Filling the void in middle-market seniors housing

Frank Marro is president and CEO of Drever Capital Management Frank Marro is president and CEO of Drever Capital Management

Drever Capital Management applies skills honed in the multifamily sector

By Frank Marro

If you were to ask for the secret to success in the housing industry, I would say that it’s the same as in all successful businesses — serving the customer. Among the key questions: “Who is the customer and how do we best serve his or her needs?”

After decades of success, why is Drever Capital Management (DCM) transitioning out of the more mainstream multifamily housing space and into the seniors housing niche? 

The answer goes back to the critical questions involving the customer. As our traditional customer base — workforce housing tenants — ages, it is natural that we try to continue to serve these same customers, but we must do so in a way that reflects their changing needs. At Drever, it’s been our tradition to serve them in a socially responsible way.

Sticking with what we know

Despite amassing an apartment portfolio totaling more than 70,000 units over a 40-year period, the truth about Drever Capital Management is that we have never really been in the multifamily housing industry. We have been in the customer service industry. Resort-like apartment communities for the underserved workforce or middle market is the product we’ve provided. 

The degree to which we have succeeded is measured by high occupancy and low turnover driven by long-honed management practices, signature enhancements and fostering a sense of community, all while increasing the bottom line to our investors. (Using cost-efficient sustainability measures is one example.)

Historically, our customers have been middle-market folks with workforce incomes in need of a nice place to live. Ideally, these communities provide services that extend beyond the basic needs like safety, security and stability and help make their lives easier. 

By providing amenities like afterschool tutoring programs, free immunization clinics, recreational facilities and upgraded concierge-like services, we brought an extra level of care, service and attention to our customers. This added value to our customers has yielded returns to investors that have consistently exceeded our baseline projections. In short, we have done well by doing good.

Excellent service is portable

With the country growing older and the emerging supply of seniors housing primarily targeting the high and low ends of the income spectrum, the void that existed in middle-market multifamily housing is repeating itself in the seniors arena. 

The underserved, income-earning workforce under 65 years old is gradually becoming the underserved retiree group living on a retirement income that is too high to qualify for subsidized housing and too low to afford luxury housing. Serving the underserved in a cost-effective way is a space that DCM not only knows, but one in which we excel.

While the day-to-day details of seniors housing operations differ greatly from conventional apartment property management practices, the fundamentals of excellent service and how to provide it are still the same. 

By aligning ourselves with best-in-class, third-party operators, as well as partnering with experienced developers, we are able to lay the foundation for the same kind of success through service we have enjoyed in the multifamily sphere. At the same time, we are continuing our commitment to provide desirable communities with a thriving culture to this growing demographic.

Our sense of commitment to customer service guided the transformation of The Village at Southlake in Lexington, S.C., our first seniors housing project completed nearly two years ago. The struggling development, which eventually became an REO property, was turned into a vibrant 122-unit independent living community focused on supporting residents in an active, engaged and highly social lifestyle. 

Their desire for connection inspired not only inclusion of a movie theater, community garden and other social spaces, but led to the opportunities for residents to engage with members of the local community through hosted lectures, classes and other events open to the broader public. 

The increase in occupancy by over 35 percent in less than 18 months during a renovation serves as a strong indication that the principles and practices we’ve implemented in multifamily translate well into the senior housing space. 

Right place, right time

In reality, our movement into the senior housing space is not as much a transition as it is an expansion of perspective. The Baby Boom generation has left a deep footprint on the American landscape and their retirement will be no less impactful. 

In a broadened view, the “Silver Tsunami” looks less like a singular swell of Baby Boomers crashing on the retirement beachhead, and more like a wave that will propagate for decades to come. 

Focusing our attention on the seniors space is simply recognizing it as the right place at the right time for our customers, and letting our customers’ progression through life lead the way. 

For many of our customers, independent living will prove to be just a step on their journey. For some, the progression in age will be accompanied by a need for progressive care. By incorporating higher acuity care into our operating platform now rather than later, we continue to put ourselves in the position to not only respond to our customers’ needs, but to anticipate them.

The attention we give to the people that live in our communities, our customers, leads to much more of our success than our considerable attention to the buildings themselves. Although this approach has its origins in multifamily housing, in seniors housing it is critical not only because seniors housing is different, but also because it is more challenging. 

As we move from the multifamily housing industry to seniors housing, we can continue to be successful so long as we remember we’re not moving anywhere at all, we’re just changing the way we serve our longtime customers, while continuing to do well by doing good.

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