question is, Can that be healthy for the market, the operators and investors looking for a capital provider? Our answer is no.

Now, we might change that answer if Welltower was always providing the best terms because it has the lowest cost of capital in the market. But in its own supplemental report for the fourth quarter of 2023, management states that “Welltower competes on Data Science, Operating Platform and Capital Allocation Capabilities – NOT cost of capital.” While the first three are important, we would say poppycock to not competing on cost of capital.

Welltower’s dividend yield is a low 2.6%, which is not great for investors, but certainly helps when pricing new deals and they have to think of their next equity raise. The next lowest is Ventas at 4.1%, other than Diversified Healthcare Trust at 1.24%, but that is because they are just maintaining a penny-a-quarter dividend. And because of its financial strength, Welltower’s cost of borrowing is the best of the peer group. But hey, their success has nothing to do with its cost of capital.

CareTrust REIT (NASDAQ: CTRE), which has always had a relatively high dividend yield despite the fact that its share price keeps rising, has a yield of 4.9% followed by National Health Investors (NYSE: NHI) at 6.4%. Healthpeak is at 7.0%, and LTC Properties (NYSE: LTC) at 7.2%. Then come the two REITs with the largest concentration of nursing home ownership, Sabra Health Care REIT (NASDAQ: SBRA) at 8.58% and Omega Healthcare Investors (NYSE: OHI) at 8.65%. While investors have been penalizing REIT owners with big SNF concentrations because of what happened during the pandemic, their SNF investments also provide the biggest opportunity for larger returns (and yes Rick, we agree with you).

We are still in the middle of the pandemic recovery, and a period of recovery is the best time for RIDEA structures as the REIT can ride the increase in cash flow. Today, it is the increase in census, margin and cash flow. It certainly was a great time after the Great Financial Crisis, but that was

a financial and housing meltdown and was relatively easy and quick to recover from; the pandemic is quite another situation, coupled with inflation and labor supply/cost issues. This will take longer, and unlike 12 years ago, not all ships will rise in the post-pandemic waters at the same pace, and some not at all. The operating environment is more complex, which requires better leadership at the top. While the leadership has certainly improved since the GFC, it still has room to get better. What will be interesting to watch is how the “newcomers” do in replacing an entire generation of founders and CEOs who are retiring from the business. Some will say this is a good thing as a new and different market needs new and different thought leaders, and new ways of doing things.

So, what’s the answer? First of all, the other REITs need to get more aggressive and do what is necessary to get their cost of capital down. Yeah, easier said than done, but despite Welltower’s protests that it is not about their cost of capital, it certainly doesn’t hurt. In this case, size does matter. For the smaller REITs, making $50 million a year of investments could be a fast way of becoming irrelevant. The market needs choice, especially because the management styles of the REITs are so varied. From what we hear, Welltower does not always make many friends, but their argument would be they are not in the business of making friends; they are in the business of providing above-market returns to their shareholders. Right now, that is what they have been doing. Others, like LTC, NHI and Sabra are more known for their personal touch. And who doesn’t love Justin?

Everyone thought 2023 would be a transition year, then it was 2024 and maybe next year. Unfortunately, there remain a lot of risks that providers and investors have zero control over. The first is the election and what that may bring in terms of regulations and reimbursement, not to mention economic policy. Then there is the persistently high level of interest rates which has kept the cost of capital high for everyone, not just REITs. And while inflation keeps on trying to make the Fed happy, if you have been to a grocery store or a restaurant lately, prices are still quite high. The geopolitical risks out there are scary but too many and complicated to go into.

But always remember, we have been operating in 10-year

cycles, and the next one will be at the end of this decade, roughly. Our guess is that the negative influence will be a combination of changing tastes with the boomers and a development boom. Yes, a development boom, because despite what any numbers tell them, there are a lot of people just itching to profit from the age wave turning 85.

Back to Welltower (sorry), one worry we do have is that they have become so big that it will be easy to hide any mistakes. No materiality? No need to disclose. And with $44 billion of assets, what harm can a $500 million sale/ leaseback portfolio gone bad do? Even a 25% decline in its value would be no bigger than a pimple on a rat’s behind for WELL. Why does this matter? So that market participants can know what is working and what is not, which management teams are performing and which are not.

Finally, at the risk of sounding like a broken record, now that Healthpeak has completed its acquisition of Physicians Realty Trust, now may be the time to look for some higher yielding assets in seniors housing and care to balance out the $3.0 billion of low-yielding medical office buildings and other healthcare real estate. Just a thought. While we are sure Shankh likes being number one, we liked it when there was the Big Three. It seemed like a healthier market. And we need a healthier market.

PEOPLE ON THE MOVE

As a third-generation family operator of senior care facilities in the Pacific Northwest, Blake Bozett has taken that experience to the brokerage business. And after working at Blueprint for five years, he launched The Zett Group, a new venture that focuses on seniors housing investment sales in the Pacific Northwest (and beyond). Since founding the firm in 2023, he has hit the ground running with $110 million of on-market listings. Those include about $5 million in Washington, $21 million in Idaho, $15 million in Montana and more than $70 million in Oregon.

After its entire seniors housing team left for JLL earlier in 2023, Cushman & Wakefield has started to rebuild, announcing the hire of Jason Skalko as Managing Director. Skalko comes from JLL and will be based in

the firm’s Tampa office to specialize in senior living and care investment sales throughout the United States. A graduate of the University of Florida, Skalko holds a bachelor’s degree in building construction and a master’s degree in business management.

Skalko has been in real estate since 2010 with a deep understanding of capital markets and experience in investment advisory, debt and equity placement, market analysis, valuation and due diligence across the U.S. He previously served as Director at JLL where he focused on seniors housing investment sales, debt and joint venture equity and closed more than $6.0 billion in deal volume across 24 states. We look forward to tracking the Cushman comeback.

Lastly, after 25 years running Atria Management Company, formerly Atria Senior Living, John Moore has stepped down as Chairman and CEO, but will remain on the Board as well as an advisor to help with a smooth transition. We know he had some health issues a few years ago, and we hope this is not why he decided to step down. Navigating Atria through the pandemic would have taken its toll on anyone.

Stepping in as CEO is Holly Belter-Cheeser as part of a planned transition process. She has held key positions with Atria over the past 15 years, including CFO since 2020 and CAO since 2023, SVP of Business Optimization & Operations Support from 2017 to 2020 and VP of Finance from 2013 to 2017. Obviously, she is a numbers person.

While we do not know her, and we assume she is very competent, given the current operating environment, we would have preferred to see someone with an operations background taking the helm. Even though the financial environment has been tricky, to say the least, successfully dealing with operations, staffing, census and the changing competitive environment over the next five to 10 years will be the key. That said, having a woman take over one of the largest senior living companies in the country, in an industry dominated by female workers, we are sure she will become a mentor to many and someone that other women can look up to. We wish her well and wish John a healthy and happy retirement.