After establishing a national footprint in apartments, the leaders at Phoenix-based Alliance Residential wanted to diversify into another sector. Jay Hiemenz, Alliance’s president and COO, said the company considered both student and seniors housing offshoots, but ultimately the choice was crystal clear.
“With seniors housing we liked the demographics and thought there was a need,” Hiemenz says.
As the company talked with its capital partners, the sector made even more sense. “The investment managers that we’ve done business with on the conventional side have started getting more and more into the senior housing space,” Hiemenz says. “There was a good intersection of our capital partners that would follow us into seniors housing.”
And there was an opportunity to find efficiencies with its existing platform. “We felt like we had this great infrastructure and platform,” Hiemenz says. “We really have the pieces in place to go look at sites and perhaps do acquisitions. We had everything expect for a management operations piece. So we went out and sought a leader to help us with the pieces that we didn’t have.”
Enter Dale Boyles—a 20-year industry veteran who previously served as vice president with Emeritus/Brookdale Senior Living, the largest senior housing owner-operator in the U.S. As managing director of senior housing at Alliance, Boyles’ new role will focus on strategy development, market feasibility, product design, and operating partner relationships for Alliance’s initiatives in this new segment.
“He liked the notion of having more entrepreneurial opportunities, particularly in development where he could have could have more say in product design,” Hiemenz says.
Just because Alliance is planning to build, and eventually buy, seniors facilities doesn’t mean it’s bringing its Top 10 management arm in, as well. It’s actively seeking managers for its properties, specifically the more-intensive assisted living and memory care part of the operation.
“Initially, our notion was for the assisted living piece, we could look at third-party managers,” Hiemenz says. “The independent living is something we can look at whether we want to manage ourselves or partner with someone. We managed a few independent living properties.”
Even without adding management, seniors housing will force Alliance’s developers to take a different approach to deals. For instance, parking isn’t as important on seniors deals. But things like food service and medical facilities are essential.
“If you toured some of the facilities, you’ll see big kitchens, big food preparation facilities, and big recreational areas,” Hiemenz says. “Then the units themselves have different features.”
Hiemenz expects Alliance to break ground on its first seniors deal in the next couple of quarters. It’s currently evaluating sites in the Southwest and expects that area, plus Texas and the Southeast, to be the initial target of its seniors operation.
Once things are up and running, Hiemenz sounds like someone who thinks he has gotten in on the ground floor of a great opportunity.
“Seniors housing, in certain ways, looks like conventional
did 20 years ago,” he says. “They’re starting to consolidate with the big
REITs … It’s a class that now the institutions are feeling better about getting
more exposure to.”