Lloyd Jones To Sell Majority of Large Multifamily Portfolio, Go Big on Senior Living | Ezine Daddy

Real estate development and management company Lloyd Jones is turning around in a big way, selling most of its multifamily portfolio and using those dollars in senior living communities.

According to Tod Petty, vice chairman of Lloyd Jones Senior Living, the company plans to divest about 80% of its multifamily holdings while rapidly expanding its holdings in the senior living industry.

“It’s a great time selling these,” Petty told Senior Housing News on Tuesday. “We’re going to put all our dollars back into the senior space.”

The company currently manages about 40 assets — including a handful of senior living communities — with a total portfolio value of about $1 billion.

‘The Right Time’

Underpinning the Miami-based company’s philosophy is a countercurrent of two trends. The first is that low capitalization rates and other economic conditions have made apartment buildings valuable in the eyes of investors, with some complexes changing hands at twice their original value. At the same time, senior living communities are selling at discounted prices compared to replacement costs.

Lloyd Jones CEO Chris Finlay saw similar market conditions in 2008, and with hindsight Petty said “his biggest regret…was not buying everything he could.”

“He’s been biding his time on the senior side and he believes the time is now,” Petty said.

The company has a goal of acquiring 2,000 senior living units by 2022, and although it has only completed three acquisitions so far this year, Petty said further growth is on the horizon. Currently, Lloyd Jones has a dozen senior housing projects open or in the pre-opening phase and six other acquisitions in the pipeline.

The company’s acquisition strategy hinges on acquiring low-base communities — perhaps a Grade A property that’s 70% occupied — and converting them into mid-size properties with monthly payments of about $3,500.

“Because we have an interior designer, a development team, and a site manager, we can go in and not spend all this money that we would pay at premium third parties,” Petty said.

This strategy differs from other middle-market senior companies that are looking for efficiencies in staffing to get their models up and running, Petty says.

So far, the company has found many suitable communities for acquisition deals — mostly owned by real estate investment trusts (REITs), according to Petty.

“REITs want to sell them because they don’t really have the ability to make capital investments and repurpose the asset,” Petty said. “We get them at a very low price, which is the most important factor in lower rent.”

Lloyd Jones also targets senior living communities in the Sunbelt, Midwest and Mid-Atlantic with storied stories. For example, the company recently acquired Maybelle Carter, a 131-unit senior living community in Madison, Tennessee, from National Health Inventors (NYSE: NHI) for approximately $8 million. Famous for its association with country music legend Johnny Cash, the community was built on the former estate of country music legend “Mother” Maybelle Carter.

Lloyd Jones plans to spend approximately $5 million to refurbish the property, adding new finishes, outdoor patios and an heirlooms showroom featuring select Cash and Carter family memorabilia.

With the acquisition, the community will operate under Lloyd Jones’ mid-market brand Sage Hill as Sage Hill Maybelle Carter. The company in February added two more communities to its Aviva senior living portfolio: Aviva Woodlands in Lincoln, Nebraskal and River Bend in Rochester, Minnesota.

Looking ahead, Petty said the company’s Aviva portfolio will only include acquired Class A properties and newly developed communities that are not being partnered. For its middle-income brand, Sage Hill, Lloyd Jones will focus on repurposing distressed assets and transforming them into more affordable assisted living and memory care communities.

Small to medium-sized senior living operators could also be a growth driver for Lloyd Jones, and Petty foresees a future where the company would acquire or partner with such a company.

“We can come in, do a joint venture with them, bring them under our platform…keep their good people and take over the properties, we’re definitely interested in growing that way, too,” Petty said.

The company is also growing a hotel division and plans to expand its portfolio and eventually manage those assets internally. But that drive could also lead to more growth on the senior housing side.

“The fortunate thing about it is that we can see these distressed hotel assets,” Petty said. “Our development team is now seeking and signing acquisitions to repurpose for senior housing.”

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