n Marketing n Broker Q&A n Question of the Month Don’t avoid the elephant Dealmakers stay optimistic about How can operators attract new in the room 34 finding opportunities amid crisis 42 residents amid pandemic? 22 HOUSING BUSINESS ® SENIORSThe Magazine for Seniors Housing Real Estate and Operations August-September 2020

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MarcusMillichap.com HOUSING ® Editor’s Letter SENIORS BUSINESS Vol. 9, No. 5 August-September 2020 Published by France Media, Inc. The ASHA 50 Grapple with COVID-19 Publisher Editor Chairman and CEO Richard Kelley Matt Valley Jerrold France With the fall season upon us and “We’re either going (914) 468-0818 (404) 832-8262 President winter just around the corner, there to get a vaccine, or [email protected] [email protected] Scott France is a sense of urgency to develop a we’re going to get herd Managing Editor Media Advisors Chief Financial Officer safe and effective coronavirus vac- immunity.” Until then, Jeff Shaw (404) 832-8262 [email protected] Michael F. Jacobs cine. Drugmaker Pfizer announced the industry is taking Eric Goldberg in mid-September that key data extreme measures to [email protected] Contributing Writers Senior Vice President, Lynn Peisner Editorial & Operations from its late-stage trial will be ready Matt Valley protect our most vul- Ryan Nixon Randall Shearin for the Food and Drug Administra- nerable population. [email protected] Kristin Hiller tion (FDA) to review by the end of For more insights from Schiffer Graphic Designer www.francemediainc.com October. Moderna and AstraZeneca, as well as ASHA President David Nick Topolski two other companies, are conduct- Schless, check out the Q&A in the Seniors Housing Business® (ISSN 2168-9199) is published seven times per year, bi-monthly except ing phase three trials of coronavirus ASHA 50 supplement, which con- monthly in April and July, by France Publications, Inc., d/b/a France Media, Inc., 3535 Piedmont Rd. NE, Suite 950, Atlanta, GA 30305. Telephone: 404-832-8262. E-mail: seniors@francemediainc. vaccines. tains the 50 largest U.S. seniors com. Periodicals Postage paid at Atlanta, GA and at additional mailing offices. Even if the FDA approves a vac- housing owners and operators as of POSTMASTER: Please send address changes to Seniors Housing Business, P.O. Box 308, Skokie, cine in short order, the rollout is June 1 and is published in conjunc- IL 60076 likely going to take several months. tion with Seniors Housing Business. ©2020 France Publications, Inc. Seniors Housing Business® is a registered trademark of France Public health officials will want to The supplement profiles Ventas Publications, Inc. err on the side of caution because executive Justin Hutchens, who Subscription rates: USA 1 year, $78; 2 years, $112. Single copies are $15. approving vaccines too early can be leads the REIT’s seniors housing risky. Senior living operators expect portfolio in North America. The The opinions and statements made by authors, contributors and advertisers to Seniors Housing Business are not necessarily those of the editors and publishers. to battle both the coronavirus and supplement also highlights ASHA flu season at once this year. and Argentum’s hard-fought vic- To photocopy items from Seniors Housing Business in quantities of 100 or less, authorization must obtained from and a fee paid to the Copyright Clearance Center, 222 Rosewood Dr., The good news is that eventually tory to secure some COVID-19 Danvers MA 01923. Telephone: (978) 750-8400. For quantities of more than 100 or for PDFs, we’re going to emerge from this financial relief for private-payplease contact Barbara Sherer, manager of special advertising, at 404-832-8262 or bsherer@ COVID-19 crisis in one of two ways, assisted living operators. francemediainc.com. says Doug Schiffer, president and There is light at the end of the For subscriber services, please call (855) 736-2644 or write to: COO of Allegro Senior Living and tunnel. SENIORS HOUSING BUSINESS chairman of the American Seniors Customer Service Department Housing Association (ASHA). P.O. Box 308 Skokie, IL 60076; e-mail: [email protected] Or visit www.seniorshousingbusiness.com/subscribe

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4 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 Lori S. Chief Operations and Nursing Officer Lutheran Life Communities and MatrixCare customer

C are runs deep. Lori has always been drawn to service. At nineteen, she joined the US Army Reserve, serving as a field medic and earning her LPN. “Providing healthcare that advances the wellness of others really intrigued me—I quickly realized I could make a tangible difference in the communities I served.” Later, while completing her RN degree, she took a position in residential healthcare for seniors and found caring for older adults especially meaningful. “I have learned so much from the generations ahead of me. Senior living settings provide a unique opportunity to serve those who have been the consistent models of faithful service within the communities we love.”

Today she leads a successful healthcare operations team and encourages associates to use their gifts and talents to grow into new opportunities—just as her twenty-five-year career took her from the bedside to her current leadership role. Lori says it’s rewarding to see her associates empowered and inspired to help others. And we’re inspired by Lori. We honor her, and all who do the work of care. MatrixCare.com/Carerunsdeep.

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n Cover story Editor’s Letter 4 The ASHA 50 Grapple with COVID-19 Finance 8 Ziegler closes $199.4 million bond financing for Acts Stock Snapshot 8 Lead nurturing is a priority for GlynnDevins during the pandemic. According to Jen White, senior vice president of creative and content, the ideal marketing and branding response to Capital Corner 12 coronavirus concerns in senior populations can be boiled down to two parts: the first step is COVID-19 Disruption Takes a respond to the crisis, and then establish a content solution to virtual sales for an industry that Toll on Property Sales bases most of its sales on in-person events. Acquisitions 14 n Marketing MedCore Partners purchases How to Adapt The Elephant in the Room 34 582-unit seniors housing for COVID-19 24 Seniors housing branding needs to answer an uncomfortable, but obvi- portfolio | Kayne Anderson ous, question: Will my parents be safe here? buys 34-property medical Interior designers in seniors office, seniors housing housing sector place greater portfolio from Welltower emphasis on antimicrobial n Broker Q&A materials, socially distant Not All is Lost . 42 Development 18 layouts and outdoor spaces. Investment sales professionals express optimism for future of seniors Massive Ford plant housing despite the pain caused by the COVID-19 pandemic. redevelopment in St. Paul Also: How to balance to include seniors housing aesthetics with senior- n The SHB Interview Question of the Month 22 specific needs Eric Mendelsohn, CEO, National Health Investors 52 What kinds of marketing and --- outreach are you doing to After five years at the helm of the long-standing REIT, this seniors About the cover attract new residents and housing executive has helped the company carve out a niche Senior Living Corp. owns Church Hill increase move-ins? Village, an assisted living and memory in secondary and tertiary markets. care community in Newtown, Connecticut. Banko Design created the James Tellatin on valuations Flynann Janisse on affordability Drew Roskos on design interiors with plenty of outdoor space for safe socialization. Seniors housing pricing takes a Programming can keep residents The pandemic experience will hit amid pandemic. 58 happy and healthy. 60 have long-lasting impact. 62

Harbert Management Corporation announces the final closing of Harbert Seniors Housing Fund II, L.P., with aggregate commitments of $510 million, to acquire, joint venture and develop seniors housing properties in the United States

$510,000,000 Harbert Seniors Housing Fund II, L.P. April 30, 2020

Trent Johnson Brian Landrum 469 804 3716 | [email protected] www.harbert.net 469 804 3718 | [email protected]

6 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 We are a fully capitalized bridge lender based in Seattle, WA serving borrowers nationwide. Our loans range from $10 million to $100 million and we work fast, typically closing in 30 DAYS. We offer loans for all care levels in the Seniors space including skilled nursing. Give us a call to discuss your next investment. We’d love to hear from you.

VILLAGE AT WHITE RIVER JUNCTION, VT Avant garde senior living tarzana, ca LOAN AMOUNT $29,000,000 LOAN AMOUNT $11,250,000 PURPOSE Stabilization and Bridge to Refinance PURPOSE Bridge to HUD OVERVIEW Refinanced the construction loan on a OVERVIEW The loan was a Second Lien mortgage newly constructed high-end AL/MC facility and provided cash out proceeds to in White River Junction, VT. Loan proceeds acuire another seniors housing facility were also used to pay off minor cost in Southern California. over-runs and preferred equity partner.

Billy Meyer ERIC JORDAN Kari Luttinen Lauren smyle Will Nelson (206) 734-3979 (206) 350-5190 (206) 294-7932 (206) 257-3724 (206) 576-0769 [email protected] [email protected] [email protected] [email protected] [email protected]

*Represents the most recent Seniors Housing loan transactions. Provided as representative examples of some of the types of loans provided. Terms of each loan may vary.

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Ziegler closes $199.4 million bond associated with the 20 communi- financing for Acts Retirement-Life ties, while also refinancing bonds Communities from 2012 and two revolving lines Fort Washington, Pa. — Ziegler of credit from Bank of America and has arranged $199.4 million in bond Truist. financing for Acts Retirement-Life Communities. Love Funding provides Based in Fort Washington, Acts is $97.3 million in HUD loans the third-largest nonprofit seniors during second quarter housing operator in the country. Washington, D.C. — Love Fund- The company operates 26 commu- ing has provided more than $97.3 nities in nine states with a total of million in HUD financings in 9,671 total units. second-quarter 2020. The portfolio involved in this All the loans feature long-term, specific financing includes 20 com- nonrecourse, fixed-rate debt solu- munities in seven states, with eight tions. D.C.-based Love Funding’s locations in Pennsylvania, four lo- parent company, Midland States cations in Florida, three locations in Bank, was able to complete short- Love Funding provided $12.9 million in HUD funding for Woodlands of Arnold, an assisting Delaware, two locations in North term bridge loans to secure fund- living, memory care and skilled nursing facility located in Arnold, Missouri. Carolina, one location in South ing. Carolina, one location in Georgia, In the first transaction, Love and one location in Alabama. Funding arranged financing for refinancing for Woodlands of Ar- units for residents age 55 and older. The bond issue includes $115.1 the $3.1 million acquisition of Egi- nold, an assisting living, memory The unit mix for both will consist million in tax-exempt bonds issued da Hogar San Antonio, a property care and skilled nursing facility lo- of 124 one-bedroom units, 100 two- through the Public Finance Author- located in Guayama, Puerto Rico. cated in Arnold, Missouri. bedroom units and 16 three-bed- ity (Wisconsin), Palm Beach Coun- The borrower was able to acquire In a third transaction, Love Find- room units, with an average size of ty Health Facilities Authority (Flor- the Section 8 project and extend the ing provided an $18.2 million HUD- 1,019 square feet. ida) and the Montgomery County affordability component by enter- insured loan for Chickasaw Place, a Both properties will use income Industrial Development Author- ing into a new 20-year HAP con- 272-unit, Section 8 project in Mem- averaging with tenants whose in- ity (Pennsylvania). The remaining tract. The borrower was also able to phis, Tennessee. The financing was come ranges between 30 percent $84.3 million in taxable bonds were realize additional savings through through HUD’s 223(f) program in and 80 percent of the area median issued through the Montgomery HUD’s reduced application fee in- conjunction with 4 percent Low- income. Construction of both prop- County Industrial Development centive for projects located in Qual- Income Housing Tax Credits with erties is scheduled for completion Authority (Pennsylvania). ified Opportunity Zones. tax-exempt bonds allocated by the by December 2021. The proceeds of the bonds will be In the second transaction, Love Tennessee Housing Development The financing for both properties used to finance or refinance costs Funding provided a $12.9 million Agency and The Health, Educa- was structured with Freddie Mac’s tion and Housing Facility Board Tax-Exempt Loan program, with Stock Snapshot of the City of Memphis. The HUD forward construction periods and REITs Stock Current 1 month 12 months loan will be used to preserve and 15-year permanent loan terms. symbol price change change enhance the project with a scope of KeyBank Community Devel- 9/2/20 8/3/20 9/3/19 proposed renovation at approxi- opment Lending and Investment CareTrust REIT CTRE $20.08 11.31% -12.08% mately $34,800 per unit. (CDLI) provided the construction Love Funding also utilized debt on the properties totaling $83 Healthpeak Properties Inc. PEAK $28.56 7.61% -15.65% HUD’s Interest Rate Reduction and million. Local housing authori- Welltower Inc. WELL $60.01 14.74% -31.21% 223(a)(7) programs to improve cash ties issued 4 percent Low-Income LTC Properties Inc. LTC $37.30 2.67% -20.49% flows at six currently HUD-insured Housing Tax Credits. projects by taking advantage of the Al Beaumariage of KBREC’s National Health Investors Inc. NHI $64.08 4.33% -19.00% low interest-rate environment. Commercial Mortgage Group and New Senior Investment Group SNR $4.48 34.53% -23.16% Kelly Frank of KeyBank’s CDLI Omega Healthcare Investors OHI $31.93 1.79% -16.50% KeyBank funds $50 million team structured the financing. financing for two affordable Sabra Healthcare REIT Inc. SBRA $15.65 10.91% -23.32% properties in Georgia Walker & Dunlop provides Diversified Healthcare Trust DHC $3.93 -3.68% -52.48% Lawrenceville and Dacula, Ga. $16.4 million HUD financing for Ventas Inc. VTR $43.94 16.52% -37.16% — KeyBank Real Estate Capital Colorado skilled nursing portfolio (KBREC) has secured $50 million Rocky Ford, Paonia and Glenwood, of fixed-rate Freddie Mac financ- Colo. — Walker & Dunlop Inc. has Publicly traded Stock Current 1 month 12 months ing for Dominium, a developer and provided $16.4 million in financing owners and managers symbol price change change manager of affordable housing. for three skilled nursing facilities in 9/2/20 8/3/20 9/3/19 The twin $25 million loans will Colorado. Blackstone Group BX $54.46 2.64% 15.58% be used for the construction of two The borrower is Madison Creek Brookdale Senior Living BKD $2.97 6.83% -61.97% affordable seniors housing com- Partners. The portfolio comprises Capital Senior Living Corp. CSU $0.68 0.00% -83.81% munities — Grayson Ridge Apart- Pioneer Health Care Center, a 29- ments in Lawrenceville and The unit facility in Rocky Ford; Paonia The Ensign Group Inc. ENSG $59.94 26.48% 32.35% Preserve at Peachtree Shoals in Care & Rehabilitation, a 28-unit Five Star Senior Living Inc. FVE $5.26 14.85% 3.14% Dacula, both suburbs of Atlanta. facility in Paonia; and Glenwood The Pennant Group PNTG $38.16 50.41% n/a Both four-story, garden-style Springs Health Care, a 29-unit fa- properties will each contain 240 cility in Glenwood Springs.

8 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 CUSTOM SOLUTIONS FOR YOUR CAPITAL NEEDS Floating Rate Loans 5, 7, 10 Year Fixed Rate Loans Revolving Credit Facilities

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Kevin Giusti led the origination The current owner bought the team. The HUD loans will refi- property in 2018 and improved the nance existing debt. operations and financial perfor- Renovated in 1964, Pioneer mance at the facility. Health Care Center is the only Vet- Miles Kingston led the transac- erans Affairs-contracted facility tion for Lancaster Pollard, a divi- within 80 miles. sion of ORIX Real Estate Capital. Paonia Health Care Center is a skilled nursing and memory care MassHousing provides facility built in 1984. $32.7 million refinancing to Glenwood Springs Health Care preserve affordability at Mountain is the sole skilled nursing facility View Terrace near Boston in its area, located less than a mile Stoneham, Mass. — MassHous- from its local medical center, Valley ing has provided a $32.7 million Aaron Manor Rehabilitation and Nursing Center is a 142-bed skilled nursing facility in View Hospital. refinancing for Mountain View Ter- Fairport, New York, a village east of Rochester. race, a 194-unit affordable seniors Lancaster Pollard funds housing community in Stoneham, $17.2 million HUD refinancing for approximately 10 miles north of Mortgage Corp. MassHousing of- are 128 one-bedroom apartments, Aaron Manor in Fairport, New York downtown Boston. fers the MAP/Ginnie Mae loan 50 two-bedroom apartments, 10 Fairport, N.Y. — Lancaster Pol- The borrower is an affiliate of program to the owners of rental three-bedroom apartments and six lard has provided $17.2 million in Atlantic Tambone Management, housing through the U.S. Depart- four-bedroom apartments. financing for Aaron Manor Reha- which will use the funds to pre- ment of Housing and Urban Devel- All of the units are subsidized by bilitation and Nursing Center, a serve the community and expand opment (HUD). a federal Section 8 Housing Assis- 142-bed skilled nursing facility in the affordability for at least 31 more Developed in 1981, Mountain tance Payment contract, which has Fairport, a village east of Rochester. years. View Terrace was refinanced by been extended by 20 years. The FHA Sec. 232/223(f) loan Atlantic Tambone Management MassHousing in 2010, at which will refinance several types of ac- refinanced Mountain View Terrace time the property was substan- Ziegler arranges $22.5 million quisition loans into a single pay- through MassHousing’s Multifam- tially renovated. The 194 units financing for Beacon Hill at ment structure. The new financing ily Accelerated Processing (MAP)/ are contained in three five-story Eastgate CCRC in Michigan is nonrecourse and features a fixed Ginnie Mae Joint Venture Initia- apartment buildings and four two- Grand Rapids, Mich. — Ziegler rate. tive with lender partner Rockport story townhouse buildings. There has arranged $22.5 million in bank bonds for an expansion project at Beacon Hill at Eastgate, a 300-unit Wood Memorial ElderHealth Village continuing care retirement commu- nity in the Eastgate neighborhood of Grand Rapids. The borrower is Michigan Chris- tian Home. The financing pack- age includes a $9.8 million long- term component with a 30-year 115-Bed SNF 59-Unit MC amortization and a $12.7 million Mineola, Texas Springfield, Oregon short-term loan with a three-year July 2020 July 2020 amortization that will be retired with initial entrance fees from the project. LBJ Medical Center Built in 1960, the property cur- WHEN NAVIGATING rently features 170 entrance fee UNCERTAIN TIMES, independent living units, 20 rental DELIVERING independent living apartments, 46 RESULTS assisted living units, 35 memory EXPERIENCE support units and 29 skilled nurs- SINCE 1997 ing beds. 60-Bed SNF The community has brought on Johnson City, Texas MATTERS. July 2020 Greenbrier as development con- sultant for the expansion, which will include demolishing a recently purchased medical office building Bishop Davies RidgeCrest Health Campus located on the northeast corner of campus to construct a 26-unit inde- CONFIDENTIALITY • COMMITMENT • CREDIBILITY pendent living apartment building. This new structure will be joined to the existing community by an en- CHICAGO | 630.858.2501 closed walkway. ST. LOUIS | 314.961.0070 161-Bed SNF 90-Unit ALF|SNF The project also includes reno- Hurst, Texas Jackson, Michigan WWW.SLIBINC.COM vating many of the amenity areas. July 2020 August 2020 Beacon Hill selected BBVA as the lender.

