UNDERSTANDING YOUR COMMUNITY’S - AJAS · • Market demand vs. Competitive landscape • Financial impact (required investment & ROI) • Long-term trends (population, industry,

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

[email protected]

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

[email protected]

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

[email protected]

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


• Common amenity additions

The Delaney at Georgetown Village

Georgetown, Texas

PROGRAM




• Commons: 28,000 sqft

• Required site area: 10 – 12 acres

WhiteStone: A Masonic & Eastern

Star Community

Greensboro, North Carolina

PHASE I


• Cottages: 6

• New amenities: dining, wellness, multi-

purpose

PHASE II




• 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

[email protected]

Evaluating Growth Opportunities

Navigating the Evolving Market


Senior Housing Trends

55

Source: NIC Seniors Housing & Care Market Performance Report – 1Q2018



56




57




58




59Source: NIC Insider Newsletter – February 2019


Strategic, Capital and Financial Planning


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


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


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


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


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


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


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

Documents

UNDERSTANDING YOUR COMMUNITY’S - AJAS · • Market demand vs. Competitive landscape • Financial impact (required investment & ROI) • Long-term trends (population, industry,