The Covid-19 pandemic has led to financial distress across the senior living industry as occupancy has fallen to historic lows — but for one new operator, that is an opportunity.
The newly launched company, Alta Senior Living, is planning to build out its portfolio first by acquiring communities at a good price due to the Covid-19 pandemic and its headwinds, according to Scott McCorvie, Alta’s chief financial officer and executive vice president of investments.
“The biggest opportunities in real estate come after periods of disruption, and there’s no bigger disrupter in senior housing than Covid,” McCorvie told Senior Housing News. “We feel there are some great opportunities right now with sellers who are willing to sell at a discount to focus on other industries or investments, or just exit the business altogether.”
Already, the company has closed two acquisition deals in Walnut and Sacramento, California, and broke ground on a memory care community in North Palm Beach, Florida. And the operator — which has offices in both Santa Monica, California, and West Palm Beach, Florida — is currently scouring regions in the east and west for more opportunities. Initially that search includes markets in California, Utah, Nevada, and the Southeast, including Florida and Georgia.
Heading up Alta is Doug Brawn, who is also co-founder and principal of Bountiful, Utah-based Welbrook Senior Living. Brawn will continue to work as a principal for Welbrook, an operator that is in the midst of winding down its operations in the senior living industry, McCorvie said. But Alta is now his primary focus.
The company currently has nine employees, including some who worked with Brawn at Welbrook, and is actively looking to grow its leadership roster in the weeks and months ahead.
McCorvie is also no stranger to the senior living world, with previous titles including vice president of acquisitions for Orlando, Florida-based private investment management firm CNL Financial Group; and manager of investments for Orlando-based health care investment company Sentio Investments.
McCorvie also is host of an industry podcast called The Inner Circle of Senior Living, though he plans to scale back the amount of content he produces as a result of his new role with Alta.
Alta is Latin for “high,” a word also that helps illustrate how the company seeks to elevate its senior living communities.
“We want to enhance senior living by enhancing the real estate and the operations to maximize the care and the overall value of the community,” McCorvie said.
To achieve that, Alta plans to embark on CapEx projects in each of the communities it acquires. For example, the company is investing about $3 million in CapEx for its 89-unit assisted living and memory care community in Walnut, California; and about $1.4 million in its 72-unit independent living, assisted living and memory care community in Sacramento.
“We really want to hit the immediate needs right off the bat … then it’s more aesthetics and amenities, and then last, it’s any long-term value plays, such as conversions,” McCorvie said. “We’re really focused on curb appeal, too, and we find that signage and creating a really warm appeal for drive-by traffic is important.”
The company’s operational model emphasizes features such as dining and technology, and McCorvie believes these will be key to winning over residents when pent-up demand returns to the industry.
“I think it’s going to take a little bit of time, but I think it’s going to happen this year,” McCorvie said. “I know some people are predicting ‘22 or ‘23, but I see a faster rebound.”
But while Alta seeks to bring a higher level of service and value to the communities it acquires, company leaders also believe they can do so without charging lofty rates. The company is seeking to offer rental rates that lie about 20% below the rest of the market, and achieve that by avoiding the costs of developing and building a community from scratch.
“I know a lot of people are trying to find more of a creative, ground-up construction model to meet that affordability question,” McCorvie said. “But we feel there are a lot of great opportunities in some of these well-established, stronger-reputation communities, and in coming in and updating the real estate and the operations.”
The company is also vertically integrated, and its leaders believe that controlling investment, development and operations under one roof will allow it to operate in a more efficient manner.
Currently, Alta is searching for capital and development partners for its growing pipeline. The company is focused on its value-add acquisition and development strategy through the end of 2021, but in the years to come, McCorvie hopes Alta will become a senior living industry “influencer.”
“We want to be in the forefront of helping lead the charge in creating innovative and affordable products that are focused on providing the best care,” McCorvie said. “As long as we hit our mission statement of providing the best care, we’re open to different ideas, long-term.”
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