10 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 Excellence. Sustained.

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SENIOR HOUSING | MEDICAL OFFICE BUILDINGS | RESEARCH & INNOVATION HEALTH SYSTEMS | POST ACUTE CARE Capital Corner COVID-19 Disruption Takes a Toll on Property Sales By Matt Valley Tracking Property and Make no mistake about it, transaction volume in the seniors housing investment sales market has been significantly hampered by COVID-19, Portfolio Sales Activity* the respiratory disease linked to 197,000 deaths nationally as of Sept. 17. Year-to-date through July, property and portfolio sales in the seniors $22.5 housing and care sector totaled just under $5.3 billion, down 52 percent $20 $22.1 from nearly $10.8 billion during the same period a year ago, according to Real Capital Analytics (RCA). The number of properties that traded over $17.5 $18.4 that same period fell from 703 in 2019 to 366 in 2020, says RCA. The data $15 $16.2 is based on transactions $2.5 million and above. $15.4 Michael Gehl, chief investment officer for North Bethesda, Md.-based $12.5 $14.8 Housing & Healthcare Finance, attributes the slowdown in the pace of $10 activity to heightened uncertainty. Investors are accustomed to making decisions based on the strength of $7.5 an operator, the supply-demand dynamics of a given geographical mar- ket or capital market dynamics, says Gehl. ($Billions) DealAnnual Volume $5 $5.3 “But a pandemic that has not happened since 1918 — and which raises $2.5 questions of how long it will last and how it will play out with the flu season — creates such a level of uncertainty with regard to the cash flow 0 that some capital has been pushed to the sidelines,” explains Gehl. 2015 2016 2017 2018 2019 2020** Alan Plush, CEO of appraisal firm HealthTrust based in Sarasota, Flor- Through July of this year, seniors housing transaction volume totaled ida, says the RCA figures are in line with his observations from the nearly $5.3 billion, down 52 percent from the same period a year ago. trenches. HealthTrust’s volume of business dropped 25 percent in the *based on deals $2.5 million and above **year-to-date through July latter half of March following the initial outbreak of COVID-19 in the U.S. before dipping more than 50 percent in April as the pandemic wors- Source: Real Capital Analytics ened. Since then, the economy has gradually improved but the rebound “Although survey respondents expect short-term capitalization rates for the industry has been decidedly choppy, observes Plush. to increase, we expect this to be a blip on the radar as more data becomes The appraiser describes the second quarter as an “inflection point” — available to the market,” says Bryan Lockard, managing director of JLL’s the moment the reality set in that the economic recovery was going to be Valuation Advisory Seniors Housing division. a slog. Occupancies at senior living communities had slipped by several “Medium- and long-range investor sentiment is still strong as experts percentage points by that stage, leading to a decline in revenues while prepare for the ‘silver tsunami,’ with the leading-edge Baby Boomers expenses related to COVID-19 continued to mount. The end result was now within a 10-year investment cycle of occupancy,” adds Lockard. that operators began to see significant margin compression. JLL concludes that the conventional wisdom among investors is that cap “During the period April through June, there was a huge disconnect rates will “mostly” return to pre-COVID-19 levels once the crisis passes. between buyers and sellers and lenders. The market was in a kerfuffle, Plush estimates that cap rates have risen between 25 and 50 basis an uproar,” says Plush. points this year, but that the increase has not been uniform across the industry. Markets that have been hit by a combination of oversupply and Investor outlook on cap rates shifts a significant COVID-19 outbreak — Phoenix, Atlanta, and many parts At the end of 2019, the average cap rate for majority independent living of Texas and Florida fit that description — are experiencing the biggest communities stood at 5.6 percent compared with 6.1 percent for majority uptick in cap rates, says Plush. assisted living facilities and 10.2 percent for majority nursing care facili- The veteran appraiser can relate to the financial strain that opera- ties, according to RCA. (The data research firm did not provide a second- tors and owners of senior living communities are under as a result of quarter update on cap rates due to the low level of transaction activity.) COVID-19. In addition to serving as an appraiser for the past 35 years, Cap rates have widened slightly for assisted living properties this year, he is the owner of Harbor Chase of Sarasota, a 108-unit assisted living observes Gehl. “But a lot of that has to do with Class B and C, mom-and- and memory care facility in Florida. pop type product that has been trading and usually trades at a wider cap At the end of February, the community’s occupancy rate was 90 per- rate. Also, there have been occupancy declines and expense bumps that cent. It’s now down well below that level. “We’ve been struggling to justify a wider cap rate.” bounce back because property tours are limited and competition is Meanwhile, cap rates for skilled nursing facilities haven’t moved intense,” says Plush. much, says Gehl. “The facilities that have been hit hard by COVID are Sarasota was an overbuilt market heading into the pandemic, explains just not trading, and the facilities that have seen a decline in cash flow Plush. “We even had three buildings open during this COVID-19 due to occupancy declines and labor/supply increases have seen mitiga- pandemic. It’s the dumbest thing I’ve ever seen in my life. So, it’s just tion through billions of dollars of stimulus money,” he explains. going to be a scrappy market for a long time.” Investor sentiment with respect to the future direction of cap rates shifted dramatically during the first half of 2020, according to a report Key to underwriting a deal compiled by JLL’s Valuation Advisory Seniors Housing team. In a Jan. Deals are getting done, points out Lockard, but getting those deals 31 survey of more than 100 transactional professionals specializing in the across the finish line has required additional due diligence to better seniors housing and care space, 72 percent of respondents expected no understand the short-term impact of COVID-19. change in cap rates in the near term. Each property needs to be analyzed individually, says Lockard. “Some However, that survey was taken before COVID-19 swept across the properties have experienced little to no increase in expenses, and this U.S., leading to a heavy loss of life and a virtual shutdown of whole should be reflected in the underwriting. On the skilled nursing side, parts of the economy. When JLL posed that cap rate question again on expenses are increasing for most properties. However, government May 22 to the same pool of respondents, 83 percent indicated that they assistance has helped to mitigate these costs, and both stimulus and expect to see an increase in cap rates as a result of COVID-19. increased expenses should be considered in underwriting the deal.” n

12 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 1 2 3 THE THE HOW IT PROBLEM SOLUTION WORKS

COVID-19 has brought to light The truth is that shared air is not a new Bipolar Ionization is a natural issues that have been facing issue. Even with extreme amounts of process that occurs when UV senior living communities for many cleaning, viruses, mold, odors, and radiation from the sun releases years now. Preventing the spread harmful airborne chemicals can easily positively and negatively charged of infection has become a critical be spread through shared air systems. ions into the air. These ions then topic as senior living communities The solution comes only through attach to a particle of the opposite targeting the true villain, the air. Core face devastating losses due to the charge, causing the molecule to Air Systems utilize Needlepoint Bipolar rapid transfer of COVID-19. One of become neutral. When attached to Ionization Technology to neutralize and the culprits is the shared air a harmful particle, such as a virus, deactivate harmful airborne particles systems used inside senior living the charged ion causes a chemical floating in the air. Core Air is a communities. Even by requiring proactive technology that cleans the reaction to occur on the cell wall, residents to stay inside their own air 24/7 by sending billions of ions into rendering it harmless. rooms, staff still cannot prevent the building. Even with communities Core Air’s Needlepoint Bipolar viruses from being spread through under lock-down, staff members still Ionizers replicate this natural the ventilation system. The fear of have to go in and out of rooms. And, process by releasing billions of ions infecting residents has caused residences will eventually begin into the air, which latch onto and staff to restrict guests at this time, phasing guests back in. As we adjust to neutralize the airborne particles, leading to many residents feeling our new normal, Core Air Systems can making them harmless even if lonely and confused. put minds at ease by protecting inhaled. residents, staff, and guests.

When flu season came around, the lady that runs the shelter said that in the past everyone got the flu... after the ionization was installed, there “ were only a couple of cases. ” SALVATION ARMY BENEFITS CASE STUDY Independently tested and proven to kill 99% of Coronavirus. According to an article about Destroys viruses, mold, and Needlepoint Bipolar Ionization bacteria including E.coli, and posted on HVACInsider.com in Staphylococcus. 2019, "This product was installed Neutralizes odors. in a Salvation Army homeless Reduces pollen, dust, and dander. shelter in downtown Atlanta nine UL Certified 2998 Standard months ago. When flu season which produces no harmful came around, the lady that runs byproducts. the shelter said that in the past Reduces energy costs up to 30%. everyone got the flu because of Easily integrates with existing the tight living conditions for 340 senior living HVAC systems homeless people. She said after including PTAC and VTAC. the ionization was installed, there CONTACT US: Low maintenance, were only a couple of cases." [email protected] 800.291.9921 12-year life expectancy. WWW.CORE.GREEN Acquisitions

Located in Tacoma, Washington, The Village Senior Living features 136 units. MedCore Partners purchases ings and seven seniors housing 582-unit seniors housing portfolio communities from giant REIT Well- in Washington, California tower (NYSE: WELL). Washington and California — The medical office buildings are MedCore Partners and The Na- spread throughout the country, tional Realty Group, together with while the seniors housing commu- BMO Harris Bank and Locust Point nities are all located in Florida. MB Capital, have acquired a 582-unit Real Estate and Discovery Senior independent living, assisted liv- Living operate the portfolio. ing and memory care portfolio in The price and details on the loca- seven markets in Washington and tions were not disclosed. California. “This portfolio is a very compel- The communities in the initial ling addition to our platform — acquisition include five assets in institutional-quality medical office Washington: buildings with long-duration leas- • Birchview Memory Care in es and seniors housing assets with Sedro-Wooley with 60 units. strong current cash flow and near- • Discovery Memory Care in Se- term value enhancements through quim with 55 units. significant capital improvements,” • The Sequoia in Olympia with says David Selznick, chief invest- 92 units. ment officer of KA Real Estate. • Cooks Hill Manor in Centralia Chad Lavender and Ryan Ma- with 72 units. conachy of Newmark Knight Frank The promise • The Village in Tacoma with 136 acted as advisors for Welltower on units. the transaction. Additionally, Wells The transaction also included Fargo Bank financed the seniors of a new day two properties in California: housing assets through its Fred- • Del Obispo Terrace in San Juan die Mac business, and Capital One Capistrano with 91 units. Bank NA led the financing syndi- • Westminster Terrace in West- cate for the medical office assets. is revealed minster with 76 units. MedCore plans to deploy more Strive Senior Living than $13 million of capital expendi- acquires seven-property after the storm. tures to improve the facilities. operator Sutton Homes The company has retained Orlando and Winter Park, Fla. — Tacoma-based Senior Services of Strive Senior Living, based in Or- America (SSA) as the manager of lando, has acquired Sutton Homes, the properties. SSA has managed based in Winter Park. Sutton the communities since 2001. BMO Homes is a 25-year-old operator of Harris Bank provided the senior seven seniors housing communi- loan for the acquisition. ties in Central Florida. Sutton Homes is focused on Kayne Anderson buys 34-property memory care, and Strive will medical office, seniors housing launch a new standalone memory portfolio from Welltower care brand named Sanctuary by Boca Raton, Fla., and Toledo, Ohio Strive to lead the new portfolio. visit us @ www.midcapfinancial.com — Kayne Anderson Real Estate has Strive purchased all assets of acquired 27 medical office build- the company and will continue to

14 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020

200602_Midcap_Storm_Ad_4.375x12.indd 4 6/22/20 7:33 PM Acquisitions operate the communities under of Wichita issued the bonds, and Wichita Central Business District. rental subsidy contract on all units, Sutton Homes until the full rebrand the National Development Coun- The renovation will include exte- which will preserve the housing to Sanctuary by Strive is completed cil provided $4.2 million of Low- rior upgrades and life-safety im- as affordable for very-low-income by the end of the year. Strive also Income Housing Tax Credit equity. provements. tenants. plans to fully renovate each loca- Originally constructed in 1979, The project will benefit from a Sarah Geis and Tim Gerstmann tion. the seven-story Somerset Tower U.S. Department of Housing and of KBREC’s CDLI team structured Many of these new locations are Plaza is located two miles from the Urban Development Section 8 the financing. in close proximity to Strive’s flag- ship community, Strive at Fern Park, which the buyer hopes will help it leverage operational effi- ciency. “This acquisition expands our care delivery to include large and home-style communities. This al- lows us to better meet the varied needs of our seniors community,” says Trey Vick, chief executive of- ficer of Strive Senior Living. “The acquisition also adds to our capacity and geographic presence to care for the residents and fami- lies impacted by Alzheimer’s and dementia.” Frank Ricci of Healthcare Realty Services represented the seller, while Bobby Bridges of V 3 Com- 25+ YEARS mercial Advisors represented the buyer. OF HEALTHCARE Ensign Group acquires 224-unit seniors housing campus in Tempe, Arizona FINANCING Tempe, Ariz. — The Ensign Group Inc. (NASDAQ: ENSG) has With over $5 BILLION IN FINANCING acquired the real estate and opera- tions of a post-acute care retirement SINCE 1993, Capital Funding Group campus located in Tempe. The acquisition includes Tempe provides creative, structured Post Acute, a 62-bed skilled nurs- ing facility, and Desert Marigold financing solutions for our clients. Senior Living of Tempe, a senior living center with 72 assisted liv- ing beds and 90 independent living units. These acquisitions bring Ensign’s growing portfolio to 226 healthcare operations, 24 of which also include assisted living operations, across 13 JAN-JUL 2020 JUNE 2020 JULY 2020 states. Ensign owns the real estate Nationwide 3 Ohio Skilled 4 Texas and Iowa Skilled at 92 healthcare operations. Nursing Facilities Nursing Facilities Blueprint Healthcare Real Estate Advisors brokered the transaction.

KeyBank provides $11.3 million $770 MM+ $35.5 Million $22.3 Million acquisition financing for Somerset BRIDGE-TO-HUD BRIDGE-TO-HUD BRIDGE-TO-HUD AND HUD LOANS LOAN LOAN Tower Plaza in Wichita Wichita, Kan. — KeyBank Com- munity Development Lending and Investment (CDLI) has provided an $11.3 million tax-exempt construc- tion and permanent bond loan for the acquisition of Somerset Tower CAPITAL FUNDING GROUP Plaza in Wichita. CapFundInc.com | 410-342-3155 Steele Properties plans to reno- CONTACT US TODAY: vate the 100-unit affordable se- CAPITAL FUNDING, LLC AND CAPITAL FINANCE, LLC ARE WHOLLY-OWNED SUBSIDIARIES OF CFG BANK. MEMBER FINRA/SIPC niors housing community. The city

August-September 2020 n Seniors Housing Business www.seniorshousingbusiness.com 15 Acquisitions

which were not disclosed. relationships with leading health- Aron Will, Austin Sacco and Mat- care providers,” says Uri Kahanow, thew Kuronen of CBRE National director of acquisitions. Senior Housing arranged the four- Marquis Health Services, Tryko year bridge loan with 36 months of Partners’ healthcare affiliate, will interest-only payments and a one- operate the property. M&T Bank year extension option. The lender is provided acquisition financing. a regional bank. SLIB arranges sale of 90-unit Tryko Partners acquires RidgeCrest Health Campus in 173-unit skilled nursing facility Jackson, Michigan near Philadelphia Jackson, Mich. — Senior Living Springfield, Pa. — Tryko Partners Investment Brokerage (SLIB) has has purchased the Harlee Manor arranged the sale of RidgeCrest and Springfield Commons skilled Health Campus, an assisted living nursing campus in Springfield, and skilled nursing community in approximately 12 miles west of Jackson, approximately 75 miles downtown Philadelphia. west of downtown Detroit. The Harlee Manor and Springfield Commons skilled nursing campus in Springfield, Pennsylvania, totals 173 skilled nursing beds and personal care units. The buyer, Tryko Located on more than six acres, Built in 2010, the community Partners, will rebrand the properties as Springfield Rehabilitation & Healthcare Center and the property totals 173 skilled nurs- features 50 skilled nursing beds Springfield Crossings. ing beds and personal care units. and 40 assisted living units. Total- It will be rebranded as Springfield ing 54,696 square feet, the property CBRE arranges $14.4 million between Cadence Living and a Rehabilitation & Healthcare Center was more than 90 percent occupied acquisition financing for two private equity firm. The two com- and Springfield Crossings. at the time of sale despite the ongo- communities in metro Denver munities, located in the Denver Tryko is planning to immediately ing COVID-19 pandemic. Aurora and Lakewood, Colo. — suburbs of Aurora and Lakewood, start a $2.5 million improvement The seller was a regional owner- CBRE has arranged $14.4 million total 152 assisted living units and plan. operator with communities across in financing for the acquisition of a 35 memory care units. “[This acquisition] is a natural Indiana, Ohio, Michigan and Ken- seniors housing portfolio in Colo- The joint venture plans to deploy expansion move in an appealing tucky. The buyer was a Michigan- rado. $4 million for improvements to the market — one that we know well based company looking to grow its The borrower is a joint venture two communities, the names of and in which we have established portfolio within the state.

