As anticipated, at last week’s meeting of the Federal Reserve Board, rates were held steady at 5.25 to 5.50%. Several months ago, there was hope of a potential move towards rate reductions at this March meeting, but as inflation and unemployment numbers have been higher than projected, the likelihood for rate cuts moved further into 2024.
In his remarks, Chairman Jerome Powell acknowledged that labor conditions remain tight, but that labor-related supply and demand issues are coming more into balance, overall unemployment figures are low, and we are seeing more nominal wage growth compared to recent years. He noted that, while these indicators are positive, the demand for workers is greater than the available supply. Chairman Powell also noted that, while inflation has come down, current levels remain above the 2% goal. Projections are for continued drops in the inflation rate throughout 2024 and into 2025 and 2026.
With acknowledgement that the Fed believes the current policy rate is at its peak for this tightening cycle, the primary questions now revert to the timing of the first rate cut as well as how many reductions are anticipated to follow for the remainder of 2024. The Federal Open Market Committee (FOMC) member projections for 2024 rate cuts reveal that 15 out of 19 anticipate that the Federal Funds Rate will fall below 5% by the end of the year, coming in at 4.6%. If the Federal Reserve feels that inflationary pressures and employment figures continue to move in the right direction, even if not in a neat, linear fashion, three rate reductions are anticipated, with the first likely to come in June.
What Does This Mean for Senior Housing and Care?
The higher interest rate environment has significantly impacted the senior housing sector related to limited access to capital and higher cost of capital for those who can access it. It is estimated that roughly $18 billion in senior housing loans are maturing in 2024 and 2025. Those loans are maturing in a much higher interest rate environment than when they were issued. Therefore, any rate reductions initiated in 2024 will help to make refinancing more viable. As the capital environment loosens and debt becomes more accessible, this should translate into higher transaction levels and an uptick in development activity. However, it is going to take a few rate reductions before we start to see a meaningful difference in the behaviors of senior housing developers, operators, and capital partners. The industry is also likely to benefit from a positive psychological reaction when rate reductions begin, increasing optimism among those in the field that better times are ahead.
The next meeting of the Federal Reserve Board is April 30th to May 1st with the June meeting to follow on the 11th and 12th of the month. June 12th is a day whereby other notable events have occurred, such as President Reagan’s speech in Berlin to “tear down this wall” and the day when a young girl named Anne Frank received a diary for her 13th birthday. A 2024 Fed Rate reduction on June 12th may not carry similar historical staying power, but it would sure be welcomed by many. As we sit here today, all eyes are on June.
Industry Legacies: Parents Pass the Baton to the Next Generation
This article is the second in a series showcasing parent/child duos across the senior housing and care industry. My conversation with John Rijos of Chicago Pacific Founders and his son, Taylor Rijos with Kayne Anderson, offers insights into why this is becoming a common trend.*
John Rijos has been a hospitality professional for more than four decades. As a co-founder of Chicago Pacific Founders, he expertly navigates the space where hospitality and healthcare meet while continuing to expand senior living opportunities for this rapidly growing segment of the U.S. population.
Taylor Rijos is vice president of seniors housing for Kayne Anderson’s real estate group. He is responsible for origination, analysis, underwriting and execution of acquisitions, and works with joint venture partners to oversee day-to-day management of the company’s seniors housing properties.
Tell us about yourself and your work.
John: I was in the hotel business for 20 years before selling my company to partners in 2000. At that time, I took over Brookdale Senior Living, which was a small company based in Chicago. Over the first five years, we went from 16 communities to 220. In partnership with the folks at Fortress, we took it public, and it grew to 400 communities. We then merged with what was the old American Retirement Corp., run by Bill Sheriff, and expanded to 650 communities.
When I retired from Brookdale at the end of 2013, we were the largest company in the senior living space. I was tired of traveling every week and rushing home for my kids’ sporting events. It was time for me to take a break. I went back up to Cornell University to be an executive in residence for a semester but that wasn’t fulfilling.
At the same time, an acquaintance, Mary Tolan, who I knew through Goldman Sachs was starting Chicago Pacific Founders (CPF). We got to know each other over the course of several months and decided to join forces and start a fund. That was the beginning of CPF, which is now in its third fund. In fund one, we own 20 communities outright and maintain a partnership with Welltower on others. In fund two, we own 14 communities, and in fund three, we own three communities at this point in time. We also own Grace Management, which operates all our communities and third-party communities totaling 62 across the country.
Taylor: Starting your career in this industry doesn’t start when you graduate from college. My first job was in hotel operations for the Lincolnshire Marriott in Chicago, Illinois, where I spent two summers setting up banquet tables, serving food, and working maintenance (the latter of which glamorously included riding around on carpet cleaning Zambonis). This unglamourous position marked the start of my career.
