Your Attendance was Key - Late Winter Conference CONFERENCE RECAP

Your Attendance was Key - Late Winter Conference CONFERENCE RECAP
Your Attendance was Key.

              The 16th Annual HJ Sims

      Late Winter Conference
        Sheraton Sand Key Resort
              Clearwater Beach, FL
Tuesday, February 26 – Thursday, February 28, 2019

                     Member FINRA,SIPC
Your Attendance was Key - Late Winter Conference CONFERENCE RECAP
Table of Contents

2019 Conference Review...................................................................................................................... 1

CFO Breakfast....................................................................................................................................... 2

The Senior Living Industry and Capital Markets: Today and Tomorrow........................................... 4

The Latest Digital Asset: Blockchain Technology .............................................................................. 6

Workforce Trends, Retention Strategies & the Millennials Factor.................................................... 8

Partnerships in Mixed Use Development..........................................................................................10

New Ways at Looking at Growth and Redevelopment................................................................... 14

The Future of the Continuum of Care................................................................................................17

The Science of Revenue Management and How It Can Be Applied To Senior Living................... 19

Let’s Hear from the Leaders.............................................................................................................. 21

Insights into Today’s Financial Markets............................................................................................ 23

Event & Recreational Activities......................................................................................................... 25

Save the Dates.................................................................................................................................... 26

Your Attendance was Key - Late Winter Conference CONFERENCE RECAP
2019 Conference Review

During the past sixteen years, HJ                       Program highlights included:
Sims has hosted its Annual Late
                                                        ■■Researchers from outside the
Winter Conference as a forum to
                                                          senior living industry who shared
gather experts from across the
                                                          valuable ideas from fields like
Senior Living industry. This year,
                                                          block-chain technology, revenue
more than 300 operators and
                                                          management, and financial
other professionals convened at
                                                          markets. These speakers pressed
the Sheraton Sand Key Resort in
                                                          attendees to consider how recent
beautiful Clearwater Beach, FL for a
                                                          innovations and approaches may
discussion of thoughts, experiences,
                                                          be applicable to their organizations.
and concerns from February 26
to February 28. Throughout the                          ■■Informal events to bolster
conference, attendees explored                            connection and conversation,
recurring themes like the changing                        including a session about how our
landscape of workforce engagement,                        palate for wine evolves as we age.
unique opportunities for revenue and
                                                        ■■Educational sessions that covered
mission advancement, and continued
                                                          topics, such as: workforce trends,
development of the new payer model.
                                                          partnerships in mixed-use
“Amidst upheaval in the nursing home                      development, new ways of looking
industry, and potential overbuilding of                   at growth and development, and
independent and assisted                                  the future of the continuum of care.
living and memory
                                                                   The following pages
care communities, our
                                                                   provide comprehensive
conference provided
                                                                   coverage of the many
attendees from the non-
                                                                   sessions at the 2019 Sims
profit and proprietary
                                                                   Late Winter Conference.
sectors of the senior
                                                                   Be sure to subscribe to
living industry with an
                                                                   our HJ Sims mailing
environment to share their recipes for success,” said
                                                                   list for information on
Bill Sims, Managing Principal. “With the backdrop of
                                                                   forthcoming conferences.
one of the best beaches
in the U.S., conference
participants greatly
contributed to making this
one of the best programs
we have ever hosted.”

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                  TOP        1
Your Attendance was Key - Late Winter Conference CONFERENCE RECAP
CFO Breakfast

This year’s CFO breakfast                                                  conducted by CliftonLarsonAllen
featured an overview of                                                    found that a vast majority of
change within the senior                                                   surveyed seniors would prefer
living Industry. Gail Miller, of                                           to stay in their residence (80%),
CliftonLarsonAllen, provided                                               while only 3% indicated they
insight on some of the major                                               would prefer to move to a
trends she is witnessing                                                   retirement community. Aging-in-
across the industry. Key                                                   place is becoming increasingly
takeaways included:                  for the first time in U.S. history.   viable due to affordable
                                     Additionally, the 2030s will see      technology, Internet access,
Demographic Growth                   declining caregiver ratios. In        transportation alternatives,
The 2030s are projected to be a      2010, the caregiver support ratio     delayed transition through
transformative decade. By 2030,      was more than seven potential         the continuum, and expanded
all Baby Boomers will be older       caregivers for every person in the    offerings. Other trends include
than age 65, and one in every        high-risk age years of age 80-plus.   senior living options without
five residents in the U.S. will be   In 2030, the ratio is projected       nursing living care, assisted
retirement age. The population       to decline to four to one and is      living serving higher acuity, and
in the U.S. is projected to          expected to fall further to less      a preference to maintain one’s
grow at a slower pace and age        than three to one in 2050.            current environment.
considerably, which will result in
seniors outnumbering children        Senior Living Options                 Occupancy and
                                                       As we look          Construction Trends
                                                       toward the          Independent living occupancy as
                                                       coming “Silver      of 4Q 2018 was 90.2% with 2018
                                                       Tsunami,”           showing moderate inventory
                                                       Boomers             growth and absorption. Assisted
                                                       are expected        living occupancy as of 4Q 2018
                                                       to demand           was 85.4% with net inventory
                                                       customization,      growth and absorption reaching
                                                       flexibility and     the highest level on record. The
                                                       choices. Aging-     skilled nursing sector continues
                                                       in-place is         to see reduced occupancy in
                                                       a trend that        all regions of the U.S., and the
                                                       is becoming         overall occupancy median is now
                                                       increasingly        83.9%. The industry also saw
                                                       important to        construction starts trending lower,
                                                       seniors. A          suggesting the construction
                                                       research study      pipeline may be slowing.

