Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.
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46 www.seniorshousingbusiness.com Seniors Housing Business n February/March 2017 1,700 closed transactions in excess of $15 billion, $5 billion in mortgage servicing, 27+ years debt underwriting, dedicated M&A; team, loan syndications and placements, bridge loan funding, taxable and tax-exempt bonds, equity financing for new development and acquisitions proprietary sale-leaseback financing, leading HUD LEAN lender, Fannie Mae Seniors Housing Program, approved USDA lender, trading desk with 80 years of experience, balance sheet lending, focused on seniors housing and care since 1988. Lancaster Pollard Mortgage Company is a Fannie Mae/GNMA/HUD-FHA/USDA approved lender. Lancaster Pollard & Co., LLC is a registered securities broker/dealer with the SEC and a member of FINRA, MSRB & SIPC. Speak with a professional today lancasterpollard.com | (866) 611-6555 Financing Progress Perspective Matters We listen. We evaluate. We deliver. Impact of resident interaction Another way to stop NOI prob- lems before they begin is to closely examine the backgrounds of incom- ing residents, suggests Tom McDer- mott, vice president of senior living sales for software system Yardi. Operators have even begun to screen prospective residents the same way they might screen a pro- spective employee. "Some operators are check- ing for creditworthiness of both the resident and the guarantors, and also looking for any criminal background to make sure the resi- dents and their property are safe," says McDermott. "The byproduct of successfully screening, prevent- ing that bad apple getting in, keeps the operator from losing a unit that would have to be rehabilitated and remarketed." Also on the sales front, McDer- mott sees variable pricing as a way to unlock hidden NOI. The method is currently used extensively by hotels and airlines to increase pric- ing at high-demand times and decrease during low demand. While this tool would be extremely valuable for seniors housing, nobody's been able to figure out how to make it work given the industry's long sales cycle, which many experts say is approximately 18 months. "In the apartment and hotel industries, there are a lot of pre- dictors for sales," says McDer- mott. "There are more wildcards in senior living that may prevent the successful implementation of vari- able pricing. There's a lot of explor- atory stuff going on right now, but no model that's been perfected yet." LCS is one of the operators trying to implement dynamic pricing, and the company reports some success on that front. Its approach is based more on knowing where the com- petition is priced rather than trying to predict demand based on time of year. "We're pricing to a market, and our pricing changes often depend- ing on the competition," says Buxo of LCS, adding that this is a good plan for standard rental communi- ties but not entrance-fee CCRCs. Regarding resident turnover, one cause that is often left unexplored is dissatisfied family members, notes Medtelli- gent's Shafaee. "You have to manage the rela- tionship with people outside the commu- nity, the family members pay- ing the bills," says Shafaee. "If you want to increase the length of stay, you have to keep the family happy. You can't just hit them up for money." As far as services for the resi- dents, Plante Moran's Wollschlager recommends operators try to stick to what they do best — resident care — and seek third-party help for areas of weakness. "We don't have to be all things to all people. There are a lot of good strategic partners that are prob- ably better at certain things," says Wollschlager. "Why do we also have to be the rehab company, and the foodservice company, and the cable company? I would argue oth- ers provide better customer service, better satisfaction outcomes, and better purchasing power that leads to better pricing." n Tom McDermott Yardi Following implementation of predictive financial planning tools, LCS improved the NOI margin at its North Oaks continuing care retirement community in Pikesville, Md., from negative 16.4 percent to a projected positive 17.6 percent by 2021.