LOUISVILLE, Ky., WINTER PARK, Fla., and TOLDEO, Ohio — In a massive blockbuster deal for seniors housing, the seventh-largest operator of seniors housing in the United States will acquire the third-largest, with the largest owner in the country buying up a huge portfolio of the assets.
Louisville-based Atria Senior Living has agreed to buy the operations business of Winter Park-based Holiday Retirement. Meanwhile, Toledo-based REIT Welltower will buy the 86 properties that Holiday owns and self-manages for $1.6 billion.
Holiday currently manages 240 communities in 43 states, largely in the independent living sector. The combined company will serve more than 45,000 residents with more than 19,000 employees and manage 447 communities across 45 states and seven Canadian provinces. The acquisition will result in the second-largest seniors housing operator in the country, behind only Brookdale Senior Living.
According to a release from Atria, the two brands will continue to operate separately and maintain their own current headquarters. Terms of the Atria-Holiday deal were not released.
The deal values the real estate portion of the transaction at $152,000 per unit, which Welltower estimates as a discount over replacement cost of 30 percent. The capitalization rate comes out to 6.2 percent, and occupancy is currently 76 percent, according to Welltower.
Atria plans to retain Holiday’s senior management and staff, with the transactions expected to close simultaneously in third-quarter 2021. Welltower notes that the low occupancies during the COVID-19 pandemic are already showing signs of improvement, with the portfolio showing an increase of 2.7 percent since “bottoming out” in March 2021.
Welltower and Atria have agreed to “a highly incentivized and strongly aligned enhanced RIDEA 3.0 management contract based on both top and bottom-line financial metrics” for the 86 properties, according to Welltower.
“By joining forces with [Holiday CEO] Lilly Donohue and the great team at Holiday Retirement, this transaction also enables Atria to continue on our path to create a thoughtful variety of choice as an unprecedented number of seniors seek new residential options in the decade ahead” says John Moore, Atria Senior Living chairman and CEO. “We are eager to work with the Holiday team as we together build the best pure-play management services business in senior living and create value for Welltower and the other owners of the properties we manage.”
“John and the Atria team share our vision for the significant, multi-year growth opportunity in the seniors housing sector and we are excited to embark on this journey together,” says Shankh Mitra, Welltower CEO and CIO. “Through a highly incentivized and aligned management contract, we have created tremendous upside opportunity for stakeholders of both Welltower and Atria.”
“We are deeply familiar with the Holiday assets, having looked at them multiple times in the past, and have the utmost respect and admiration for Lilly and her team,” continues Mitra. “We are delighted that we could finally align the interest of all parties, with strategic and value creation opportunity for Welltower’s shareholders.”