The senior living industry has not always had a clear vision of the active adult sector. But with the resilience of many active adult communities during the pandemic, some company leaders are taking a new look at the property type and sizing its potential for long-term growth.
That includes Will Purvis, president of Liberty Senior Living. The Wilmington, North Carolina-based operator has 12 senior housing communities, including a newly opened 194-unit active adult community under its new Inspire brand, which is part of a mixed-use development in Myrtle Beach, South Carolina.
Giving Purvis confidence that active adult is a sector worth investing in is the fact that the first Inspire community has leased up to about 20% occupied in the first two-and-a-half months it has been open.
“We had all sorts of assumptions during Covid, as I’m sure everybody did, but … we were very impressed with how active adult performed,” Purvis said during a panel discussion last week at the Senior Housing News Active Adult Virtual Summit. “If anything, it made us more bullish on the lease-up.”
Another senior living exec with his eye on active adult communities is Jim Pusateri, CEO of True Connection Communities, the senior living management platform of Chicago-based real estate private equity firm Green Courte Partners.
Three of the company’s communities have operated for years as active adult properties, and the operator is looking to the future through an opportunistic lens in determining whether active adult will be included in projects.
“As far as what we’re looking for, it’s opportunistic,” Pusateri said. “It’s a combination of what the demographics are telling you, what the markets are telling you from a competitive landscape, and what we think we can operate most effectively in a marketplace.”
It’s not just active adult operators that have noticed the product type’s relatively stronger pandemic performance. Capital providers have taken note, both on the debt and equity side, according to Purvis.
But some banks and other capital providers are hashing out who on their teams should take the lead when it comes to active adult, given that the product type shares characteristics with both multifamily and senior housing communities.
“If you look at the history of the performance of active adult through through 2020, anybody who was a skeptic … is interested in it,” Purvis said. “You’ve got the real estate groups … that weren’t on the senior housing team, they’re looking at this — and in some cases, they’re fighting to see who gets to lead it.”
Pusateri noted that there are definitely still lenders interested in the space, and that recent active adult sales have helped boost the property type’s reputation in their eyes.
“What we just went through with the pandemic has maybe slowed some of it down,” he added. “The pace of what we’re seeing with the inquiries and move-ins … if it remains the way it is now, we’re going to be in much better shape, and I think [capital] will be much more available.”
Place on the continuum
Senior housing companies are still hammering out the active adult model as they grow the product types, including figuring out its place in the continuum and how to position the buildings for success.
Some providers have floated the idea of co-locating active adult units next to other product types, such as independent living, assisted living, memory care or even skilled nursing in some cases.
Purvis is skeptical of co-locating freestanding independent living and active adult communities, given the similarities between the two property types. At Liberty, residents are more likely to make the jump from active adult into a higher-acuity setting, like assisted living or memory care, he added.
“Our goal is to have a system where they can stay in active adult just as long as they want, and then move over to an assisted living [community],” Purvis said.
There may also be cost savings for residents who stay in active adult settings for longer and then move directly into assisted living or memory care, Pusateri noted. That could resonate with the baby boomers, who don’t have as much money saved as previous generations, he added.
That is not to say either company is down on independent living as a product type. Purvis said that Liberty is interested in independent living, and sees opportunities to co-locate it alongside market-rate multifamily units.
And Pusateri said that in some markets, the property type could be favored over active adult, depending on local demand. In one case, Greene Court/True Connection acquired an active adult community and converted it to independent living.
But both companies are betting that, as the senior living industry evolves in the years ahead, independent living will play a different role than it has in the past.
“It’s maybe just a little bit too early to say there will be no independent living,” Pusateri said. “But I think that active adult certainly has a strong foothold right now … and I think it has a great opportunity to grow into something that gives people a more independent feel.”
Amenities and services
In some cases, developers and operators are co-locating active adult communities in mixed-use developments, or bringing in outside partners who offer their services on campus.
Liberty, for example, has integrated its rental continuing care retirement communities (CCRCs) into mixed-use developments that include other product types such as retail, services, restaurant or grocery. Its Inspire Coastal Grand active adult project in Myrtle Beach is part of a 34-acre, master-planned development named Pine Point Island; retail buildings will flank the active adult community.
The proximity of amenities is a way to help fill resident needs while keeping monthly rates lower than $2,000.
“Having those amenities, services and food options close by is important — they can most likely eat cheaper than we can provide,” Purvis said. “It is more affordable, more cost-effective for us to operate it.”
At True Connection’s three active adult communities in Dallas, residents can buy food through the provider on an a la carte basis. At two communities, residents can buy food prepared in an on-site kitchen; at another, they can arrange for delivery from a local eatery.
“At least once a month, we have some sort of big thing where people get an opportunity to pay $20 or $25, and have a really high-end meal,” Pusateri said, noting that this is a way to build modest revenue in addition to rents. “Sometimes we do a barbecue, we have happy hours that people can participate in — this is a very social group.”
Dining is not typically an included service in active adult communities, though some active adult providers offer dining services through partners. For True Connection, having an optional dining component acts as a competitive advantage for the operator and serves as a differentiator from other active adult or multifamily properties in the area, Pusateri said.
“As an active adult community ages and the residents age, maybe they don’t want to cook every day, but they [want to] have an option for something,” he added. “It’s a great marketing tool, as well, and we’ve been pretty successful with that.”
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