Like my father, I received a degree from Cornell University’s Hotel School. I knew the whole time I wanted to be in the senior living space but didn’t know if that meant real estate or operations. My internships during college were on the finance side (unlike previous high school internships in operations), having spent two years interning under Laurence Geller, a renowned international hotelier. Geller was CEO of Strategic Hotels & Resorts, which at the time was the largest owner of Four Seasons and Ritz Carltons in North America. After this internship, it was very clear that my optimum career path was on the ownership side of industry—as it still allowed me to leverage the hotel operation knowledge from internships, school, and talking to my dad every day.
My first job was with Welltower (f/k/a Health Care REIT) in Toledo, Ohio, where I spent two years on their FP&A data analytics team. This division had just been launched by Christian Sweetser and was probably the most valuable experience of my career. As the world’s largest owner of senior living, Welltower had access to extensive operating data across over 1,100-plus communities—occupancy, competitor stats, staffing ratios, rates, renovation costs. It was the team’s job to transform the raw data into intelligence for the organization and form the intelligence into executive talking points on quarterly earnings calls.
They eventually tapped me to join their investment group. My very first deal, ironically, was the purchase of a $550-plus million Discovery Senior Living portfolio from Kayne Anderson. This fast tracked my path on their acquisitions/asset management team, as shortly after this closing, Welltower called on me to help open their first regional office overseeing West Coast operations in Beverly Hills, CA. But relationships are everything, and I must have made a good impression on Kayne, because after keeping in touch over the years, they offered me a vice president position. By accepting, I become their third employee on a fast-growing senior living team, which included a main responsibility of leading asset management of our largest operator Discovery Senior Living with over 30+ communities between opportunity & core funds. But most importantly, I got to learn from another great mentor and close friend Max Newland.
John: I’m not just saying this because Taylor is my son, but I’ve seen a lot of asset managers in my 24 years in senior living, and he is as good as there is. Everyone who works with him says the same thing. He grew up around it giving him an unprecedented level of rounded knowledge. When you’ve seen all sides like he has, things make more sense. You can quickly discern what’s right, wrong, true, and false. Taylor’s advantage is his ability to reverse course, strategize, and think differently, which helps him advise managers and operations in a uniquely valuable way.
How do you balance advice from those who’ve been in the industry versus lead with new ideas for the future?
John: Over his lifetime, Taylor saw us win a lot of times, but also lose a lot of times. He probably learned just as much during the times when I was not successful. Failure requires a lot more introspection. He watched all that in real time. More importantly, he always knew what he was going to do, he just didn’t know how he was going to do it.
One of the things that I’ve always admired about him is he doesn’t trade on me. That would be easy to do, but he doesn’t. Even when he was a student at Cornell and I used to speak there all the time, a lot of people didn’t even know my son was there until they saw us together in the dining hall. The fact that he chose to be humble and create his own set of accomplishments is admirable.
Taylor: It’s all about how you take the advice. Let’s call a spade a spade—there’s an incredible advantage to having your parent as a knowledge source. You get to tap into their expertise through daily conversations. All of those morsels of information—good, bad, and some that don’t seem very important at the time—really add up over the course of 20 years. Over time, I was able to form a holistic view of the industry and gain perspective that can’t be gained any other way. I didn’t realize this until had become more seasoned in the corporate world.
What are the highlights of being in the same industry?
Taylor: We’ve never worked directly with each other until September 2020, after having been in the industry for nearly a decade. This was by far my most notable professional milestone because it’s the most sentimental. We had a large mega campus in The Villages called Sumter Senior Living. I called my dad up and asked him to take managerial control. Within 48 hours, he had his team in the Villages, and, within a week, we had Grace signed up to manage it. That’s the day we became partners. I was happy that moment came at a point when I was confident that I could impress him. I think I’ve done that.
John: In our work capacity, my company operates a few communities for Taylor’s company, and he is the VP in charge of the relationship. It’s easier to help a son or daughter when advice is just advice, that way they can take it or leave it. At the end of the day, he gets the benefit of my thinking, but it’s his own thinking that he has to move forward with. When a child is your employee, there’s a different, more complicated relationship to navigate. I’ve always been really thrilled that Taylor’s taken my advice while paving his own path in the industry.
John, what advice do you have for the next generation?
John: First, I would say it’s great if you have a mentor or someone who’s always looking out for your best interest all the time, no matter what. That gives you confidence to trust what you’re hearing and take it for what you think it’s worth. The other person gets no benefit other than seeing you succeed. Everybody needs a mentor, whether it’s a family member, or the first person you went to work for who you know cares for you. When you’re young, you’re going to make a lot of mistakes, most of which you can recover from if you get good advice and guidance.
