2016 LARGEST PROVIDERS
Few shakeups in top 10; growth expected to continue for next two years. BY ANGELA HICKMAN
The state of senior living is largely the same as last year’s landscape - occupancy is stable, the industry is mature, and providers and investors continue to buy, sell, and build properties, a trend that is expected to continue through 2017. Still, a mature industry brings its own set of challenges, not the least of which is right-sizing organiza- tions, determining the most successful opera- tional model, and managing a labor shortage. This year’s list of the largest providers in senior living shows few changes in the top 10. Brookdale continues to hold the top spot, with capacity for more than 100,000 residents, nearly three times the size of Holiday Retirement, its closest competitor in terms of size. The occupancy rate for seniors housing was 89.7 percent in the second quarter of 2016, un- changed from year-earlier levels, according to NIC Chief Economist Beth Burnham Mace. “It is NIC’s expectation that occupancy will remain close to today’s levels as demand and supply largely match each other. That said, the timing of supply deliverables may be faster than the market can absorb in any given quarter, and the occupancy numbers may oscillate in and around today’s rate.” Several factors support continued demand for senior living, such as “the residential housing market, which remains on an upward trajectory in terms of the velocity of sales, home prices, and low mortgage interest rates,” Mace adds. “These factors provide a supportive backdrop for potential residents as they try to sell their strong and the economy continues to churn out jobs at a relatively fast clip, she says, pointing out “since reaching its pre-recession job peak in May 2014, nearly 6 million new jobs have been generated, making this the third longest post-war expansion (after the early 1990s and the early 2000s).”
Movers and Shakers in capacity among some providers. At Five Star Senior Living, for example, “we took on the management of 15 communities in addition to two communities on our own balance sheet,” says President/CEO Bruce Mackey. “We have taken on the management of three additional communities so far in 2016, and we just last month completed a fairly large sale leaseback transaction with Senior Housing Properties Trust for seven of our communities.” “There has been a lot of development over the last few years and we are starting to see those communities enter the market,” adds Tana Gall, CEO of Blue Harbor Senior Living. “I don’t anticipate any issues with absorption in most markets, but expect our overall occupancy Several companies on the 2016 list reported
double-digit growth when compared with the 2015 list. Pathway Senior Living, for example, grew 18 percent, moving from No. 64 on the list to No. 55, and plans for eight new assisted liv- ing/memory care projects are on the books for 2017. “Our philosophy as it relates to growth is to maintain discipline as to what we might want to buy and or operate,” says Pathway CEO Jerome E. Finis. “Our operating models must work in a new community rather than adjusting how we operate to just buy something on the cheap.” Among the other companies reporting sig- nificant growth are Northstar Senior Living (up 85%), Capri Senior Communities (43%); Americare (up 41%); Frontier Management (41%), Commonwealth Assisted Living (37%), a regional operator that added two communities in Virginia; Kaplan Development Group (25%); growth in the next several years; the company
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