The boards of Front Porch and Covia voted Monday to affiliate, a decision that will create one of the largest not-for-profit senior living and affordable housing providers in the country.
The affiliation must be approved by regulators and is expected to close in early 2021.
“Until that happens, both organizations will continue to operate their communities and their organizations separately,” Kari Olson, chief innovation and technology officer at Front Porch, told McKnight’s Senior Living. “When we do come together next year, it will be under the Front Porch name and Front Porch’s CEO, John Woodward, will be assuming leadership of the combined organizations.” Covia’s CEO and president, Kevin Gerber, is expected to leave once the affiliation closes.
Front Porch’s current headquarters in Glendale, CA, will be the combined organizations’ headquarters, with Covia’s headquarters in Walnut Creek, CA, transitioning to a regional office, Olson said.
Front Porch ranked No. 21 on the 2019 LeadingAge Ziegler 200 list of the largest not-for-profit senior living organizations in the United States, and Covia was No. 47. When it comes to senior living, both are especially strong in independent living.
Overall, according to the LZ 200, Front Porch has 2,819 units across 10 communities (five continuing care retirement / life plan communities and five independent living communities), and Covia has 1,589 units across six CCRCs. A combined organization would place in the No. 10 spot on the 2019 LZ 200, which considers affordable seniors housing separately.
Covia ranked No. 36 on the list of largest not-for-profit affordable seniors housing operators on the 2019 LZ 200, with 911 units across eight communities. Front Porch, according to the list, has 100 units.
Altogether, the combined organization will provide senior living, affordable housing and community services for more than 10,000 people across 54 communities, according to the organizations.
In fact, it was affordable housing that originally brought the two organizations together, Olson said.
“Covia has a resident service coordinator service program that has been providing resident service coordinators into Front Porch affordable housing communities for a number of years,’” she said. “That’s initially how we worked together, but through the Front Porch Center for Innovation and Wellbeing, the resident service coordinators of Covia and Front Porch affordable housing have all been working together to bring tele mental health services into affordable housing for the past four years. So we like to tackle innovation challenges together. We’ve had some success there, and we look forward to doing more.”
Specifically about a possible affiliation, Olson said, “The CEOs have been talking for a couple of years, and the conversation got serious between the boards late last year.
Both organizations are financially very strong, with Front Porch’s debt rated an A by Fitch and an A- by S&P, and Covia’s debt rated an A- by Fitch, according to the most recent LZ 200 publication.
“There’s no trouble here. It’s two strong organizations thinking about the future, coming together to both secure how we take care of people today and to create the future,” Olson said.
That doesn’t mean there won’t be financial benefits from the arrangement, she added.
“We certainly see coming together as a way of ensuring long-term stability, definitely achieving economic benefits, giving us a strong position to manage costs and definitely combined purchasing and negotiating power,” Olson said.
The new organization will have a “significant” presence in The Golden State, she noted.
“Covia has a strong presence in the Northern California marketplace, and Front Porch has a strong presence in the Southern California marketplace,” Olson said. “So the geographic synergies are significant and create a really strong organization that will have enhanced access to capital and be well-positioned for growth.”
Front Porch was formed in 1999 by the merger of California Lutheran Homes, FACT Retirement Services and Pacific Homes. Sunny View Retirement Community joined Front Porch in 2006. Covia is more than 50 years old and changed its name from Episcopal Senior Communities in 2018.