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                    TOP      2
Your Attendance was Key - Late Winter Conference CONFERENCE RECAP
Workforce Pressures                    enrollment. The transition of Baby    (CMS)
Workforce trends in the senior         Boomers, coupled with enhanced        largest VBP
living industry include a required     benefits, at lower overall costs      initiative. It is
focus on recruitment and               to beneficiaries, has made MA         worth noting that four in five MA
retention as demand for talent         attractive to this generation. For    enrollees are in plans that require
continues to increase as well          context purposes, Accountable         some form of pre-authorization.
as an evolution in workforce           Care Organizations, which are         Most enrollees are required to
demographics. It is no surprise        Medicare’s #1 value-based             receive pre-authorization for
that the senior living market is       purchasing (VBP) model have 10        high- cost services (like Skilled
growing and senior living job          million beneficiaries participating   Nursing). According to a 2018
growth outpaced the private            in all versions, including non-risk   study by the Kaiser Family
sector between 2006 and 2016.          bearing. This equates to 17% of all   Foundation, 71% require pre-
                                                                             authorization for a Skilled Nursing
                                                                             Facility stay, compared to 62%
                                                                             for Home Health services, and
                                                                             12% for preventative services.
                                                                             The narrowing health networks
                                                                             will result in “haves” and “have
                                                                             nots.” This means the liaison role
                                                                             is critical in navigating Medicare
                                                                             Advantage relationships and the
                                                                             ability to “tell your story” will
                                                                             be key as referrals move to high
                                                                             quality, low cost providers.

Job openings in health care and        Medicare beneficiaries. Compared      For more information on
social assistance continue to rise,    to the 20+ million Medicare           this session, please contact
topping 1.1 million in June 2017.      beneficiaries enrolled in MA          Christina Rappl.
The senior living industry will        plans, it is double that of Centers
need to recruit and retain 300,000     for Medicare & Medicaid Services’
more employees in the next ten
years, while the labor force that is
comprised of 16-24 year olds will
see a 2.8 million decline.

Medicare Advantage
Medicare Advantage (MA)
enrollment has grown by more
than 70% since the passage of
the Affordable Care Act (ACA) to
just over 20 million beneficiaries,
or 34% of total Medicare

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                      TOP       3
Your Attendance was Key - Late Winter Conference CONFERENCE RECAP
The Senior Living Industry and
Capital Markets: Today and Tomorrow

Each year, we begin the                                                     present for providers with sufficient
HJ Sims Conference with                                                     infrastructure and scale.
an overview of senior
living industry and capital                                                 Turning to capital markets, Bill,
market trends, as well as                                                   who last year believed “everything
an update on the latest                                                     points to higher interest rates,”
from HJ Sims. In addition                                                   noted that with the results of
to financing more than                                                      the mid-term elections and
$1B in 2018, adding 20                                                      expectations of economic growth,
new employees, and                                                          interest rates have actually fallen
welcoming baby Lucas                                                        since last year’s conference. Bill was
Rappl to the investment                                                     hardly alone in his assumptions;
banking family, we also                                                     of hundreds of predictions from
launched our Corporate                                                      our 2018 conference, the closest
Social Responsibility                                                       to actual was just the third lowest
(CSR) program. For                                                          interest rate.
CSR’s inception year, our
organization was honored                                                    Aaron Rulnick, Managing Principal

to partner with Gift of Life, who was on site to          and Co-head of Investment

educate attendees about their work to cure blood          Banking, highlighted a number of

cancer through marrow and stem cell donation.             unique non-profit financings that

More than 30 attendees chose to enter the registry        HJ Sims was proud to complete

with a swab of the cheek.                                 in 2018. As expansion and new
                                                          developments predominated
                            Bill Sims, HJ Sims            capital needs in the wake of tax
                            Managing Principal,           reform and the elimination of
                            highlighted current senior    advanced refundings, HJ Sims
                            living industry trends and    crafted a number of innovative
                            implications for providers.   short-term debt structures and secured shorter call
                            Firstly, increased research   periods. Most notably, these innovative structures
                            on loneliness (not to         included the utilization of subordinate entrance
                            mention the first UK          fee bonds to maximize the ability to deleverage,
                            Minister of Loneliness)       while meeting loan to value requirements. Another
                            could lead to increased       inventive structure helped clients to preserve future
market penetration as the benefits of community           entrance fees in order to pay down outstanding
become more known. With continued revolution              debt, instead of the new related debt, as the older
of the nursing home sub-sector, opportunities are         outstanding debt carried a higher coupon.

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                      TOP       4
Your Attendance was Key - Late Winter Conference CONFERENCE RECAP
In instances of refinancing and expansion alike, we       Rounding out our executive
saw an increase in the utilization of taxable bank        panel, Anthony Luzzi,
debt. With the benefit of declining tax-exempt bank       President of Sims Mortgage
rates (owing to the lower corporate tax rate), the        Funding (SMF), updated the audience on the HUD
ability to quickly secure a taxable loan was appealing,                            happenings of the past
especially in instances of short-term capital needs.                               year. While 2018 multi-
                                                                                   family and health care loan
                           Jeff Sands, Managing                                    production was generally
                           Principal and Co-head                                   in line with that of 2017,
                           of Investment Banking,                                  the recent partial Federal
                           explained the anatomy of                                government shutdown
                           our HJ Sims Investment                                  temporarily slowed down
                           (HJSI) deals, highlighting                              the review and closing of
                           how the structure                                       applications.
                           is typically used by
                           proprietary senior living      In 2018, SMF) closed loans across all three HUD
                           providers relevant to non-     mortgage insurance platforms: LEAN for Healthcare,
profit borrowers in a variety of situations. Please       Multi-family Accelerated Processing, and Office of
email Rebecca Brady for a copy of our forthcoming         Hospital Facilities. The SMF team established new
white paper.                                              and expanded partnerships with bridge lenders and
                                                                             expanded its financial advisory

                        Anatomy of HJSI Financings                           practice throughout the year.

                                                                             For more information on
                                                                             this session, please contact
                                                                             Kerry Moynihan.

In the context of some of the key financings and
transactions HJ Sims completed this past year, Jeff
shared ongoing trends in the industry and how some
operator and capital providers are responding. These
included: nursing home consolidation and divestiture
by REITS, more affordable communities with 25%
Medicaid waiver, and increased participation by
private equity funds.

