All That Glitters Isn't Gold. Sometimes It's Silver.
Posted on July 29, 2021
When Kevin Maddron joined Foundry Commercial in 2018, not only did he bring with him a dedication to the oversight of the firm’s financial operations, but also a wealth of experience in the development and management of projects in the seniors housing and healthcare services sectors. Data from the U.S. Census Bureau has long predicted the far-reaching impacts of the “Silver Tsunami,” a term being used to describe the mass movement of Baby Boomers – now entering their twilight years – into communities which better support their needs as they age. Case in point, the number of adults ages 85 and older, those often identified as needing higher levels of care or assistance, is expected to quadruple from 2000 to 2040.
In fact, according to reports by the Center for Medicare and Medicaid Services, spending on healthcare services is expected to grow in excess of 5 percent annually over the next five years to reach over $6 trillion by 2027. Likewise, as Baby Boomers continue to age, the industry expects demand for seniors housing to increase from 25,000 units of production per year (2015-2020) to 92,000 units per year (2025 to 2030). These supportive living environments will be in high demand as the number of elderly support persons will plummet from four to just two workers for every person age 65 and older by 2040.
Upon joining Foundry, it was clear that an amazing opportunity existed to cultivate a healthcare and seniors housing platform to meet these growing needs. In preparation for this groundswell – and long before any of us had even heard of a virus called SARS-CoV-2 – the increased demand for medical office buildings, healthcare facilities more convenient to patients, and housing options for seniors was apparent. So, in 2019, Foundry launched its healthcare and seniors housing platform, with Maddron and Chris Mauth spearheading those efforts. Clients ranging from WakeMed Health and Hospitals in Raleigh, NC to Tribe513 in Greenville, SC, searching for a resource to vet and manage the real estate and development processes for their facilities, began to tap into the network and expertise of Foundry’s new platform.
By June 2020 – in the middle of a global pandemic – Foundry announced a JV partnership with Foster Senior Living, forming FSL Senior Living Ventures, which acquires, develops, and manages seniors housing assets across the United States. In this arrangement, Foundry provides capital and transaction expertise for the JV partnership, while Foster Senior Living manages all day-to-day operations of the jointly owned and managed communities. The momentum continued. At the end of 2020, and then again within the next three months, FSL Senior Living Ventures and Fundamental Advisors partnered to acquire two additional seniors housing communities in Kansas City and Jacksonville Beach.
This June, Foundry formed another JV partnership with Cascadia Senior Living, a leading seniors housing operator with 12 communities in Washington and Oregon. Like the relationship with Foster Senior Living, Foundry will assist with the sourcing of capital and investor reporting, while Cascadia will be responsible for day-to-day operations of the facilities. This partnership expands Foundry’s presence into the Pacific Northwest, adding 714 existing units to the seniors housing portfolio, with future expansion efforts already in the pipeline.
This comes at a time when the healthcare and seniors housing industries are emerging from one of the most challenging years on record. As one might imagine, the number of new residents entering independent living, assisted living, and skilled nursing facilities dropped dramatically during the pandemic. This timing also happened to coincide with many newly constructed facilities coming online, some just a few years too early for the wave of aging Baby Boomers who will soon occupy them. For Foundry, this scenario creates real estate opportunities, positioning Foundry’s operating platforms for continued growth in the sector.
Given all of the opportunities in the immediate sight lines in the industry, Foundry’s healthcare and seniors housing team has grown quickly to keep pace with the amount of interest and activity in the market. In February, Jimmy Yu joined Foundry’s healthcare and senior living team as Vice President of Senior Living. Based in Tampa, Jimmy manages the platform’s senior living investments, while serving as the primary contact for operating and equity partners and assisting in acquisitions and due diligence. In addition, Ryan Weekes, a Senior Analyst in Foundry’s D&I group, has taken the lead within the Deal Hub on all healthcare investment underwriting. There are plans to add even more associates who will be specifically dedicated to healthcare and seniors housing in the coming months.
During a year filled with uncertainty, the propulsion of Foundry’s healthcare and seniors housing platform remained a bright spot for the company, making it clear that unbridled growth and development opportunities would be on the horizon for many years to come and positioning the platform to be a part of the solution as the tidal wave of oncoming needs hits the shore.