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nity in Cupertino. KT Urban is de- veloping the property. The mixed-use project has now cleared all required approvals ex- cept the City Council, which plans to review the proposal before con- struction can begin. Located at 21267 Stevens Creek Blvd., Westport Cupertino will fea- ture 206 senior living apartments, including 48 affordable units and 27 memory-care units, and 88 sin- gle-family units in a mix of row home and townhome styles. In ad- dition, the development includes 20,000 square feet of retail. The site is located across the street from De Anza College and the Cupertino Senior Center. Community amenities will in- clude an onsite library, theater, lounge, restaurant, café, roof deck and terrace, medical offices and exercise rooms providing a range Highland Bridge, a redevelopment of a 122-acre Ford plant in St. Paul, has a focus on residential, featuring seniors housing, market-rate multifamily housing and 760 units of affordable housing, as well as for-sale row homes. of activities and support for senior residents. Additionally, the project Massive Ford plant An estimated 14,500 construction Xcel Energy has partnered with will feature below-grade parking, redevelopment in St. Paul jobs will be created for the project. Ryan Cos. with the goal of provid- electrical vehicle charging stations to include seniors housing Once complete, an estimated 1,000 ing 100 percent renewable energy and bicycle parking. St. Paul, Minn. — Ryan Cos. has employees will be employed at the at the project. Xcel proposed a pro- The project is a redevelopment of broken ground on the redevelop- site. gram whereby residents and busi- the former 71,254-square-foot Oaks ment of a 122-acre former Ford “We’ve paid particular attention nesses have the opportunity to sub- Shopping Center, which sits on an plant in St. Paul’s Highland Park to what makes Highland Park spe- scribe to receive locally generated 8.1-acre site. KT Urban’s original neighborhood. Named Highland cial, and our goal is to uphold those solar and hydroelectric energy to plan was rejected by the City Coun- Bridge, the project has a focus on unique qualities, to expand upon power their homes and buildings. cil in 2017, but the new proposal in- residential, featuring seniors hous- them, and to create a place where “[Our] goal to reduce carbon cludes the addition of seniors hous- ing, market-rate multifamily hous- people thrive for generations,” says emissions 80 percent by 2030,” says ing and below-market-rate units. ing and 760 units of affordable Mike Ryan, president of north re- Chris Clark, president of Xcel Ener- Project partners include Atria Se- housing, as well as for-sale row gion for Ryan Cos. gy-Minnesota. nior Living, Related Cos. and C2K homes. Pulte Group has joined the proj- Architecture. In addition to the project’s 3,800 ect team as the developer of the KT Urban receives approval for housing units, Highland Bridge is for-sale row homes. Pulte plans to Westport Cupertino mixed-use Highridge Costa completes slated to include 150,000 square feet deliver approximately 320 homes project in California 13-story affordable seniors of retail space, 265,000 square feet that will range from 1,900 to 3,000 Cupertino, Calif. — The City of housing tower in Oahu, Hawaii of office space and 50,000 square square feet. Prices will start in the Cupertino Planning Commission Kapolei, Hawaii — Highridge feet of civic or institutional spaces. upper $300,000s. Construction is has approved the development Costa, in partnership with Hono- More than 55 acres of public space expected to commence this winter of Westport Cupertino, a seniors lulu-based Coastal Rim Properties, will include four new parks, biking with the first homes available in housing and multifamily commu- has completed the first phase of and walking paths and two base- winter 2021. ball fields. Weidner Apartment Homes was Presbyterian Homes & Services selected as the primary develop- will own and operate the project’s er for the market-rate housing at senior living component. The com- Highland Bridge. Project for Pride munity will offer independent liv- in Living, CommonBond Commu- ing, assisted living and memory nities and Habitat for Humanity care apartments with an array of will develop the majority of the af- service offerings and amenities. fordable housing component. Twin Cities-based Presbyterian Of the affordable housing units, Homes is a nonprofit operator and 380 will be reserved for those earn- developer. ing up to 30 percent of the area Ryan Cos. completed the pur- median income (AMI), 190 will chase of the former Ford plant in be reserved for those earning up December 2019. Ford began pro- to 50 percent of the AMI and 190 duction of the Model T at the site in will be reserved for those making 1925, but the plant closed in 2011. up to 60 percent of the AMI. Rents Westport Cupertino will feature 206 senior living apartments, including 48 affordable units Total project costs for the redevel- will range from $675 to $1,350 per and 27 memory-care units, and 88 single-family units in a mix of row home and townhome opment were not disclosed. month. styles. In addition, the development includes 20,000 square feet of retail.

18 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 Development

Hale Moena Kupuna, a $130 mil- housekeeping. have acquired two seniors housing units including independent liv- lion affordable seniors and multi- development sites in Coral Gables ing, assisted living and memory family rental community in Kapo- ZOM, Watermark acquire two and West Palm Beach, both cities care, with 50,000 square feet of lei on the island of Oahu. development sites in South Florida located on the Atlantic Coast of amenities. The first phase is a 13-story high- Coral Gables and West Palm Beach, South Florida. The site is adjacent to the Shops rise designated for seniors, fea- Fla. — ZOM Senior Living and Wa- The Watermark at Merrick Park at Merrick Park and across the turing 153 affordable apartments termark Retirement Communities in Coral Gables will comprise 196 street from a train station. in a mix of studio, one- and two- bedroom floor plans. Upon full build-out, the three- phase Hale Moena Kupuna will of- fer two 13-story residential towers with ground-level retail and com- mercial space. Community amenities include a meeting room, picnic area and a community workspace with high- speed internet access. The development is being fi- nanced with a combination of tax- exempt bonds, tax credit equity and a $10.7 million rental housing revolving fund loan from the Ha- waii Housing Finance and Devel- opment Corp. Citibank is serving as the con- struction lender and Aegon is the tax credit investor. ARI ADLERSTEIN Managing Director 212.612.0174 Greenbrier Development opens [email protected] CCRC on Berry College campus in Rome, Georgia ARI DOBKIN Rome, Ga. — Greenbrier Devel- Managing Director opment has opened the first units 212.612.0165 at The Spires at Berry College, a [email protected] continuing care retirement com- munity (CCRC) in Rome. ‘s The property, first announced in 2018, is located on the campus of Berry College, a private liberal arts school approximately 60 miles northwest of Atlanta. The first 55 apartment units, as well as 26 freestanding cottage homes, are now accepting resi- MERIDIAN’S SENIOR HOUSING dents. The community will feature 144 apartments upon full build- AND HEALTHCARE TEAM out, and the units are 70 percent pre-sold. The Berry College Board of Trust- PROVIDING SOLUTIONS IN: ees conceived of the project, and engaged Dallas-based Greenbrier to develop it. Greenbrier Senior • DEBT FINANCING Living will oversee all operations. Brasfield & Gorrie was the gen- • EQUITY PLACEMENT eral contractor for the project, and Ziegler Financial provided funding • INVESTMENT SALES for the community. Laurie Steber will serve as executive director of The Spires. Several Berry College student workers are part of the Gate of Opportunity Scholars Program, and are required to work at least 30 hours per week at The Spires. meridiancapital.com These students serve in various roles from concierge to server to

August-September 2020 n Seniors Housing Business www.seniorshousingbusiness.com 19 SHB – March 2020.indd 1 3/24/20 1:04 PM Development

The Watermark at West Palm health, well-being and happiness Beach will feature 154 units of inde- of our vibrant senior population,” pendent living, assisted living and says Ron Ziebart, president and memory care with 30,000 square CEO Link Senior Development. feet of amenities. Insight Senior Living specializes M&T Bank provided construc- in new-development senior living tion financing for the West Palm communities, providing consulting Beach project, while PNC Bank during development and pre-open- funded the Coral Gables project. ing and management services after MSA Architects and Lemay- opening. Link Senior Development Escobar Design designed both focuses exclusively on the develop- communities. Verdex Construction ment and management of seniors will build the West Palm Beach housing. property, while Kast Construction Ativo is the Portuguese word for will construct the Coral Gables “active.” property. The Watermark at Merrick Park in Coral Gables will comprise 196 units including independent Groundbreaking is slated for lat- living, assisted living and memory care, with 50,000 square feet of amenities. Realty Capital acquires 77 acres er this summer on both projects. for mixed-use project in Texas The developments will be the 21 states, including four develop- Living of Yuma, Arizona, is cur- to include active adult second and third communities in ments nearing completion. rently under construction with a Mansfield, Texas — Realty Capi- South Florida for ZOM Senior Liv- planned opening in early 2021. The tal Management has acquired ing, which has another project un- Link Senior Development, Insight Portland-based company also has 77 acres in the Fort Worth suburb derway in nearby Wellington. The Senior Living launch Ativo brand communities planned in Prescott of Mansfield for the development company is a subsidiary of ZOM with three communities planned Valley, Arizona; Buckeye, Arizona; of Watson Branch, a mixed-use Living, which has developed al- Portland, Ore. — Link Senior De- Albuquerque, New Mexico; and project. most 22,000 standard multifamily velopment and Insight Senior Liv- other projects in various design Preliminary plans call for 10,000 apartments with a total estimated ing have launched the Ativo Senior phases throughout the Southwest. square feet of retail and restaurant value of $4.3 billion. Living brand, with three upcoming “This relationship between In- space, 250 single-family homes, a Watermark Retirement Commu- communities currently announced sight Senior Living and Link Senior 190-unit active adult community nitiesSeniors is a seniors Housing housing Business operator, in the Southwest. Development was forged based by Greystar, a 350-unit apartment managing 63 communities across The first property, Ativo Senior on our mutual enthusiasm for the complex by Trinsic Residential and a 10-acre public park. Louisiana-based First Guaranty Bank partnered with Dallas-based Realty Capital Partners to finance the acquisition of the land.

Pennrose to repurpose Mary Stone School in Massachusetts as affordable housing Auburn, Mass. — Pennrose has closed on financing for the rede- velopment of the Mary D. Stone school building in Auburn, a sub- urb of Worcester. The project will turn the three- story, 1920s-era property into a 55-unit affordable seniors housing community. Plans call for the renovation of the historic school, demolition of some later-built wings and con- struction of a new expansion. The property sits on 1.3 acres, and con- struction has commenced. Comprising a mix of studio, one-bedroom and two-bedroom apartments, 80 percent of the units are reserved for seniors earning up to 60 percent of area median income. The remaining units will have market-rate rents. As part of the development plan, Pennrose has contributed $25,000 to the Town of Auburn for new equipment for the public play- ground on the property.

20 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 THE CLUB ROOM

MedCore Partners and The National Realty Group Announce the Construction of Sooner Station at University North Park

Norman, OK — Dallas-based MedCore Partners, together with The National three courtyards, a large pool area designed for relaxing or socializing Realty Group (TNRG) in Houston, are bringing a state-of-the-art senior living with friends, paved fitness trails around the campus, covered parking, and community to the Norman market. This 188-apartment development will a dog park. feature 100 independent living residences, 64 assisted living apartments, and 24 memory support suites as a needed offering to the residents of Norman Perhaps the most exciting element to Sooner Station which sets it apart in and surrounding areas. The campus is located at 2803 24th Avenue NW the marketplace is its relationship with the University of Oklahoma Alumni at Radius Way in University North Park. Association. Sooner Station is the Senior Living Community Sponsor of the OU Alumni Association — the first time this important relationship has been Sooner Station was designed to offer seniors a wide range of services forged in the Norman area. Dave Hail, Executive Director of the OU Alumni to support the type of hassle-free lifestyle they enjoy, while keeping them Association, said this about the relationship. “Sooner Station’s support of engaged in meaningful endeavors. “Sooner Station enhances quality of life the OU Alumni Association makes it a destination for OU Alumni events, because it removes the hassle and stress from everyday obligations,” Tiffany meaningful reunions and connections, continuing education opportunities, Cobern, Director of Seniors Housing Operations for MedCore, stated. “By OU campus visits and many other great opportunities to keep alumni in combining concierge-level services with a Class A property, we want Sooner the area connected with the University. We look forward to this incredible Station to be the retirement destination for anyone who values staying opportunity with the support of Sooner Station.” connected to all the important things – friends, family, education, fitness, worship, and giving back to their community.” Integral Senior Living, a leading operator in the senior living industry, will manage the day-to-day operations of Sooner Station. The community Offering inviting, indoor/outdoor dining venues kicked off the forward- is anticipated to open in the fall of 2021. Priority reservations are being thinking design of Sooner Station. But the amenities offerings go far beyond accepted now for studio, one-bedroom and two-bedroom residences. that. Starting with a sound-enhanced education and training center, Sooner For more information, please call (405) 504-9007. Station will invite its residents and the surrounding community to participate in religious services, special interest classes, speaker sessions, featured performances, and other gatherings. The main common areas also include a salon and spa, a club room with bar seating for watching sports or hosting gatherings, a spacious fitness center, and a physician clinic to be supported by a local health system. Outdoor spaces include two al fresco dining areas,

SOONERSTATION.COM / (405) 504-9007 SPIRITED SENIOR LIVING Question of the Month What kinds of marketing and outreach are you doing to attract new residents and increase move-ins? Find creative solutions Video is an essential tool A slow return to normal Safety and service meet By Joseph Jasmon By Dan Williams By Douglas Schiffer By Ted Doyle CEO Principal, COO President, COO Vice President of Marketing American Healthcare Seasons Living Allegro Senior Living & Communications Management Group LCB Senior Living The pandemic has We’re working to We adjusted our challenged our indus- make visiting the com- We took a ground- business relationship try to think outside the munity more accept- up approach to post- visits and offered a helping hand box and find creative new ways to able. Whether it’s reassuring pros- COVID marketing feeling that, all to those businesses reopening attract customers. At Seasons Liv- pects that we’re working hard to things being equal, people who with COVID-related assistance. ing we have put a big emphasis on maintain the highest levels of need our services are going to go We continue to provide virtual virtual tours showcasing our com- cleanliness or setting up outside where they feel most safe. tours and have started a video pro- munities. Video has become an ‘living rooms’ so families can visit, A messaging strategy was cre- gram to introduce ourselves to the essential tool in getting the ameni- it’s important to demonstrate our ated wrapping all of the tradi- community. ties we offer in front of prospects. ability to be welcoming in this new tional benefits within the concept We recently began to offer in- Much of our marketing message normal. of safety. “Where Safety Meets home assistance, advice and a per- has changed to emphasize how we For prospects to become resi- Service” was launched as an son to call for prospects who are can keep our residents safe. We dents they have to know that integrated campaign across all nervous about moving. Enhancing have created an animated video they’ll be safe and engaged with- channels. our online presence and working highlighting infection control to out being cut off from their family At the same time, we conducted our family networks is the key. educate consumers. and friends. We continue to take family surveys to gauge our work Now more than ever we have We’ve had fun utilizing the it a day at a time. In-person tours, and received very positive feed- to be creative in building and fos- community buses as mobile rather than virtual, are beginning back that we’ve been able to share. tering our relationships with our sales offices, going out to refer- at our active adult and indepen- We’re also creating robust virtual potential families. It is our goal ral sources and offering curbside dent living communities, and it’s tours and have restored a real to be a valuable resource to the snacks. This has been a big hit. making all the difference as we sense of life and activity within the community. slowly return to normal. communities.

Market the positives Manage marketing budgets Residents offer testimonials Create hybrid strategies By Jill Harlow By Rick Westermann By Heather Frahm By Sarabeth Hanson Agency Director Vice President of Sales & Chief Marketing Officer, President, CEO Watermark Retirement Marketing, Rental Senior Vice President Harbor Retirement Associates Communities Life Care Services Benchmark Senior Living Our focus in our At Watermark Retire- In March, Life Care As a company built sales and marketing ment Communities, Services immediately on human connections, efforts is, of course, to we’re providing residents and reduced marketing spend across Benchmark values honest and maximize every effort to encour- families with peace of mind by all channels hoping to rede- ongoing communication with resi- age new business and grow our sharing our laser focus on safety in ploy it later at a higher return on dents and families. Since COVID- census while acting responsibly to every area of our communities and investment. In June, we began to 19, this dialogue has been more ensure that we’re not putting our our 30 years of experience in deliv- increase our pay-per-click monthly important than ever. That is why residents or associates at risk. ering exceptional service and care. spend by closely following our we asked our communities to par- We focus on well-choreographed, Watermark’s marketing message digital marketing key performance ticipate in a June survey. high-quality virtual tours, and reflects our longstanding approach indicators in each local market to An impressive 87 percent of these will continue to be a large to transformative aging — incor- maximize spend and performance. respondents indicated their impres- part of our process. Our intention porating high-quality care with Like many providers, we quickly sion of Benchmark stayed the same is to take the lessons we’ve learned integrative wellness in an envi- adjusted our sales approach in or improved since COVID-19. about the opportunities we have ronment that supports daily liv- March and April with prospec- Meanwhile, 43 percent indicated with the technology at hand and ing with an abundance of choices. tive residents and referral partners their impression of Benchmark to incorporate them into our tradi- Watermark communities offer a to digital using Zoom, FaceTime, has improved since the pandemic, tional sales process. This creates a retirement lifestyle that embraces Google Duo, pre-recorded videos, while 24 percent indicated they new enhanced hybrid sales process renewal and engagement with text and targeted email campaigns. have a favorable impression of the and cadence, where the virtual tour amenities and programs that Coaching our teams and practic- the entire seniors housing industry. is an enticement to come visit in enrich mind, body and spirit. ing mock virtual tours have been The results offered insights on person. Our commitment is to lift the paramount to the success we have how we can improve and pro- Above all, we are going to con- weight for families concerned seen converting these prospects to vided a treasure trove of testimo- tinue our focus on the individuals about providing a safe and healthy move-ins. nials for brochures, digital promo- that we serve and will serve by lifestyle for their loved one. tions and prospect letters. What developing deep, meaningful rela- carries more weight than the opin- tionships with our prospects that ions of people who already call will allow us to connect with them Benchmark home? on a deeper level.

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We’re invested in the well-being of your community. Contact us to get free programming for your fi rst two months. O‡ er ends 12/31/20. Commitment required and other restrictions apply. Visit dish.com/seniorliving n Design How to Adapt for COVID-19 Interior designers in the seniors housing sector place greater emphasis on antimicrobial materials, socially distant layouts and outdoor spaces.

