Welltower’s senior moment: REIT is buying $1.15B portfolio of elderly facilities on West Coast

19-property deal includes 9 senior communities in SoCal, 3 in LA
By Hannah Miet | October 11, 2016 06:00PM

The "Vintage Burbank" senior living center and Welltower CEO Tom DeRosa

“Vintage Burbank” site and Welltower CEO Tom DeRosa (via CBRE, Getty Images)

Welltower, an Ohio-based real estate investment trust, has agreed to buy a portfolio of 19 senior housing communities on the West Coast for $1.15 billion in a deal that makes it the largest owner of senior housing in Northern and Southern California.

It will pay the seller, Vintage Senior Living, approximately $445,000 per unit for the properties, 18 of which are in California, according to a release from CBRE. Matthew Whitlock, Lisa Widmier and Aron Will of CBRE’s capital markets national senior housing team represented Vintage in the transaction. 

The 2,590-unit portfolio contains nine Southern California properties, including three in Los Angeles County, four in Orange County and one in Ventura’s Simi Hills. It also includes nine communities in Northern California and one Tacoma, Washington. Some of the assets have excess land that Welltower could ultimately develop, but it will focus on filling the existing properties first, executives said on a quarterly earnings call last week.

“This is an ideal, strategic acquisition for us,” said Welltower CEO Tom DeRosa. “It allows us to go deeper into two important core markets, solidifying our number one market share in Los Angeles, gaining the number one position in San Francisco. That adds to our number one position in New York, Boston and Seattle – five of the sexy six core markets in the U.S.”

The acquisition will be funded primarily through dispositions in the remainder of 2016, DeRosa said.

The L.A. properties in the deal are the Vintage facilities at 11000 New Falcon Way in Cerritos, 2721 West Willow Street in Burbank and 4061 Grand View Grandview Boulevard in Culver City. The firm’s strategy is to get as close to the urban core as possible, which is atypical for senior housing, DeRosa said.

Vintage will transfer management of the facilities to Welltower’s operating partners Senior Resource Group, Sunrise Senior Living and Silverado.

On average, the properties acquired in Southern California are roughly 83 percent occupied, versus 84 percent in the portfolio overall. Welltower now owns 58 senior housing facilities in the Southern California region.