LCB CEO: Obsolete Buildings a Worse Senior Housing Problem Than Oversupply

In the decade since its founding, LCB Senior Living has established itself as a regional powerhouse in the Northeast. CEO Michael Stoller is proud of LCB’s rapid growth and solid occupancy, and is positioning the Norwood, Massachusetts-based company for its next chapter in the midst of a tough operating environment.

In particular, LCB is focused on the workforce challenges that are besetting senior living providers nationwide, Stoller told Senior Housing News during a recent interview in Chicago. LCB is putting structures in place to help people “share the monkeys” — that is, to share workloads so that no one has too many monkeys on their back at any one time.

Stoller is also committed to investing significant dollars into LCB buildings on an annual basis to keep them competitive, and he is concerned that the industry norms around capital expenditures need to change. In fact, he thinks that obsolete buildings might be a bigger drag on the industry than oversupply.


And LCB’s development and acquisitions strategy also has evolved, with “true urban” locations on the drawing board and active adult as a possible new market for growth. Currently, LCB’s portfolio consists of 27 communities either operational or soon to open, across Connecticut, Massachusetts, New Hampshire, Pennsylvania, Rhode Island and Vermont.

A different take on oversupply

Stoller has deep roots in senior housing, having previously been a founder of Newton Senior Living. Newton grew to become the 16th-largest senior living provider in the nation and was sold in 2005 to a division of Lazard Freres.

Following that deal, the Newton team did not take long to get back in the game by starting LCB. Coming out of the financial crisis, they saw a need for more assisted living, and set about bringing that to market through a mix of value-add acquisitions and ground-up development.


“I’d say that the greatest accomplishment to date is probably that we’ve created over 1,300 new jobs by building new buildings,” Stoller told SHN.

Some might consider the pace of growth “insane,” but LCB also has been able to maintain a strong and consistent culture, he added.

Whether a new development or an acquisition, LCB takes a property-by-property approach to create a product that fits the local community and meets the demands of specific markets.

“Our vision has always been that there’s no classic prototype,” Stoller said. “Everything is local. Local market, local size, site.”

The primary focus is assisted living. LCB had about 2,000 beds as of March 2019, and 64% were AL, with another 28% in memory care. But within those settings, the company is committed to being on the lower end of the acuity spectrum.

“We don’t want to get to an unlicensed nursing home kind of a feel,” Stoller said. “Therefore, some properties become somewhat competitive with independent buildings even though they really aren’t.”

Stoller is sensitive to the new supply that has flooded some locales in recent years, and LCB walked away from at least one deal because the market dynamics changed. LCB has managed to maintain occupancy on its stabilized portfolio of around 89% to 93%. As of Q3 2019, nationwide assisted living occupancy was at 85.4%, and senior housing occupancy as a whole sat at 88%, according to data from the National Investment Center for Seniors Housing & Care (NIC).

“We have some in the high 90s, [but] a couple of deals that we have will always be difficult based upon market,” Stoller said.

LCB managed to keep occupancy relatively stable in the face of new competition thanks, in part, to significant annual capex spending.

Most of LCB’s lenders and financial partners were originally envisioning capex at about $300 or $400 a unit. LCB came back with $1,200 a unit, and Stoller thinks the number ideally should be even higher.

“Twenty years ago, people had a car for 10 years. Now, people are leasing cars and turning them over in three years,” he said. “People are upgrading their homes. Our consumer wants what’s new and what’s fresh and what looks good. We need to provide that to them.”

Indeed, he maintains that the occupancy dip in senior housing — where occupancy recently hit a historical low point — is not strictly a function of new supply. 

“I think the bad news about occupancy … is being described inaccurately,” he said. “It’s being described as oversupply. I don’t think that’s true at all. I think … there are so many buildings that are at or near obsolescence, that people have not put enough money into upgrading or keeping their properties updated.”

As a result, existing stock cannot hope to compete with new buildings, and even offering a lower price point will not be successful in shoring up occupancy. The situation would be less dire, Stoller believes, if capex investment and timelines were more aggressive. LCB is going into buildings that are only five years old to upgrade WiFi and retrofit bistros.

“We are not, as an industry, investing enough in our buildings,” he said.

In terms of what the future holds, LCB has a “handful” of development deals in the works, including with Boston-based capital partner Berkshire Residential. Potential sites could be as far south as Washington, D.C., but LCB likely will not venture west of the Hudson River, according to Stoller.

He is interested in the evolving active adult space, and foresees opportunities to create “true urban” communities. Currently, LCB’s portfolio includes a few multi-story buildings in the downtown areas of smaller urban areas, but the company has worked up designs for 7- to 10-story buildings that could go up in large city centers.  

Shifts in the real estate market — such as the decline of retail — have created opportunities for senior living development that did not exist in the past. As a result, LCB is seeing more acceptance of senior housing in urban areas. Still, Stoller’s biggest disappointment in LCB’s 10-year history is that a potential downtown project was put on ice due to what he called “blatant age discrimination.”

“If we had deeper pockets, we would’ve fought that one hard,” he said.

New ways to staff

With unemployment at historic lows, wages on the rise, and caregivers in short supply, the senior housing industry is facing a severe workforce crunch. Labor costs are high, while recruitment remains hard and turnover rates remain high.

LCB is tackling this issue in a few ways, including by evaluating wage levels and offering robust benefits, but a major focus is on fostering greater collaboration. That’s because the company identified overwork as one issue leading to turnover. Stoller highlighted the resident care director position, saying that one pitfall is that they can become “their own worst enemy.”

“They want to keep everything on their shoulders and work insane hours, not because we demand it, but because a lot of them have come from the nursing industry,” he explained. “Their expectation is that they’re responsible for everything every minute of the day, 24/7.”

Convincing individuals to change their approach to a job is a tough proposition, he noted, so LCB is taking steps to make it easier for them. For instance, the company is considering implementing new staffing approaches and systems, such as having an on-call system on a statewide basis for certain responsibilities.

“We talk a lot about collaboration,” Stoller said. “One of the expressions is ‘get the monkeys off your back’ — share the monkey with somebody else, and now it’s a shared problem.”

That collaborative approach carries over into Stoller’s own leadership style, according to Chief Investment Officer Danielle Breton.

“An executive director can pick up the phone and call him,” Breton said. “He makes himself available to you.”

Stoller agreed that he tries to be an “inclusive” leader. Family is also of paramount importance to him, and creating a family-friendly workplace culture has been a top priority. This has also helped LCB from a recruitment and retention standpoint, he believes.

“You can’t be happy in a job if you’re not happy at home,” he said.

Overall, his leadership style is an “odd combination” of being inclusive and trying to bring out the best in people, while he can at times be “demanding and myopically focused,” Stoller admitted.

He is also demanding of himself, in coming up with ways for the company to keep improving.

“I think the biggest thing that I’m focused on right now is, how do we get better at everything?” he said. “… It sounds a little too expansive, but you have to start with that over-reaching idea or goal, [then] get down in the details to make it happen.”

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