With the sale of its entire assisted living portfolio complete, organic and external growth will be a priority for New York-based New Senior Investment Group in 2020, CEO Susan Givens said Thursday.
In 2020, the real estate investment trust will evaluate the portfolio to determine where to invest capital to “freshen up” properties, which are an average of 20 years old, Givens said during the company’s fourth-quarter and full-year 2019 earnings call.
“But I think there are certain assets that are in certain markets where we can test a bit and we can try a little bit of a new model without having any sort of significant impact on our portfolio,” she added.
The “one-off” experiments, Givens said, “could teach us something and could allow us to grow with other partners and within other subsets of the independent living space.”
The REIT’s portfolio now is 96% independent living, and Holiday Retirement manages communities that account for approximately 95% of net operating income, the CEO said.
Another priority for New Senior has been expanding the number of operators in the portfolio. “Holiday is an important partner of ours, and we believe they have done a great job operating our assets,” Givens said. “That said, we also recognize the benefits of having a diversified portfolio of operators.”
New Senior isn’t ruling out growth through senior apartments, which attract even younger older residents who have even fewer health and activities of daily living assistance needs, on average, than independent living residents.
“We are looking at lower-acuity products compared to what we have today. I think it’s a natural sort of progression to think that now, with us being almost 100 percent independent living, that looking at something like senior apartments could make sense,” Givens said. “I think that there are a lot of people poking around in that space right now, and obviously, the pricing is still pretty tight, so we have to kind of consider that. But I think there are some interesting models that are starting to emerge out there which are kind of a hybrid between independent living and pure senior apartments.”
One experiment the REIT won’t be conducting is adding healthcare in its communities, however, the CEO said.
“We’re more focused on the existing product and figuring out if there are ways we can kind of tweak the product to attract a larger sort of audience or have a slightly different product from what we have today,” she said.
Communities serving residents with greater health and ADL needs, Givens said, generally have higher labor and capital expenditure costs. “Labor per resident last year for independent living was up about three percent. If you compare that to our assisted living assets, that was up about six percent,” she said, citing a time when New Senior’s portfolio included both independent living and assisted living communities.
