Here's a quote you've probably heard before: “We're looking to become a leader in the senior housing industry.” This is an aspiration often uttered, but how often backed up by results? Now suspend that skepticism. Believe it or not, Prevarian Senior Living vows to make good on its ambitions. And it might just have the moxie to pull it off.
A relatively new real estate development and investment firm based in Dallas, Prevarian Senior Living was created by the principals of Prevarian Hospital Partners in partnership with Dodd Crutcher, a commercial real estate veteran, when both parties agreed they could not resist the growth potential of senior housing. “It's an industry that's transforming,” Crutcher says, noting his excitement that the baby boomer population is set to change everything about service delivery in an industry he's just getting accustomed to. It may very well be a fun, challenging time to start making deals.
As such, the company is starting slow, first identifying opportunities in and around Texas, focusing on assisted living and memory care, thinking strategically about where to expand nationally, “building the company the right way,” he stresses. It recently began construction on a 102-unit assisted living facility, and a similar-sized project should break ground this fall with a third starting toward the end of the year. The company is also expecting to grow through acquisition and is looking at some portfolios that could increase its own portfolio “tremendously,” Crutcher says. But if the company creates just three development projects a year, it will be satisfied.
This was not always the approach, however. Back toward the end of 2007, when the company's principals began seriously considering senior housing, they thought of merely owning the real estate. Prevarian Hospital Partners, after all, does not operate hospitals, so why operate assisted living facilities? Allan R. Brown, Jr., co-founder and principal of the Prevarian companies, shares his mind-set during those few years ago: “We certainly understand the facilities and we understand the way the market is behaving, so let's go out and build or buy these communities-just the real estate-and put operators in a lease.
“And that didn't work,” he says with a laugh, hinting toward the following year in 2008, which “was not the time to be proposing long-term leases to operators. It was a pretty rough period for a lot of them, so that initial plan hit the trash can after we were told ‘no’ enough.”
Brown says he and his team of real estate experts went out and did true field research for close to a year, talking with senior housing operators large and small, for-profit and nonprofit, building those vital relationships, learning what providers truly desire from an investment partner.
“I think many real estate investors want to get in and out of these transactions and make a nice profit. But operators are looking to further develop their industry,” adds Crutcher. “They have a long-term vision. And that's our vision as well.”
It's really just about being on the same page. In a saturated industry such as healthcare, the one thing that could give this company a leg up on the competition is understanding the person on the other side of the table. Health systems, bundled payments, accountable care organizations: If it hasn't been made clear at this point-post-healthcare reform-partnerships are becoming necessary. And as acute care providers are awakening to the value of post-acute care and senior living, the principals at Prevarian have already spent years speaking hospital and health system language, with the Hospital Partners side of Prevarian informing “everything that we do on the senior living side,” Brown says.
“There's a number of developers and investors like us that are doing the same thing, partnering with existing operators and going in together with each having some skin in the game opening these communities,” he continues. “But hopefully our credibility, by virtue of our experience and relationships, will make the difference in some opportunities.” And when you've set your goals as high as Prevarian has, wielding any kind of difference-maker is pretty much mandatory.
Long-Term Living 2011 October;60(10):36-37