Taylor, what advice do you have for the previous generation?
Taylor: It doesn’t matter if it’s a father, mentor, or boss, there’s a clear reality that those who are older have done things that younger generation hasn’t. They’ve gone through the business cycles numerous times. They have experience, answers, and the good ones are willing to give it to you.
At the same time, business is evolving. My dad’s case is a bit different because his advice is more modern than some legacy leaders who built a company 20 years ago. The way investments were built and owner/operator relationships were managed decades ago isn’t applicable to the way you’re going to build those investments today. I think you have to find a way to absorb the previous generation’s knowledge, then have the confidence to apply it in a way that works for you.
Something I say often that I got from my father is “success in this business is not rocket science.” It’s about caring for seniors. Not “caring” for thirty minutes during an important investor call or a regional ops meeting, and then hanging up, and going back to not executing on value promises. It’s caring when you wake up, when your phone rings in the middle of a vacation, when you go to bed. The future is brightest for the people who go to bed worrying about who’s relying on them.
When you care about the details—hallway paint selection, marketing material, your spend on executive director salaries—that adds up to success overtime. It’s invisible, but caring is what creates culture and there’s no shortcut for that.
John: Most people who talk about culture don’t know what they’re talking about. They get stuck on certain taglines. That’s not culture. What Taylor just said is culture. Treat your coworkers as if they’re the most important people in the world. Look at your associates and your residents and ask yourself: How can I make you more successful? That builds trust. I tell people all the time, whether you’re in the hospitality, healthcare, or real estate business, we really are in the trust business. Trust is something you gain by the ounce and lose by the gallon. You must be trustworthy all the time. If your whole organization acts that way, that’s culture.
Turning insights into action was more than a theme at the 2024 NIC Spring Conference, it was a goal. The Innovation Labs held in Dallas offered attendees an opportunity to do just that – with some of the brightest minds in the industry.
Returning after their well-received launch at the 2023 NIC Spring Conference, the Innovation Lab sessions brought together industry leaders in smaller, “roll-up-your-sleeves,” workshops that allowed for a more in-depth and dynamic experience to tackle some of the most challenging issues facing the industry.
The conference featured six Innovation Lab workshops on timely topics that included operating models for baby boomers, middle market strategies, the future of Medicare and Medicaid, using data to support senior living’s value, AgeTech, and accessing public funds to enhance profitability. The interactive format provided attendees the chance to collaborate with peers in a small group workshop format. Read further for highlights from two of the Innovation Lab sessions.
Operating Models for Boomers
“There are 30 million more boomers than there were silent generation. I’m not sure that has fully sunk in for any of us,” said Bre Grubbs, Partner & Chief Strategy Officer, Leisure Care, opening the first Innovation Lab of the day by laying out just how large the demand will be as boomers enter the senior living market. She emphasized the diversity of the boomer generation while highlighting the vastly different outlooks between the oldest and youngest of the boomers.
Joining Grubbs in leading the session were Madisen Medley, VP of Business Development at Merril Gardens; Bethany Ghassemi, Chief Legal Officer, HumanGood; and Sophia Lukas, Chief Operating Officer of St. Paul’s Senior Services.
Reviewing results of a survey conducted to understand what boomers want as they age, Grubbs noted that onsite healthcare services weren’t chosen as a want by the boomers in the survey, even though they’ll need them. “What they do want is to stay at home, but the reality is their health may change and then they have no idea what they’ll do.”
As breakout group discussions began, attendees were tasked with addressing different focus areas for working with boomers’ wants and needs including accommodations, healthcare, engagement, and fear.
Ghassemi discussed boomers’ biggest fears, which are overwhelmingly financial—reduction of social security, outliving their savings, declining health leading to long term care expenses – and challenged attendees to think of ways to address them for potential residents.
To stimulate a discussion focused on engagement, a question was asked, “How do we allow people to continue to live their lives the way they want to live them and maintain their lifestyle?” The accommodations workgroup mentioned the varying transportation needs, recognizing that older boomers prefer a campus shuttle while the younger boomers prefer rideshare services like Uber.
Lukas offered a provider’s perspective on healthcare services. She noted that what they have and haven’t had success with both related to access – specialists aren’t coming into the senior living buildings so there’s still a need for transportation, residents prefer to keep their own primary care physician rather than switching to the onsite physician, and even the technology infrastructure required to facilitate telehealth is a consideration.