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                     TOP       5
Your Attendance was Key - Late Winter Conference CONFERENCE RECAP
The Latest Digital Asset:
Blockchain Technology

                           This year’s conference
                           featured keynote
                           speaker, Manual
                           Stagars. Stagars,
                           who resides in Zurich,
                           Switzerland, spoke
                           about the latest digital
                           asset, blockchain
                           technology. An award-
                           winning documentary
filmmaker and an expert in blockchain technology,
artificial intelligence, and Fintech, Stagars
also serves as host of a blockchain podcast.
Stagars has authored numerous books about
entrepreneurship, financial innovation, Open Data,
and impact investment. Stagars speaks frequently,
around the globe, illuminating audiences about
blockchain technology.

What is blockchain technology (blockchain)? In
a nutshell, a blockchain is a distributed digital
ledger with transactions in sequence. Blockchain
is a growing list of records or blocks, which are
linked using cryptography. By design, a blockchain
is resistant to modification of the data it contains.
It is an open, distributed ledger that efficiently
records transactions between two parties in a
verifiable and permanent manner.

A blockchain is typically managed by a peer-
to-peer network, whom collectively adhere to
a protocol for inter-node communication and
validation of new blocks. Once recorded, the data       blockchain records are not unalterable, blockchains
in any given block cannot be altered retroactively      are considered secure by design. The most well-
without modification of all subsequent blocks, which    known use of blockchain technology is by the crypto
requires consensus of the network majority. Although    currency Bitcoin.

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                  TOP       6
Your Attendance was Key - Late Winter Conference CONFERENCE RECAP
Where is current research occurring? Below is a
classification of seven blockchain dimensions by
researcher Roger Wattenhofer:

These are the dimensions that blockchains enable      In closing, Stagars offered the following advice
and on which research is happening. The farther out   to those considering the utilization of blockchain
one travels down                                                technology:
each arrow, the more
                                                                ■■It takes time to understand this technology;
advanced a system
                                                                   take several months to read and research.
becomes. According
to Stagars, most                                                ■■There is a great deal of “hot air”
companies do not                                                   surrounding this technology; learn to ask
follow this example;                                               the right questions.
rather, they focus on
                                                                ■■When you decide to try the technology,
a few dimensions
                                                                   be mindful of controlling risk. As the
and neglect the
                                                                   technology is still in the inception
remainder; thus,
                                                                   phase, even experts are in a constant
compromising the
                                                                   learning cycle.
integrity of the
                                                                For more information on this session,
                                                                please contact Jimmy Rester.

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                  TOP        7
Your Attendance was Key - Late Winter Conference CONFERENCE RECAP
Workforce Trends, Retention
Strategies & the Millennial Factor

Recent surveys of senior living      Nursing (ASN) for $1,000 tuition.     Given the caregiver labor
executives have confirmed that       For community students, the           shortage, recruiting employees
labor issues continue to be a        tuition can be funded with no-        is just as challenging as
dominant challenge in the senior     interest loans provided by a          retaining employees. Ms. Rickert
living industry. Industry experts    local agency, Jewish Free Loans.      discussed the use of technology
Yvonne Rickert, Senior Director      For LAJH staff members who            for recruiting efforts. Rickert
of Human Resources at Life Care      seek ASN admission, if after          highlighted the benefits of
Services (LCS), and Molly Forrest,   certification/licensure they choose   leveraging digital job listings
CEO and President of the Los         to work at the LAJH, 25% of           and social media presence
Angeles Jewish Home (LAJH),          the loan is forgiven for every        (LinkedIn), including an increase
discussed the unique approaches      six months they stay with the         in the quantity and quality of
their organizations employ to        organization. Another proven          applications and total outreach,
compete for and retain talent in a   retention method for the LAJH         especially candidates whom
tight labor market, including how    is a training program focused on      rely on the Internet for their
these approaches have changed        teaching front-line staff members     job search. Rickert talked about
throughout the last few years.       the skills needed to advance          the way in which data gathered
                                     in the workplace, particularly        from those sites can improve
While turnover levels can vary       employees with language and/or        employee recruitment.
by employee type, both panelists     math challenges. Specifically, the
discussed the high levels of         LAJH created a program through        Rickert addressed the key
turnover at the caregiver and        which an employee can complete        factors LCS focuses on when
front-line positions, which          English and/or math classes (or       hiring employees: personality,
can be 50%-75% for for-profit        earn a GED) via a local adult         intelligence, experience and heart
companies, and 30%-35% for           educational program. For every        (the latter being, particularly
non-profit organizations. Ms.        six hours of LAJH University          important for caregivers). She
Forrest explained how the Jewish     classes (above the federal/           explained that the facility tour
Home has been able to maintain       state minimum requirement             is important in evaluating these
an 11% turnover rate through a       of 12 annual hours), the LAJH         factors; much can be gleaned
combination of creative solutions.   employee receives a twenty-           from observing how a candidate
One example included offering        five cent increase in pay (to be      interacts with residents and
Certified Nursing Assistant (CNA)    applied the year following the        staff members. For example,
classes to the public through        annual evaluation).                   does the candidate smile at a
LAJH’s Annenberg School of                                                 resident when they meet? In LCS’