By Kristin Hiller

Interior designers within the senior living space say they’ve always considered health and wellness as an integral part of their work. But today — amid the coronavirus pandemic and the vulnerability of seniors — safety and infec- tion prevention is at the forefront of design decisions. Karla Jackson, principal and design director with Austin, Texas-based StudioSix5, says that COVID-19 is now a long-term design consider- ation for her company. “All materials for all levels of care will be expected to stand up to more rigorous clean- ing protocols,” she says. “Space planning con- siderations will be different and operations will be different. The environment will have to support new ways of performing daily tasks and managing resident access to services and amenities.” Another consideration today, according to Jackson, is how to develop personal protective equipment stations and coronavirus-related signage that fit the aesthetic of a community Interior designers are attempting to create more outdoor areas and flexible spaces due to COVID-19. Pictured are Banko and “don’t look like an afterthought.” Design’s outdoor seating area at Everlan of Clemson, an independent living community in South Carolina. Spellman Brady & Co., a firm based in St. Louis, already had specific design standards in place for infec- tion prevention, but has put work into analyzing the need for further protocols, accord- ing to Alicia Nicolay, director of design. These design stan- dards include finishes, furni- Alicia Nicolay ture and even artwork. Spellman Nicolay says that in addi- Brady & Co. tion to selecting antimicro- bial surfaces, using sheet product for flooring reduces the amount of seams, which are often difficult to keep clean. “We’re trying to eliminate as many seams and pores as possible so there aren’t crev- ices where germs can live and breathe,” she explains. Melissa Banko, founder and principal of Mar- ietta, Georgia-based Banko Design, says that her company continues to select antimicrobial and bleachable materials in its seniors housing projects.

24 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 Other considerations include specifications.” durable fabrics that can be wiped Selecting hard flooring surfaces “Touch-free fixtures and systems, and scrubbed often, as well as car- or carpets that are bleach solution- pets that can be cleaned frequently tolerant should also not have sig- as well as a greater number of and withstand heavy use. nificant impact on costs, according “A long-term consideration to Jackson. automated doors, are already related to product design is the Designers say that a new consid- ability for end users to clean and eration as a result of COVID-19 is being requested.” disinfect the furniture,” says Dean how to design spaces for guests to Jarrett, vice president and gen- enter and exit a community safely. — Amy Cheever, Cuningham Group eral manager of Martinsville, Vir- “We are looking at what COVID- ginia-based H Contract, which is a 19 guidelines mean for an entry Hooker Furniture company. experience that is both safe and “It will be important for interior welcoming,” says Cheever. designers and product suppliers to “Although this may be more utilize materials that are durable short term in some of the more enough to stand up to the rigors stringent precautions, it provides of cleaning and disinfecting proto- an opportunity to look at how to cols, as well as providing guidance continuously improve the experi- to end users on how to properly ence for both health and hospital- do so,” adds Jarrett. ity,” she explains.

New considerations Socially distant design Another health initiative today As the nation adapts to social is touchless technology in an effort distancing guidelines, design- to reduce contact on surfaces. ers are reconfiguring layouts and “Touch-free fixtures and sys- seating arrangements. Furniture tems, as well as a greater number may be placed in different spots of automated doors, are already or removed from a common area being requested,” says Amy entirely. Cheever, associate principal and One of the most significantly senior living practice leader for impacted areas is the dining Cuningham Group, which has room, according to Jarrett. eight offices worldwide. “We have seen operators tem- If operators don’t have the porarily stop serving in their din- budget for new equipment, they ing rooms in favor of delivering should focus on adhering to more meals directly to resident rooms,” frequent and stringent cleaning observes Jarrett. “We have also protocols, says Jackson. But fabrics seen operators testing modified that are cleanable with a bleach dining room seating arrangements, solution “are no more costly than such as spacing tables further those that aren’t,” she says. “It’s apart from each other and limiting just a matter of making the right seating to one resident per table.”

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August-September 2020 n Seniors Housing Business www.seniorshousingbusiness.com 25 September. Charla Goss, director of interior design for Austin, Texas-based Pi Architects, says that in addition to designing spaces that adhere to social distancing, a current design consideration is the creation of more outdoor areas or spaces that open up to the outdoors. Other features Pi is staying abreast of include HVAC upgrades for higher filtration and the creation of separate wings that could be sequestered if a community were to experience a large outbreak of COVID-19. Indoor air quality is now a con- sideration for designers, accord- ing to Johnny Dagher, associ- ate principal and architect with This rendering shows plans for The Ridge Pinehurst in Lakewood, Colorado, near Denver. StudioSix5 is the interior designer for the luxury Orlando-based Baker Barrios. “We community, which is scheduled to open soon. are implementing HVAC solu- tions such as bipolar ionization and integrated ultraviolet light- ing, which kill and control patho- gens as they move through the air,” he says. Construction costs for HVAC upgrades or health-focused inte- rior finishes can be upwards of $50,000 for medium to large proj- ects, says Dagher. His advice for cost-conscious operators is to select options such as touchless light controls and faucets, which help reduce the spread of infection without break- ing the bank. Designers say that new mea- sures related to COVID-19 are likely here to stay. Focus must be given to more rigorous infection control mea- sures and built-in flexibility to support physical distancing, says Jackson. “That assump- Cheever says that COVID-19 tion applies to any area of design shines a spotlight on the issue where people gather, but espe- of isolation and loneliness, and cially to seniors housing where she looks to design as a possible the populations are so vulner- THE BENEFITS OF PARTNERING WITH A solution. able,” she says. COLLIERS SENIORS HOUSING EXPERT “We are studying how amenity According to Banko, the way to spaces are positioned in a build- design for COVID-19 is to “cre- Specialized Expertise ing, and how they can have more ate flexible interiors for an ever- 50 years of combined in-depth knowledge of access to the outdoors, natural changing world.” ventilation and the potential for In other words, flexible spaces Seniors Housing asset types ease of safe distancing for both can either be left open or com- visitors and residents.” partmentalized for smaller gath- Consultative Approach At Benedictine Living Com- ering areas. Full-service brokerage tailored to your needs munity in Shakopee, Minnesota, Cuningham Group designed Flex space offers perks Goal-Oriented Strategies the wellness room to jut directly “Flexibility” is a buzzword in Our goal is not just to be successful, but to out into the garden spaces. The the design industry today that provide an invaluable service design team and landscape archi- goes beyond COVID-19. tects coordinated the plants and Designers say that seniors interior finishes at the 183-unit housing owners are increasingly Damien Carriero and Ken Carriero, CCIM Phone: +1 800 858 5904 independent living, assisted liv- requesting flex spaces that can Email: [email protected] ing and memory care commu- be used for a broad range of nity, which is slated to open this activities. Creating spaces that are

26 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 Keep residents connected with faster WiFi Provide your residents with easy access to their friends and family. Give them secure, consistent, best-in-class WiFi connectivity and reliable Voice services. Plus, they’ll love the endless TV and entertainment options, and feel more confi dent with trusted 24/7 support.

To increase the value of your property, visit SpectrumCommunitySolutions.com/senior ing to Banko. “Our clients want warm, welcoming com- munities full of amenities for their residents,” she says. “The days of sterile, institu- tional-feeling seniors hous- ing are gone.” This hospitality model applies to independent liv- Melissa ing, assisted living and Banko memory care communities, Banko Design according to Banko. “The root of hospital- ity design is hosting — and that’s exactly what our operations and care teams do,” she says. Banko designed a rural and equestrian- inspired theme at The Phoenix at Union Hill in Canton, Georgia, which is north of Atlanta. The 153-unit independent living, assisted Phoenix at Union Hill in Canton, Georgia, features a salon as one of its amenities. Other offerings include a pool, playground, living and memory care community, owned landscaped gardens and walking paths. Phoenix Senior Living owns the 153-unit independent living, assisted living and memory care community. by Phoenix Senior Living, features outdoor amenities such as a pool, landscaped gar- multi-use helps cut costs, spaces that can be used for dens, walking paths, a playground and ball which is a good business multiple activities through- field. model for targeting lower- out the day and can be uti- For Goss, “surprising” is the one word that to middle-income seniors, lized a lot more. It saves on describes interior design in the seniors hous- according to Nicolay. square footage and the cost ing industry today. “A lot of times there will to build.” “A lot of outside folks still have images of be a space in a community There’s a huge focus on quaint and dainty Victorian bed and breakfast- that’s only utilized two to amenity spaces and a shift like spaces in mind when they think about three times per week,” says Johnny toward a hospitality model Charla Goss senior living,” she says. Nicolay. Dagher in today’s seniors housing Pi Architects “Today’s senior living is anything but “We’re trying to create Baker Barrios design and services, accord- that.” n

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Contact 813.739.6101 AAC 00 1785 IB 635 How to balance aesthetics with senior-specific needs Interior designers in the senior living space want their communities to feel like home, but they have to balance the aesthetic demands with the specific needs of seniors. For exam- ple, they must consider the ease and move- ment of residents when selecting flooring so that it accommodates walkers and canes. Mini- mizing the variety of flooring surfaces helps ensure seniors can move around with relative ease, says Alicia Nicolay, director of design for Spellman Brady & Co. Furniture heights, wider circulation paths, handrails in corridors and more office space to accommodate staff are some other consider- ations for a seniors housing project, says Karla Jackson, principal and design director with StudioSix5. Designers should look for seating products that provide the proper heights and depths so Pictured is the lobby and fireplace area at The Langford in College Station, Texas. The newly opened, 114-unit continuing care retirement community is situated near nature paths and Pebble Creek Country Club. that seniors can easily sit and rise, says Dean Jarrett, vice president and general manager of ing to the family member that’s bringing his or Banko Design, says that each community has H Contract, which is a Hooker Furniture com- her loved one to the community,” says Nicolay. its own narrative. The designer’s role is to pany. H Contract is currently focusing on new For Nicolay, a good example of design, com- build out the story using rhythm, scale, vol- product development and has expanded its fort and amenities is The Langford in Col- ume, light and color, and balance that against seating product line by nearly 50 percent over lege Station, Texas. The newly opened, 114- the property’s functionality, location and resi- the last 18 months. unit continuing care retirement community, dents. “We believe that interior design is not Another differentiator on senior living proj- situated near nature paths and Pebble Creek merely decoration — it is molding, planning ects is that the audience is twofold — the Country Club, features “upsized condo-style and shaping a space,” she says. “Color, trends design must appeal to both the resident and flats arranged in cozy clusters,” according to and decoration may change, but good design his or her family members. “We want the resi- the property’s website. does not.” dent to feel comfortable, but we’re really sell- Melissa Banko, founder and principal of — Kristin Hiller

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By Lynn Peisner

Senior living has been weathering a public relations fiasco since March. Media portrayals of senior communities as hotbeds of coronavi- rus infections played a role in ceasing move- ins as the general public has presumed that the “nursing home” presented in news reports is synonymous with all levels of seniors housing. Marketing and branding experts, along with owners and operators, are working hard to turn that around. “All senior living got lumped into the same category,” says Bryan Herrman, senior vice president of insights and strategy for Kansas City, Missouri-based GlynnDevins. “This is the biggest issue for the industry. There’s a real need for education on defining the different levels of care, the different types of communi- ties, and which communities are being the most impacted by the virus. “There’s a lack of understanding in the media that’s causing confusion around what Kayne Anderson Real Estate Advisors and Watermark Retirement Communities are preparing to open The Watermark at is the real situation within communities across Brooklyn Heights (pictured above) as part of Watermark’s upscale Elan Collection. Watermark instituted numerous changes in the country. I think that’s the biggest challenge the day-to-day operations of its communities that focused on safety in the areas of dining, community life, sales and right there.” marketing, and has staged reopening plans that are tailored to each community’s status and location. Seniors and their families have good reason non-congregate care settings. As of Sept. 18, a dywine Living, echoes Herrman’s comments, to be concerned. According to the Centers for total of 196,277 Americans saying her priority at the Disease Control and Prevention (CDC), eight have died from COVID-19, moment is communicating out of 10 COVID-19-related deaths occur in the according to the CDC. a message of safety. That’s 65-and-older age group. This reality appears to a shift from what prospects have affected occupancy in senior living com- Educate prospects were seeking before the age munities. In early July, the National Investment One point most operators of the virus. Center for Seniors Housing and Care (NIC) and marketing specialists “Prior to COVID, families reported that seniors housing occupancy fell can agree on is this: Now were concerned about sup- 2.8 percentage points in the second quarter is not the time to deliver portive health services and, of 2020 from 87.7 percent to 84.9 percent. NIC aggressive sales pitches to Bryan of course, the lifestyle their Valerie experts said this is the largest quarterly decline prospective new residents. Schachter mom or dad would have in Whitman since data reporting began in 2005. Educating the public about Watermark our communities,” she says. Leading To drill down into the numbers and under- a community’s safety has Retirement “Now, they are worried Response stand the effect of the disease on housing taken precedence over all about whether their loved trends in more detail, NIC has issued a request other marketing and brand- Communities one will be safe in any com- for proposal (RFP) for a national study on the ing initiatives that may have munal environment. impact of the COVID-19 pandemic on older been on the table before the COVID-19 crisis. “The impact of COVID on our elderly pop- Americans. “We have to nurture relationships during this ulation has been astounding. The first thing I The study, funded by a grant from NIC, is environment versus selling,” says Herrman. would want to know as a customer is: ‘What expected to track fatalities as well as issues “Some of that has been forced upon us. But we measures are you taking to make sure my mom such as mobility at independent living, assisted need to rebuild confidence, trust and reputa- can be safe and social?’” living, memory care and skilled nursing prop- tion as an industry, and to rebuild brand equity Bryan McKeever, vice president of market- erties, and compare them to metrics of people at that local level.” ing and sales for The Roche Associates based of similar age and health characteristics in Brenda Bacon, president and CEO of Bran- in Wilbraham, Massachusetts, says there are

34 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 four main parts to the anatomy of a branding message today: • First, drive home the point that the community is a safe place. • Secondly, ensure a description of specific safety measures is in place. • Thirdly, provide examples of how a community is engaging with residents while respecting social distancing. • Lastly, point out that the com- munity has had few, if any, cases of COVID-19 if that’s the case. “Just to give you an indication of messaging in this day and age, there’s very little about the com- munity itself, about amenities or services or the hospitality angle,” says McKeever. “It’s all about the safety aspect and saying, ‘We’re open and we’re here for you.’”

The right response Lead nurturing is a priority for GlynnDevins during the pandemic. According to Jen White, senior vice president of creative and content, the “What a difference a couple ideal marketing and branding response to coronavirus concerns in senior populations can be boiled down to two parts: the first step is respond to the crisis, and then establish a content solution to virtual sales for an industry that bases most of its sales on in-person events. quarters make,” remarks Max Newland, managing director of ing of marketing and branding to two parts: the first step is says White. “Having people onsite Kayne Anderson Capital Advisors. that happened virtually overnight respond to the crisis. Then estab- was the biggest way to showcase The Los Angeles-based company in senior living. lish a content solution to virtual how wonderful a community is.” is an alternative investment firm According to Jen White, senior sales for an industry that bases Part one of that solution means that manages investments across vice president of creative and con- most of its sales on in-person not ignoring the elephant in the multiple asset classes, includ- tent with GlynnDevins, the ideal events. room. ing energy, real estate, credit and marketing and branding response “Virtual sales weren’t something “Early on [in the pandemic], growth equity. Newland’s com- to coronavirus concerns in senior a lot of communities were neces- the big questions from our clients ment sums up the massive retool- populations can be boiled down sarily doing before the pandemic,” were, ‘Do we stop talking?’ ‘Is this

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August-September 2020 n Seniors Housing Business www.seniorshousingbusiness.com 35 This LeadingResponse direct mail sample illustrates the importance of ensuring your keting strategy became a mat- audience knows details about the safety, care ter of depositor engagement and and community that has been in place prior retention, so a number of virtual to the pandemic. events and initiatives were put a time to go quiet?’ But these com- into place.” munities still have to keep their For example, every Friday the pipeline filled,” explains Herrman. marketing and sales team holds a “And the cost of doing nothing Zoom call with depositors to sim- far outweighs the cost of maintain- ply connect and communicate. ing brand awareness during this “The team stays engaged with time,” continues Herrman. “So it’s those individuals, and they ease not a question of if we should say any fears,” says McKeever. “We anything. It’s more a question of lean on the track record of Key- what should we be saying. Our stone Senior Management Services position is that this is the time to as an operator and the tremendous nurture, to educate, not to hard job they have done to prevent any sell. But you still have to be out outbreaks in their communities.” there talking.” McKeever adds that sales and Every community is different in marketing teams are now pivot- terms of the right way to handle ing to lead-generating activities this challenge. In the case of The and marketing events that pro- Roche Associates’ client Keystone vide prospects the opportunity to Place at Wooster Heights — a new- engage with the sales team either build, 140-unit independent living, through small, socially distanced, assisted living and memory care in-person gatherings or virtually. community in Danbury, Connecti- “We’re providing prospects cut — the primary goal was sim- options to connect with the sales ply to not lose the sales that had team in a manner that is most already been made prior to the comfortable for them,” says community’s scheduled fall 2020 McKeever. opening. Brett Fails, director of digital “Prior to COVID, the commu- marketing at Austin, Texas-based nity had 55 active deposits,” says Threshold, says his agency focuses McKeever. “During the pandemic on educating prospects about shutdowns, a big part of the mar- a community’s current policies

36 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020

protocols since April, specifically requiring test- Change in Opinion of IL Communities ing for residents, family members and staff that far exceeds local Department of Health stan- Since COVID-19 Pandemic dards,” says Newland. “At a few communities, we have partnered with local labs to offer test- Change in Opinion of Independent Living In spite of the press and the news coverage of COVID-19 over the past ing to our residents and neighbors.” several months, the majority of respondents have not changed their Communities Since COVID-19 by Prospect Type Kayne Anderson Real Estate Advisors and opinion of independent living communities since the onset of the (Question Only Asked of the Purchased List) pandemic. Those who have changed their opinion, however, have Watermark Retirement Communities are pre- changed it for the negative. paring to open The Watermark at Brooklyn No change Heights, part of Watermark’s upscale Élan

55% Collection. 61% “We operate across 21 states and are adher-

More negative ing to all local guidelines and have a nation- wide task force in place, led by our COO who was previously with the largest hospital sys- 36% 35% tem in Tucson, Arizona,” says Bryan Schachter,

More positive chief investment officer of Tucson-based Water- 4% 9% mark Retirement Communities. Prospect Adult Child “There were numerous changes required Prospect Type 22 in terms of day-to-day operations, includ- ing dining, community life, sales and market- Preliminary results from a study conducted by ProMatura Group on the impact of COVID-19 on seniors housing show that ing. We have developed our staged reopening those who changed their minds about independent living changed their view toward the negative. Sources interviewed for plans that differ for each of our communities, this article say the virus has mostly affected move-ins in independent living. based on each one’s status and location,” adds Schachter. and ensuring they understand the availabil- In addition to holding virtual tours, many ity and usefulness of virtual tours during this senior communities have added a tab at the top Tools for a tough job pandemic. of their webpages that are dedicated to COVID, Marketing firms are tailoring their offerings “Communities should focus on the language showing how the pandemic is being handled to support senior living clients. Jessica Kraft, describing virtual tours,” says Fails. “And onsite. This content can consist of updates on executive vice president with Minneapolis- they should ensure the creative and the ads are when the staff was last tested, details of plans based Bluespire, says her company is provid- reflecting the current options of engagement, to begin social activities, or how the commu- ing specific COVID-19 content and tools so cli- such as joining a VIP list or reaching out to nity is contributing to neighborhood safety as ents can build their brands and messaging, and hold a virtual tour for the prospect and their a whole. accelerate their digital transformations to reach family.” “We’ve been rolling out aggressive testing their target audience more effectively.

