We wrote earlier this year of Drever Capital Management’s seniors housing ambitions in both the acquisition and development markets. The company, which has only recently shifted its focus from multifamily to seniors housing, had already made its first acquisition in 2012, purchasing a 124-unit independent living community in Lexington, South Carolina with just 50% occupancy. That deal happened to be a perfect example of Drever’s acquisition strategy of purchasing struggling communities, injecting some capital improvements ($3.7 million in this case) and hiring an operator (Renaissance Senior Communities) to improve census (it is up to 90% now) and maximize revenues. Since then, Drever has acquired five other properties, including four assisted living communities and one independent living community. The company has ambitions to acquire around five more in 2016, and possibly more in 2017.
On the development side, Drever currently has five sites under control, with two in the Atlanta, Georgia area, one each in Dallas and San Antonio, Texas, and one in Fort Collins, Colorado. Four of these will be majority-IL communities, while the Colorado community will be 100% memory care. On average each developed community will feature around 125 IL units, with some including up to 60 AL/MC units, for a project cost between $25 million and $30 million. As far as rents, Drever is targeting the middle market, with the monthly rate ranging from $2,000 to $2,500. That is a portion of the market where the company sees some space, as opposed to the frothy luxury assisted living/memory care development market. Plus on the acquisition side, the decreased appetite for acquisitions by some of the REITs may provide more of an opportunity for Drever. To finance these projects, Drever will bring in capital partners to provide a majority of each project’s equity, and thus receive a majority ownership, and will turn to conventional bank loans (valued around 60% loan-to-cost) or bond financing (up to 85% loan-to-cost) for the debt component. The first five projects are expected to break ground in the first half of 2016.
