SINGLE-SITE DIVERSIFICATION –
UNDERSTANDING YOUR COMMUNITY’S
PRODUCT LIFE CYCLE IN A RAPIDLY
EVOLVING MARKETPLACEPresented by: Andrew Banoff, Blake Gillman, Ted MacBeth,
Aaron Rulnick
April 2 • 10:30 – 11:45 a.m.
Envisioning Creative Disruption
Today’s Speakers
2
Ted MacBeth
SVP/Director of Life Plan
Development
LCS Development
Andrew Banoff
President and CEO
Jewish Senior Services
Blake Gillman
VP/Director Post-Acute Care
Services
LCS
Aaron Rulnick
Managing Principal
HJ Sims
3
DISRUPTION in the Senior Living Space
is Here
• Enhanced Competition
• New, potentially even more
complex, healthcare
environment
• Industry consolidation
• Labor challenges
• Changing consumer
WHAT WE’LL COVER
• The post acute revolution
• Repositioning of one of the top Jewish communities in the country
• The changing national landscape of senior living
• Evaluating growth opportunities
• Questions and discussion
5
POST-ACUTEREVOLUTION Blake Gillman
VP/Director Post-Acute
Care Services
LCS
515.875.4733
6
Aging Population Impact on Skilled Nursing
7
Definitions:Column A: Current and Estimated Utilization = Percentage of total population over the age of 65 in a Skilled Nursing Bed
Column B: Projected Occupied Beds = Total Population Times Column A
Column C: Current SNF Beds Available = Total number of SNF Beds in the U.S. (Per source Statista.com/statistics)Column D: Bed Availability Re-purposing Projected = Projected percentage of Column C that will remain after re-purposing (i.e. semi-private to private conversions, etc)
Column E: Projected Available SNF Beds = Column C times Column D
Column F: Actual/Projected SNF Bed Occupancy = Percentage of beds occupied Column B divided by Column E
Column G: Projected SNF Bed Over/(Under) = Column E minus Column B
Care Delivery Revolution
8
Deliver care everywhere
Personalized care
Proactive wellness rather than reactive care
Chronic disease management
End-of-life care
Actual Population Health Needs
9
CHOICE CONVENIENCE AFFORDABILITY
10
Can you create a unique healthcare
ecosystem within a community?
HEALTHCARE ECOSYSTEM
11
JEWISH SENIOR SERVICES
NURSING HOME REPLACEMENT
COMMUNITY REDEVELOPMENTAndrew Banoff
President & CEO
Jewish Senior Services
203.365.6413
The Harry and
Jeanette Weinberg
Campus
Pictures
Copyright Sarah Mechling
Courtesy Perkins Eastman
and KBE Building Corporation
• Aging demographics/changing needs
• Increased competition (for-profits)
• Community integration/health care partnerships
• New models of care
Big Picture Themes
Strategic Goals (2011)
• Nursing home replacement with household model
• Add assisted living and memory care
• Community services expansion
• Linkages to broader community
• Bring 43 years of traditions, Judaism, etc.
• Campus opened June,
2016
– $100M project financed by
HJ Sims
• Achieved all Strategic
Goals
– Tenants include Federation,
JFS, Merkaz
– Community services growth
from $0 (2003) to $15M
(2019)
• Next: IL/more AL
– Community services
$50M!?!?
The Harry and Jeanette Weinberg Campus
Lobby/Donor Wall
Synagogue/Multi-Purpose Room
“Kosher” Courtyard Café
One of Seven Courtyards “Yahrzeit” Plaques
Assisted Living
1-BR Apartment
Skilled Nursing “Household”
Kitchen/Dining Room
Beauty Salon
“Re-Bar”
“The J” Juice Bar
Fitness Center
Fitness Center
Pool
Child Development Center
Relocation of Stained Glass
32
THE CHANGING NATIONAL
LANDSCAPE OF SENIOR LIVING Ted MacBeth
SVP/Director of Life Plan
Development
LCS Development
515.875.4714
Where are you?
