Seniors Housing Business

ASHA 2018

Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.

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AS H A 50 24 2018 ASHA 50 2018 many changes. Seniors want to live life to the fullest, and the CCRC model is going to need to consistently evolve to provide an even more stimu- lating environment with easy access to great healthcare. Apartment homes will likely be larger, with open floor plans and access to outdoor space. I expect tech- nology to play a major role in the ongoing product- and service-level changes. What is the average age of your residents? Butler: About 80 years old. We are always looking for opportunities to lower this average age, but we are seeing a much more active and engaged 80-year-old than what we saw a few years ago. We're also finding that people are living longer and they are with us a long time. How is the seniors housing market performing in general? Butler: The stand-alone assisted living/memory care sector is overbuilt. Low barriers to entry are the driv- ing factor. It's not cost-prohibitive to build a 100-unit assisted living/memory care facility. The CCRC space is expensive to build and has a high-cost barrier to entry. What is the average cost of an Erickson project? Butler: It can be well north of $500 million when completed. Yes, that is expensive, but we are extremely well-capitalized and well-positioned to execute on our growth plans. Where does your capital come from? Butler: Erickson Living self-funds its own con- struction for the most part. We do not rely on outside investors, and we require minimal financing to fund the development and construction of our communities. The communities that we own and/or manage have total revenues of more than $1 billion. What are some of the industry's long-term challenges? Butler: Healthcare is ever changing, and there's no way to hide that we are a healthcare company. There's always pressure on the healthcare side, with Medicare changes and reimbursements. It's tricky and politically charged. The healthcare component will always be important. The cost of development continues to rise, outpacing the increase in home values. That's a challenge as we build communities. I think as long as we have a long-term view, it works because there is a need. Fortunately, our cus- tomers are very happy, and resident satisfaction is high. One of the bigger chal- lenges faced by big operators is the workforce. We have 15,000 employees, and we work hard every day to attract, develop and retain them. We are keenly aware that our product is only as good as our talent base. What is the Erickson difference? Why would a senior want to move to one of your communities? Butler: Our scale allows us to offer unparalleled opportunities at an unmatched value. Our communities have hundreds of activities and clubs, which provides for an incredibly engaging environment in which to live. We also offer a medical platform that is second to none. The Erickson Health Medical Group is one of the largest geriatric practices in the country. We have over 100 physicians on staff and conducted 30,000 same-day appointments last year. This unique medical program provides confidence and peace of mind that simply can't be replicated. We also offer Erickson Advantage, a Medicare Advantage health insurance plan. Beyond that, there is a peace of mind that comes from knowing Erickson Living is a financially sound com- pany that safeguards a resident's investment over the long term. What's the last 10 years been like for you personally, shifting from the investment side to running a seniors housing company? Butler: This has been the most rewarding, exciting 10 years of my life. It's rare to do something where you see the impact you make on people's lives. My parents moved into one of our communities four years ago, and I get a chance to see the company from the adult child's perspective, and as CEO of the company. When you walk through the community and people come up to you and say they wish they had moved in sooner, you know you're making a difference in people's lives. That's pretty rewarding. n Q&A with Alan Butler An upscale theater is one of the amenities at Caton Woods, the assisted living building opened in 2016 at Charlestown, Catonsville, Maryland.

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