Press "Enter" to skip to content

Civitas Senior Living to Open 20 Communities in Next 2 Years

Seven years after its founding, Civitas Senior Living has gained significant scale and is in a major development push. The Dallas-based company has a portfolio of 35 operational communities and plans to add another 20 within two years.

For some of these developments, Civitas is working with capital partners that are entering senior living for the first time. And Civitas is refining a data-driven operating model and leveraging the skills of a young leadership team.

“What I’m most proud of is, we have a younger company [and] half our C-suite is female — not by design, all through hiring the best person for the position,” CEO and co-founder Wayne Powell told Senior Housing News at the recent Argentum conference in San Antonio.

Many of the new developments are located in Civitas’ home state of Texas, but the company is also moving further afield, with openings planned in Arizona, Colorado, Florida and Kentucky.

A shift in strategy

The Civitas story really begins about 13 years ago, Powell said. That’s when he and his wife, Misti, had the opportunity to invest in a senior living community in the Fort Worth area. Through that investment, they met many of the people who would become co-founding partners in Civitas, including President Cooper Vittitow, Chief Marketing Officer Amy Vittitow, Co-Managing Partner Jay Dempsey and others.

Civitas began by acquiring turnaround properties, but shifted its strategy to ground-up development for several reasons. For one, it is harder to do turnarounds when the core leadership team now has responsibility for a larger portfolio and can no longer be on-site leading the day-to-day efforts at the troubled community, Powell said.

Market conditions have also changed. Competition has ramped up, as have consumer expectations, increasing  the amount of capital needed for a turnaround.

“Some groups do not have the money to put into an aging asset, and if we can’t get the capital infusion or buy it and have the money to go into it upfront, we’re not interested,” Powell said.  “The asset has to look like it’s at the top of the market.”

Civitas has also scant appetite these days for third-party management. The company owns about 50% of its portfolio, with the balance in joint ventures or managed. Going forward, Civitas would only consider managing for strategic partners, such as a JV partner that needs help with another project, Powell said.

This has left development as the path toward growth, and the current robust pipeline has been underway for five or six years. In the last two to three years, supply has flooded certain markets around the country and construction costs have surged, but Powell believes that the company has selected sites wisely and is managing expenses.

Several Texas markets that Civitas is developing in — including San Antonio and Dallas — have recorded significant occupancy declines in recent years, tied largely to supply-demand imbalances. However, in Texas another other states, Civitas has carefully evaluated demographics, labor conditions and other factors, and has chosen sites with barriers to entry that have largely insulated it from new competition, although there have been some impacts, Powell said.

“What were six to nine-month fills have lengthened out to 14-, 16-, 18-month fills, which is really what you pro forma anyhow,” he said.

He believes that signs point to slowing construction and a move toward market stabilization. And construction costs are also becoming more stable, he said, but they have indeed risen, making value engineering more important.

“We have to make sure that if there’s any efficiencies that will not negatively affect the customer experience, we’ve got to look at those efficiencies,” he said. “It’s just the new reality. We have to adjust to it.”

Civitas did not intend to have quite so many projects opening their doors in such a condensed period. Some projects moved more quickly than anticipated while others encountered delays. Still, Powell is confident that the company can execute as these new properties come online.

“In the last two to three years, there have been months when we’ve opened two, three buildings  in four, five weeks,” Powell said. “What we learned and most providers probably already know is, make sure your integration team is strong, and make sure your ops team is not involved in integration, so we’re not pulling from existing communities — it’s a diversion of attention.”

Today, systems and timelines are in place so that startups — though always challenging — can happen “like clockwork,” he added.

Civitas has teamed with a variety of capital partners to drive its development, preferring to work with local firms in the areas where the communities are located. Some of these capital partners are new to senior living.

For example, hotel-focused investor and developer LKP Ventures is the joint venture partner on Harvest Senior Living, an 83-unit assisted living and memory care community going up in the Dallas/Fort Worth metroplex. NexCore Group develops health care facilities such as hospitals and medical office buildings, and is now entering senior living by working with Civitas on a 100-unit assisted living and memory care project in Cape Coral, Florida.

These capital partners appreciate the operational complexity and intensity of senior living and at the same time bring valuable insights from their own areas of expertise, such as hospitality and health care, Powell said.

While there has not been an “organized process” to bring components of hotels or health care into the senior living projects, this has been “at the forefront of our conversations,” he added.

The Civitas model

A typical Civitas development is about 80 to 100 units of blended assisted living and memory care; if there is an independent living component, Civitas prefers to have at least 120 units. Generally the different levels of care have their own dedicated amenity spaces but share a common kitchen.

Perhaps it’s natural, given that many of its leaders are members of the millennial generation, that Civitas’ operating model is based largely on technology and data.

“Our focus has been taking the systems we have and really focus on how to make the data work for us,” Powell said.

For example, the industry historically has relied on spend-down sheets to track expenses. Working with RealPage, Civitas managers now are essentially able to manage the profit-and-loss statement in real time.

At morning meetings in communities, the teams go through a specific checklist to review payables, and ensure that invoices are posted in less than 24 hours. As a result, at the end of the month, the communities already know what they’ve spent, and financial reports can be closed in a single workweek. From the community level on up through the organization, this enables greater focus and nimbleness.

“It’s made a huge difference,” Powell said.

On the clinical side, Eldermark is helping improve medication management processes to drive more proactive care.

“We want advance notifications if med pass is running late or a med was missed. We don’t want to find it at the end of the shift or next day,” Powell said. “We’re working  closely with pharmacy providers to make sure that we have medications that … are easiest to inventory, to pass.”

And Civitas invested more than $1 million in training last year, including extended orientations for executive directors, rather than on-the-ground training. Misti Powell recently took the chief people officer title to further drive workforce engagement and initiatives.

Future investments could include virtual reality to aid in workforce training, which is a promising but not yet fully realized technology offering, Wayne Powell said.

As for future new development, once its current expansionary period is completed, Civitas will “settle out” for a while, Powell said. Opportunities continue to flow in, but the company is passing on the vast majority; discipline is more important than ever given current tough operating conditions in many geographies.

“We’ll start telling ourselves a story about a market and we say, no … Does it work, or doesn’t it work? Let’s move on,” Powell said.

The post Civitas Senior Living to Open 20 Communities in Next 2 Years appeared first on Senior Housing News.

Source: Senior Housing News

Be First to Comment

    Leave a Reply