The Real Deal Chicago

Waterton buys controlling share of senior housing operator Pathway to Living

The Chicago-based investment firm is backing a push to build or buy new senior facilities all over the country
By Alex Nitkin | January 23, 2019 12:25PM

Waterton CEO David Schwartz (left) and Pathway to Living CEO Jerome Finis with the Pathway to Living facility in Oak Hill (Credit: Pathway to Living)

Real estate investment firm Waterton bought a majority stake in Pathway to Living, a Chicago-based senior living operator with 29 facilities totaling more than 2,600 units.

In 2015, Waterton bought a 50 percent share and half the seats on the board of Pathway to Living, Waterton CEO David Schwartz told The Real Deal. The Chicago-based investor last month paid an undisclosed sum to boost its share to 80 percent.

In the four years Waterton has shared ownership of the housing operator, it helped finance the development or acquisition of nine new facilities, including its $33.8 million pickup of the Grandbrier in northwest suburban Prospect Heights last year.

Pathway has another three residences in its development pipeline, including one each in suburban La Grange and Westmont. The third is planned in the Philadelphia area, marking the first step in an East Coast expansion push Waterton will help power.

Pathway to Living offers a mix of independent-living, assisted-living and memory-care facilities, with an average resident age of 83. The company’s expansion will put it in prime position to catch a wave of Baby Boomers, the oldest of whom are now in their early 70s, Schwartz said.

“We wanted to be well situated for that massive demographic bulge that’s coming in the next 10 years,” Schwartz said. “Demand is going to be so strong, it’s unlikely we’ll even be able to develop enough senior living facilities to accommodate that demographic.”

The majority shareholder will line up “one-off investments” for each new facility but anticipates creating a larger investment vehicle to allow backers to buy into the senior living space as Pathways expands its reach beyond the Midwest, Schwartz said.

Waterton specializes in apartment management, with more than 60 properties across 15 states combining for about $4.8 billion in total assets. Its portfolio lists eight Chicago properties, including the 49-story Presidential Towers in the West Loop.

Pathways’ suburban expansion coincides with multiple other senior housing operators planning new complexes in Chicago.

Artis Senior Living is building a 136-unit facility in Chicago’s Lakeview neighborhood, and Ryan Companies will seek approval from the Chicago Plan Commission on Thursday to build 248 senior apartments in Portage Park’s Six Corners area. In Norwood Park, the Catholic order Sisters of the Resurrection is preparing to sell its convent to be turned into a 72-unit assisted living facility.