Belmont Village CEO: Needs-Based Demand Returning, But Market Pain Cannot Be Denied

“Anybody who is in our business who doesn’t see pain out there in the marketplace is in denial.”

These are the words of Belmont Village CEO Patricia Will, who last week shared her thoughts on a range of topics during an hour-long appearance on SHN+ TALKS. We are pleased to share the recording and this transcript of the conversation with SHN+ members. Read on to learn:

— Why Belmont Village currently has the richest development pipeline in company history

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— Belmont Village’s anticipated timeline for occupancy recovery

— How a JV with Baptist Health South Florida raises the bar on how hospitality meets health care

— Developments in the works with multifamily giant Greystar

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— How Belmont Village achieved an 80% staff participation rate on Covid-19 vaccination

— Will’s top concern for 2021, and the biggest challenge she faced last year

This interview has been edited for clarity.

SHN: Patricia Will is the co-founder and CEO of Belmont Village. Houston-based Belmont Village operates a portfolio of 32 senior living communities across the country, and has been an industry innovator in many regards, including through mixing care levels in a single building, creating specialized programming for early stage memory care, and through ambitious and creative development projects in high barrier to entry markets.

In 2019, Belmont Village announced a development partnership with Baptist Health South Florida, and you’re working on your first project in Coral Gables. Can you update us on the progress of that project?

Patricia Will: This is a very unique partnership in that it is both strategic and financial. Baptist Health is our partner not only on this project, but other projects that we are working on in our pipeline in a four-county area in South Florida. Baptist Health is the largest health care system in South Florida and sees roughly 25% of the population in the four-county area.

The genesis of this project came in part out of a desire on the part of Baptist to diversify to related fields that it could both invest in and contribute to. And seniors, being an obvious part of their customer base, was a logical place to go. We went through a bit of a beauty contest where Baptist looked at a variety of providers, and was really looking to partner with a provider that could both demonstrate expertise in development and operations. We were lucky enough to work for several years with Baptist on the vision for what this partnership would look like, and ultimately kicked it off in 2019.

The Coral Gables project is very interesting in that there are a lot of firsts embedded in it. For starters, Baptist Health is headquartered in Coral Gables — this is their hometown. They are very well and widely known there, and placing a project in the context of a mixed-use development in ground-zero Coral Gables is an important thing to do. The customer base in Coral Gables is very unique, very affluent, very [Hispanic and fluent in Spanish]. One of the things that Baptist did in vetting us for this project was to tour our project in Mexico City, and [Baptist knows] that we can operate a project in a bilingual fashion.

The most important thing that you’ll see in this project, and the others that we do with them, is a confluence of great hospitality, operating programs and health care. We’ve never really seen a disconnect between those things. But in this project and the ones that come after it, we’re putting that on steroids.

That means that Baptist’s expertise in all of the disciplines — from neuroscience to heart to orthopedics — will be brought to bear in our buildings. We have a very unique center going into the ground floor of the building. It’s called “Healthy Living by Baptist” and it will be a combination of health promotion and wellness for seniors in the community at large. For our seniors living in the building, it will become a mecca for wellness and mindfulness. A lot of very rich programming will happen out of that quasi retail space.

Can you describe that component of the project a little more? Is there anything that you’re offering here that you’re especially excited about just in terms of the services or the capabilities?

Of many things that will be in this building, both on the ground floor and throughout, our programming are things that, for us, accelerated during the pandemic. One great example is state of the art telemedicine.

Baptist is very expert in that, and we have taken advantage of telehealth during the pandemic, in ways that we couldn’t have imagined. Health promotion and wellness, mind and body for seniors is an important subject. Certainly, with respect to the pandemic, the emotional and psychological side of isolation has become front and center, just as infection control and testing. I think you’ll see elements of what we’re doing that address both of those things forevermore. But the expertise of a great hospital system in that regard is a terrific ally.

Another interesting project Belmont Village has in the works is a 17-story high-rise in [LaJolla, California] with Greystar, which is the largest U.S. operator of multifamily apartments. Can you talk about that partnership with Greystar and how it’s informed the plans?

We’ve been a player in [the grater] San Diego [area] for 20 years now. And we believe that this is a market that has been underserved pretty much since we got there. We and Greystar decided to do something very different here than what you see more typically, where a multifamily developer or a developer from another sector builds a building, and then hires an operator to operate it.

We decided to roll up our sleeves and co-develop a building. Our development teams work hand-in-hand. We were very active in informing the design of the building with respect to what works for our senior population, but also for our staff. Greystar came to the table with extraordinary ideas about how to evolve the units that we were building to make them more consumer friendly. We co-own with Harrison Street, our [equity] partner. And we will operate the building as a branded Belmont Village building.