Discussions turned to meeting the needs of older adults who can’t afford to move into senior housing, including the large middle market contingent, and providing access to services in other ways such as widening the reach to the broader community.
Grubbs concluded the session by committing to summarizing the insights from the discussion groups for NIC volunteer committees to synthesize for future action. She also noted that she would be bringing ideas back to her own organization to explore what they can start implementing.
Middle Market
The number of middle-income seniors will grow to 14.4 million by 2029, double the number just 10 years ago. And there was a full room during the Navigating the Middle Market Innovation Lab, discussing strategies for meeting the looming demand.
Avery Wallace, Senior Associate at the Milken Institute, opened the discussion with an overview of barriers to serving the middle market, including challenges in managing costs of capital and of care. VIUM Capital’s Executive Managing Director, Steve Kennedy, offered best practices for working with debt providers and noted the importance of communication during each deal phase.
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“Militant expense controls” were just one of the ’secret six ingredients’ that contribute to Cardinal Senior Management’s success in the middle market said Co-Founder, Joe Pohlen, while Innovation Senior Living’s Founder & CEO, Pilar Carvajal, shared tips from their experience strategically repositioning distressed communities.
Pine Park Health Chief Strategy Officer, Jim Lydiard, chair of NIC’s Partnering for Health Committee, facilitated working group feedback, which included recognition that solutions will need to be market-specific, and suggestions for use of modular and manufactured construction.
Innovation Lab presentation materials are available to conference attendees in the Conference App.
AgeTech: Transforming Senior Living with Innovative Solutions
AgeTech is reshaping the senior housing industry as we know it, enhancing the overall well-being of our residents.
AgeTech, as it is defined, is the dynamic integration of technology that is tailored to meet the unique needs of our seniors. It is also reshaping the senior housing industry as we know it. A tech-infused approach is not only enhancing the overall well-being of our residents but is also addressing the challenges faced by caregivers and communities that provide services for our aging population.
An Enhanced Quality of Life
AgeTech solutions significantly contribute to improving seniors’ overall well-being by addressing their health and lifestyle needs. The integration of smart home technologies and health monitoring solutions ensure safety for patients and provide valuable insights into changing resident needs. These technologies also often enhance quality and longevity of life within our communities.
The technological transformation happening in our communities not only attracts a broader range of residents, but it also enhances the living and working environment for team members who serve our seniors.
As it relates to senior care programming, health monitoring devices and wearable technology empower senior housing providers to offer personalized healthcare and wellness programs. Through data that these devices provide, predictive analytics can contribute to proactive and preventive care, enhancing overall health management and quality of care, and lifestyle for our residents.
The collection and analysis of data from AgeTech solutions can also provide valuable insights into residents’ health, behavior, and preferences. Senior housing providers can make informed decisions regarding community management, personalized care plans, resource allocation, and the quality of care and services provided. Through this approach, communities can now differentiate themselves as quality and value-based providers.
Erin Maruzzella, the Executive Director of the Innovations in Aging Collaborative, emphasizes the importance of designing caring solutions for seniors, acknowledging the diversity among our aging populations. “We should be designing with seniors, not for seniors. The goal is to understand that every senior is unique, and solutions should be adaptable to individual needs.”
Given the challenges and opportunities, the following are key considerations when evaluating AgeTech solutions:
Accessible features for the older adult consumer
Consideration of cognitive demands required for utilization (e.g. simple navigation, minimalist design)
Ability to leverage solutions for passive health monitoring
Affordability
Ability to overcome digital literacy barriers
Data accessibility and integration with other solutions and platforms
Overall ease of implementation for both the consumer and the operator
Conclusion
Solutions should be designed with the ultimate user, the senior, in mind, and vendors should be willing and able to share data in a usable format for communities. There are intermediate steps needed before technology can be fully utilized to ensure adoption and value creation, suggests Danny Kaplan, a gerontologist, co-founder, and general partner for Equitage, a soon-to-be launched venture capital fund that is focused on investing in AgeTech. “You should consider how much customer and user education is required. Specifically, do people need to be educated about the problem, or do they know the problem exists?”
AgeTech is not just a technological revolution, it is a compassionate and thoughtful approach to reshaping the senior housing industry. By fostering innovation, improving resident experiences, and addressing the evolving needs of the aging population, AgeTech paves the way for a future where senior living residents receive efficient, connected, and personalized care.
2024 NIC Spring Conference Turns Insights into Action
Attendees gathered in Dallas for three days of content, connections, and actionable insights.
Attendees gathered in Dallas for three days of content, connections, and actionable insights.
Against the backdrop of an ever-evolving senior housing and care landscape, the 2024 NIC Spring Conference brought together industry leaders, experts, and stakeholders to exchange ideas, network, learn, and chart a forward-looking course for the sector.
