What operators Can Learn from wellpointe’s planned $2b Affordable senior Housing Project 

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Senior living organization Wellpointe is taking a big swing with a public-private collaboration to see a 3,200-unit affordable housing project come to life in Los Angeles. It carries lessons in affordability for the senior living industry.

Wellpointe is bringing the $2 billion project, Viva L.A. Warner Center, to the Woodland Hills area of L.A. The project is moving forward after nearly four years of planning, and is in the entitlement stage prior to actually breaking ground. 

It’s a new type of project for Wellpointe. The Fresno, California-based operator primarily focuses on developing small-home assisted living communities within residential neighborhoods.

The project is adapting the company’s format into a vertical space to be more appealing to the market. It’s the first of new brand that Wellpointe hopes to implement in other markets.

It also comes at a time when affordability in senior living is a particular concern. The need for the project in the area is huge, according to CEO George Kutnerian.

“I think that projects like Viva LA at Warner Center are going to be ushering in a new era of what I would describe as social infrastructure investment,” Kutnerian told me.

The senior living industry needs a combination of private and public collaborations and partnerships to expand penetration rates and create more middle-market and generally affordable services for older adults. While the Wellpointe project and its scale represents a risk, I think it’s a risk that more in the industry should take in the years to come.

In this members-only SHN+ Update, I analyze my conversation with Kutnerian and the need for affordable senior housing, and offer the following takeaways:

• What the industry can learn from Wellpointe’s biggest project to date 

• There is a dire need for affordable senior housing communities in many markets  

Learning from the Viva Project

When it’s completed, the Viva L.A. Warner Center project will consist of four towers, scaling between 32 and 42 stories tall and total 2.2 million square feet. The project will replace an existing commercial office building, and will also have over 61,000 square feet of non-residential use.

Architectural firm Gensler, which is also designing the adjacent Rams Village, a 52-acre neighborhood and act as the team’s permanent headquarters alongside performance venues, mult-use concepts and public open spaces, is the design firm for Wellpointe’s Viva project.  

One of the main lessons embedded in Wellpointe’s project is that, if the industry wants to change things in a big way, it must start early. Wellpointe and its partners started working on the Viva L.A. Warner Center project in 2022.

Another lesson is that senior living operators can adapt smaller-scale ideas into bigger ones. Wellpointe’s has previously offered affordable assisted living services in locations that are similar to single-family homes and carry a co-living style. Wellpointe co-locates communities in residential neighborhoods in Central and Southern California.

With the Viva project, Wellpointe is super-sizing that idea in a vertical footprint. The company is adapting its co-living model for use in its high-rise project with “neighborhoods” located within the buildings for residents as opposed to single-family homes.

Wellpointe is planning for the community’s units to follow universal design principles, and the company is seeking licensing to more seamlessly mix independent living, assisted living and memory care residents.

Viva “represents a new physical form, but the substance is the same: private units and baths, shared living spaces, social connection and person-centered and directed services,” the company wrote in a press release.

Wellpointe is currently looking to close its financing for the project with a groundbreaking date set for 2027. The company is specifically seeking public and private funding, including from tax-exempt bonds, low-income housing tax credits (LIHTC) and U.S. Department of Housing and Urban Development (HUD) dollars.

Notably the project is not receiving a subsidy from the city of Los Angeles – by design, Kutnerian said. The company’s goal with the project is to source funds completely from traditional sources of affordable senior housing funding. I can see the appeal for more projects that don’t cost cities more directly in the form of subsidies.

The project qualifies for the city of Los Angeles’ Executive Directive 1, which is designed to remove barriers and help fast-track affordable projects like Viva. I don’t think it’s a stretch that we will see similar projects moving ahead in other cities if they can follow similar guidelines and tap into similar funding sources.

Making all of this hard is that assembling a capital stack from multiple funding sources, including ones that require approval of government funds, is not always for the faint of heart. But it’s what I think more in senior housing will have to do if they hope to address the wide and growing affordability gap.

“It’s a different type of operation and payer mix, so I do think that it’s difficult to just on a dime transition from market rate to this,” Kutnerian told me. “Even though this is a new type of format for us, we’ve been operating in in this segment in terms of affordable assisted living for quite some time now, so it’s not new to us.”

Need for larger affordable projects remains

Underpinning the Viva project is the fact that millions of older adults will want and need senior housing but won’t be able to afford it.

As of 2023, 58% of older renters were burdened with housing costs, marking an increase of over 570,000 people between 2019 and 2023, according to Harvard University’s Joint Center for Housing Studies. The statistics for older homeowners are better, but still saw an increase from 24% to around 28%, totaling 7.9 million people.

Even back in 2022, affordability concerns were becoming prevalent, following the release of NIC’s “Forgotten Middle” study, which revealed over 11 million older adults are projected to have assisted living out of their price range by 2032. Additionally, the rapid amount of projected growth for older adults across the country is going to put even more strain on existing affordable housing resources, according to LeadingAge.

A recent NIC study showed affordability is both a perception and a reality for prospective residents.

“A number of markets have unoccupied units priced within reach of a large portion of older adults, based on median income and net worth metrics. This suggests that confidence in assisted living and disconnects between current lifestyles and future plans for aging can be more significant barriers than just cost,” the study’s authors wrote.

While not every project can encompass the scale and price tag of Wellpointe’s planned community in Los Angeles, the progress and momentum behind Viva tells me that more operators can explore similar arrangements in their own markets. But they have to start now.

“I think others will follow. Certainly, we’re trying to set a good example,” Kutnerian said.

The post What Operators Can Learn From Wellpointe’s Planned $2B Affordable Senior Housing Project  appeared first on Senior Housing News.