Ventas (NYSE: VTR) is transitioning operations of 26 previously troubled communities in three states to three new operators, the company announced Tuesday.
All three are existing operating partners for the Chicago-based real estate investment trust (REIT). Sodalis Senior Living is slated to operate 13 communities in Texas, while Priority Life Care is operating eight communities in Florida. Discovery Senior Living is assuming management of five communities in California through its operating company, Integral Senior Living.
“Within Discovery, we currently have numerous former ‘Holiday buildings’ that we operate utilizing as part of a dedicated team that focuses solely on this type of product,” Discovery CEO Richard Hutchinson told Senior Housing News. “Our thesis continues to be that these buildings are consistent in their market, customer, and operating characteristics and will benefit greatly from our customized selling proposition, operational ‘playbook,’ dedicated local management team and tremendous partnership with Ventas.”
Ventas is expanding its current existing relationships with the three operators in an effort to “increase occupancy and performances” in the communities in question, according to a press release. All three operators are expected to begin operating the majority of their communities around Sept. 1, with current operator Atria Senior Living helping to facilitate the transitions.
To help the 26-community portfolio improve operations, Ventas is leveraging “best-in-class data analytics” and “aligned management agreements” under its ongoing “right markets, right operators” strategy, the company’s management noted earlier this month.
The transition comes weeks after Ventas management noted that a segment of the company’s senior housing operating portfolio (SHOP) had struggled to regain occupancy lost during the pandemic.
“Softness” in the segment — a selection of former Holiday Retirement communities operated by Atria Senior Living — contributed to the company’s “disappointing” independent living occupancy growth of just 10 basis points in the second quarter of 2023, according to Ventas Chief Investment Officer and Executive VP of Senior Housing Justin Hutchens.
“These communities will benefit from executing the more aggressive measures in our OI playbook, including operator transitions and comprehensive redevelopment,” Hutchens said during the Aug. 6 call. “And these plans are already underway.”
This isn’t the first time Ventas has made a similar move. In 2021, the company transitioned 90 communities operated by Eclipse Senior Living to seven other operators — including Discovery, Sodalis and Priority Life Care — after Eclipse ceased doing business in early 2022.
Fast-forward to today, and the portfolio has seen net move-in growth in 13 of the past 15 months, and delivered occupancy improvements of 370 basis points in the second quarter.
“This is a prime example of performing on our ‘right market, right asset, right operator’ philosophy,” Hutchens said.