R.D. Merrill Co. (Merrill Gardens)
Specialties: R.D. Merrill Co., the parent company of Merrill Gardens, focuses on timber holdings and real estate development; Merrill Gardens owns and operates 56 independent- and assisted-living retirement communities in 10 states
Management: Charlie Wright, chairman; Bill Pettit, president; Steve Delmore, executive vice president; Doug Spear, CFO
Founded: R.D. Merrill Co. was started in the early 1900s; Merrill Gardens was launched in 1993
Headquarters: Seattle
Current projects: Merrill Gardens at Kirkland, with 115 apartments (completed in early 2009); co-developing 230 Broadway in Seattle with SRM Development of Spokane, with 234 apartments and 23,000 square feet of retail (start in spring of 2011 and finish in early 2013)
Image courtesy of Runberg Architecture Group Merrill plans to start construction this spring on a 234-unit apartment at 230 Broadway on Capitol Hill in Seattle.
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Seattle-based retirement community developer Merrill Gardens in September entered into a partnership with Health Care REIT of Toledo.
The REIT put 13 of its retirement communities into the partnership and Merrill put in 25. The REIT has 80 percent interest in the partnership; Merrill has 20 percent.
Because Merrill put in more retirement communities, the REIT paid the Seattle company $220 million and assumed a pro-rated share of $249 million in Merrill debt to reduce Merrill’s interest in the partnership to the 20 percent. The partnership will pay Merrill a fee to manage the 38 properties.
The joint venture also has the first right to purchase nine properties Merrill Gardens currently owns.
The venture is valued at $817 million, said Merrill Gardens/R.D. Merrill Co. President Bill Pettit.
The partnership gives privately held Merrill greater access to capital in the public markets to finance growth, and aligns it with a company that also believes in owning retirement communities long term, he said.
Additionally, the deal allowed Merrill to buy out investors in the company, Pettit said. California projects
Merrill Gardens will use its additional liquidity to continue to develop senior housing, Pettit said.
It has one project under construction in San Diego and owns two sites in the San Francisco Bay Area that it plans to start construction on next year. It is looking at two sites each in California and Florida, and one each in Georgia and Texas. It has not entered into purchase-and-sale agreements for them and would not build all right away, Pettit said. The firm just completed four development projects in the Puget Sound region.
Changing tastes
Seniors today want to live in housing that has a residential rather than clinical-institutional feel, said Pettit.
In the 1990s and early 2000s, developers built senior housing that was similar to hotel or hospital rooms with access to common areas. Now good senior housing developers construct residential apartments for seniors that have full kitchens and amenities of a home, he said.
“I believe seniors are served best by trading one residential setting for another,” Pettit said. “They just want to have more convenient access and the support that can be achieved in a building where they can get heath care.”
Mixed-use projects
R.D. Merrill Co. has also expanded into developing apartments with retail. In the next seven years, it expects to have completed about 900 units in the Puget Sound region, with SRM Development of Spokane as co-developer on some of the projects. Merrill acquired the sites in “urban villages” over the last four years, Pettit said.
“This is what we believe will be very attractive multi-generational assets for the Merrill family given the appeal of multifamily projects in the Puget Sound region,” he said.
The firm also is considering buying apartments locally, but they would have to be at an “attractive price” as it believes new buildings better hold their value long term, Pettit said.