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38 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 Bluespire has focused many brand imple- ber referrals, direct mail, and in-person or vir- mentation strategies on virtual engagement tual events are all part of a sound marketing opportunities such as virtual tours and per- strategy, according to Roche. at Newbury Brook A Life Ful lling Retirement Community sonalized digital brochures. The firm is also “We really did an enormous number of leaning on its C2 Mar.Tech platform, which is events, as well as all the multi-channel mar- a tracking and management system for search keting support for those events, including WE'RE OPEN engine optimization (SEO) and multi-channel follow-up phone calls by The Roche Associates’ & HERE FOR campaigns. professional telecommunications team aimed at YOU “We are also leveraging marketing automa- prospects and referral sources,” he explains. tion, content creation and communication “These calls are designed to generate positive tools — including our senior-living-specific interactions and engagement with our sales ❤ Unwavering commitment to serving, COVID-19 content library and the COVID-19 teams. Before COVID, after COVID — if you’re supporting, and caring for older adults digital command center,” says Kraft. just relying on the internet and digital market- ❤ Extensive safety measures and care standards The Roche Associates quickly developed ing, I can tell you you’re not going to get the to ensure residents stay COVID safe “COVID-19 SOS Communication Products,” results you want,” emphasizes Roche. ❤ Endless opportunities for residents to stay a menu of six service packages developed to Valerie Whitman, vice president of senior social while engaging in social distancing engage audiences through a variety of con- living with LeadingResponse, says that opera- duits. These conduits include virtual events tors should supplement tours with content SEE HOW OUR RESIDENTS such as interactive webinars and keynote that makes a property stand out. She advises ARE THRIVING! speakers, social media campaigns, telemarket- seniors housing communities to provide the ing, script development, real-time reporting same type of grassroots content most other As illustrated in Callthis sample (860) promotional 404-6254 piece from The on prospects, digital and direct marketing, and businesses are currently using in their adver- Roche Associates, operators should communicate via a multi-channelto arrange marketing anstrategy IN-PERSON about the major orbenefits more. tising and messaging — stories about what’s of living in a seniorvirtual living community. tour TODAY! Marketing during the virus isn’t as easy as being done for the local community, their staff To help ensure the safety of our residents, simply switching from in-person to online and for their audience. notin-person only makes visits may their be limitedoff-the-clock to our model hours apartment. a little tours. A multi-pronged approach is most “Virtual marketing events, landing pages and easier, it also lessens potential exposure to the • • effective, says Joseph Roche, president of The direct mail should be sure to utilize stories,” coronavirus.INDEPENDENT LIVING ASSISTED LIVING MEMORY CARE Roche Associates. His company’s pre-COVID says Whitman. “Great human-interest stories are playing out data indicate that somewhere between 12 to She explains that stories can be about fam- across most industries, and we want to make 15 percent of sales can be tied back to digital ily members visiting from outside a window sure senior living is doing its part to showcase marketing. or, as one LeadingResponse client is doing, what they are doing,” says Whitman. That led Roche to the obvious follow-up allowing its staff to order their personal gro- Prospects’ need for safety assurances might question: Where do the other 85 to 88 percent ceries through the senior living community’s not magically disappear after a coronavi- of sales come from? food distributor. This enables staff to skip the rus vaccine is developed and distributed. Professional referrals, resident/family mem- grocery store on the way home from work. It “I wouldn’t just limit safety messaging to

August-September 2020 n Seniors Housing Business www.seniorshousingbusiness.com 39 Marketing & Sales of Seniors Housing & Care Communities During COVID-19

COVID-19, but other infection pre- Q1 Do your communities have the staffing resources available during the assisted living or memory care vention and control measures,” COVID-19 crisis to directly and personally communicate by phone with the indicated that having a primary says Roche. hundreds or thousands of existing prospects in your community CRMs? care physician on site or via tele- “That’s the hot button, but I medicine is essential. remember years ago at one of our “In order to meet this customer communities, overnight we had 25 expectation, exploring formal Yes 77.27%77.27%77.27% people in the hospital at once due 77.27%77.27% or informal relationships with a to the flu. To solve the problem, hospital or physician provider we had Dr. Joan Roche, who is The network will be important,” says Roche Associates’ clinical director, No 22.73%22.73%22.73% Joe Roche, adding that many evaluate what was going on.” communities are already spend- Joan Roche found that some of 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ing more on staffing, equipment the nurse’s aides were not prop- This April survey conducted by The Roche Associates titled “Sales & Marketing Strategy and and services now than they origi- erly changing gloves as they went Tactics During COVID-19 Pandemic” revealed that the majority of communities have the nally anticipated. “That could from room to room. Additional ability to personally communicate by phone with their prospects. Typically, phone be a major change for a lot of training and new protocols were communications by onsite marketing teams generally are limited to the strongest leads. But these assisted living communi- Roche advises follow-up phone calls to support all marketing efforts. immediately put into place regard- ties as they try to keep pricing ing changing gloves after attend- are doing to keep residents and Roche suggests that communi- levels within reasonable limits, ing to each resident, and the prob- staff safe.” ties place a registered nurse in the because physicians don’t work for lem cleared up within a week. That’s especially true today as spotlight for events and marketing nothing.” Obviously, the thing we need to a growing number of consum- initiatives. How much money operators focus on right now is COVID-19,” ers question what happens in the “My advice to senior living should invest in marketing is the says Joe Roche. “But we should future if a terrible flu season or communities nationwide is to age-old question. There are a lot of also emphasize the importance of another novel disease strike. make sure you have a nurse with variables involved with calculat- having safety measures in place “It’s going to be a little differ- very good credentials on any ing a marketing budget. For exam- for all forms of infectious diseases ent for each brand, but it’s impor- webinar having anything to do ple, an existing community that is because they can blow through tant they utilize some storytell- with COVID-19. That’s who all underperforming likely faces chal- seniors communities quickly and ing combined with factual data of our clients want giving their lenges that differ from a start-up with consequence.” on what they’re doing, and what presentations.” community. Whitman agrees that it’s a smart they’ve been doing all along,” says Preliminary results from a study “Pre-pandemic, I would suggest idea to make safety more of a per- Whitman. conducted by ProMatura Group many operators were not budget- manent marketing tactic. “We’re on the impact of COVID-19 on ing nearly enough,” says Roche. still providing that general com- An authentic voice seniors housing that were released “Generally, we suggest that an munity information, but we’re also Credibility is key in brand- in late June reveal that more than existing community budget at providing information on what we ing and messaging right now. Joe half of prospects shopping for least 5 percent of revenue to gener-

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40 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 ate the leads needed to meet occu- Health risks notwithstanding, seniors may have had before with plan community is about. pancy goals. New start-up projects the era of the coronavirus has friends, neighbors, family or even “But it’s even more paramount should be budgeting between 3 reinforced the idea that people a familiar store clerk have mostly right now with the residents hav- percent and 5 percent of the total need personal connection and been compromised. ing their emotional needs met construction and development interaction to thrive. This was “A lot of our clients want to and receiving emotional support. costs, depending upon the size of true for seniors living at home show how living at a continu- Meals are still being provided, pre- the community, through lease-up alone even before the virus hit, ing care retirement community scriptions are still being filled, and and the achievement of 92 percent but now that need is amplified (CCRC) has advantages, even dur- you’re still being connected, even or greater occupancy.” as vulnerable populations like ing the pandemic,” says White. if it’s virtually, to a community of In light of COVID-19, many seniors are being asked to isolate “No matter what happens, you’re peers and friends. I think that’s operators are well advised to take and distance. Connections that set. That’s always been what a life important.” n a hard look at their marketing spend. “In times of crisis or occupancy decline, operators may shift into cost-cutting survival mode, with marketing or resident dining bud- gets oftentimes among the first on TRUSTED SENIORS HOUSING the chopping block,” says Roche. “While fighting the virus has certainly resulted in higher ADVISORS FOR ALL YOUR expenses, I would highly cau- tion against a marketing budget INVESTMENT NEEDS cut or deferring marketing. Now more than ever, operators need to communicate via a multi-channel marketing strategy the major ben- Our nationally-recognized platform has expertise efits of living in a senior living community, and why their com- in projects of all sizes and scopes munity is a better option than the competition.”

A positive spin While the pandemic has created a branding emergency, there are signs the situation is getting better. The ProMatura study shows that the virus has primarily affected move-ins in independent living. $5B $6B TOP RANKED Seniors who are considering the IN SENIORS AND IN SENIORS AND LENDER possibility of making a lifestyle HEALTHCARE HEALTHCARE WITH FANNIE MAE, change are delaying their decision FINANCING* PROPERTY SALES** FREDDIE MAC & HUD because they don’t have an immi- nent care need. But the branding and marketing efforts deployed since the coronavirus outbreak began may be moving the needle By combining our property sales team with our fi nancing platform, on that issue. GlynnDevins started tracking Walker & Dunlop can tailor capital solutions to your seniors housing portfolio. confidence and sentiment back in Our longstanding capital markets partners and deep understanding of agency March, when only 22 percent of seniors and their families believed lending provide access to fi nancing options that satisfy your unique needs. independent living was a safe place to be during a health cri- sis. In May, that figure rose to 33 percent. “We believe that upward shift is a result of some of the education the communities and the industry are doing on defining the differ- ent levels of care, how those dif- ferent levels are being impacted, ASSISTED LIVING  SUPPORTIVE LIVING  INDEPENDENT LIVING  MEMORY CARE and what communities are doing SKILLED NURSING  TRANSITIONAL CARE  CONTINUING CARE  LAND as precautions to ensure the safety LONG TERM CARE  PHARMACIES  AGE RESTRICTED of their residents,” says Herrman. “We think that education is break- To fund your vision, visit WalkerDunlop.com ing through. Still, with only 33 * Since 2009. **Transactions completed while at another brokerage fi rm. percent of respondents believing CA loans made or arranged pursuant to a California Financing Law license. communities are a safe place to be, we’ve got a lot of work to do to rebuild that confidence.”

August-September 2020 n Seniors Housing Business www.seniorshousingbusiness.com 41 n Broker Q&A Not All is Lost Investment sales professionals express optimism for the future of seniors housing despite the pain caused by the COVID-19 pandemic. By Jeff Shaw Roundtable participants The pandemic that took on the world and Brooks Minford Kris Lowes threw the U.S. economy into disarray hit Associate Director Director seniors housing hard. Housing an age group Berkadia Evans Senior Investments that’s particularly susceptible to the virus has proven to be an extreme challenge. Daniel Geraghty Richard Swartz However, those within the industry still Senior Vice President Vice Chairman believe in the long-term health of seniors hous- Senior Living Investment Brokerage Cushman & Wakefield ing as an asset class. During the Great Reces- sion of 2007 and 2008, seniors housing fared Jordyn Berger Jeffrey Hyman better than many other types of real estate. Senior Director Senior Vice President While this recession is distinctly different, Walker & Dunlop Colliers National Seniors Housing Group many expect seniors housing to fare well again. Seniors Housing Business spoke with over a Bruce Gibson Steve Thomes and Ryan Chase dozen brokers that work in senior living real Principal Senior Managing Directors estate and asked them about the past, present Senior Capital Advisors Blueprint Healthcare Real Estate Advisors and future of this sector in light of the COVID- 19 pandemic. Cindy Hazzard Todd Lindblom Seniors Housing Business: How was acqui- Broker National Director sition volume trending in the six months before JCH Senior Housing Brokerage Marcus & Millichap the pandemic? Geraghty: Over the past five to six years, the Ted Flagg Adam Heavenrich M&A volume has been strong and 2020 was Senior Managing Director Managing Director not looking much different — we were trend- JLL Capital Markets Heavenrich & Company ing toward another record year as an industry. Berger: Acquisition volume was on a terrific Aron Will trajectory pre-pandemic and slowed signifi- Vice Chairman cantly mid-year. While we are seeing velocity CBRE Capital Markets starting to return, buyers are keeping their feet on the ground by implementing more conser- While first mortgage rates are currently folios began to represent a historically high per- vative underwriting and making sure that any lower than pre-pandemic rates, leverage has centage of the total. Several large trades were projected cash flows can actually be achieved. decreased causing the blended cost of capital to put on hold as COVID-19 hit. Additionally, they are incorporating some post- be very similar to pre-COVID levels. Hazzard: We were in line to have one of our COVID-19 expenses that are here to stay, such Flagg: Heading into COVID-19, acquisition best years ever. The good news is that we still as additional costs for infection control includ- volume was consistent with recent years with have most of them in process. Most of our deals ing personal protective equipment (PPE). the exception that larger seniors housing port- are moving forward, albeit at a much slower pace. Hyman: Acquisition volume held steady through 2019, with a flurry of activity in the fourth quarter. Deals were taking longer to get to closings, as buyers and their equity were looking for longer sustained operations histories. SHB: What have been the effects of the pan- demic on acquisitions? Heavenrich: Uncertainty. COVID has created a new paradigm for the assisted living income statement, which is only slowly emerging. On the revenue side, buyers must get comfortable with underwriting projected occupancy rates with uncertain demand. On the expense side, virtually every line item has to be reexamined, including staffing, insurance, equipment and training. The counter force has been the flood of capi- tal from private equity. In addition, the contin- Blueprint Healthcare Real Estate Advisors brokered the sale of The Shoreline of Clinton, a 48-unit memory care community in Clinton, Connecticut, located on Long Island Sound east of New Haven. ued downward pressure on interest rates has

42 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 translated to cheap debt for 3) Timeframes of the trans- transactions that are likely transactions. action were extended or to close this year or early These uncertainties are put on hold given the more in 2021. We are also seeing causing a slowdown in trans- conservative lending envi- a significant uptick in bro- action volume, lower lever- ronment or underwriting ker’s opinion of value (BOV) age transactions and higher uncertainty. requests, which is often a cap rates in the short term. 4) The transaction was leading indicator of transac- Minford: As with many terminated due to losing tion volume. industries, COVID–19 forced Cindy the lender, declining perfor- Brooks Will: Until enough time Richard owners and operators of Hazzard mance or dealing with issues Minford passed to gather some Swartz seniors housing to stop and JCH related to their existing Berkadia empirical data about how Cushman & think about the way they con- portfolio. the sector performed dur- Wakefield duct their day-to-day busi- Additionally, it could be a ing the crisis, many equity ness within the sector. Everything — building combination of all four challenges. investors were hesitant to commit to deals. This layouts, staffing, policies and procedures, geo- Gibson: Most owners that were contemplat- was due to an inability to reasonably under- graphic locations, care levels and payor sources ing selling pre-pandemic are holding off until write them, let alone perform the perfunctory — is being discussed amongst the owners we they see more stability in perceived pricing and due diligence required with onsite visits. Now are speaking with. buy-side demand. The same is true for buy- that time has elapsed, there is enough data for Ultimately, it seems seniors housing opera- ers in that many are sitting on the sidelines. investors to dip their toes back in the water. tors have largely proven they are capable of Other investors have shifted focus to troubled The issue is now the disconnect vis a vis buyers safely handling and managing through these or turnaround properties. and sellers regarding valuations. tough times and the general public is acknowl- Flagg: There are multiple factors that compli- Swartz: There has been a significant slow- edging that. cate transactions in the cur- down in transactions dur- Geraghty: Generally, the rent environment, including ing the pandemic due to transactions SLIB has closed a less robust finance market, transaction mechanics and or been working on fall into difficulties in conducting uncertainty. four buckets: property tours and third- Starting in late May, we 1) Closed at the original party inspections, and issues began to arrange virtual terms. relating to license transfers. tours for third-party reports, 2) Closed with a price But even with all of these which has given way to lim- reduction (typically 3 to 5 potential roadblocks, trans- ited in-person touring and percent) and some extended Daniel actions are occurring, and we Bruce Gibson the ability to move deals Jeffrey timeframe given the inability Geraghty are seeing a gradual thawing Senior Capital along. We were also able to Hyman to conduct tours or finish on- SLIB of the market. JLL is work- Advisors bring a few new properties Colliers site work. ing on a growing number of to market.