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                     TOP     8
experience, these characteristics    Wage compensation is generally      partnering
cannot be accurately measured        a short-term satisfier, though      with
by personality assessments; the      paying a sufficient living wage     educational
tests did not draw a correlation     is important. Employees may         institutions to provide students
between scores and success.          leave for a wage increase or an     with direct, real-world experience,
Instead, Rickert recommends          advancement, but if a workplace     as well as financial assistance and
involving the best employees         boasts a positive culture, that     scholarships for college students
in the recruitment process in        employee may return, if you leave   to pursue studies that prepare
order to hire others with similar    the door open for them.             them for a career in senior living.
                                     With employee engagement a          Forrest provided insight on
Both panelists noted that with       key to success, Forrest revealed    the ways in which LAJH is
four to five generations working     that LAJH engages employees         partnering with local universities
in communities, there is not a       through the Chai-way to Health      to develop the next generation
single formula to retaining top      wellness program. The program       of senior living leaders. She also
talent as people from different      provides a way for employees        highlighted the success of their
age groups tend to stay in a         to publicly recognize the good      Annerberg School of Nursing,
position for different reasons.      acts of their colleagues, and       which educates and trains
A community’s ability to adapt       empower staff to help improve       students to become qualified
to their workers and provide         the organization by seeking their   health care practitioners, whom
multiple avenues for retention       advice in key decisions like the    will, in the course of their careers,
is key to reducing turnover. For     selection of a health care plan.    meet the needs of a culturally
example, Rickert noted that 75%                                          diverse society in its continuum
of Generation Z believes they        Both Rickert and Forrest agree      of illness-wellness.
can be entrepreneurs and when        that the industry faces a long-
deciding where to stay long          term challenge of attracting the    For more information on
term, they may value career          highly skilled workers whom are     this session, please contact
advancement over other factors       needed to take care of an ever-     Curtis King.
that might be more important to      increasing senior population.
other age groups.                    Rickert expounded about the
                                     ways in which the LCS Foundation
With that said, regardless of age,   is discovering a solution to
both panelists agree that money      this challenge by providing
is not the most important factor     opportunities to high school
and employee engagement is key.      and college students, including

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Partnerships in Mixed
Use Development

The focus of this session was to provide different         William (Bill) Pettit, Jr., President and Chief Operating
perspectives on the intersection of mixed use              Officer of Merrill Gardens kicked off the discussion by
development and senior living communities.                 highlighting his organization’s experience in driving
Following on the 2018 HJ Sims Conference theme of          successful mixed use developments. In reviewing
growth in demand by the Baby Boomer generation             a survey conducted by A Place for Mom, 85% of
for downtown communities, this session gathered            independent living consumers, and 66% of assisted
leaders from the for-profit and non-profit senior living   living consumers, place importance on being within
communities, as well as a well-known mixed-use             walking distance of at least one major neighborhood
developer evaluating the inclusion of senior living        amenity, with a significant percentage of each
communities in its developments.                           demographic indicating that this was a “must have”
                                                           in making their decision on where to live.

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The first community presented by Mr. Pettit was           Merrill Gardens has repeated
University Village, located in downtown Seattle. The      these town center successes
community sits upon a 2.5 acre site that is comprised     elsewhere in Washington
of 123 dually-licensed independent living/assisted        and California, creating senior living communities
living apartments and 103 market-rate apartments          adjacent to town amenities, allowing their residents
with 22,500 square feet of retail space. The total        to be within walking distance of at least one
development cost was $70 million with $55 million         major neighborhood amenity. As a result, they
financed with tax-exempt financing. The senior living     have achieved rapid fill-up of new projects and
apartments frame one side of the site, while the retail   stabilized occupancy earlier than may otherwise
space and market-rate apartments are on the other         have been achievable. They believe that town
side of the site; a common courtyard is positioned        center development represents an important new
between the buildings. Mr. Pettit mentioned that the      opportunity for senior housing. Though it can take
mixture of senior living and market-rate apartments       more time and potentially increase costs, there are a
encourages intergenerational interaction – including      limited number of opportunities in a particular town
students of the nearby University of Washington           creating natural barriers to entry. The popularity of
either visiting grandparents or creating friendships      these communities reflect the shifting preferences of
with residents of the Merrill Gardens community.          today’s seniors who seek to be more connected to
Residents and students share meals, and the happy         their surroundings.
hour at Merrill Gardens was frequented by residents
of the market-rate apartment buildings.                   Bill Hagstrom, Vice President of Senior Housing
                                                          Partners, the development arm of Presbyterian
Another highlighted project was Merrill Gardens           Homes & Services, walked through a case study
at Burien, a bustling, growing town that boasts           of their Folkestone Community, located on the
a number of prominent companies with national             shores of Lake Minnetonka in Wayzata, MN. While
headquarters within 10 to 15 minutes of the               Senior Housing Partners has developed a number
community (including Starbucks Coffee, The Port           of projects—from strategic planning and product
of Seattle, Sea-Tac Airport, Alaska Airlines, REI,        positioning to site selection and zoning and regulatory
Weyerhaeuser, Amazon, Russell Investments, and            compliance—the Folkestone project was highlighted
Nordstrom). An undeveloped two-block area was             in our session to illustrate the nuances of combining a
situated in the town center of Burien, and was a          local government’s vision for a particular site and the
prime location for a mixed-use project located near       developer/end user’s vision for the site. The master
a town square park, transit center, farmers market        plan for Folkestone includes 80 condominiums, 36
and library—all within one block. Merrill Gardens         market-rate apartments, a 115-room boutique motel,
developed Merrill Gardens at Burien for $41 million,      109,000 square feet of retail space and a senior living
including 126 units with a 15-unit memory care wing.      community that is sponsored by Presbyterian Homes
At the opening, Merrill Gardens collected 100 deposits    & Services, including a 30-unit care center, a 58-unit
and within six months, saw 94% occupancy, which           assisted living community, enhanced assisted living
drove more than $2 million in revenue.                    options, a 17-unit memory care neighborhood, and
                                                          148 independent living units.

