A company that has made a name for itself owning and operating luxury and urban senior housing properties is entering a period of accelerated growth, which includes venturing outside the state of Colorado for the first time.
Balfour Senior Living recently hired its first COO and is planning to open a 150-unit rental community in Ann Arbor, Michigan, its first outside of the Rocky Mountain state. The Michigan community will offer independent living, assisted living and memory care services and come with amenities such as a saltwater indoor swimming pool, outdoor courtyards, landscaping and separate dining rooms.
Existing Balfour communities also offer a similar model, featuring multiple care levels. One example is the Balfour at Riverfront Park, a project that involved repurposing a historic Denver train depot, and that won the 2015 Senior Housing News Design Award for Best CCRC.
Currently, Balfour has six operating communities in Colorado, with three more under construction and two others in the development pipeline.
The expansion to Michigan comes amid a significant period of growth for the senior living provider, according to Michael Schonbrun, the company’s founder and CEO.
“We’ve really been doing one [new community] every three or four years, but we’re accelerating now,” Schonbrun told Senior Housing News. “We’re now looking at building two or three each year.”
Moving into Michigan
To many senior living companies, making the leap to a new state or region can be a daunting decision. Each market is different, and the people who live there people might have different tastes and preferences. For Balfour, the decision to expand to Ann Arbor made sense for a variety of reasons.
“We thought the competitive set was not very formidable,” Schonbrun said. “And we thought there hadn’t been much new development in that market in a long time.”
Balfour Senior LivingThe University of Michigan, which is located in Ann Arbor, was also a plus. Balfour hopes to have a close working relationship with the college’s nursing school, business school, and law school—all of which have an interest in gerontology. The community in Ann Arbor is also slated to have a handful of units set aside for students to live there at a reduced rate or for free.
Also, Schonbrun’s wife and Balfour’s co-founder, Susan Juroe, grew up in Michigan, and the two still visit from time to time.
“[The new community] is going to have a very distinct flavor of Michigan in the architecture and interior design, which will be different from what we’ve built in Colorado,” Schonbrun said.
Some business trends in Colorado also made looking outside the state more attractive for the senior living provider.
“There’s an awful lot of new construction that’s coming into Colorado,” Schonbrun explained. “When you factor in that we really need to go to places that have reasonable levels of affluence, and so not every possible market is the right market for us, it was time to look elsewhere.”
And Michigan might only be the beginning for Balfour Senior Living. The provider is also eyeing new development in the coastal states, particularly in places where older adults have a certain level of affluence and taste. In the past, Balfour looked at San Diego and Irvine, California, though neither opportunity was moving forward at the beginning of this year.
Why growth ‘makes sense’
While the company currently has about 600 senior living units, that number is set to climb to roughly 1,000 in the next year.
One reason Balfour has kicked its growth into a higher gear relates to financing in the senior living industry. Investors are eyeing the senior living industry with a growing appetite, especially as they learn more about the private-pay side of the market segment.
According to a recent survey from professional services firm JLL (NYSE: JLL), some investors are increasingly seeing the appeal of senior living communities that offer independent living, assisted living and possibly memory care services on the same campus—a product type that Balfour has focused on.
“There’s clearly a lot of capital that is now interested in senior housing,” Schonbrun said. “So, we’re taking advantage of the money that’s now available.”
At the moment, Balfour is focusing only on new development rather than acquisitions, partly because acquiring a decades-old building which meets Balfour’s standards usually costs only slightly less than building one of its communities from the ground up.
That’s not to say the company is ruling out acquisitions in the future, though, especially if overbuilding continues to be an industry trend. But the provider will be choosy about what—and where—it buys.
“It’s got to be the right market, and it needs to be a place that we’d want to be in,” Schonbrun said. “We just don’t want to pick up a bargain just because it’s available and they’re desperate.”
Another reason growth makes sense now is that Balfour is simply more of a seasoned company with two decades of experience under its belt. And, by opening new properties that need to be staffed, Balfour can further cultivate and develop its talent pool at a time when attracting and retaining workers is vital to most senior living providers.
“For all those reasons, it makes sense to be more aggressive,” Schonbrun said. “[But] I have absolutely no interest in making it to the ASHA [American Seniors Housing Association] top 20 list. We have arguably a much more ambitious goal of just wanting to be recognized as the most innovative and most profitable.”
Written by Tim Regan