33
Revolution
PR
OD
UC
T L
IFE
CY
CLE
Introduction(0-5 yrs)
Growth(5-15yrs)
Maturity(15-25yrs)
Decline(25+yrs)
TIME
Growth Maturity
Future
Curve
Present
Curve
Innovation
Opportunity
Your Customers• The Silent Generation
– Born 1925-1945
– Peak influence 2005-2025
• Baby Boomers
– Born 1946-1964
– Peak influence 2026-2044
Consumer Expectations
• Culinary
• Health services
• Wellness
• Transportation
• Technology
Are you ready for the
next generation?
Formal Cocktail Lounge
Bistro Juice Bar
MULTIPLE DINING VENUES
Photography by Michael Baxter Imaging
Photography by Michael Baxter Imaging
Salon Fitness
Classes Aquatics
WELLNESS
Is It Time To Diversify Your Product Offering?
NEW
DEVELOPMENT/
EXPANSION
NEW RENTAL
PRODUCT TYPEREPOSITIONING
• Renovation and/or expansion of existing community
• New programs
• New services
• Marketing efforts for branding, market positioning
• Appeal to different market segment
• Lower risk profile
• Reduced project schedule and capital cost
• Expansion of mission
• Organic revenue growth
• Achieving economics of scale
39
Sinai Residences of Boca Raton
Boca Raton, Florida
PHASE I
• Independent living apartments: 234
• Assisted living suites: 48
• Memory care suites: 24
• Skilled nursing: 60
PHASE II
• Independent living apartments: 111
• Common amenity additions
The Delaney at Georgetown Village
Georgetown, Texas
PROGRAM
• Independent living apartments: 116
• Assisted living suites: 55
• Memory care suites: 32
• Commons: 28,000 sqft
• Required site area: 10 – 12 acres
WhiteStone: A Masonic & Eastern
Star Community
Greensboro, North Carolina
PHASE I
• Independent living apartments: 46
• Cottages: 6
• New amenities: dining, wellness, multi-
purpose
PHASE II
• Independent living apartments: 67
• Assisted living suites: 24
• Memory care suites: 12
• Renovation of the existing SNF
Whitestone Facility
Assessment• Aging physical plant – 100 years
• Undesirable apartment mix
/size/amenities
• Insufficient common space & décor
• Limited funding/balance sheet
• Excellent reputation for health
services
• Favorable market parameters
• New branding initiative
Aerial Site Plan
BEFORE
AFTER46
BEFORE
AFTER47
48
AFTER
BEFORE
49
AFTER
BEFORE
50
AFTER
BEFORE
51
AFTER
BEFORE
2007 2013 2018
Net Operating Income ($2,023,040) ($245,706) $59,285
Total Operating
Revenues$7,275,768 $10,368,952 $13,889,969
Cash/Investments $1,921,949 $7,712,003 $10,620,760
Comparison
53
EVALUATING GROWTH
OPPORTUNITIESAaron Rulnick
Managing Principal
HJ Sims
301.424.9135
Evaluating Growth Opportunities
Navigating the Evolving Market
Evaluating Growth Opportunities
Senior Housing Trends
55
Source: NIC Seniors Housing & Care Market Performance Report – 1Q2018
Evaluating Growth Opportunities
Senior Housing Trends
56
Source: NIC Seniors Housing & Care Market Performance Report – 1Q2018
Evaluating Growth Opportunities
Senior Housing Trends
57
Source: NIC Seniors Housing & Care Market Performance Report – 1Q2018
Evaluating Growth Opportunities
Senior Housing Trends
58
Source: NIC Seniors Housing & Care Market Performance Report – 1Q2018
Evaluating Growth Opportunities
Senior Housing Trends
59Source: NIC Insider Newsletter – February 2019
Evaluating Growth Opportunities
Strategic, Capital and Financial Planning
Evaluating Growth Opportunities
Strategic Considerations for Single Site Providers
61
Single-site providers can operate independently, but should consider the following:
Financial Strength Required
• Cushion in projected financial performance
• Key ratios / measurements (1.5x debt service
coverage, 200+ days cash)
• Lower for providers like JHEP that have greater health
care mix
• Important to build cash reserves (future re-investment,
safety net, etc.)