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Residents of Wayzata felt strongly that a significant      to develop 250 underground
portion of the development should contain retail           parking stalls. The community
space. Initial hopes were that leading big-box retailers   also needed to be walkable, even
would lease the space; however, when that did not          in the harsh MN winters; therefore, a geothermal
come to fruition, the retail targeting strategy shifted    energy system was implemented to heat and cool the
to smaller units. Now, the community includes a            campus. Additionally, the sidewalks and streets are
barber, hair salon, several restaurants, Sotheby’s         heated in the winter.
International Realty, high-end boutiques, a running
store, Anthropologie, and a Pilates studio. Additional     The senior living community at Folkestone is vibrant
requirements of the city were that there be sufficient     and well-occupied with occupancy rates for its care
parking to accommodate the mix of residents,               center running at more than 92% since its opening in
retail customers and hotel patrons; thus, the need         2015. The assisted living occupancy touts an average

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                     TOP        12
occupancy in excess of 96% since opening. Memory           aspects. In developing
care is at 97% occupancy and independent living            Downtown Columbia, Howard
averages 99% occupancy since opening. Among the            County maintained significant
lessons learned with the Folkestone community were         requirements of Howard Hughes, including
the need to be careful in making commitments to            incorporating affordable housing, open space and
local jurisdictions, reinforce the focus on the benefits   parks, upgraded public infrastructure and structured
for the community residents, consider service retail       parking to accommodate a “park-once” approach,
over product retail, expect that there will be smaller     allowing visitors to the area to park once and walk
retail units, plan for parking and, depending on           within the town center.
the size of the retail commitment, engage a retail
management company.                                        Important wins for this development included
                                                           securing Tenable, a publicly traded cybersecurity
Our final presenter was Mauricio Diaz, the Director        company, as a flagship tenant that is establishing
of Strategic Initiatives from The Howard Hughes            its world office headquarters at the development,
Corporation, a large mixed use developer in NY,            and securing tax increment financing in the amount
MD, TX, NV and HI, among others. Though Howard             of more than $48 million to support the costs of the
Hughes does not presently incorporate senior living        public infrastructure. Through tax-exempt financing,
in its developments, it has been evaluating the            the Maryland Economic Development Corporation
addition of senior living as part of the offerings of      issued bonds, the proceeds of which were used to
its mixed use developments and is eager to offer its       pay for public infrastructure within the development
perspective on how a large mixed use development           and the debt service of which will be paid from the
can evolve. Diaz provided information regarding            increased tax revenue received by Howard County.
its present development, Downtown Columbia in              This form of tax-exempt financing is available in
Columbia, Maryland, conveniently located between           nearly all states and should be a consideration in a
Baltimore, MD, and Washington, D.C.                        mixed use development, specifically in areas where
                                                           significant additional property tax revenue will be
Once complete, the new Downtown Columbia will              generated, public infrastructure is a meaningful part
include 4.3 million square feet of office space, 6,250     of the development plan, and the development would
residential units, 640 hotel rooms and more than 1.25      not otherwise be completed or provide the same level
million square feet of retail space. While there is no     of services and amenities.
senior living community presently contemplated, a
community like this would incorporate the walkability      For more information on this session,
requirements for seniors and have a third-party            please contact Melissa Messina.
managing the retail space and other development

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                      TOP        13
New Ways at Looking at Growth
and Redevelopment

Aging physical plants that are difficult to maintain and       modern technology and opportunities for more social
market to new residents, land use restrictions, local          engagement. The demographics were encouraging:
community opposition, and rising construction costs            The 65-74 age group was expected to grow by almost
are just a few of the challenges senior living providers       40% throughout a five-year period.
face today in their efforts to improve and
succeed. The focus of “New Ways at Looking at              Seattle Households % Change in Demographics
Growth and Redevelopment” was to examine
the strategies three leading organizations
employed to overcome these challenges and
deliver positive results.

                            Paul Aigner,
                            Vice President,
                            Age, shared his
                            experience in
                            Parkshore, a
                            community in
                            downtown Seattle
on the shore of Lake Washington. Parkshore
opened in 1963 and residents in its 113
independent living apartments enjoyed sweeping                 Transforming Age embarked on a comprehensive
views of Lake Washington throughout the 15-story               master planning exercise for Parkshore in 2014.
building. However, over time, the building became              Based on their analysis, they arrived on a capital
“stuck” in the past and was not as relevant as it once         budget of $30 million to “reinvent” Parkshore. Units
had been in this competitive market area. More than            were combined, in-unit washers and dryers were
half of the apartments were less than 750 square feet,         installed, and studio apartments were no longer on
none had in-unit washers and dryers, and there was a           the menu. Changes to the resident experience were
no-pet policy. Occupancy had declined to 82%, while            implemented: Modern dining venues were created,
the average resident age increased to 87.                      common areas like an updated multi-purpose room,
                                                               theater/lecture room and a Sky Lounge that took
Market research yielded anticipated themes: Existing           advantage of the views of Lake Washington were
residents liked the sense of community, the current            created. Operationally, the prior three-meals-per- day
amenities and were not looking to change, while                plan was eliminated in favor of a more desired one-
prospective residents demanded larger units,                   meal plan, and the community is now pet-friendly.

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In order to maximize the return on investment,                   Sequoia entered into
the entrance fee and monthly service fee for each                agreements with Safeway, one
apartment were analyzed, and premium pricing                     of the largest supermarket
applied for the higher and larger apartments.                    chains in the country, for the redevelopment of a
                                                                 25-acre former office park. Safeway’s initial plans
The master plan was a tremendous success. Occupancy              called for a mixed use development with shopping,
has increased, there is now a 300-person wait list and           dining, entertainment and office venues, but after
the average resident age has decreased to 82.                    local opposition forced Safeway to carve out a four-
                                                                 acre parcel for other uses, Sequoia signed on to
David Latina, Vice President of Development for
                                                                 develop a senior living community. This relationship
Sequoia Living (until recently, Northern California
                                                                 achieved Sequoia’s primary objective of avoiding the
Presbyterian Homes & Services), described
                                                                 potentially costly and time consuming process of
the development process for one of its newest
                                                                 obtaining the required land entitlements.
communities, Viamonte at Walnut Creek. Walnut Creek
is 24 miles east of
San Francisco, and
about 12 miles east
of Berkeley, CA. The
real-estate boom
in Northern CA is
well documented
with institutional
capital flooding the
market and new
condo and rental
housing development.
Although this was
a target market for
Sequoia, management
realized they could
not compete alone in
order to secure land.
Furthermore assume
the entitlement and
resource risk that
would accompany
going it alone.

