Another major multifamily developer is getting into the seniors housing industry. In the past year, we have seen a number of either private equity groups or real estate developers, all with experience in the multifamily market but not so much in seniors housing, dip their toes (some more like cannonballed) into seniors housing development, including Drever Capital Management, Alliance Residential and Validus Group. Now, Scottsdale, Arizona-based The Wolff Company announced its plans to develop six independent/assisted living communities with 858 units throughout the Western United States. To build up its seniors housing team, in March 2014 Wolff brought on Mike Milhaupt, who has over 20 years experience developing senior living properties at First Centrum.

With the new team in place, the company expects to break ground on its first six communities (three in Washington and one each in California, Colorado and Nevada) in the next three to four months. Each will feature between 120-150 units of independent living, with a smaller AL portion, and are expected to cost around $200,000 per unit to develop. Wolff will then hire third-party management companies to operate. Ultimately, once these six projects are up and running, the company expects to invest up to $300 million in equity to develop six to eight properties a year and to make strategic acquisitions as well. Wolff also intends to finance the development with mini-perm loans from conventional lenders (around 65% loan-to-cost) before taking them to agency. Aware that the much ballyhooed “demographics” will not be fully felt for some time, the company is underwriting based on between four to five move-ins a month, a relatively conservative rate. We will have to wait and see what impact this new developer will have on the market, or what impact a growing development market will have on it.