Vi Starts Next Chapter With New President, Puts Rental Community Plans on Hold

It’s been a big six months for Chicago-based senior living operator Vi.

The company earlier this year announced that longtime president Randy Richardson was retiring in May, and that CFO Gary Smith was stepping in to lead the company as president. In the half-year that followed, the operator put some plans into motion while pushing others to the sidelines.

Efforts in 2022 have resulted in new and effective ways to manage the company’s workforce and bring new talent into the industry. The company also has given a boost to its technology operations with several new initiatives and a focus on creating a living experience for the incoming baby boomer generation.

On the other hand, development headwinds have caused the operator of continuing care retirement communities (CCRC) to rethink its plans for a return to the rental sector with a project in Arizona. While that project is no longer moving ahead, Vi and its management team are still committed to the concept and hope to make it work elsewhere in the future.

But Smith is in no hurry to jump headlong into a new project or radically change things. Part of that has to do with where Vi sits today. As of mid-September, the operator’s occupancy is hovering just shy of 90%, with no debt other than construction financing.

And now that some of the clouds surrounding Covid-19 have lifted, he sees the operator devoting more time to initiatives aimed at boomers, such as in technology and dining.

“People say, ‘What’s going to change with the baby boomers coming in?’” he said. “And I think the answer is higher expectations than we’ve ever had before.”

Passing the torch

Although the company is entering a new chapter with Smith as President, it is not a radically new one than before.

Smith worked for the company for 21 years, while Richardson spent 22 years at the company before his retirement. And given the amount of time they spent together, Smith believes that his appointment as president will be to “continue the success” that the executive team has built over the years.

Among Smith’s first initiatives when he took the reins as President was touring the company’s 10 CCRCs with outgoing leader Richardson. In a few instances, it was the first time a company executive had visited since the start of the pandemic.

During each visit, Smith said he introduced himself and asked about each community’s challenges, and generally how things were going.

“The big elephant in the room was the workforce, and that’s definitely been what our focus has been,” he said.

One feather in Smith’s cap has been Vi’s inclusion on the annual Best Workplaces in Aging Services list from Fortune and Activated Insights, which ranks operators based on their scores in employee surveys from Great Place to Work. The operator shot up from the no. 9 spot in 2021 to third in 2022.

Though the pandemic had previously resulted in Vi having more unfilled worker positions on its payroll than ever before, Smith said certain initiatives have moved the needle since.

Smith said the company’s success with the annual worker survey has to do with the fact that it provides career paths and fair compensation, among other benefits. The company also has a staffing app called ViHive, which enables leaders to communicate with their teams and gives frontline workers 24-hour access to important information.

“We’re continuing to see a decline in the number of people who leave, and then an increase in the number of people we’re hiring,” Smith said. “We’re getting back down to more of a normal level of open positions. We’re not there yet, but we’re moving that direction.”

Still, about a third of Vi’s employees have been with the company for at least a decade — and that alone is an accomplishment worth celebrating, Smith said.

‘Going in the right direction’

Like many other CCRC operators, Vi’s occupancy has recovered well since the darkest days of the pandemic. One indication of that success is the company’s independent living units, about half of which have met or exceeded the operator’s 94% pre-pandemic occupancy rate, while the other half are not far behind.

On the assisted living, memory care and skilled nursing side, Vi’s occupancy averages about 80%, and Smith said he expects to push that up to 85% in the foreseeable future.

“There are a few communities that we’re focused on to keep pushing occupancy, but we’ve been going in the right direction this past year,” Smith said.

Thanks to its widespread recovery in 2021, Vi “blew away” its revenue expectations that year. This year, the company is “a good amount ahead of budget” thanks to strong resident referrals and a healthy housing market. Also furthering the company’s progress in the early Smith era is the fact that the company simply is not facing the kind of in-person restrictions as it saw in 2020.

While he acknowledged the industry is at a challenging point, he is also optimistic about the future. And after almost three years of the pandemic slog, Smith said he hopes to start getting back to more normal operations and innovation in the weeks and months to come.

“I love the initiatives that we’re now able to start pursuing again, after … so much attention has been paid to the pandemic and to taking care of workforce issues,” he said.

Rental plans hit delay

One area where Vi is not making forward progress — at least for now — is in its plans to return to the “CCRC light” rental senior living sector with a new model that Richardson first teased about three years ago.

Under the original plan, Vi was set to open a 320-unit luxury rental senior living community in Scottsdale as part of a larger mixed-use development called Cavasson. The community would have all of the amenities and services normally found in a CCRC save for one, skilled nursing.

Additionally, instead of asking prospective residents to pay a large mostly refundable entrance fee in excess of $500,000 or more, Vi would instead have charged a smaller, non-refundable “membership fee” closer to $50,000 in a model similar to Watermark Retirement’s high-end Elite and Elan collections.

“There is an opportunity for an upscale product that isn’t available in a lot of markets unless you’re in a CCRC,” Smith said. “This is a concept that others are starting to do, but there’s still an unmet demand.”

The move would have marked the first time the company operated in the space since it sold off its portfolio of rental communities in 2011. But, the project was not meant to be in its current iteration, as rising costs for new construction have effectively sidelined it.

“Project costs started increasing dramatically from where they have been … and then, on top of that, interest rates started increasing and lenders started getting nervous about where the economy was going,” Smith said.

But that does not mean Vi’s overall goal of returning to rental senior living is dead. The project in Arizona is on hold, and Smith said there may be opportunities to revive it should conditions change. In the meantime, the company is looking at other sites for the model, including in the Chicago area.

And in the meantime, Smith said Vi will continue to seek to innovate and improve.

“We want to quite simply be the place where older adults want to live and people want to work,” he said. “And if that comes together, we think we’ll be successful.”

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