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August-SeptemberSenior Housing Business Mag2020 Ad 2020.08 n Seniors V1.indd Housing 2 Business www.seniorshousingbusiness.com8/26/20 10:35 43AM Most deals that launched adjustments of roughly 10 to in the short term, hurting B in late first quarter were sub- 20 percent depending on the and C property values. sequently pulled or other- deal. We typically are seeing Flagg: In the current envi- wise put on hold. Since the these adjustments on com- ronment, cap rates are not early days of the pandemic munities where occupancy the best tool to use in valu- there have been few oppor- has been hit hard over the ing senior housing assets. tunities to come to market, last few months and the buy- The vast majority of assets and those that have are being ers’ previous underwriting are suffering from a decline marketed in a more limited Jordyn no longer aligns with current Kris Lowes in occupancy due to COVID- Todd fashion. That said, we are Berger performance. For deals that Evans Senior 19, as well as increased Lindblom increasingly seeing investors’ Walker & have managed to remain in Investments expenses due to the purchase Marcus & willingness to underwrite Dunlop a strong occupancy and reve- of PPE and higher payroll Millichap new opportunities, which is nue position, the adjustment costs. These factors result in driving some institutional owners to test the has been minimal — this is largely attributed to an impairment to NOI that will be short term market. We have a number of Class A opportu- interest rates remaining at such low levels. and non-recurring in nature. nities that we are just launching now. Berger: Valuations are now based on post- Applying a cap rate to actual or near-term Thomes: Acquisitions have slowed some- COVID operating expenses, which incorporate forecasted NOI effectively assumes that the what, particularly in March and April as every- some items that were not present pre-COVID, short-term impairment to NOI is permanent, one was scrambling to figure out what was including infection control expenses and and this is punitive to valuations. Therefore, happening at the community level as well as heightened dietary expenses. We are seeing less prudent investors in the current environ- with capital markets. What we’re seeing as the aggressive forecasting year one, with opera- ment are more focused on longer-term cash most significant impediments to closing: tions remaining close to post-COVID status flow projections where assumptions relating 1) Lack of debt capital/uncertainty of lenders quo. to post-COVID-19 occupancy improvement 2) Ability to safely transfer Gibson: Theoretically, and expense reductions can operations amid COVID values for stabilized prop- be factored in. We find that 3) Slowing acquisitions erties in the upper tier have most core and core-plus capi- to ensure safe and effective not been as impacted by cap tal has not altered their long- operations within the current rate changes as they have by term return expectations, portfolio occupancy dips due to the but many value-add and SHB: What changes are we pandemic. There was already distress buyers are seeking seeing related to valuations a bifurcation in the market higher returns in the current and capitalization rates dur- Ryan Chase separating Class A versus Aron Will market. Ted Flagg ing this time? Blueprint Class B and C properties in CBRE Hazzard: We have heard JLL Minford: Generally speak- terms of cap rate margin. I from several appraisers that ing, we have seen pricing believe this gap will widen some lenders are putting

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44 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 RELATIONSHIPS

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Kayne Anderson Real Estate (KA Real Estate) is a leading real estate private equity investor in senior housing, medical office, off-campus student housing, and self storage. As of May 31, 2020, KA Real Estate has $10.5 billion in assets under management across its opportunistic equity, core equity and real estate debt investments. KA Real Estate is part of Kayne Anderson Capital Advisors, an investment firm that manages $30.5 billion in assets under management, and has more than 30 years’ experience focused on niche investing in the KAYNECAPITAL.COM real estate, infrastructure, credit, and private equity sectors. pressure to add a half percentage tionships, or private sellers with a point to cap rates as a COVID pen- limited number of distressed deals alty or a “just in case.” As a pos- where ownership has capitulated. sible balance to this, many lenders Will: Private equity is still and underwriters are looking more the dominant buyer category, closely at the previous two to three although several of the major years for the stability of the cash REITs have re-emerged and are flow and to verify that any dip in looking at deals again. The REITs census and revenue will rebound Grandbridge’s Seniors Housing and Healthcare Finance Group provided $16.6 million in have largely been net sellers over after COVID-19. financing for the acquisition of Summer Vista Assisted Living in Pensacola, Florida. the past few years, and this will Chase: I have a little soapbox continue for at least a few who are campaign on cap rates in general. est in the market with numerous to five facilities in their portfo- shifting strategies. Cap rates are supposed to describe offers tendered. However, com- lio. The REITs are mostly looking Flagg: Sellers currently active in the risk of holding stabilized munities that have been impacted to sell some of their older, non- the market are groups that have assets. The majority of transactions more significantly by the virus, core, struggling assets to clean up some compelling reason to sell. each year, pandemic or not, aren’t with elevated PPE costs and staff- their balance sheet and reposition That could be the need to adjust stabilized. So, I would encourage ing wages, are being underwritten their portfolio with newer assets. allocations or a looming debt the investment community to use with these costs in place, impact- The private owner-operators are maturity. Another situation we are cap rates as a secondary reference ing asset values. We are advising selling due to newer, tougher seeing is that some newer assets point for valuation when thinking clients to carefully track COVID- regulations within state and fed- have not performed as anticipated, about assigning risk. 19-related expenses to help ensure eral law. Many smaller owners and the equity has decided to sell Speaking to the overall transac- the assets are being valued fairly. with institutional-quality assets even if that means taking a loss. tion market, there are fewer insti- were also receiving strong pric- The REITs are active sellers cur- tutional, large seniors housing Who’s still buying? ing pre-COVID, which has driven rently, as they seek to redeploy transactions happening right now. SHB: Who are the biggest buy- transactions. capital into the medical office or Valuations on value-add deals are ers and sellers right now, and Swartz: Most buyers continue life sciences spaces, or simply to holding near pre-pandemic levels. why? How has that changed over to be private equity in nature. exit certain seniors housing assets From a macro standpoint, there are the last year? The previous 24 months has seen and replace them with assets that a lot of buyers who want to pur- Geraghty: In the current envi- a steady flow of new institutional are more in keeping with their cur- sue deals now, yet there are fewer ronment, we have seen local and commitments to the seniors hous- rent business plans. deals available on the market. regional operators become the ing space, which has resulted in Active buyers today include So while the financial textbooks most aggressive in terms of acquir- strong fundraising among many private equity groups, public and say we may expect to see higher ing existing assets. They often private equity funds that target private REITs, and large family returns demanded during a period partner up with a REIT or a pri- seniors housing. While fundrais- offices. Foreign capital is also kick- of increased uncertainty, the prac- vate equity group. If they elect to ing has been impacted in 2020, we ing the tires on a lot of deals but tical application of having many purchase on their own, they typi- still expect in excess of $5 billion to has been slow to actually transact. buyers with too few goods to pur- cally use a conventional bank loan be committed this year. With the Hazzard: The biggest buyers chase is having an offsetting effect. and/or raise equity through high- limited amount of product to come are those that have strong balance Lindblom: Regions and facili- net-worth individuals or through to market in 2020, there is a signifi- sheets and previously established ties have been affected differently. friends and family. Many of the cant amount of dry powder on the banking and lending relationships. Marcus & Millichap has recently national or institutional capital sidelines that is increasingly eager Most of the lenders we are work- marketed several assets with partners have been sidelined for to be deployed. ing with are far more cautious, essentially no COVID-19 expenses the time being. Most of the sellers that have but still pressing forward. We being underwritten. The facilities Over the past year, the largest come to market have been publicly are finding in general that lend- offer a solid census and the assets sellers have either been REITs or traded groups that seek to realign ers are reticent about making new have generated significant inter- private owner-operators with one their portfolios and operator rela- loans to unproven operators and organizations. The biggest sellers really have not changed that much. We find sellers active in pretty much every We're focused on providing category from institutional and small portfolio, down to the indi- stability & insight vidual mom-and-pop. Lowes: There are a few REITs in the face of uncertainty. and private equity funds that are still active, but most have pulled out of the acquisition market as they are managing their troubled assets and dealing with the vola- tile capital markets issues. Any investors that do not have sector expertise (family offices, pension funds, etc.) were scared off by the potential impacts of COVID on the sector. The most active groups cur- rently are owner-operators work- Let’s talk about how we can help. ing to build their portfolios and 312.300.4000 | [email protected] value-add buyers looking to find distressed deals. From a seller standpoint, inde- pendent and institutional groups

46 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 have both been looking to eral opportunistic buyers are closely monitor- sitive to limiting the number sell their communities. This ing the market and searching for assets that of visits to the buildings up pandemic appears to be a wouldn’t normally become available to the until closing. tipping point for many inde- marketplace. Gibson: Having seen sev- pendent owners who have SHB: What has surprised you the most about eral cycles, very little sur- been thinking about getting the marketplace for transactions since the pan- prises me. out of the business for a long demic struck in mid-March? Hazzard: For the most time. On the institutional Berger: We were surprised by how buy- part, other than deals taking side, we are seeing a lot of Steve ers were so quick to bail on transactions, even longer, we are as busy if not Adam owners deciding to divest Thomes Class A real estate. However, it was under- busier than prior to the pan- Heavenrich distressed projects that have Blueprint standable, since no one knew where the bottom demic. Yes, when the pan- Heavenrich & a long time horizon for a would be found. Now that things seem to have demic first hit a significant Company turnaround. It has certainly bounced off the bottom, we see buyers coming number of deals came to a accelerated many groups’ plans to take dis- back to the market. screeching halt. However, by the end of May tressed deals to market. It has also been surprising and deeply most were coming back online. I am a bit sur- Thomes: We’re seeing private equity making encouraging to see how well onsite and cor- prised that lenders are taking their time jump- the most significant moves, which isn’t really a porate staff have handled the care of resi- ing back in. significant change from 2019. We’re also seeing dents. They have been rock stars in this regard, Flagg: I’ve seen several market cycles in my REITs opportunistically get back into the mar- despite so many more requirements and career, but this one is quite different than the ket. However, there remains significant price restrictions placed on them, along with addi- ones before. The seniors housing market is competition and structure flexibility offered by tional pressures relating to family and friends influenced by the opinions and sentiment of the private equity corner of the market, result- not being able to visit residents. Staff did a ter- the many individuals that influence transaction ing in a majority of transactions being won by rific job of providing activities, dining and con- decisions. private groups. nection points without exposing residents to One notable surprise is that some of the Lindblom: Transaction activity currently COVID-19. groups with capital raised and ready to deploy remains constrained. That being said, owners Minford: Overall, the market seems to be have not been more aggressive in seeking out that entered the market over the past five to 10 responding well to acknowledging that seniors deals in the current environment. I view this years as more of a real estate play are now see- housing is a need-based business. As more time as a short-term window during which ing the operational complexity involved with operators accelerate the pace of resident move- investors can snap up assets at attractive prices, seniors housing, and many will likely consider ins, we will continue to see renewed confidence and I wonder why more investors are not exiting this property type. Large owners are from buyers and lenders to get deals done. We actively seeking to do so. evaluating their portfolios and will also likely have already seen buyers get creative on how Will: There was an almost visceral reaction make some moves. they will conduct due diligence on communi- and pullback on the part of the commercial War chests of cash are being built for deploy- ties they have under contract and I expect that banks in March and April. Although it wasn’t ment into U.S. seniors housing properties. Sev- to continue for some time, as they remain sen- long lasting, that swift initial pullback was

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August-September 2020 n Seniors Housing Business www.seniorshousingbusiness.com 47 even more severe than we wit- value (LTV) ratios as lenders have nessed in 2008. Thankfully, at least different perceptions of risk mostly half of the lenders in our sector are due to the uncertainty surround- back in the market. ing COVID-19. Lenders require Hyman: After the initial pause more equity from the borrower. to assess how the industry would Most lenders also want significant be affected, the marketplace is recourse for higher LTV loans. still robust. Both top-tier proper- Rates have remained attractive, ties as well as mid-priced proper- which is the one positive. ties are highly desirable. It should Gibson: There is a definite gap be noted that the increases in between supply and demand for construction costs have, pre-pan- MedCore Partners and The National Realty Group, together with BMO Harris Bank and Locust construction lending. Although demic, focused activity on acquir- Point Capital, acquired a 582-unit independent living, assisted living and memory care there has obviously been over- ing property operations. We have portfolio in seven markets in Washington and California. Included in the transaction was The building in certain markets, there seen a little easing of construction Village Senior Living, pictured, in Tacoma, Washington. are still many projects in stable costs, but expect continued strong markets that should move forward asset acquisition activity. operators in these segments. I’m pancy over the coming years. but are slowed or killed due to slightly more bullish on the inde- Chase: I’m more bullish on the inability of the sponsors to obtain Type of care matters pendent living market in the near higher acuity, needs-based seg- debt. Even if you can obtain con- SHB: Which segments of seniors and mid-term. ment of the market right now. My struction or acquisition debt, the housing are you most bullish and Flagg: Many thought that the opinion has changed a bit since entire process is extremely cum- bearish on right now and why? active adult and independent liv- the start of the pandemic on this. bersome and slows down the Has your opinion changed at all ing sectors would be the hardest We’re going to see the effects of transaction process. This is an area since the start of the pandemic? hit. But surprisingly, we are seeing consumer preferences translate that needs an industry disruptor. Berger: We believe that the that active adult projects are faring to overall lower industry perfor- Hazzard: Instead of waiting to majority of the market segments relatively well during COVID-19, mance for the independent liv- see what the actual impact was, within seniors housing remain as are many independent living ing segment, essentially consum- a surprising number of lenders strong in the long term. While properties. As these sectors will ers holding off on the decision to totally bailed out of the seniors there have been some difficult also be the first to benefit from move into a communal setting housing market when the pan- public relations challenges for our the coming baby boomer wave because they don’t have to. I see demic first hit. I certainly agree industry, we know that, ultimately, hitting age 75, we are bullish on the psychological impact of the with using caution and additional we operate within a needs-based these sectors. Assisted living and pandemic playing out over the due diligence, but to walk away environment and that our provid- memory have been hit harder in longer term in the lower acuity set- from an entire industry I find ers and their staff want what is many cases, and we are hearing tings. Conversely, consumer needs troubling. best for their residents and their about more issues with COVID-19 should support the assisted living, Until the lenders get off the families. Additionally, the changes outbreaks in memory care. But I memory care and skilled nursing bleachers and back onto the play- that have hit our workforce will believe these are short-term issues segments. ing floor, our industry will simply reduce some of the staffing pres- and expect occupancy levels to SHB: What impact, if any, are muddle along. sures of the past. recover over time. lenders having on deal velocity? Lowes: At this point in the cycle, Gibson: There have been many A silver lining of the COVID- Geraghty: Over the past four to they are not slowing deals down negative articles on assisted liv- 19 pandemic is that seniors hous- six months, our industry has seen in any capacity. There seems to ing and skilled nursing over the ing construction starts have fallen the lending market drastically be a large number of lenders still last few years. I’m most concerned precipitously and are expected to change in terms of how it analyzes active for acquisition financing for about knee-jerk legislation that remain low for some time. This a transaction. The most significant cash-flow-positive deals. may have unintended harmful will allow assets in previously sat- disconnect between the borrower Chase: The ‘super nationals’ consequences on investors and urated markets to improve occu- and lender appears to be loan-to- (BMO, Grandbridge, KeyBank, Wells Fargo) are sidelined or lim- ited at the moment. This has a direct impact on velocity of insti- tutional, large-scale transactions — especially on the seniors hous- ing side. Everything is deal spe- cific, but these have the collective impact of lowering equity returns in the short run. I would expect to see a lot of loan refinancings in 2022 or 2023 that were written in 2020.

The road ahead SHB: Looking into your crystal ball, what do the next 12 months hold for seniors housing? Minford: Activity on our current pipeline is telling us that the next two to three months leading into the holiday season will be active as buyers and sellers want to close out the transactions currently in process. How well the industry handles any resurgence of COVID

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Mike Taylor Ken Sinha Gerri Ann Bagdonas Head of Healthcare Lending Financing solutions are subject to credit approval. Property insurance may be required.In California, equipment finance and leasing is made or arranged pursuant to a California Finance Lenders Law license. in the winter months will have a potential employees to the sec- direct impact on 2021 activity. That tor, but our biggest fear continues said, confidence does seem to be to be widespread pay structure coming back and our hope is by increases. late first-quarter 2021, the seniors Target has increased its mini- housing industry would have mum wage to $15 per hour, fol- demonstrated its capabilities to lowing Amazon and other compa- handle whatever comes its way. nies. How long does this take to Gibson: I don’t see much change Private equity investment firm Tryko Partners acquired Hopkins Manor, a 200-bed skilled migrate over to seniors housing? in the seniors housing market nursing facility in North Providence, Rhode Island, for $14.5 million. Swartz: We are concerned about until there is a vaccine that has the lack of distinction between been widely distributed. While lier in the pandemic. Most families as sellers work through their port- skilled nursing and seniors hous- there could be decreasing occu- have a current hesitancy to move folios determining the best busi- ing in many press pieces, which pancy due to lower move-in rates, in their family members due to the ness models going forward. seems to have inspired recent I believe most operators have done lack of visitation possibilities at SHB: What issues in our indus- Congressional fact-finding activ- a phenomenal job of dealing with present. New development proj- try keep you up at night? ity targeting the seniors housing the situation by taking appropri- ects that opened before COVID Berger: Providing more attrac- space. We are watching federal ate precautions and implementing will struggle the most as lease-up tive affordable seniors housing regulations and policies carefully better training and strong safety velocity will likely slow down. options is critical to enhance the and will calibrate expectations standards. Let’s all hope for a Projects currently under construc- percentage of the target popula- accordingly. quick solution. tion certainly face an ominous tion who benefit from our prod- Lindblom: In many cases the Hazzard: We are turning the future until a vaccine arrives. ucts and services. We hope we media has driven a perception corner. Once the general election Swartz: After almost no activ- continue to see new and more gap as it attributes health risks to is over, regardless of who wins, ity in May, we have valued over innovative product alternatives all parts of the seniors housing there will be huge strides toward $2 billion of sales opportunities in along the continuum, such as well- spectrum. normalcy. All the parts of the econ- the last 60 days. Given the pent- conceived active adult concepts, One concern will be how the omy that were driving the seniors up demand of buyers, we expect technology solutions and develop- traditional onset of flu season housing industry engine are still to see a significant increase in ers willing to take a risk on afford- could erroneously be attributed there. With the slowdown in new transaction levels as market par- able options. to COVID, creating headlines that construction, we could see average ticipants become clearer in their Lowes: The pandemic has mischaracterize the operational census creep back up. understanding of valuations. caused a lot of the industry to for- reality of most senior care facili- Lowes: There is a strong pent-up Hyman: As the country contin- get the tremendous staffing issue ties. Facilities are in a better posi- demand for new resident move- ues to respond to the effects of the that we faced before the pandemic. tion to manage the flu season than ins due to the ban on admissions pandemic, there will be significant The widespread job loss certainly ever before, although some media most communities imposed ear- opportunities in asset acquisitions, will help our industry attract more may tell a different story. n

