It may sound odd to talk about a robust development pipeline of transitional care facilities and not focus on Mainstreet, which has dominated the market with plans to invest up to $5 billion in the next five years. Nevertheless, a new entrant to the transitional care market, National Healthcare Realty (NHR), is setting out to build 20 facilities in the next three years as the preferred developer for Welbrook Senior Living (not to be confused with Mainstreet’s “Wellbrooke” brand of facilities). Led by Mark Wimer, formerly of Kindred Healthcare and Sun Healthcare Group, Welbrook currently has six facilities located in California, Nevada and Utah, while also self-developing two more transitional care facilities in Colorado and Arizona. But its desire to grow led them to NHR.
The total pipeline is valued of $155 million at the moment, but that should increase to over $220 million by the first quarter of 2016. There are currently 15 active projects in various stages of development in Arizona, New Mexico, Colorado, Nevada and Montana (markets where Mainstreet does not really have a foothold), in addition to five sites in Texas currently under agreement that will break ground in early 2016. Designed by Lantz-Boggio Architects, each facility is 36,000 square feet and features 50 private units catering only to private pay and Medicare patients. Occupancy should be helped by strong alignments with local hospitals in each market where Welbrook will enter. In terms of cost, NHR plans to allocate about $12.5 million, or $250,000 per bed, at each facility, to be financed with about 80% loan-to-cost debt from local banks or national banks. NHR will also co-invest with certain private equity investors to fund the remaining development cost. The first facility is expected to open next month in Las Cruces, New Mexico.