We’re already at work, moving through entitlement on a second project with Greystar in California and, to be honest, we’re exploring others. The partnership has worked very well. It’s a partnership of equals. Greystar recognized that, no matter who finds the site or knows how to entitle it from the get-go, the expertise of a senior housing developer is as important as the expertise of a senior housing operator. So we are toe-to-toe and it’s working extremely well. It’s one of those situations where I would say that one plus one equals three.

It’s worth noting that Greystar has a big active adult portfolio. Have there been any discussions about co-locating a Belmont Village development with an active adult [community] that Greystar is doing, or already completed?

There haven’t been any that we’ve worked on. We have worked on sites where Greystar might put a market-rate multifamily complex and we might put a Belmont Village or mixed-use opportunity. It’s not to say that up that opportunity is just not presented itself. If there’s land to do it, and it makes sense, of course. [The other question] is that the whole thing underwrites.

Can you talk about your development pipeline in general: Do you have projects underway?

We have a project under construction right now in Los Altos, in northern California. And beyond that — it is going to sound funny — but we probably have the richest development pipeline of high quality projects that we’ve ever had.

What’s happened during Covid-19, from a development perspective, is very hard-fought sites — many of which we had been working on for years — now have less competition [for] other uses, and they finally came through. We also are working with other developers on co-development opportunities.

We like the coasts. We will continue to develop and have a very rich pipeline in California. We love South Florida, and you’ll see more of us there. Ironically, when you have a situation where just about every real estate class, save industrial, has questions, it has created for those of us who are holding to a very high standard in major markets an unbelievable opportunity. So we will continue to develop, and we will have several exciting announcements to make during 2021.

Would Belmont Village consider developing active adult?

We’re not going to build active adult at all. One of the things that I think is really important is to know what you’re good at, and to evolve that product. Although we understand the need for active adult, and we respect that, we find that our combination of finding and entitling high quality sites in markets with large numbers of seniors where we can aggregate communities in large metropolitan areas, and provide both great hospitality and great care, is our niche.

We evolve in that niche; our buildings and our programs aren’t the same as they were 20 years ago. In fact, we have undertaken a massive innovation program and put a tremendous amount of capital into the communities that we made 20 years ago. But we’re not moving into active adult, which is basically apartments for seniors. We think there are plenty of other people who are multifamily developers who can do that very well, including Greystar. We don’t think that this leverages our expertise.

Let’s turn to operations: Can you share examples of changes that occurred during Covid-19 that you think were particularly significant or will be lasting?

How to make spaces useful at safe social distances has been a lesson learned. We’ve done very well with that, because our buildings have important common areas that we could accommodate. The continued importance of that, [and outdoor spaces] in the climates that will bear it, is something that we learned was terrifically important and is apt to be forever.

I mentioned earlier the advent of telemedicine. Even if you didn’t have the threat of Covid-19, we’ve all known for a very long time that you can triage all kinds of issues — both physical and emotional — with high-grade quality imagery just like we’re using now, and keep seniors from having to wait around in waiting rooms or sit in ERs unnecessarily. That’s one of the silver linings of Covid-19. That improves quality of life for seniors and their families enormously. I think that’s here to stay, which is pretty exciting.

The rigor with which we need to operate, something that we’ve not shied away from on the care side, operating always with nurses inside our buildings 24-7, was really brought home by Covid-19. Our nurses not only care for our residents and supervise our non-licensed caregivers; back in March, they learned how to test everyone. They are integral to being able to deliver the product that we deliver.

How are your vaccine clinics going? How is the pace of vaccinations and the rate of participation among residents and staff?

This is a really happy story. When the CDC opened the portal so that we could sign up all of our communities for vaccine clinics last November, we may have been the first on the site. We were assigned to Walgreens across the country. We prepared and practiced, as they did … and we were assigned first clinics in all of our communities across the country as early as between Christmas and New Year’s and as late as the beginning of this week.

[Our] process internally to educate our families, our residents, and significantly our awesome team members, has been unrelenting. We worked it 24-7, and it’s worked. We’ve invoked experts. We’ve set up help lines, we’ve had all manner of webinars and sessions. And I’m pleased to say that with all our first clinics in and second clinics underway right now, we’ve got 97% of our seniors vaccinated and about 80% of our workforce. So we are deeply excited, our workforce is excited. Many of them have made testimonials to share in videos with other team members. Many of them were homesick with Covid-19, even some in the hospital. It’s an all-out effort, a celebration. And I think that after almost a year of Covid-19, one can’t have enough celebrations. All of our vaccine clinics have really been a kick both for the seniors, for our residents, and even for our family members.

To what do you attribute the high rate of vaccinations among your staff?

We knew that it was going to be very important within a short period of time to inform our workforce. We put together a series of tools we have in service meetings and changes of shifts, 24 hours a day. As I mentioned, we set up a helpline of nurses — who aren’t ours, but have expertise on the vaccine — in order to answer private and difficult questions that employees may have. We’ve had a lot of fun with it, and [implemented an] important education campaign, one that’s very deliberate.