                              The mixed use community surrounding The Orchids at Walnut Creek

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                             TOP      15
Management also recognized the human resources             The Lamplight Inn is a 14-story
required for a new community development and               community that began its life as
opted to engage one of the leading firms in the field,     a Holiday Inn in 1968. Centrally
Greenbrier Development, to serve as development            located in downtown Fort Wayne, it was at one
consultant for Viamonte.                                   time well known as the destination for many social
                                                           events in the city. Priority Life Care purchased
Sequoia determined Viamonte would be a “dynamic            the building in 2010 for $4.4 million and invested
senior living” community and adopted a home-for-           approximately $2.0 million in renovations that
life model. This entrance fee community would offer        included a new roof, modernization of the elevators
residents 174 independent living apartments, assisted      and conversion of the hotel rooms to care rooms.
living and memory care on campus with skilled              Supplementing its own investment were grants
nursing services provided by three local facilities from   from Fort Wayne as part of the city’s downtown
whom residents could choose.                               revitalization program. This conversion is credited
                                                           with jumpstarting a broad revitalization of the
The hard work by Sequoia and Greenbrier has paid
                                                           city and the surrounding neighborhoods that has
off so far. The sales goal of deposits on 75% of the
                                                           surpassed $426 million in completed projects (or
independent living apartments was achieved in just
                                                           project under construction or consideration).
12 months, which, according to management, is tied
for the second fastest in the country. After closing       Today, the community consistently enjoys
on a $187.2 million Cal Mortgage bond financing in         occupancy at or above 90% and generates healthy
May 2018 ($142 million to be repaid with entrance          cash flow. Adding to its unique attributes is that
fees), construction is underway with initial occupancy     the Lamplight Inn is the largest Medicaid waiver
scheduled for mid-2020.                                    community in the state of IN, expanding the care
                                                           provided to more area seniors.
Severine Petras, CEO and
Co-Founder, Priority Life Care Management, provided        For more information on this session,
her unique experience in converting a former               please contact Andrew Nesi.
hotel in downtown Fort Wayne, IN, into a senior
living community. A project such as this has many
challenges on several fronts: design, age of physical
plant, operations, and revenue management—to
name a few.

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                       TOP     16
The Future of the Continuum of Care

Skilled nursing and the care          facility. Slavin provided his        was provided as a social model
aspect of retirement communities      viewpoint on the trends,             and the nursing home industry
is in the midst of a transformation   challenges, and stressors that are   preferred to keep this new care
and providers are continuing          effecting the changes in providing   type as non-medical. If a CCRC
to face challenges of delivering      skilled nursing care. He envisions   were to add assisted living to its
the full continuum of care while      facilities remaining smaller in      campus, the community was only
operating an efficient business       size, but adopting a hospitality     permitted to provide services to
for their residents. This session     approach to environment and          existing residents and was not
provided three perspectives           customer service. Certain skilled    allowed to admit from outside
on navigating the future of           nursing facilities may seek to       of the community. Brookhaven
skilled nursing as organizations      repurpose portions of their          continued to operate with only
and communities try to grow           assets to add additional care,       nine assisted living units until
and reposition in the current         such as assisted living, mental      2005, when the internal demand
environment. Also illuminated         health, specialized units and        was growing with a wait list.
in the session was the ways in        reinvestment in post-acute. Slavin   The organization then sought to
which senior living providers will    discussed how the new vision of      expand its independent living
either embrace or de-emphasize        the continuum of care will contain   with an additional 40 units and
skilled nursing care as part of the   more overlaps within the various     assisted living to 20 total units to
continuum of care.                    components as compared to the        meet internal and external needs,
                                      current silo model.                  while creating more private
Warren Slavin, CEO Emeritus                                                rooms in its skilled nursing with
of Charles E. Smith Life              James Freehling, CEO and             private showers. Following these
Communities, shared the               President of Brookhaven at           changes, Freehling formed a
perspective of a not-profit           Lexington, provided the story        health care task force to assess
executive who is running a            of the evolution of a mid-size       the shifting needs of Brookhaven.
single campus organization            single-site CCRC located in          The task force implemented
with a spectrum of care. Their        Lexington, MA, for more than         change on the campus of
campus provides the continuum         30 years. Because in the early       Brookhaven in the form of de-
of care with skilled nursing,         1990s there was no assisted          emphasizing skilled nursing and
assisted living, memory care and      living in MA and skilled nursing     reducing the number of beds. As
supportive independent living,        was typically added to meet          well, they added assisted living
but each component is operated        internal life care resident needs,   units and built 49 independent
independently. Notably, the           Brookhaven operated with only        living units on adjacent land.
skilled nursing facility consists     independent living and skilled
of 550 beds, which is a large         nursing care. Once assisted
operation for a stand-alone           living was regulated in 1994, it

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                   TOP        17
Richard Ackerman,
Chairman and Senior
Managing Principal of Big
Rock Seniors Housing
provided insight on the                                                  environment, versus skilled care.
development of new class                                                 This allows the community to
“A” senior housing and                                                   have little to no reliance on non-
how its organization was                                                 private pay revenue sources to
addressing the needs of                                                  eliminate financial uncertainties
today’s senior population,                                               that accompany the Medicare
which is continuing to                                                   and Medicaid reimbursement
change with Baby Boomers                                                 programs that are associated with
nearing retirement age.                                                  skilled nursing.
Ackerman emphasized
                                                                         The speakers described ways in
that residential design that
                                                                         which non-profit and for-profit
is based on accessibility
                                                                         organizations are evaluating the
and amenity offerings is
                                                                         ever-changing care component
vital to new independent
                                                                         need of the continuum, along
living residents. Big
                                                                         with transforming residential
Rock communities are                 The third pillar of entertainment
                                                                         consumer needs. Each
implementing an operational          offers premier dining rooms
                                                                         organization advocates for
strategy via “three pillars”         and bars, movie theaters with
                                                                         less reliance in the future on
(technology, wellness, and           cinema quality screens and
                                                                         traditional skilled nursing care in
entertainment). The technology       sound systems, large auditoriums
                                                                         the senior living environment.
pillar provides “smart”              for professional and education
technology with seamless             programming, and ample indoor       For more information on
voice recognition and on-            and outdoor lounge areas,           this session, please contact
site IT; these services and          helping residents to enjoy a        Kerry Moynihan.
products are expected to assist      sense of community. Big Rock
residents and provide fully          communities are designed and
integrated technology into           operated with an emphasis on
the physical infrastructure,         hospitality and well-being, but
while accommodating future           provide no skilled nursing care—
advancement. The wellness            based on the view that retirement
pillar delivers all aspects of       communities are focused on
fitness, including: exercise         the consumer and skilled care
studios, aquatic centers, aerobics   is shifting toward rehabilitation
rooms, on-site trainers, physical    and short-term stays. Hence,
therapists, and nutrition experts,   residents are provided wellness
helping to promote well-being for    services, within a residential
every resident in the community.     assisted living or memory support