Economies of Scale
• Difficult to profitably operate community that is too
small
Market Differentiation
Product Differentiation
Strong Management / Board Leadership
Evaluating Growth Opportunities
Leveraging and Prioritizing Financing Capacity
• Reinvestment in existing facilities
• Expansion of existing facilities & addition of new facilities
• Sale of assets that are not so strategic
• Acquisition/affiliation with existing providers
• Development of new campuses
• Addition of new programs/services (non-facilities-based)
• Home care/home health, hospice, CCRC w/o walls, PACE
• Forms of investment
• Building, buying, leasing, affiliation, partnering
• Criteria for Evaluation
• Trends in utilization (occupancy & payer mix)
• Market demand vs. Competitive landscape
• Financial impact (required investment & ROI)
• Long-term trends (population, industry, political & regulatory)
• Criteria for Prioritization
• Quantitative (accretion/dilution to financial performance, ROI, time-to- market)
• Qualitative (mission, tactical, strategic)
• Risk/reward dynamic
• Retaining debt capacity for future (known/unknown) opportunities
Evaluating Growth Opportunities
Leveraging and Prioritizing Financing Capacity
Representative Case Studies
New Campus Development
64
DIVERSIFICATION OF PRODUCT OFFERING
• Entrance fee to rental product
• Suburban to downtown location
• High-end, but broader market due to rental – EF product dominates market
• Only rental CCRC with full continuum
• 184 IL, 51 AL, 36 MC, 54 SNF
• Non-recourse to sister community
DIVERSIFICATION OF PRODUCT OFFERING
• New EF CCRC in different county and market
• More upscale product type to reflect market
• Change in unit mix – sister community has significantly higher healthcare mix
• 205 IL, 36 cottages, 20 AL, 12 SNF
• Non-recourse to sister community
Representative Case Studies
Campus Repositionings
65
MODERATE EXPANSION AND
REPOSITIONING• Multi-phased project includes “main
street” concept with new common
areas and amenities
MAJOR EXPANSION AND
REPOSITIONING• Multi-phased project (30 months) New
wellness center and dining venues
Representative Case Studies
Campus Repositionings
66
SMALL REPOSITIONING TO MODERATE/AFFORDABLE
• Replacement of existing HUD apartments with new 80-unit LIHTC building
• Addition of moderate income EF product:
• 14 cottages and 33 apartments
• Remaining 25 IL units offered as rental
• Future phases to include additional moderate income cottages and
repositioning of assisted living and skilled nursing facilities
SMALL REPOSITIONING TO ADD NEW PRODUCT TYPE
• 297-unit rental CCRC adding 44 entrance fee units
• Also remodeling a portion of the common areas and amenity spaces in
existing IL living building
• Two-phased project
Representative Case Studies
Replacement Facilities
67
REPLACEMENT FACILITIES ON NEW SITE
• First household model in the State of Connecticut
• Offers skilled nursing, rehab and assisted living as well as fitness and wellness center
• Community hub offers: child care, adult day, home care, hospice, outpatient therapy,
geriatric assessment, Center for Elder Abuse Prevention, Institute on Aging, Senior
Choice at Home® and Home Together®
REPLACEMENT FACILITY ON EXISTING SITE
• Tore down 125+ year-old building and replaced with new building including 22 memory
care units and 52 traditional assisted living units in a “neighborhood model”
• Located adjacent to 40-unit assisted living facility added in 1935
• Moderately priced relative to the market
Representative Case Studies
Acquisitions
68
ACQUISITION OF DISTRESSED CCRC
• Acquired out of bankruptcy
• Community had 78% overall occupancy across all levels of care
• Purchased under new affiliate of existing organization outside of Obligated Group (“OG”) due to
significant refund obligations
• Intend to add to OG once stabilized
• Needed to infuse capital for physical plant and liquidity needs
ACQUISITION OF MULTI-FAMILY HOUSING COMMUNITY
• Age-restricted community with aging population
• Property includes retail and a restaurant
• Plan to replace existing retail with more senior-friendly business and add services to enable residents
to better age in place
• Strategic location for new owner
• Provides “hub” to offer services to the broader
senior community
Envisioning Creative Disruption
QUESTIONS AND DISCUSSION