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Visit us at Omnicare.com/FinancialPartnership to learn the full story. n The SHB Interview Eric Mendelsohn, CEO, National Health Investors After five years at the helm of the longstanding REIT, this seniors housing executive has helped the company carve out a niche in secondary and tertiary markets. By Jeff Shaw

Despite all the challenges facing seniors housing, Eric Mendelsohn is a big believer in the product. He cut his teeth at Seattle-based Emeritus, serving as senior vice president of corporate development from 2006 to 2015. It was a period of tremendous growth for the company, culmi- nating in giant operator Brookdale Senior Liv- ing buying Emeritus in 2014. Emeritus’ portfolio totaled 1,100 communi- ties in 46 states at the time Fast facts of its acquisition, which Company Name: made Brentwood, Tenn.- National Health based Brookdale the larg- Investors est owner and operator Founded: 1991 in the country for several years. The company is Headquarters: still the largest opera- Murfreesboro, Tenn. tor, but has since fallen Portfolio: to third-largest owner 148 communities, behind Welltower and 12,852 units Ventas. Locations: Left without a job as a Nationwide result of the acquisition, Mendelsohn received a Eric Mendelsohn gives a presentation at the National Health Investors 2019 Music City Symposium in Nashville, Tennessee. call from a former colleague, Justin Hutchens at National Health Investors (NYSE: NHI), to join the team as executive vice president of corpo- for managing the portfolio, as well as how Gates Foundation is a large, Seattle-based char- rate finance. Eight months later, Hutchens left the company is adjusting to the COVID-19 ity organization that seeks to enhance health- for HCP — now known as Healthpeak Proper- pandemic. care and reduce poverty.] ties — and Mendelsohn took over as CEO. This job was really the first time I got to Originally incorporated in 1991, NHI’s cur- Seniors Housing Business: Walk us a bit switch from being a lawyer representing clients rent portfolio features 148 seniors housing through your career history and how you got to actually being the client. As a major, grant- properties totaling 12,852 units, making it one here. funded research university, we were leasing of the largest owners of seniors housing in the Eric Mendelsohn: Like a lot of leaders in this and constructing state-of-the-art labs, medical country. The portfolio spans the continuum of industry, I have a legal background and spent offices and clinic spaces for researchers. I got care, and has a focus on secondary and tertiary many years representing banks and REITs and to interact with bonding agencies that financed markets in the Midwest and South. investors in real estate transactions and financ- these projects, the researchers that were going The company’s stock, like all REITs, took a ing. That gave me a good solid foundation in a to use them, and the property owners and tumble when the COVID-19 pandemic broke lot of the disciplines that are on my desk as a landlords that would provide the space. out, falling from $90.79 per share on March 4 REIT. I had my first experience with REITs in this to $33.56 on March 18. The stock rallied in the SHB: How did you end up at Emeritus? role. We were a big tenant of Alexandria REIT ensuing months, however, closing at $63.79 per Mendelsohn: I was doing transactions for (NYSE: ARE), and my peer that I dealt with at share on Sept. 17. the University of Washington — it has a large Alexandria was Peter Moglia, who is now Co- Seniors Housing Business spoke with Men- medical research and office portfolio because CEO of Alexandria. We still keep in touch. delsohn about his career path and strategy of the Gates Foundation. [The Bill & Melinda These were pretty high-profile deals in Seattle.

52 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 Emeritus contacted me in 2006 with the oppor- tunity to work for the company. In early 2006, I transitioned from heavy medical real estate to seniors housing. I worked directly with Dan Baty, who was the CEO of Emeritus, and Ray Brandstrom, the CFO. At the time Emeritus had 120 buildings. Shortly thereafter we merged with Summer- ville Senior Living, based in the East Bay area of Northern California. That was an 80-build- ing transaction, and we were fortunate enough to combine our operations. Granger Cobb became our president and Justin Hutchens became our chief operating officer. SHB: That’s an all-star lineup. Mendelsohn: That was the golden age of seniors housing. That Summerville transaction occurred in the National Health Investors owns Sagewood, a 466-unit continuing care retirement community located in Phoenix. The operator summer of 2007. That changed the character of is LCS. the company tremendously. Dan Baty felt that we had the right team and the right platform to SHB: Is that what led to the NHI to talk to Justin. She and Justin had lunch, and grow the company. opportunity? I believe that’s where Justin first got the idea of Of course, there was a recession right after Mendelsohn: I looked around at various working for HCP. that, so we went hunting for companies to buy. opportunities. Justin Hutchens called me from Fast-forward five months later, Justin We bought several smaller companies, then NHI and made a very compelling case that accepted a position as chief investment officer ended up buying Sunwest Management, a we should work together again, that I could and later president at HCP. I became interim 235-property company based in Oregon, out of help grow the company, and I agreed. He also CEO at NHI. bankruptcy. We did that in a joint venture with pointed out that as an amateur guitar player No one was more surprised than I was that Blackstone. there would be plenty of music to listen to, Justin was leaving. I had mixed feelings about Right before the Sunwest acquisition, Jus- which was compelling. So, in January 2015, I it — he’s a very dynamic leader. He built a tin Hutchens left for NHI and we soldiered on moved to Nashville. great foundation for the company and I was without him. Then in 2014, after two years of Here’s where it gets interesting and where looking forward to growing that with him. marketing the company, we were purchased by the conspiracy theories start. We went to a But as much as I missed him, I was excited Brookdale. That deal closed in December 2014 NAREIT conference and ran into Lauralee Mar- about the opportunity to lead a REIT and put and I was out of a job. tin, then the CEO of HCP, who said she wanted my own mark on NHI. And I’m very grateful

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August-September 2020 n Seniors Housing Business www.seniorshousingbusiness.com 53 that in October of that year, the calls with the communities to board decided to make me the review operational performance. CEO, no longer interim. That was Under normal circumstances almost exactly five years ago. before COVID-19, we would meet SHB: What were the differences face-to-face with our operators between your positions at Emeri- three to four times a year at confer- tus and NHI? ences, be it InterFace, NIC, Argen- Hutchens: At Emeritus I ran tum or ASHA. Those face-to-face corporate development, handling meetings are a great opportunity acquisitions, financing, joint ven- to catch up and discuss the state of tures, development and manage- operations. ment of legal teams that support SHB: What sort of metrics do those activities. Dan Baty liked the you use to determine success? idea of getting a two-fer, meaning Mendelsohn: Every jurisdic- both a legal and finance function tion has its own peculiar survey from one employee. style. Some surveys are focused on When I got to NHI, I was tasked physical plant; others are focused with corporate finance, which is on resident health, procedures Brightwater is a 229-unit continuing care retirement community located in Myrtle Beach, generally limited to the financing South Carolina, operated by Senior Living Communities. and policies, especially in skilled and banking relationships related nursing. So, when we’re review- to NHI’s corporate debt. NHI has An active role are receiving good care and are ing surveys, we’re looking for any a large bank group that funds our SHB: With 148 properties total- happy with their circumstances. indication of resident care needing revolving credit facility. We also ing 12,852 units, NHI is one of the We check on that often. attention — any flags, any caution use private-placement debt from largest owners of seniors hous- How do we check? We visit the signals. insurance companies and term ing in the country. How do you buildings on a regular basis. We SHB: What might raise a red loans of longer duration provided manage a portfolio so large while have asset managers who travel to flag? by a subset of our bank group. ensuring each community pro- each building every year. We also Mendelsohn: Medications are The thinking at the time was vides quality care? have third-party vendors that we sometimes administered incor- that I would also work on various Mendelsohn: The name of the use to monitor licenses and sur- rectly. That’s something that you other projects in addition to the game is working closely with the veys or inspections by state regu- have to watch out for in assisted corporate debt. operators. lators. By reading and tabulating living. Justin referred to me as his Swiss Keep in mind that while we those surveys, we get a good indi- Many people are relying on the Army knife because of the mul- don’t operate the buildings, as a cation of how all the operators are nurses’ aides and the pharmacy to tiple hats I previously wore at capital partner we are very moti- doing. prepare the right amount of medi- Emeritus. vated to ensure that the residents Then we have monthly phone cation for the residents. If that isn’t done perfectly every time, harm could occur. So, we focus on that activity and make sure there’s no regulatory issue surrounding the building and the pharmacy and delivery of the medication.

A balanced approach SHB: NHI spans the continuum of care, but the portfolio contains over twice as many communities Accessible. Responsive. Trusted. in private-pay seniors housing than in skilled nursing. Do you have a preferred type of care, or is the portfolio breakdown opportu- nistic rather than strategic? Mendelsohn: In the past 10 years, NHI has strived to get to the right mix of private-pay seniors housing versus government- funded skilled nursing. The mix we have now, which is roughly 30 percent skilled nursing to 70 percent private pay, is a ratio that we’re comfortable with. If I could choose right now what product to buy, I would probably lean more toward skilled nursing. DHG Healthcare Senior Living That is a product that is in scarce Market Assessments | Financial Planning | Feasibility Studies supply. A lot of the buildings are older, and many of them are being Post-Acute Care Strategy | Strategic Planning | Audit & Tax shut down. If you look at some of our recent deals, you’ll see a skilled nursing dhg.com/healthcare [email protected] @dhghealthcare development that just opened with developer and operator Ignite

54 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 Medical Resorts outside Milwaukee. The devel- opment is named Ignite Medical Resort Oak Creek. It’s a great example of newer skilled nursing — better design and a very aestheti- cally pleasing product. We love that. The future of skilled nursing is exciting because the number of skilled beds keeps shrinking as the population of potential resi- dents keeps growing. There will always be a need for skilled nursing services as hospital stays become more expensive and services offered by skilled providers become more sophisticated. Meanwhile, newer buildings provide a desirable atmosphere for residents. Other than that, we’re opportunistic. We’re looking for deals that are in areas of the coun- try that offer value and with operators that we believe are best in class. SHB: Tell me some more about your operators. Mendelsohn: When deciding on an invest- ment, it’s very important to us for the operator to have a great culture. We want an operator that’s in the business for the right reasons and takes care of their residents and their employ- In January, National Health Investors and LCS paid $133 million to acquire Timber Ridge, a 401-unit continuing care retirement ees. We’ve noticed a great difference between community in Issaquah, Washington. operators that are in it for a buck, and opera- tors that are in it because they care about peo- less as possible to achieve those goals. lenges that the space has, whether related to ple and like helping people. SHB: What is a telltale sign that developers regulations or resident experience. They want We also want to be in business with people are only in seniors housing for a quick buck? to leverage our contacts and funding for their who are looking for a relationship, not just a Mendelsohn: They have little or no experi- fees, and they want a profitable exit with- capital partner. We try to be the first telephone ence in building seniors housing product. Usu- out any relationship to the project after it is call an operator would make if it needed fund- ally they have had multifamily or commercial complete. ing for an acquisition or an expansion. We try experience prior to seniors housing. They have SHB: Before the pandemic, you were active and work with the operator to make it as pain- no knowledge about the operational chal- in the acquisitions market — selling eight

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August-September 2020 n Seniors Housing Business www.seniorshousingbusiness.com 55 communities to Brookdale for $39 I negotiated with Justin Hutch- of our investors. lion loan in 2015 to recapitalize the million and joining with LCS to ens when I was at Emeritus and What do we look for? We look property and fund the expansion, buy the high-profile Timber Ridge he was at NHI. The buildings that for a good market; a good physi- then joined with LCS to acquire community near Seattle for $133 Brookdale bought were formerly cal plant; a well-run operation; the property for $133 million in million, both in January. What’s Emeritus buildings. healthy, happy residents; and January of this year.] your general acquisitions and dis- We’re very hesitant to sell build- an environment that isn’t overly Oftentimes, providing a loan is positions strategy? What do you ings as a REIT. We’re a dividend- competitive. a good way to get your foot in the look for in a community? paying organization, and buying NHI’s footprint is mostly in the door when the capital partners are Mendelsohn: Dispositions are properties that are accretive to the Midwest and South. That is inten- ready to exit. It allows us to estab- tricky. The communities we sold portfolio helps us pay that divi- tional. We believe there’s great lish a relationship with the parties to Brookdale were part of a deal dend year after year to the benefit value in underserved markets, and up front and have them get com- we’ve done well by investing in fortable with us and see how well those markets. we can execute on transactions. SHB: A lot of investors target high-barrier-to-entry markets. It Pandemic takes Its toll sounds like you choose to buck SHB: What has been the effect MOSSADAMS.COM that strategy. of COVID-19 on the NHI portfolio Mendelsohn: That’s exactly so far? OPPORTUNITY right. We tend to focus on ter- Mendelsohn: We’re trying to tiary and secondary markets. We be as transparent as possible. As believe that smaller towns where a public company, we understand / LTC RISES IN people want to stay near their everyone is very interested in the church, near their family, near impact of COVID on our business. their university, near their doc- Every week we publish a chart tor have a lot of value. We found that shows the impact of COVID THE WEST over time that these buildings do on our buildings. I’m sad to as well and generate returns simi- say that as the country has been lar to more expensive properties in reopening, that has taken its urban, coastal markets. toll on our buildings. We were SHB: How much ground-up recovering in May and June. The development does NHI do, and trend was very favorable. Once what’s your strategy? the reopening started, the trend Mendelsohn: We’re very picky reversed itself dramatically and about ground-up development. COVID came roaring back in For example, last year we com- many of our markets. pleted three buildings in total. SHB: So, what do you do now? Two were private pay, one was Mendelsohn: It’s been a real Fresh perspectives. Industry-smart the Ignite deal I mentioned in challenge for us and our opera- Milwaukee. tors to make sure that residents are insight. Engaging collaboration. We look for established organi- being cared for and that the busi- It’s how Moss Adams brings West zations that have a long history ness of running these buildings of building and operating seniors is maintained while ensuring the to business. More than a location, housing. We’re not interested in safety of employees and residents. it’s the entrepreneurial ethos we journeyman developers that just It’s also been difficult for our want to build a building and move operators to maintain morale. The deliver to 210+ long-term care on to the next project after they funny thing about leadership is facilities nationwide. Discover how receive their fee. We want a part- you really only see it when you’re ner who will stick around, run the in a time of crisis. When things our customized business solutions project and benefit from the design are running great, it’s easy to be can help your organization thrive. and the quality of the build. a leader. Things tend to run them- SHB: It seems like NHI does a selves. When you have a real cri- decent amount of lending, as well. sis, that’s when you want people RISE WITH THE WEST. Can you explain the level of vol- to make thoughtful plans and exe- ume and the strategy behind the cute them. financing business? Mendelsohn: We loan to own. A good example of that is the Tim- ber Ridge project near Seattle. We financed a mortgage on that to build Phase II. Once Phase II was complete, we had a purchase option to buy the property, which we did. [Timber Ridge at Talus in Issaquah, Washington, features 401 units, including 330 independent ACCOUNTING / CONSULTING / WEALTH MANAGEMENT living apartments, 14 assisted liv- ing apartments, 12 memory care Assurance, tax, and consulting offered through Moss Adams LLP. Investment advisory services offered apartments and 45 skilled nurs- Eric Mendelsohn participated in the The through Moss Adams Wealth Advisors LLC. Investment banking offered through Moss Adams Capital LLC. Register’s Annual Great Bicycle Ride Across ing beds after the expansion proj- Iowa (RAGBRAI), an annual seven-day bicycle ect. NHI provided a $154.5 mil- ride, in 2019.

56 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 So, we’ve been trying to do all of that while supporting our opera- tors as they manage through this crisis. SHB: What can you, from the owner position, do to help opera- tors manage the pandemic? Mendelsohn: NHI has been very hands-on with regard to helping operators source personal pro- tective equipment (PPE). At the very beginning, there were a lot of untrustworthy companies selling masks, gowns and face shields. We were able to identify a legitimate supplier and connect our opera- tors with that supplier. We’ve also been a good resource for the confusing stimulus pro- grams. Many of our operators qualified for stimulus money, but didn’t have the banking relation- Ignite Medical Resort Oak Creek is a 144-unit, recently opened skilled nursing facility in Oak Creek, Wisconsin, operated by Ignite Medical ships they needed to get prior- Resorts. National Health Investors funded $25.4 million in financing for the development. ity. We were able to help them by referring them to banks that we had relationships with. able to act as a hub of information COVID. That includes testing Hermes I got on eBay. I think it’s In addition, we were able to help and best practices. But that’s nor- and interactions with residents or from 1967. with referrals to labs to do testing mal course of business for NHI — families. SHB: Not the amateur guitar of employees and residents. These we just ramped it up for COVID. SHB: What’s something people playing? are labs that are affordable and Lastly, we created a web page in the industry would be surprised Mendelsohn: I thought about efficient. This came about through for all of our clients that included to find out about you? that. The fact is at this point most normal communications between best practices and other resources Mendelsohn: I have a manual people know this about me. I took our operators and asset manage- that we developed regarding typewriter on my desk, and I use it a poll at the office and everyone ment team. We have 37 operating policies, procedures, signage and to write thank-you notes to friends agreed that wouldn’t be news to partners in 34 states, so we were anything else having to do with and business associates. It’s a anybody. n

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August-September 2020 n Seniors Housing Business www.seniorshousingbusiness.com 57 HOUSING & HEALTHCARE FINANCE, LLC Expert Lender providing Expert Solutions E: [email protected]

FOLLOW US ON LINKED www.hhcfinance.com Acquisitions COVID-19 Impacts Property Valuations Seniors housing pricing takes a hit amid pandemic.

