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HRA CEO: Occupancy Gains Show Demand for Luxury Senior Living, Support Our Growth Plans

In late June, Harbor Retirement Associates (HRA) held the grand opening for a new community in Princeton, New Jersey — and the company is set to add other newly developed properties this year, as the business recovers from Covid-19.

“We kept the development pipeline going throughout Covid, which was a major feat,” CEO Sarabeth Hanson told Senior Housing News. “Albeit we are slightly delayed in opening, we are really excited that we’re launching now [in Princeton].”

Hanson is excited in general about the direction that HRA is headed, and cites several numbers that tell a story of recovery and new beginnings:

  • Occupancy is up 785 basis points from the Covid low in June 2020
  • Occupancy (87% same-store) is 230 basis points above pre-Covid levels
  • Another 3 new developments are slated to open in 2021
  • 8 triple-net properties have transitioned to Welltower
  • A little over $10 million is being invested to upgrade that Welltower portfolio
  • 81% of HRA associates have been vaccinated for Covid-19

The workforce challenges that are besetting the industry are a headwind, but Hanson is optimistic they will ease at least somewhat when enhanced unemployment benefits end — and she is confident that the HRA’s value proposition of a hospitality-forward senior living model is still resonating strongly with consumers.

Growth through development

Of the 36 communities HRA is currently operating, 23 of them are assets that the company developed or co-developed since Hanson joined the company in 2012.

With these developments, the goal has been to create a luxury brand focused on top-tier hospitality. Hanson pointed to dining as one example of this approach; newly developed buildings all feature multiple dining venues, including a grab-and-go counter, a bistro, a full-service bar branded as the Fusion Lounge, a restaurant serving American fare, and a grill room.

“All of our communities do have chef studios with the exhibition kitchen and the hearth oven, where chefs are preparing really five-star meals for residents — so if they choose to have a flatbread it’s still going to come out as beautiful as the filet mignon,” Hanson said.

Other amenities include fine arts studios, fitness centers and beauty salons staffed by trained HRA employees, who were able to provide one-on-one services even during the pandemic.

In addition to Princeton, the other developments slated for opening in 2021 are located in East Hartford, Connecticut; Cordova, Tennessee; and Portland, Maine. HRA can and does develop in a variety of different types of markets, but the company closely evaluates demographic trends to ascertain future demand for its luxury product, Hanson said.

“When we develop, we will only develop to a third of the demand in the market,” she explained.

With strong pre-leasing sales in Princeton that picked up over the last five months, Hanson also believes that Covid-19 has not diminished demand for HRA’s offering.

Strong clinical care is an important part of that offering. For instance, before the pandemic, HRA introduced its Sound program for people with early-stage dementia. The program is a competitive differentiator in certain markets and has helped drive occupancy as Covid-19 has receded, Hanson said.

But, even if the pandemic made consumers more aware of clinical capabilities, HRA is still leading with its hospitality offerings.

“We don’t believe that the average person gets super excited when they wake up in the morning and they say, ‘Man, today’s the day I’m going to get my five o’clock meds at five o’clock,” she said. “So, we don’t lead with that. We lead with the hospitality, with anticipating needs, with this really incredible life enrichment … all the independence that comes with making choices.”

Forging ahead with Welltower

HRA’s new relationship with Welltower arose because HRA’s former landlord, real estate investment trust Healthpeak (NYSE: PEAK), decided to largely exit senior housing during the pandemic.

But, transitioning the eight triple-net assets from Healthpeak to Welltower was not just a matter of necessity, Hanson said.

“When we joined with Welltower, we definitely wanted a programmatic relationship and to grow the portfolio,” she said.

That growth could come through acquisition. For example, some communities and portfolios that opened shortly before the pandemic have been struggling with lease-up. Some of these assets could be a fit for HRA’s luxury model, Hanson noted. But, the price has to be right to create appropriate upside without just taking on all the risk.

More growth through acquisition already was a strategic priority for HRA in 2020, before the pandemic struck and threw the M&A markets into disarray.

HRA has come through Covid-19 without layoffs and with the platform to expand into new markets and states.

“We’re still fully set up to take on some new acquisitions, and our organization is ready to do so,” Hanson said.

Meanwhile, HRA and Welltower mutually invested the $10M-plus of CapEx into the eight triple-net buildings. The renovation and repositioning projects are slated to be completed this month.

With new dining venues and through other upgrades, the communities will be more similar to HRA’s newly developed properties and “primed for post-Covid success,” Hanson said.

Operational lessons from Covid-19

Though heartened by the recent occupancy gains, Hanson is concerned about workforce challenges. Across the senior living industry — and many other sectors — employers are struggling to hire workers and are contending with rising wage rates. 

“Some markets are incredibly hard,” Hanson said.

HRA is benefiting from already paying higher wages than most competitors, and is drawing on lessons learned during the pandemic, including the importance of flexibility.

“During the pandemic we were very flexible about shifts … we were able to offer a lot of flexibility and choice to our associates,” she said.

HRA also supported associates in other ways, such as by allowing them to purchase staple household items and food at cost. When schools were first closed and associates were scrambling for child care, HRA rented out ballrooms and conference rooms at hotels and set up impromptu day care, around the clock.

“It really built a level of loyalty and appreciation,” Hanson said.

The challenge now is to apply some lessons learned during the pandemic while returning to a more normalized operational footing. For example, the company added life enrichment staff during Covid-19, in order to continue to deliver a high level of service to residents in their units and hallways. That led to some additional labor costs but also some valuable operational adaptations.

“In a lot of ways, we’ve become more efficient,” Hanson said. “When you have to serve 160 residents door-to-door three times, five times a day — because we’re going through with snacks and hydration, and the bar cart was going through — you learn ways to do things that we hadn’t done them before, and a little bit more efficient, and how to structure and use your associates.”

Going forward, Hanson is focused on the core business but also thinking about other strategic directions — home health care “is always on my mind,” she said. For the moment, though, she is taking stock of where the company is after the unprecedented challenges of Covid-19.

“I think that coming out the other side of it, as an organization, we’re stronger,” she said.

The post HRA CEO: Occupancy Gains Show Demand for Luxury Senior Living, Support Our Growth Plans appeared first on Senior Housing News.

Source: For the full article please visit Senior Housing News

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