Mercedes Kerr did not speak English when she started middle school in the United States, after moving from Mexico to Texas with her family.
“It was sink or swim,” she says, of being dropped off at school in Houston for her first day.
The challenge of quickly learning a language and adjusting to a new place helped build her adaptability skills, she told Senior Housing News during a recent interview in Chicago.
She is now drawing on those skills as she adapts to a new role: president of Belmont Village. Kerr was named to the position in May and has been on the job about three weeks.
Kerr comes to Houston-based Belmont Village from Toledo, Ohio-based real estate investment trust Welltower (NYSE: WELL), where she was an executive for 11 years. Prior to that, she was a vice president at Irvine, California-based HCP (NYSE: HCP), another of the “Big Three” health care REITs.
Transitioning from the ownership side to a senior living operating company presents significant challenges, but Kerr believes that her time in the REIT world will serve her, and Belmont Village, well. She thinks that the industry is going through a “tremendous evolution,” and she intends to leverage her skills and expertise to drive innovation — which she sees as a must for senior living providers generally and a strong suit of Belmont Village, which is on the forefront of several industry trends. The company — which has a portfolio of 31 communities — has pursued urban, mixed-use projects; forged university ties; and struck a development partnership with a health system, Baptist Health.
Kerr’s adaptability already has been tested several times in her career, including in 2014, six years into her tenure at Welltower. That’s when Tom DeRosa became CEO of the company, which at the time was called Health Care REIT.
DeRosa immediately began to put his stamp on the REIT, not only by renaming it but by replacing almost all of the existing leadership. Kerr was a notable exception.
“Mercedes was able to conceive of a forward-looking vision for this company, whereas the others were attached to the old vision of the company,” DeRosa told SHN. “And that [vision] was clearly aligned with the concept of what can we do to maximize shareholder value, what is this business, and how do we capture a whole other layer of value that was different than how we believed value was captured in the past?”
The new way forward was rooted in DeRosa’s conception of how the overall U.S. health care system was changing, with care migrating away from high-cost settings like hospitals and into community-based settings — including senior housing properties.
“There was something very promising and logical in the steps we were taking together,” Kerr said, of Welltower’s new direction under DeRosa. “It wasn’t as if we were trying to dream something up and it didn’t quite make sense.”
She and DeRosa hit the road to connect with players, including major health systems, that previously were largely outside the scope of the REIT’s business model. Pitching the Welltower vision was not easy and required Kerr to tap into her resolve.
“It wasn’t as if people understood who we were and what we were doing,” she said. “It was, for sure, a labor of perseverance.”
Welltower did make progress, engaging in transactions that will test the theories and vision that DeRosa and Kerr pitched.
Most notably, Welltower partnered with Toledo-based nonprofit health system ProMedica to acquire the large HCR ManorCare portfolio of skilled nursing facilities and senior living communities. The idea is that ProMedica will be better able to manage the health and wellbeing of seniors — including those enrolled in its Medicare Advantage plan — by owning the SNFs and senior living communities where they reside and receive care.
Results from this effort are still to be seen, but the deal may have been a watershed moment. Other health systems have now tied up with senior living providers — including Sanford Health and the Evangelical Lutheran Good Samaritan Society. And Welltower is no longer a stranger to health systems but is fielding inquiries from them, DeRosa has said on earnings calls.
Belmont Village — which counts Welltower as its largest capital partner — has already gotten on board, to some extent, with this vision of the future. Its co-developments with Baptist Health will bring an enhanced level of care to residents, Belmont Village founder and CEO Patricia Will has said.
Even internationally, Belmont Village is pursuing more alignment with health systems and hospitals. The company opened a community in Mexico City that is literally connected, via a skybridge, with one of the best hospitals in that city. Belmont Village is interested in further growth in Mexico, so Kerr’s roots in that country — where her father was a real estate developer — could also come in handy.
Kerr’s overall vision for Belmont Village is in keeping with providing more coordinated and comprehensive care through closer integration with players up and down the continuum. This is not necessarily the direction that every senior living provider should take, Kerr said, but it leverages Belmont Village’s existing strengths — the company was a pioneer of early-stage dementia care, for example, and its university collaborations also put it on the forefront of the latest clinical approaches.
Other senior living providers might choose to stake their future on a lighter care model and find success in doing that, Kerr said. But she is certain on one point: Providers that stick to the status quo will find themselves in trouble, because old ways of doing business are not sufficient to meet a host of challenges and seize new opportunities.
Consumer expectations are rising, advances in technology are upping the ante on how communities are run, and new competitors and more sophisticated investors are coming to the space — and these are just some of the reasons why Kerr sees senior living entering “the next phase of our lifecycle.”
Throughout her time at Welltower, Kerr was focused on business development — her final job title at the REIT was executive vice president of business development. But “relationship management” is how she and the Welltower team really conceived of her role, she said.
She was forging connections to build the business externally, but an equally important part of her job was managing established relationships across the Welltower portfolio, including with its senior housing operating partners.
“One thing that was really very critical with Tom’s guidance in the past few years was that not all growth is external,” she said. “We were also focused on generating organic or same-store growth.”
To that end, Kerr worked with senior living providers on efforts to gain business efficiencies and enhance their operations, such as by leveraging data analytics and group purchasing.