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                TOP         18
The Science of Revenue
Management and How It Can be
Applied To Senior Living
Highlighting research from the travel and hospitality    attracting more travelers – these included the use of
sectors, including airlines and hotels, Professor        differentiated fares, underpinned by multiple classes
Christopher Anderson presented a thought-provoking       of service (economy, business class, first class), varied
session, offering insights on the evolution of revenue   amenities (seating location, amount of legroom,
management in these sectors, and drew parallels to       checked baggage with/without fees, cancellation/
the senior living sector.                                change options, etc.) along with the amount of lead
                                                                                          time a seat is booked
                                                                                          prior to departure date.

                                                                                          Further, Professor
                                                                                          Anderson highlighted
                                                                                          the common tendency
                                                                                          for airlines, as well as
                                                                                          companies across the
                                                                                          hospitality sectors,
                                                                                          to compete based on
                                                                                          price, which frequently
                                                                                          escalate into “price
                                                                                          wars” and, rather than
Central to the effective and profitable use of           driving favorable financial performance, result in
revenue management is the existence of what is a         declines in profitability.
“perishable” service – in other words, the service is
available for consumption by a customer only for a       Beyond the airlines, Professor Anderson highlighted
limited amount of time. Examples in the travel realm     the dramatic transformation and developments
include airline seats, cruise vacations and hotel        within the past few decades in the hotel sector.
rooms, among others, with similar applicability for      In this realm, he discussed the growth of the
senior living room/service capacity.                     Internet and the emergence of commission-based
                                                         travel intermediaries who provide customers with
Using fundamental economic principles of supply-         transparency on room rates and availability from
demand, Professor Anderson described the genesis         multiple hoteliers across the world. Most recently,
of revenue management strategies, beginning with         with the proliferation of mobile device functionality
airlines in the 1970s, and their subsequent evolution    and utilization, and continued growth in low-cost
within the industry, as well as other hospitality and    bandwidth, this evolution has further advanced as
travel sectors, in the following decades. He cited       customers have access to this information at any
strategies in the airline sector that are aimed at       time—literally at their fingertips.

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                       TOP         19
Building on his review of the airline and hotel            to the magnitude and duration
industries, Professor Anderson discussed sales and         of discounting as it will have a
marketing in the senior living sector as well as the       more sustained financial impact
implications and opportunities for the use of              on the service provider.
revenue management.
                                                           Professor Anderson observed that senior living
Relating to marketing and sales, Professor                 services, varying across the continuum of care and
Anderson discussed the impact of the Internet and          even within each care/service component, lend
advancements in its use in senior living marketing         themselves well to the use of revenue management
and sales. This includes the evolution of digital          strategies. This is further supported by their delivery
marketing in the senior living sector, evolving from       in a facility/campus-based setting with varied unit
primarily passive banner/display advertising to more       types, sizes and locations as well as physical and
active “per-click” advertising. As further illustration,   service amenities. With this said, in response to
he provided an example of the variability in the “per-     sentiments expressed by Conference attendees,
click” cost of advertising among multiple senior living    he acknowledged the uniqueness of senior living
communities as well as commission-based senior             services, including the provision of high levels of care
living community intermediaries, such as a Place           and custodianship of older adults in the latter stages
for Mom and, located within a common              of life – this is a significant difference compared to
geographic market.                                         travel and hospitality services which, while being high
                                                           value from a leisure/lifestyle perspective, are less
Relating to revenue management opportunities in
                                                           personalized or sensitive in nature and complexity
the senior living sector, Professor Anderson noted
                                                           and do not typically impact life and death.
similarities between senior living and the airline
and hotel sectors, as well as the cruise ship and          The session prompted interesting discussion and
casino sectors. Interestingly, relating the cruise ship    thinking about the current and potential strategies
sector to senior living, he noted opportunities for        for revenue management. Further questions for
additional revenue generation, beyond revenue from         additional consideration include:
room occupancy, resulting from resident demand
                                                              ■■The applicability of specific revenue management
for additional services and amenities; for the casino
                                                                strategies across the continuum of care from
sector in relation to senior living, he noted the
                                                                independent living to assisted living/personal
opportunity for “customization” of services catering
                                                                care to memory care and skilled nursing, and
to the required and discretionary needs of residents.
                                                                home and community-based services, each
Further, Professor Anderson discussed the concept of            of which have differing demand features and
“lifetime customer value,” centered on the duration             sources of payment/reimbursement and
of a customer relationship and the total amount of
                                                              ■■The extent of further growth of commission-
potential revenue that may be generated. He noted
                                                                based intermediaries, like a Place for Mom and
that consideration of lifetime value should inform
                                                      , and the impact on the demand for and
pricing levels and the extent of any discounting in
                                                                pricing of senior living services.
price. For example, for short-term stays, it may be
advisable to offer significant price discounting to
                                                           For more information on this session,
fill unused capacity; on the other hand, for longer-
                                                           please contact Jim Bodine.
term stays, careful consideration should be given

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                        TOP        20
Let’s Hear from the Leaders

