Real estate development company Bonaventure is exploring senior living acquisitions in 2023 as the cost of new development and sourcing capital for projects remains high.

The Arlington, Virginia-based real estate development company will look for assets that are “great buildings with great fundamentals, but they have a bad balance sheet,” according to CEO Dwight Dunton.

“I think there are great opportunities to re-deploy value and add capital,” Dunton told Senior Housing News. “Especially because we believe that the [development] pipeline will grind to a halt.”

Bonaventure over the years has focused on developing resort-style senior living communities primarily focused on middle-market rates. The company’s home territory is in the state of Virginia, where it has undertaken several senior living projects.

Today, the company is expanding in other states, including North Carolina, which is a new market for Bonaventure. The company at the beginning of the year announced four senior living projects totaling 560 units in Virginia and North Carolina.

All told, Bonaventure has more than 6,000 units in its multifamily and senior housing holdings representing $1.5 billion of assets under management. The company currently has five senior living communities under development and three others that are open and operating.

Senior living strategy

Going forward, Dunton said Bonaventure’s senior housing strategy will center on acquisitions and mirror what the company is already doing in the multifamily apartment sector.

Last year the company acquired six multifamily communities spanning nearly 1,400 units as part of its overall $1 billion spend in 2022.

Despite the differences between multifamily and senior living real estate development sectors, Dunton thinks the two feed off of one another.

 

Bonaventure’s senior living communities are similar to independent living, though Dunton said they lie closer to active adult than IL.

In some cases, Bonaventure is co-locating other types of senior living at its properties. For example, the company is developing a 120-unit assisted living community next to an age-restricted community with 664 units.

Chicago-based Senior Lifestyle currently manages all of the company’s senior living communities.

Bonaventure’s communities had been operated by Solvere – now AgeWell Solvere Living – but have been operated by Senior Lifestyle.

“We made the switch because Senior Lifestyle’s values more closely aligned with ours,” Dunton said. “And they have extensive independent living experience that better aligned with the communities we’re building.”

Bonaventure’s pipeline includes three age-restricted communities for adults 62 years of age or older, one independent living community one assisted living community.

“All five of our development communities will be opening in 2024,” Dunton said. “The first will be Alate Old Down … an independent living community in Alexandria, Virginia.”

While Bonaventure’s pipeline and portfolio are a mix of senior living asset classes, Dunton believes the various value propositions of those asset classes require a case-by-case approach.

”If one looks at the higher-acuity demand picture, it could be good in a particular market, but that market’s labor component could make it a bad investment,” he said. “So, I think it’s not a simple algebraic equation.”

As for future growth, Bonaventure is targeting markets where older adults are looking to live, either because they want to be closer to their hometown or to where their family currently lives. In particular, he looks for markets where he believes the company’s different product types can share certain kinds of demand — something Dunton called a “holy grail.”

“We’d like to identify an area … where we can tap both of those feeder stocks for future residents,” he said.

Dunton believes Bonaventure is currently sitting at the intersection between two big trends: weak supply in high-demand markets; and a growing and dire need for middle-market senior housing from a cohort sometimes called the “forgotten middle.”

Bonaventure is in fact a middle-market development company at heart, according to Dunton. He added a challenge for the company is balancing affordability with the need to make up for high costs elsewhere.

Operating in the middle market in 2023 is tricky given where expenses for operators are. For example, middle-market rates in North Carolina may not constitute middle-market rates in Virginia. And given where expenses are today, Dunton believes that will remain a challenge.

“With today’s heightened inflationary environment, it’s a moving target,” he said.

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