By James Tellatin Between 2007 and 2009, the average price for inde- pendent living and assisted living properties declined The COVID-19 pandemic has clearly impacted seniors housing 28.5 percent, according to Senior Care Acquisition valuations. Reports. Capitalization rates for both property types The market for seniors housing assets is only beginning to thaw from increased by more than 100 basis points from 2007 the pandemic’s spring and summer freeze. In the absence of actual sales to 2009 (spanning the depths of the recession), even data priced in the pandemic, using enterprise valuations from publicly though interest rates were significantly lower in 2009 traded REITs and operating companies with large concentrations of than 2007. seniors housing is a proxy to individual asset values. James Equity values for the “Big Three” healthcare REITs Operationally, most properties are experiencing lower occupancies Tellatin fell roughly 20 percent from Sept. 1, 2008, through and higher per-resident-day operating expenses and these conditions are Integra Realty Aug. 31, 2009. Roughly midway through this times- likely to persist for some time. Resources pan, the average equity valuations from the Big Three Lower mortgage rates may offset some of the negative valuation driv- were off 50 percent. ers from the first months of the pandemic. Government stimulus, to This rough comparison between the average seniors housing price date, has helped operators. But, since value is based on anticipated earn- trends around the time of the Great Recession displays a parallel rela- ings and those stimulus payments are now water under the bridge, those tionship between the two markets — publicly traded REITs and indi- past payments do not transfer into present value. vidual asset values. The question today is whether or not such a relation- Anticipated future stimulus money will factor into value. However, as ship exists in today’s market, even though the circumstances driving of this writing, there is no certainty that private-pay seniors housing will valuations are hugely different — global financial crisis versus global receive further assistance. Healthcare providers, such as skilled nursing health pandemic. facilities, hospitals and other medical providers, have received and can Seniors housing properties are largely valued off cash flow, with most expect to continue receiving stimulus. properties priced off normalized net operating income (NOI) or EBITDAR (earnings before interest, taxes, depreciation, amortization and rent). The painful numbers The NOI is capitalized into value by dividing NOI by the rate to equal Salient factors stemming from the coronavirus pandemic globally value. As shown in the REIT valuations, a 20 percent value decline may impacting seniors housing operating results and valuations include: be caused by several scenarios: • Lower occupancies as controllable move outs exceed move ins. This 1) NOI would drop by 20 percent, and the capitalization rate would is a result of self-imposed reasons at the facility level and hesitation from remain unchanged. a market that leans toward greater social distancing, which will remain 2) NOI remains unchanged, and the capitalization rate increases by a significant factor until the virus is brought under control. Data from roughly 180 basis points (from 7 percent to 8.8 percent, for example). the National Investment Center for Seniors Housing & Care (NIC) shows 3) More likely, NOI declines some, and the capitalization rate increases occupancy rates for surveyed properties with mostly independent liv- by some amount to equate to a 20 percent decline in value. ing falling by more than 150 basis points from March to May of 2020; We see some REITs reducing their dividends, and also seeing their div- assisted living occupancy declined by more than 250 basis points in the idend yields increase, resulting in lower valuations. It is likely that going same period. forward for some time, NOI levels will be lower and capitalization rates • Operating expenses are difficult to rachet down in tandem with will be higher than before the pandemic. Quantifying these two parts of lower census levels, as some expenses are fixed and some variable the valuation equation is difficult. For example, a 20 percent decline in expenses are increasing, like food and protective equipment. value might be caused by an increase in the capitalization rate from 6.5 • Existing residents are minimizing use of common area amenities percent to 7 percent, and a 12 percent drop in NOI. for social distancing purposes, which are important factors in residents Many real estate investors look to Moody’s Analytics’ commer- choosing seniors housing options; thus residents feel they are not receiv- cial property price index (CPPI) as a guide to future property values. ing full value or benefits for their rent. Moody’s tracks apartments, retail, office and industrial property sectors. • Elevated risks are being built into capitalization and discount rates. Moody’s anticipates CPPI indices to reach low points in early 2021, There is no question that COVID-19 has negatively impacted valua- with “total” real estate dropping from 100 percent in January 2020 to 85 tions for the healthcare and seniors housing property markets. percent in September 2020, before reaching a low of 79 percent in March Cash flows are disrupted by reduced occupancy, higher operating 2021 or ahead of the expected arrival of an effective vaccine. expenses, possible lowering of rent caused by changes in demand and In conclusion, if the equities market is near the valley today, then over additional risk premiums applied to the capitalization processes. the next six to 12 months we would expect individual property values The lifeblood of an appraiser is comparable sales data, which pro- to decline approximately 10 percent to 15 percent given the experiences vides guidance for capitalization rates and per-unit pricing, the para- from the financial crisis in 2008 to 2009. The CPPI lines up with REIT val- mount value markers. Given the absence of contemporary sales data in uations. So, while individual asset transaction data is nearly non-existent the early months of this pandemic, an appraiser will likely apply pre- currently, these other references point to the uncomfortable conclusion COVID data and adjust the pricing to reflect current market conditions. that seniors housing property values, on average, have deteriorated. The equities market is liquid and provides a valuation consensus among This may be more so in the markets that were already experiencing a large and diverse group of investors. Historically, there is a correlation oversaturation prior to the pandemic, and less so in markets where between valuations in the equities market and the real estate market. unmet need existed. In those markets where there is unmet need, it will Healthcare REIT enterprise valuation (equity plus current assets and be interesting to see if developers pursue or delay planned projects. liabilities) fell over 20 percent during the first half of 2020. A silver lining is that taking on a development start today will likely be completed after the pandemic is resolved — let’s all hope. Looking to the past The deterioration of equity values during the Great Recession paral- James Tellatin is senior managing director of Integra Realty Resources’ Healthcare & leled a decline in the average per-unit price for seniors housing and Senior Housing Practice Group. He is also author of The Appraisal Institute’s text- nursing facility transactions during that period. book “The Appraisal of Nursing Facilities.”

58 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 Dwight Capital Closes Acquisiton of Love Funding

The Love Funding Platform will be Rebranded and Integrated within Dwight Capital

Dwight Capital, one of the nation’s largest and most prominent private commercial real estate lenders, has acquired Love Funding, the HUD lending subsidiary of Midland States Bank. As a result of this acquisition, Dwight Capital has become the largest dedicated FHA/HUD Multifamily & Healthcare financing firm in the nation and is poised to continue its industry leading HUD financing production.

787 Eleventh Avenue | 10th Floor | New York, NY 10019 212.960.3750 www.dwightcapital.com Affordable Housing Identify Best Services for Your Affordable Community Programming can make all the difference in keeping happy, healthy residents. By Flynann Janisse certification is gaining traction as a standardized approach for tenant programming. One crisis at a time is no longer an option for the multifamily industry. Affordable housing that offers CORES-certified pro- As seen in many other sectors, the global pandemic highlighted already gramming may qualify for Fannie Mae Health Hous- broken or deficient systems, exacerbating challenges accessing quality ing Rewards financing incentives. Additionally, a few affordable housing. states have begun to incorporate CORES in their qual- The United States was already in the midst of a national housing crisis ification criteria when addressing housing needs as before COVID-19, especially for seniors as baby boomers adjust their they look at developer applications for tax credits. housing demands to fit their lifestyles. Now the need for quality afford- Flynann able housing is dire and must be acknowledged. Janisse Know your residents’ needs The importance of access to housing is something developers work- Rainbow To date, Rainbow is the only third-party service pro- ing with specialized populations already know well. For example, the Housing vider to receive the certification. Developers that offer Housing First model acknowledges the best chance for success in any Assistance CORES-certified services know the programming endeavor is knowing you have someplace safe to which to come home. offered will meet residents’ needs because a commu- However, the benefits are not limited to the chronically homeless. Hous- Corp. nity scan (e.g. walking distance to food, transit, banks, ing is an intersection of better health outcomes, improved financial sta- stores, hospitals, etc.) is a critical component in the program, ensuring bility and everything in between. residents have input into the types of services they want and need. A “community scan” is a multidimensional, descriptive analysis of a Programming makes a difference neighborhood, town or city, county, region or state. A community scan Affordable housing services such as medical support, exercise activities can identify needs in a community, as well as existing resources and and computer training are key to helping residents reach their personal institutions, potential partnerships and gaps in services. goals. Service-enriched housing programs help stabilize communities When combined into a streamlined offering, available through a while improving the financial performance of a multifamily property. variety of platforms, seniors benefit tremendously from this model. A There are benefits to both in-person and online services. However, it is blended focus on social engagement; health and wellness; computer the quality and caliber of the programming that make the largest impact. skills; food programs; medical care resources and referrals; and physical When partnering with a service provider, developers must identify activities will offer something for everyone. which services are suitable for what they want to build. Specific ser- Medical research has documented the importance of staying physically vices cater to different demographics. For instance, services for seniors active and eating healthy, but doing so on a fixed budget can be a chal- are aimed at helping this age group stay healthy, connected and active. lenge, particularly for those just transitioning into retirement. It is, there- Activities that support seniors housing residents may not necessarily be fore, easy to make the connection to the importance of wellness program- the same for individuals living in affordable housing properties serving ming. However, at first glance, computer literacy may appear to stand out. the general population or assets with a large school-aged population. Today’s seniors are more comfortable with computers and smart- It all starts with service-enriched housing. By folding meaningful pro- phones than ever and have every right to the benefits technology-based grams and services into the fabric of quality housing, these communities programming can offer as their family community counterparts. Accord- offer residents much more than just a roof. Homes become a place where ing to a Pew Research Center survey conducted last year, the vast major- a real quality-of-life enhancement is possible. ity of Americans (96 percent) own a mobile phone of some kind, while Services specifically designed to improve financial and social capaci- 74 percent also own a desktop or laptop computer and roughly half own ties directly result in a more stable tenant population. The benefit is then tablets. Computer literacy ensures seniors can keep in contact with chil- carried to owners that enjoy lower turnover, increased safety and, best of dren, grandchildren and friends anywhere in the world. all, happy residents. In midst of stay-at-home orders across the country, many multifamily This model can be tailored to any demographic and is most effective operators were racing to figure out how to safely keep in contact with when a program plan is built using input from the tenants themselves. their residents. Rainbow’s LINK platform backed by our national call For family communities, service-enriched housing means creating work- center, was already doing this work and easily pivoted into assisting res- force development opportunities for the adult population, enrichment idents, connecting them to timely community-specific information and, programming for the youth and life-skills training for all age groups. most importantly, fighting isolation. The benefits to senior communities are equally tangible, even more so Our seniors are a valuable asset with much to offer. As housing pro- in the context of helping this particularly vulnerable population during viders, we owe it to this generation to do more than have them simply the COVID-19 health crisis. age in place. Seniors should be given opportunities to enrich their lives Pre-pandemic programming is still incredibly important, focusing on as well as make an impact on others. fixed-budget financial literacy, crisis intervention, healthy lifestyles and Volunteering programs build a true sense of community through net- community enrichment. In recent months, federal agencies are work- working and social activities. This win-win allows youth to benefit from ing with service providers as a conduit for communication about avail- a senior’s age of wisdom, while at the same time giving seniors a plat- able assistance. This includes disseminating information from the USDA form to impart essential knowledge garnered from years of experience. about food programs, getting information from the IRS in the hands The senior population shaped history. The lessons learned from the of those receiving Social Security Income ensuring they receive their Cold War and the Civil Rights Movement will be relevant as the country CARES Act stimulus, and both nationally and locally enacted renter pro- moves forward out of this health and economic crisis. tection programs. A properly designed, service-enriched housing model will not only Resident services have become broadly accepted as a stabilizing fac- curate opportunities for this enrichment to happen, but it will also foster tor in multifamily communities, and, as such, greater emphasis is being an environment where community stabilization can happen naturally. placed on formalizing best practices that will deliver desired results. A new certification exists for both owners and third-party providers Flynann Janisse serves as the executive director of Rainbow Housing Assistance Corp., that have developed an impactful service-enriched housing model. The a nonprofit organization that provides service-enriched housing programs for resi- Certified Organization for Resident Engagement and Services (CORES) dents of rental housing communities throughout the country.

60 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2020 SAVE THE DATE!

SEVENTH ANNUAL INTERFACE SENIORS HOUSING Southeast » NOVEMBER 5-6 » A VIRTUAL EVENT

PRODUCED BY INTERFACE CONFERENCE GROUP, A DIVISION OF FRANCE MEDIA

InterFace Seniors Housing Southeast, the industry’s largest and longest running regional conference, is back by popular demand!

This year’s event, scheduled for November 5-6, will be held as a virtual conference and once again bring together the leading owners, operators, investors, developers and financiers of seniors housing in the Southeast as well as those in other parts of the country who do business in the region.

We’re excited to bring the industry together and offer great content, insight and networking in a safe, virtual environment in a year in which in-person conferences aren’t a possibility.

This two-day event will feature seven panel sessions, 40-plus speakers, a keynote address, scheduled networking, roundtable sessions and a virtual exhibit hall. AGENDA TO INCLUDE:

• Operating, Investing and Developing in a COVID-19 • Designing for the Long Term: What Does the Pandemic Mean Environment and a Post-Pandemic World for Seniors Housing Architecture? • CEO Power Panel • Scheduled networking including virtual lunch and cocktail • Keynote Address networking hours • Marketing/Leasing Overview • Virtual exhibits and InterFace Value Plus roundtables • Southeast Demographic Trends and Product Acceptance

PLATINUM SPONSOrs Gold SPONSORs Silver SPONSORs

Early Bird Registration Rate of $215 Available Until october 9

REGISTRATION & GENERAL INFO: SPONSORSHIP & SPEAKING OPPORTUNITIES: Alicia Turlington Rich Kelley Eric Goldberg 404-832-8262 914-309-6954 404-832-8262 [email protected] [email protected] [email protected] www.interfaceconferencegroup.com What’s on my Mind Incorporating the Pandemic Experience into Design From processes to spaces, senior living design and construction are in for a change.

By Drew Roskos smaller-scale crises that we will now want to be better prepared for. Now in month six of our country’s full-scale reaction to the COVID-19 Operators must consider everything from the spatial pandemic, we are all embracing today’s heightened awareness of public needs of telehealth appointments to where the extra health across the board, especially in our field of senior living. chairs are stored when social distancing; and from the As of this writing, roughly one-third of COVID-19 cases reported have creation of processing spaces to identifying places for been in senior living communities. As research continues to teach us the additional location of permanent hand washing more about the spread of the virus who is at the greatest risk, we are also stations. This new overlay opportunity will allow a likely all growing in our realization of how this pandemic experience Drew Roskos facility to be designed with a typical health condition will impact the creation of the senior living facilities of the future. HED in mind, while preparing for these kinds of frighten- Our national housing team at HED is working to layer pandemic- ing atypical events as well. related design thinking in with the accumulated design understand- When it comes to more permanent physical design ing of best design practices. While certainly our healthcare design col- changes for future facilities, there are a few that will need to be imple- leagues, and many of us working in the housing sector, have already mented without a doubt. considered traditional germ and disease flow for years, we know this One of those is a greater focus on HVAC design — considering add- pandemic will increase the expectations of occupants, developers and ing zones and increasing air filtration as a result of this pandemic. While building visitors for decades to come — as it should. mechanical systems have moved toward more efficient choices in an What has not changed, though, is our insistence on keeping quality of effort to reduce energy consumption, these new lenses of filtration effec- life and resident happiness as the priority for design success. For both tiveness and isolation compartmentalization will take a more center- residents and staff, a community is only successful if it serves the needs stage role in the years ahead as well. of the occupants. So, when it comes to both quality of life and health, We are also confident that outdoor spaces will be significantly re-exam- these groups will always warrant the most important consideration. ined in the years ahead. From the simple mathematical need to increase social distance, to a pent-up desire to be outdoors after initial quarantines What we need to hold on to evolved, we are now excited to focus on the most effective design of out- Senior living communities that are in dense areas with a strong connec- door space for a larger variety of lifestyle needs for our seniors. tion — both physically and programmatically — to the larger, public com- While the importance of active spaces and walking paths remain for munity will continue to be the most successful and the healthiest environ- the physical health of our seniors, we are now also eager to increase ments for older adults. Social connectivity, and its impact on mental and the crafting of intimate spaces where people can passively watch out- physical health, will continue to be a top priority of this population group, door activities from a safe distance or gather in small groups to connect both during the remainder of this pandemic event and long after. It’s an amidst the fresh outdoor air. aspect that we can’t lose sight of on the heels of this experience. Another noticeable area where we all saw an immediate opportunity We need to continue to actively solve for those needs while also incor- was technology. Those facilities that were more technology-enabled had porating healthy design responses to today’s research around this virus more options when it came time to change their typical operations. From and other communicable diseases. Our mandate will be to find a balance walking into and out of rooms without needing to touch switches, to between helping families be comforted by this new level of care without hosting virtual family hangouts, technology proved to be the greatest feeling constricted by it. gap creator between the haves and the have-nots. We see this continu- Well before we knew of COVID-19, senior living communities would ing to drive the conversation as we create new communities moving change their operations or increase physical distancing as a result of forward. busy flu seasons, pneumonia outbreaks or otherwise. Programming and And in the area of access control, independent living or active adult scheduled activities changed to account for these concerns, and staff communities might see an uptick in multiple entrances, creating ways members wore masks, gloves and other personal protective equipment for facilities to lock down individual halls or break resident groups (PPE) in order to do their part in containing these germs. down into smaller groups or neighborhoods. This idea, though, will But with a heightened consumer awareness of these kinds of health certainly not shift in the memory care or skilled nursing, where secu- challenges now, we can all expect a more careful eye on the facility itself rity and safety of resident arrival and departure will continue to take and its role in disease spread, especially when potential residents are priority. considering their options. Additionally, the seniors housing industry was creatively moving to No need for overreaction utilize more external resources in fulfilling the care of their patients. The most important point on the mind of our team, as we actively From telehealth visits to video-based activity engagement, these sys- work on the design of new senior living facilities, is to not “react” our temic changes were already helping to reduce the outside visits from way into new problems. excess people. While pandemic woes will certainly weigh heavy on the minds of As this shift toward external care providers, and a reduction in onsite operators and families for many years to come, we know there are many staff continues much more on the road ahead, it is my hope that we see a dimensions to health. The opportunity to learn from this unique viral balance on our facilities’ accommodation of family and visits with loved experience is most certainly great, and it is an important opportunity to ones, and less on providers. seize. We are excited to apply today’s senior living lessons to our design process. How will we adapt? As always, though, we must all be careful to make long-term decisions To start, the first adaptation we need to make is to the design process for our buildings based on a holistic set of industry knowledge, not just itself. around unique experiences or isolated information garnered from our From the onset of a facility’s design effort, we need to be prepared to journeys along the way. also design what we are calling a “health management overlay.” This overlay should be crafted with operational leaders to ensure the feasibil- Drew Roskos, AIA, LEED AP, is a housing studio leader with national integrated archi- ity of specific ideas in the event of another public health crisis, or even tecture and engineering firm HED.

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