We were fortunate to have three      The Board was centralized and      housing, using charitable
industry leaders address the         reduced from 75 to 17 members.     donations to add services.
2019 HJ Sims Late Winter             The Board focused on short-term
Conference attendees.                stability and long- term growth.   This strategy has successfully
                                     Once structural changes were       transformed MRC into a well-
Ron Jennette, President and          accomplished, the Board turned     balanced and financially secure
CEO of Methodist Retirement          to instituting a new strategic     organization that has “evolved
Communities (MRC), shared            growth and initiative plan.        to serve.”
the story of the transition of his
non-profit organization from         The first step was difficult–the   Our next speaker was Wayne
“Mission Driven” (but financially    organization needed to shed        Powell, CEO of Civatas Senior
                                                                                     Living, a for-profit
                                                                                     senior living provider.
                                                                                     Powell spoke about
                                                                                     “Succession Planning
                                                                                     for Growth.” He talked
                                                                                     about the journey from
                                                                                     an entrepreneurial
                                                                                     enterprise to a
                                                                                     sustainable company.
                                                                                     He discussed the
                                                                                     growth of Civitas,
                                                                                     which evolved from a
                                                                                     company with limited
                                                                                     assets in 2012, to a
challenged), to what is today a      itself of unprofitable assets.                  company that today
growing and financially secure       After that, it decided to embark   manages 35 communities with 24
provider. When a new CEO was         on a measured growth plan          more under construction.
hired in 2008, the organization      that incorporated three areas
inherited a company with multiple    of development. First focus:       In order to create a sustainable

boards, a decentralized leadership   entry-fee developments that        platform, Powell emphasized

structure and no plan for growth.    serve middle/upper markets and     three needs: identify leaders

                                     generate financial resources       in your organization early and
As Jennette put it, the key to       for the organization. Second       dedicate resources to develop
success was to first create an       focus: more middle-level rental    their leadership talent; develop
organization that was focused and    communities. Third focus:          systems that can grow with
fully dedicated to a growth plan.    restricted income HUD senior       the organization; and allow for
                                                                        leadership transition.

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                  TOP        21
Powell challenged leaders to             ■■The need to customize and        attention
continually evaluate the “exit              personalize the delivery of      to personal
plan.” As he put it, an organization        care by giving residents         preferences
should strive to be in a position           choices and empowering           and a dedication to ensuring each
that, if there was a sudden                 staff to meet resident choice.   person lives the life they seek to
exit of the top leaders in the                                               the fullest extent possible.
organization, others should            Kelly painted a picture of the
be prepared and trained to             future where residents and            For more information on
seamlessly “pick up the ball and       caregivers interact both within       this session, please contact
run with it.” Only by having a         and outside communities with          Jeffrey Sands.
strong bench and systems that
ensure sustainability can an
organization succeed.

Our final speaker was Sean
Kelly, President and CEO of The
Kendal Corporation. Kelly gave
an aspirational talk about Kendal
in “A Changing World of Senior
Living.” He discussed success
factors “across the field of aging.”
These included:

   ■■A total focus on creating an
     inclusive, caring and loving
     “culture” which permeates
     your organization, your
     staff and envelopes your

   ■■Attention to scale–adopting
     efficient systems that can
     bring more programming
     at better pricing to
     residents and leveraging
     off community resources to
     augment services;

   ■■A recognition that cost
     matters and a commitment
     to understanding how
     people perceive value and
     how to deliver it throughout
     the organization; and

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                    TOP         22
Insights into Today’s
Financial Markets

Matthew Forester, Chief Investment Officer and              domestic product growth in the U.S. has closely
Director of Investments for BNY Mellon | Lockwood,          followed population growth, and population growth
provided keen insights into the impact of tightening        has steadily declined. GDP and population growth
monetary policies and the many changes we are               has similarly declined in Germany, Japan and the
seeing in our geopolitical and political environments.      European Union.
Of the many “take away” points in Forester’s
presentation, several are of significant interest to        Also, the correlation between the decline in birth
the fixed income marketplace and Senior Living              rates for these countries and decline in the 10-
Providers. The performance of the S&P 500, after a          year interest rate for respective sovereign debt is
rather significant fall in January of 2019, appears to      dramatic. If these correlations hold true in the future,
have discounted a great deal of near term pessimism,        interest rates are not likely to increase significantly in
resulting in a rebound to the levels of the fall of 2018.   the near to intermediate term. This analysis suggests
                                                            that those who believe interest rates are on the verge
However, capital markets are sensitive to economic          of substantial increases will be disappointed. The
growth and economic growth is sensitive to                  impact on savings returns for seniors and pension
population growth, and to a lesser extent,                  funds is significant.
improvements in productivity. Historically, real

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                         TOP      23
Forester also discussed the tight labor market in       In summary, the economic
the U.S. The number of job openings had declined        indicators Lockwood is watching
sharply, and job openings now equal or exceed           include: upside indicators like
workers unemployed. This is a significant change in     labor market momentum, deregulation and tax
this ratio brought on by the recent strong economy.     reform environment, and strong consumer sentiment;
Somewhat surprisingly, the worker shortage has          ambiguous indicators like “neutral” interest rate
been relatively mitigated by people who were            level, currency risk and trade rhetoric; and downside
once considered out of the workforce and are now        indicators such as late stage economic cycle risks,
returning to the workforce. The presentation referred   weak global date and demographic constraints.
to these workers as “coming from sidelines.”
                                                        For more information on this session,
                                                        please contact Mark Landreville.

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                                 TOP     24
Event & Recreational Activities

We invite you to view photos from   William Dean Chocolates, Sailing   While the weather may not have
the 2019 Late Winter Conference.    on the Kai Lani Catamaran and      cooperated, we all managed to
Shown below are highlights          the Schooner Clearwater, Fishing   have a fun time!
from our recreational activities:   at Hubbard’s Marina and Biking
                                                                       For a full look at all the
Golf Tournament at Innisbrook,      through Dunedin.
                                                                       conference photos, please visit
Chocolate Making & Tasting at

2019 LATE WINTER CONFERENCE RECAP | WWW.HJSIMS.COM                                             TOP       25
Save the Date for San Diego in 2020
InterContinental San Diego
February 25 – 27, 2020

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