Kai Hsiao, the CEO of recently formed management company Eclipse Senior Living, is aiming to create a tech-forward operating platform and ultimately attract a more diverse group of consumers to senior housing. And Eclipse is off to a quick start, thanks in part to its connections with two big names in the industry: Holiday Retirement and Elmcroft Senior Living.
Eclipse is not only being led by former Holiday CEO Hsiao but is based out of Holiday’s old headquarters building near Portland, Oregon. And, Eclipse has hired many former Holiday employees who did not relocate to Florida when the independent living giant moved its corporate HQ there last year. Courtesy Eclipse Senior Living
Furthermore, Eclipse is getting off the ground by managing a portfolio of roughly 80 senior housing properties that were previously operated by Louisville-based Elmcroft Senior Living. Most of these properties used to be under triple-net leases with Chicago-based real estate investment trust (REIT) Ventas Inc. (NYSE: VTR). In Oct. 2017, Ventas announced that the portfolio would be transitioning to a joint venture structure, in partnership with an institutional investor and the new operating company led by Hsiao. Ventas owns a stake in Eclipse, and Eclipse executives also have capital in the company.
Hsiao recently spoke with Senior Housing News about Eclipse’s tech-forward operating model, hospitality-inspired approach to building a portfolio, and the status of the Elmcroft transition, including a new logo (pictured above) and website being introduced today.
After leaving Holiday, you did a stint at real estate investment trust HCP. Why go back to operations with Eclipse?
After being at HCP, I figured out that I much prefer being on the operator than the ownership side. The analogy I use is that it’s the difference between pulling the string and pushing the string. I’d much rather pull the string, and see results sooner rather than later.
So I was looking at forming a management company and had some people who wanted to work with me, folks that I worked with before, at Holiday … we stepped into the old Holiday space here in Portland, Oregon, when [Holiday] decided to move to Winter Park, Florida.
How many people are working in the Eclipse corporate office now?
I would say a majority of folks who we hired were folks that Holiday decided not to retain. They’re people who are familiar with us, and we’re familiar with them. That’s how we were able to build out the management company so quickly. We have just under 100 folks.
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What makes Eclipse stand out from other operators?
We have a major investment in terms of the technology and infrastructure that we have … systems that are ground-up, non-shelf products that we have sort of built ourselves, that are integrated, real-time systems.
Having looked at other operators, one of the challenges is having data at your fingertips. I would like to think we don’t have that concern. We have a single source of truth. There are some companies that are an amalgamation of different companies, through M&A, and you have systems on top of systems, and sometimes that doesn’t lead to the most efficient way of doing things. So, we’re focused on building out world-class systems and making sure they’re all integrated.
How did you manage to create homegrown tech platforms so quickly?
The good news is, we knew what systems we wanted to have and how we wanted to develop them, based on our [experience]. We knew how we wanted it to look, and we knew how to get from Point A to Point B, and what we needed to do differently, what we needed to avoid.
Do you have an in-house tech team that created the platforms or did you contract with vendors?
It’s a combination of in-house and contract tech companies.
Any other hallmarks of Eclipse, that you think will make it stand out from other operators?
I think a lot of senior housing companies have grown through M&A, so their growth is more through that than organic. We’ve proven ourselves, with our history, that we can perform through same-store organic growth.
So with that in mind, you’ve taken over the Elmcroft portfolio, and you must see potential for growing the bottom line there. Where are you focused in these early days?
I think there’s a lot of opportunity in the portfolio and we’re focused on capturing that opportunity. I think our track record is what directed [Ventas and the institutional investor] in terms of working with us, in capturing that value. Pat and Tim [former Elmcroft CEO Pat Mulloy and President Tim Wesley] have built a great company, and we’re honored the baton has been passed to us. We believe in the Elmcroft mission and our goal is to grow Elmcroft moving forward.
As for the transition, we’ve visited every single one of the communities already. We did an associate survey and got feedback from them on what they thought could be improved … the number one answer was better tech, to make things more efficient. I’d like to think we’re certainly addressing that for them.
We had our first leadership summit last week, where we brought the field and regional teams together and got them in sync with our goals and objectives … we really wanted to build teamwork.
And one of the things we really wanted to get clarified with everyone is … Eclipse is really the parent management company, but we’ll have multiple brands underneath Eclipse. Elmcroft is one of those brands. We’re rolling out a new branding and logo on March 1. You’ll see it says “Elmcroft by Eclipse Senior Living.”
Why have sub-brands under Eclipse?
Elmcroft has a specific target market. We’ll have different brands targeting different markets and levels of acuity down the road.
Is it fair to compare this approach to hotels, that have an overarching brand like Marriott and sub-brands like Courtyard by Marriott?
I come from both hospitality and retail development. That’s certainly a strategy used before, and one we plan to use as we move forward. Not all seniors are built the same. Our goal is to match the senior to the product they desire the most.
What markets are you looking at for growth, and how do you foresee expanding the portfolio over time?
Right now, if you look at the states we’re in, I think you call it “the smile,” down the West Coast, across the South, and up the East Coast. Do we plan to fill in that smile [with properties in the empty middle]? The answer is yes.
I think there are three main channels. The one we’re getting the most inbound calls on right now is ownership groups looking to transition to a different operator. The like our track record and infrastructure.
On the ground-up development side, senior housing penetration seems to be static in the 10%, 11%, 12% range. Developers will say it’s because not enough people know about senior housing. I think we haven’t built anything the other 90% of seniors like yet. We’ll be trying to speak to the seniors whose needs and wants haven’t been spoken to yet.
Third, in regards to acquisitions, we’re taking a look at that as well. Luckily, we’ve got some friendly capital sources to help us do those things.
So you would do ground-up development down the road, and have owner-operated buildings?
There would be owned and operated buildings down the road. But we are third-party management first and foremost.
Looking big-picture at the senior living industry right now, what has your attention?
I’ve always been an advocate for trying to get work visa programs for folks outside the country to come and fill some positions in senior housing.
The other thing, from from a value proposition standpoint, with Americans living longer and saving less, I think that ensuring more folks can look into senior housing as an option [is important]. I’m personally advocating for—there’s a child tax credit program, I think there should be an adult tax credit program. If you’re helping your mother or father with senior living expenses, you should be able to deduct those from your own personal taxes.
This interview was edited for length and clarity.
Written by Tim Mullaney