With 21 properties in the Welltower operating portfolio, Belmont Village accounted for 3.8% of the REIT’s senior housing net operating income as of Q2 2019. Kerr participated in the transactions that built this relationship between Belmont Village and Welltower, and came to know Belmont Village as a company — and its founder and CEO, Patricia Will — very well.
“She’s a dear friend of mine personally, and it’s a company that I’ve always admired,” Kerr said.
Will initially brought up the idea of Kerr joining Belmont Village casually — it was “almost a conversation in passing,” Kerr said. However, the idea resonated with her. She brought up the possibility with DeRosa, and the two engaged in a series of conversations. They both came to see the move as an exciting opportunity for Kerr, who could take what she had learned during her time with Welltower and use that to help drive innovation at an operating company.
Kerr is emphatic that this should not be interpreted to mean that she will be pursuing a Welltower-driven agenda at Belmont Village, noting that Belmont Village is a privately held, separate entity from the REIT despite their close partnership.
In terms of how Belmont Village has fared during the recent period of supply-related occupancy challenges in senior housing, Kerr described the portfolio as “sturdy.” Some communities require that the team “work double time” but others have proven resilient. She credits Will’s disciplined and patient approach to real estate development; Belmont Village is willing to have years’-long lead times on projects that are in desirable locations with high barriers to entry. Examples include the recently opened community in a mixed-use project in Chicago’s Lincoln Park neighborhood, and the Westwood location in Los Angeles, near UCLA. Once these properties fill up, they tend to remain fully occupied, Kerr noted.
Will remains as CEO at Belmont Village and her vision will continue to shape the future of the company, including by leading its external growth initiatives, Kerr explained. She and Will have a “very specific list” of their respective responsibilities but also plan to closely collaborate.
Their collaborative relationship and easy rapport were on display during the course of Kerr’s interview with SHN, which took place in the Library Bar at Chicago’s Ambassador Hotel, where Will was also staying. Even as Kerr was being interviewed, she and Will were problem-solving around a situation that had arisen the night before, when Will had lost her phone and wallet.
“This is leadership in action,” Will joked.
“This is how we work together,” Kerr added.
The phone and wallet were located and were being delivered to the hotel as Kerr wrapped up the SHN interview and Will departed for an event.
Her ability to build strong relationships is a lynchpin of Kerr’s overall leadership style. She likes to assemble teams of content experts, set a vision, and delegate responsibilities.
“It’s important for me to organize my thoughts and organize so I don’t drive my team crazy,” she said.
Despite her familiarity with Belmont Village and senior living generally, Kerr acknowledges that she has a lot to learn about what it takes to succeed as an operator. It’s a challenge that DeRosa thinks will bring out her best, citing her vision, her functional talents and her leadership abilities.
“I think it’s going to draw on a lot of the skills she developed at Welltower and also provide her a very steep learning curve,” he said. “I think when you take people like Mercedes who exhibit the characteristics I just outlined, history will show that they exceed expectations.”
Raising her voice
Beyond Kerr’s business skills, she has another talent: singing.
It runs in the family. Kerr’s sister is Paty Cantú, a hitmaker who has reached No. 1 on the Mexican Albums Chart.
“While most of the credit for singing in Mercedes’ family goes to her sister, a pop-music diva in Mexico, Mercedes has an amazing voice!” Will told SHN.
DeRosa confirmed: “She’s very modest, but she actually has a beautiful singing voice.”
While she can wow with her singing during off-hours, in her capacity as a senior living professional, Kerr is raising her voice to speak out on issues of importance for the industry, including the need for more women in leadership.
She and another Welltower executive, Christy Stone, were part of a steering committee that started a women’s initiative at the REIT. They host an annual women’s breakfast during the National Investment Center for Seniors Housing & Care (NIC) conference. And Kerr is also part of a women in leadership initiative at industry association Argentum.
She is optimistic on this issue. For instance, she believes that progress has been made since she herself took a career “offramp,” leaving HCP to care for her children for two years. She was able to re-start her career with relative ease, but considers that she was at least “85% lucky.”
“Whether it’s people telecommuting or somehow having more flexibility in their careers, I tend to think that that will become more commonplace than it was when I did this,” she said.
Kerr is also the sole representative of the senior living industry on a newly formed stakeholder advisory committee to consult with California Governor Gavin Newsom on the state’s master plan for aging.
“For us to have conversations about what [California’s aging population] means from the perspective of infrastructure, and support, wellness programs, and everything else, I think it’s a worthy initiative,” she said. “I think it’s going to translate throughout the country … It’s a privilege to have any voice in trying to shape [this], and so I take that with a fair amount of responsibility.”
It’s a responsibility that she’s taking on in the midst of starting at Belmont Village, so she has a lot of work before her. But she’s drawing confidence from the fact that — unlike when she started middle school — she is already speaking the same language as her new teammates.
“If I felt like, oh my gosh, I’m going to be speaking in a foreign language to these folks about innovation and they don’t have what it takes to get there, I wouldn’t have considered it,” she said. “There was already a lot of progress toward innovation and objectives, and now I come in to round out a team that’s already quite capable of heading there on their own.”