The conference theme — “Insights into Action” — reflected the event’s goal to give leaders the actionable insights to embrace and capitalize on the future of senior housing and care. Thoughtful and engaging programming highlighted the emerging trends shaping the industry, while addressing current challenges and opportunities.
Drawing more than 1,800 participants, the conference was held March 5-7 at the Omni Dallas Hotel in Dallas, TX.
Bob Kramer, NIC co-founder and strategic advisor, kicked off the three-day event. He noted that the focus of the conference was care and housing for older adults but within a broad framework. This comprehensive vision goes well beyond the traditional offerings of providers to include the management of chronic diseases and taking increasing responsibility for resident health and longevity. “This opens the need and opportunity for partners as we address the complete needs of our residents,” said Kramer.
Here are key highlights from the 2024 NIC Spring Conference.
Important New Research Shows the Value of Senior Housing. Older adults who live in senior housing communities live longer, receive more home health services, and benefit from greater rehabilitative and preventative care in the two years following move-in than those who do not, according to new research presented at the conference and conducted by NORC at the University of Chicago. “It’s all about outcomes,“ said Dianne Munevar, vice president, Health Care Strategy at NORC.
Dynamic Main Stage Discussions. Eight main stage sessions brought together top experts on the dynamic trends driving the sector. Three sessions focused exclusively on the skilled nursing segment. Here’s a quick recap of other popular sessions.
Medicare Priorities and Programs. Answering the question of how senior housing and care providers can better work with the Centers for Medicare & Medicaid Services (CMS), Dr. Meena Seshamani, Deputy Administrator and Director at CMS, took the stage with Dr. David Grabowski, Professor of Health Care Policy, Department of Health Care Policy at Harvard Medical School. Seshamani said the agency’s expanded definition of care and other initiatives will impact senior housing and care. “It is extremely important to us to encourage data, transparency, and innovation,” she said.
Big Retail Healthcare Strategies. The lines between healthcare and retail are blurring. Companies like Kroger and Amazon are diving into the healthcare space at a time when senior living is trying to figure out where it fits in. Leaders from major retailers and healthcare companies including Kroger and One Medical, discussed the opportunities to partner with the senior housing and care industry in new care delivery models. “Amazon and Kroger have invested in data and have evolved. As a senior housing and care industry, we have to change too,” said panelist Chip Gabriel, partner, Senior Living TransFormation Company. “Amazon is customer obsessed, so One Medical is patient experience obsessed” said Lindsay Botsford of One Medical. “We want to make it dramatically easier for customers to find, choose, afford, and engage with the products and professionals that can improve health.”
Capital Markets. Commercial real estate faces a difficult financing environment, even as the economy continues to expand. Rising interest rates have slowed senior housing transactions. One of the country’s leading economists, Doug Duncan, chief economist at Fannie Mae, put the discussion in context. He was joined by a panel of senior housing finance executives. Duncan noted that the service side of the economy has continued to show strength despite other soft spots. He expects three interest rates cuts by the Federal Reserve in the second half of 2024. Recognizing an opportunity, the REIT Welltower will continue to put capital into senior housing, according to John Olympitis, senior vice president and head of corporate development at the company. Panelist Jamie Cobb, chief financial officer at Columbia Pacific Advisors, said it’s a good time to deploy capital in the sector, but hard to do since banks are hesitant to finance new development.
Conference attendees can view conference presentations in the conference app.
Collaborative Innovation Labs. The conference featured five Innovation Lab sessions. The interactive format was brought back from its well-received launch at the 2023 NIC Spring Conference. Attendees collaborated with peers in a small group workshop format. Timely topics included middle market strategies, operating models for baby boomers, and AgeTech, among others
Networking Opportunities. Attendees also enjoyed a variety of opportunities to connect with colleagues. Comfortable networking areas including two designated networking lounges were provided to meet with industry peers. Evening receptions were held outdoors for participants to enjoy the spring weather. First-time attendees participated in a special gathering with fellow inaugural conference participants.
A special Women’s Networking Meetup was held the first morning of the conference to allow attendees to meet and network before the full start of the conference. Colleen Blumenthal, COO at HealthTrust, shared personal stories with advice on how to achieve professional and personal goals. She offered the group some advice: Decide and define what you want to be. Find your people. Let go, occasionally. And set new goals.
Looking Ahead. Attendees at the 2024 NIC Spring Conference gained a deeper understanding of the opportunities and challenges facing the industry that will serve as catalysts for change. As NIC’s Kramer concluded, “We are turning insights into action.”
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