Forget the Pro Forma: Opening a New Senior Housing Community During Covid-19

GenCare at Point Ruston, a new community in Tacoma, Washington operated by GenCare Lifestyle, received its first move-ins on March 2, nearly six weeks after Washington state reported the first U.S. coronavirus case.

When the doors opened, GenCare at Point Ruston had move-in commitments from 47 seniors. By the time Governor Jay Inslee announced a statewide shelter in place order on March 23, only 15 new residents were settled inside, GenCare founder and CEO Leon Grundstein told Senior Housing News.

There have been no new move-ins since. Even though the latest models from the University of Washington’s Institute for Health Metrics and Evaluation show new cases beginning to trend downward, Grundstein is unsure when more new move-ins will arrive.

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New senior housing communities that opened just prior to the industry disruption wrought by the coronavirus pandemic are contending with partially empty buildings, residents in lockdown, increased spending on supplies and elongated lease timetables.

Lockdowns that continue for weeks or even months will apply greater pressures on budgets and reserves.

But Vitality Living Founder and CEO Chris Guay observes that opening a new community in the midst of a pandemic comes with advantages as well.

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For example, buildings are easier to secure to non-essential personnel and staffing does not need to be expanded to meet changing demands.

Moreover, operators that are opening new communities, as well as those managing expansions, believe that move-ins will continue, but with tighter evaluation of new residents.

The ongoing demand will ultimately prove out the belief that senior housing is well-equipped to keep vulnerable people safe, Guay told Senior Housing News.

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“We still feel that there are some articles [being published] that miscast [senior housing] as unsafe, when the opposite is true. What can be worse for someone who [tests positive] for Covid-19 is being unable to access basic services. Someone is always here to ensure those continue,” he said.

Stalled leaseups

Grundstein does not have a timetable for when the rest of the residents committed to GenCare at Point Ruston will move in. GenCare already lost two months in its original lease pro forma to Washington’s shelter in place order, and is recalibrating the pro formas by an extra four to six months, once the order is lifted.

It’s hard to imagine that there won’t be at least a moderately negative effect on lease-ups and move-ins.

Duane Morris Partner John Weiss

“Even if [the order] ends on May 4, the spigot of move-ins will not suddenly open again,” he said.

Slower lease timetables will have a ripple effect on operations for new communities, Andrew Robins, co-chair of the hospitality sector practice at Miami-based law firm Akerman, told SHN. Robins’ practice includes senior housing and continuing care retirement communities.

“[Operators need to] consider the impact on labor costs, health insurance, routine and non-routine operating supplies and equipment, new insurance requirements applicable to pandemics, and financing costs and reserve requirements,” he said.

It is still too soon to tell if declining occupancy due to slower lease-ups and fewer move-ins overall may be an ongoing trend. Data from the National Investment Center for Seniors Housing & Care (NIC) indicates that overall occupancy took a slight dip in the first quarter of 2019. Since the pandemic did not force massive shutdowns across the country until mid-March, NIC’s data is a snapshot of where occupancy was prior to the outbreak. Real estate investment trusts (REITs) have released data showing that senior housing move-ins slowed in the second half of March.

The impact of the coronavirus on occupancy and leaseups will become clearer in the months to come, attorney John Weiss, a corporate partner at Duane Morris, told SHN. Based in Chicago, his practice centers on bankruptcy and financial restructuring.

“Statistics are slow in coming and are widely varied, but this has happened so fast that most facilities haven’t yet experienced a dramatically negative effect. The true impact won’t be felt for a few months yet, and will depend on how quickly we get back to more normal travel and interaction. It’s hard to imagine that there won’t be at least a moderately negative effect on lease-ups and move-ins,” he said.

Easier to secure

Brentwood, Tennessee-based Vitality operates 16 communities in Alabama, Florida, Tennessee and Texas. Two of those communities came online within the past month. Traditions of Mill Creek in Brentwood offers independent living, assisted living and memory care, and opened in mid-March. YourLife of Wildwood, a standalone memory care community in Wildwood, Florida, opened at the beginning of April.

Traditions of Mill Creek moved in 18 residents before Tennessee Governor Bill Lee ordered a shelter in place order for the state on April 2 and has continued to move in residents since, although Vitality did postpone a planned open house.

The lower census at communities just starting to lease up does have benefits. Operators can completely shut down portions of a building that are not in use, as well as keep track of residents’ movements more easily.

Traditions of Mill Creek completely secured its memory care wing in accordance with Vitality policy, along with guidance from the CDC and local public health departments, Guay told SHN. It also closed down portions of the building that are not in use, along with communal amenities.

Residents at GenCare at Point Ruston can still go outside, as long as they stay on campus grounds and wear facemasks, Grundstein told SHN. Otherwise, they are restricted to their apartments. The property’s dining rooms have been closed to residents and meals are being delivered directly to their apartments. To maintain social distancing guidelines, Point Ruston’s fitness trainer is conducting individual workout sessions with residents in the community fitness center. Group activities are being conducted in passageways, with residents at a safe distance from each other.

The emptier buildings require less staff, as well. GenCare has not done much outreach for new employees since the shelter in place order went into effect, and is operating with a nominal staff for the time being. Two associates that were hired prior to Point Ruston’s opening have furloughed themselves for the time being, however. Both are in high risk demographics for Covid-19.

In the meantime, the remaining staff are doing multiple tasks during the work day.

“It is all hands on deck here. All of our employees are working in the building, pitching in where needed,” Grundstein said.

Demand for needs-based housing continues

The impact of the coronavirus on new communities may be felt less in higher acuity settings such as memory care, where move-ins are tied more closely to consumers’ immediate needs.

Garden View Care Center, a memory care community in Monona, Iowa operated by Senior Housing Management, expanded from six units to 10 in late February, and management is already working to fill the new apartments, Senior Vice President and COO Allison Law told SHN. Cedar Rapids, Iowa-based Senior Housing Management operates 67 communities across the country.

So far, management has two deposits secured for residents to move in, and Law is confident that the other three units will be filled.

Senior Housing Management is preparing for the expected demand in memory care with testing required before moving in. In Iowa, where Governor Kim Reynolds has not issued a statewide shelter in place order, move-ins are still happening across the operator’s communities, and some are even seeing upticks in occupancy.

But larger operators such as Senior Housing Management need to be cognizant of existing guidelines in states where it manages communities, as there is no one-size-fits all protocol, Foley & Lardner Partner Christopher Donovan told SHN. Based in Boston, he co-chairs the law firm’s health care industry and post-acute care and senior housing practice teams.

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