Turnaround storıes

The new owners of the Village at Southlake in Lexington, S.C., created new outdoor spaces including patios and an outdoor dining area with seating for more than a dozen people. The new owners of the Village at Southlake in Lexington, S.C., created new outdoor spaces including patios and an outdoor dining area with seating for more than a dozen people.

Three case studies show how seniors housing operators can bring new energy to struggling communities

By Bendix Anderson

Grand Villa of Delray Beach West doesn’t just have a van to transport residents around town. There’s also a nice, new four-door sedan.

“The seniors asked for it,” says Steven Piazza, president of Senior Management Advisors (SMA), based in Clearwater, Fla. They wanted their ride to doctors’ appointments or social events to feel a little less institutional.

It’s the little touches that helped transform Grand Villa from a half-empty property formerly known as Heritage Park into a fully occupied community. Turning around properties like the Grand Villa requires a great deal of care, experience and strong listening skills to hear what residents have to say.

As investors eagerly buy up seniors housing properties, very few stabilized assets are available for sale. Investors now look to create their own well-performing seniors properties by buying up troubled communities and improving their performance.

“Repositioning existing seniors housing facilities has become a mainstream investment,” says real estate advisor Mel Gamzon, president of Miami-based Senior Housing Global Advisors. 

Sweeping renovation of Village at Southlake provides spark

The Village at Southlake in Lexington, S.C., was just 62 percent occupied when Drever Capital Management, based in Tiburon, Calif., bought the property in September 2012 and began a $1.5 million renovation. 

Today the property is more than 90 percent occupied. 

“It’s a resort-style lifestyle,” says Matt Dunham, director of client and vendor relations for Portland, Ore.-based Frontier Management, the new operating company at the community.

The 124-unit independent living property first opened in 2008, just in time for a severe recession. But it also suffered from a badly chosen package of amenities, picked out by a developer with little experience in seniors housing.

Residents rarely used the community’s full clubhouse and pool. Every apartment is equipped with its own kitchen and laundry machines, for example, even though the community provides linen service for residents and three meals a day in the dining room.

Drever bought the property out of foreclosure four years after it opened for less than half the original cost of construction. The renovation created a whole new suite of activity spaces and experiences designed to attract seniors. 

A little-used library on the second floor has become a terrace where residents now gather to enjoy happy hour in the evening. The Village doesn’t have a license to serve liquor, though residents have wine lockers on the terrace and are able to serve themselves.

“It’s by far the most utilized space in the community,” says Noah Drever, senior managing director of Drever Capital Management 

As part of the renovation, two parking spaces were moved to make room for an outdoor patio and dining area attached to the main dining room. The common areas have proven to be vitally important in helping the Village attract new residents, says Dunham.

The renovation also removed two apartments, giving up the income from that rentable space to make room for the building’s management office next the Village’s concierge desk. 

“We removed $220,000 worth of inventory,” says Drever. It was worth it. “Now you have the offices by the front door, behind the dining hall.”

Previously, the management offices for the community had been divided into four separate areas. The old office spaces became more new community space, including a new mailroom and an area by the dining room for residents to store their pushcarts or wheelchairs, instead of leaving them jumbled by the dining room door.

Rents start at $1,715 a month for a studio. “We are still the most affordable independent living community in Lexington,” says Drever.

Focus on common spaces helps rejuvenate Grand Villa

Two years ago Grand Villa of Delray Beach West was only 50 percent occupied — and that’s just the 196 independent and assisted living units. There was also a 32-bed former nursing home that stood totally empty. 

Today the 30-year old property is fully occupied after new owners completed a full renovation.

Baltimore, Md.-based Valstone Partners paid $20 million for the property in 2013. That’s substantially below what it would cost to build the property from scratch, according to Gamzon of Senior Housing Global Advisors, who consulted the seller on the transaction.

The new owners embarked on a $3 million renovation. They brought in SMA, an experienced operator, to manage the property.

“The first thing we did was sit down with the residents and family members,” says SMA’s Piazza. He communicated with the residents at Grand Villa early and often throughout the renovation of that property. 

The first stage turned the empty nursing home wing of the Grand Villa into a 32-unit Alzheimer’s residence, which began to fill up as soon as the units opened. A significant number of the existing residents needed the services. 

The next stages split the rest of Grand Villa between independent living and assisted living units for residents who needed a few more services.

“The goal is to provide them with a continuum of care,” says Erik R. Abel, Valstone’s managing director and chief financial officer. 

The renovation also includes several new places for the seniors to gather, socialize and join in activities. There’s a private dining room for parties in addition to the main dining room, and a café with beverages, pastries and coffee. 

There’s a “country store” and a beauty salon. The developers also built an outdoor kitchen and barbeque area next to the swimming pool. 

To make room for these and many more new common spaces, the developers took four of the apartments at Grand Villa out of service. That meant giving up more than $10,000 a month in operating income. “We have recognized that sometimes it’s better to give up revenue and create some common area,” says Piazza. 

The developers also divided up some of the larger, existing common spaces at Grand Villa.

SMA has gone to great lengths to make sure that every piece of the redevelopment is fitted to the seniors – even the individual pieces of furniture. The chairs are a little taller, for example, with a cushion that’s more firm than usual, says Piazza.

Piazza enlisted his own elderly mother to help pick out equipment for the exercise room to make sure the treadmills and other machines would be easy for seniors to use.

His mom also helped pick out the two new vehicles used to transport residents to and from doctors’ appointments to ensure that the seniors could get in and out of the car and van comfortably. 

Staff training, support key to Fountain Circle’s success

Fountain Circle Care & Rehabilitation Center in Winchester, Ky., was in serious trouble when Signature HealthCARE bought the seniors housing property in April 2013. 

The skilled nursing community was on the Special Focus Facilities list of the worst nursing homes in the country kept by the Centers for Medicare & Medicaid Services. 

But Fountain Circle improved so quickly that in just 60 days the property was off the government list and well on the road to recovery. 

“That’s unheard of,” says Joe Steier, CEO of Signature HealthCARE, a Louisville, Ky.-based firm specializing in turning around troubled properties.

Getting the 126-bed nursing home back on track began with the staff. “We will do a lot of training to get their self-esteem and confidence back,” says Steier.

Many troubled nursing homes get trapped in a downward spiral. A mistake by a staff member turns into a negative report that creates an atmosphere of panic and fear. Staff members fear that they are just one mistake away from being fired, which leads to more mistakes and a general unwillingness to admit to failings and improve. 

“A good community can start to unravel,” says Steier. “Before you know it the floors are dirty.”

Signature retrains staff at the communities it takes over. “Our goal would be to keep the majority of the staff — 80 percent or more,” says Steier.

Staff members are trained to admit mistakes as they occur and immediately work to correct them. Signature uses a system of progressive discipline that monitors an employee’s performance over time.

Fountain Circle showed immediate improvement. “It’s a really good team,” says Steier. Government regulators noted the improvement and the community is now fully occupied and often has a waiting list.

Signature is also completing a $1.2 million renovation that will replace flooring, lighting and bathroom fixtures. Signature uses its own in-house contractor to help make its renovation dollars go farther. 

Signature has also brought a new set of services and activities to Fountain Circle, from a “Night to Remember” prom to participation in an art gallery program called “Reflect N Us” and Senior Olympics. 

“They were so used to having Bingo as their main activity,” says Steier. “Now you see excitement and adventure in their eyes.”

The seniors at Fountain Circle are now looking forward to group activities, including a trip to Walt Disney World in November.