At the origin, people were mainly worried about efficacy and side effects, and the data is really good. As we had our own clinics, both our seniors and our staff members were excited about the efficacy and experienced minimal side effects — sore arms, basically. We were able to use their own testimonials, juxtaposed with those of people who had Covid-19, in order to be able to share the gift of immunity and the benefits of the vaccine.

How painful is that out in the market right now? We’ve heard that there is a lot of competition, a lot of concessions happening, and it’s tough times.

Anybody who is in our business who doesn’t see pain out there in the marketplace is in denial. The reason for that is quite simple. There was a moment last year, around the end of March, where a very large number of us, for all the right reasons, closed our front doors. We were pre-possessed with taking care of who we have. We had to make the decision, even before the regulators’ fears, to restrict non-essential visitors. We had to learn how to use PPE and test everybody.

The moment that you close your front door but continue to experience attrition, you’re going to experience pain. We went into that eyes wide open. We have terrific partners who understood what we were doing and still understand it, thankfully. When you do that, it’s going to take a while to [bounce back]. We don’t have illusions. We’re a long term player. We’ve been at it for a long time.

We continue to have meaningful ownership in all of the buildings that we ever made, and continue to operate them. We know that last year, there was obvious pain and suffering, both economically and occupancy-wise, and there will continue to be. We will get it back, but it’s going to take time. We cannot wave a magic wand and make up for the fact that you experienced attrition without backfilling the people that you lost. It’s just simple math.

How do you anticipate the industry rebuilding occupancy, and how will Belmont Village rise above the fray?

There is pent-up demand that sat on the sidelines during Covid-19: families that had their loved ones with them, families with dementia … We believe that that pent-up demand is already showing up at our doorstep. To a degree, it will defray the competition in the marketplace because you’ve got almost a year’s worth of people that have sat on the sidelines. We’re seeing it already, and that will be part of the equation.

The other part is that we’re going to bear — and ought to bear — a lot of scrutiny for how we handle this. The notion that we have a fully vaccinated workforce and senior population, in Belmont Village’s case, is going to come a long way with our customers. That’s an important ingredient. Our ability to have both great health care and great hospitality will sell itself.

Is Belmont Village in a better position than other providers that had more of a hospitality model to serve a lower acuity population?

I can’t really speak to that because I don’t understand the market and the dynamics of what’s going on there. I can say that the needs-based space is coming back, and that we’re glad to be able to provide that amalgam to the customers that are out there.

I don’t think though, that lifestyle-base [senior housing] is going to be marred or maimed, long term. Isolation is the enemy of younger, more lifestyle oriented seniors, and senior housing communities of all sorts are going to answer important needs. If anything, the pandemic will have pointed that out. They may just be slower now to make the move. But I’m not even sure that because I’m not monitoring this.

Are you seeing a higher acuity resident that has been at home and haven’t been moving in as early as they might?

We have been talking about higher acuity residents for as long as I’ve been in the industry. Each year, the average age of our residents creeps up a little bit. Certainly, particularly with respect to the isolation that seniors have felt at home, there is a fair amount of acuity out there. I don’t know if that’s a predictor of longevity.

I think that programming activities, participation, getting life back will be a very large part of it, together with consistent medication management, physiotherapy, a whole lot of things. I wouldn’t say that the acuity that we’re seeing is necessarily an indicator of how long people will be with us. Rather, we have a big task at hand to help them get their lives back.

What are your predictions for the influx of private equity investors entering the space?

Private equity investors tend to play a long game. To that extent, they agree that this is a good bet. We have to remember that the wind is still in our sails overall, with respect to demand drivers in this industry. A year or two of pain and suffering is not going to knock the private equity players out.

I also think, as a real estate investor, that you have to look at the alternatives. Relative to other real estate sectors, elements of the senior housing market will continue to look awfully good. Our yields are positive and there’s a real demand for the product. I think that we’re going to continue to see — perhaps not at the rate that we saw before — private equity available, certainly to us, in the sector. Part of that is where does the money go? What are the alternatives?

But is there another class of private equity investor in the space that does not have patient capital?

Well, none of them are my partners. [laughs] We don’t have a single situation where any of our partners have a gun to their heads. We can continue to do what we’ve always done, which is to maximize value over a period of time, and work really hard at that.

To the extent that you’re in a finite life fund that has returned money to its investors this year, that would be a problem.

I don’t have any illusions about 2021. We’re gonna make it as good as we can. But it’s going to take a while to get it back.

When do you believe occupancy will return to pre-pandemic levels, for Belmont Village and the industry?

I believe it will happen in 2022, but I can’t tell you when. Our stable assets are now in lease up again. As for our properties in lease-up, it depends on where they are in the [care] continuum. Essentially, we took a timeout for a year, but they were already at 70%. I think we’ll bring them in at the end of this year early next, for those that are earlier in the process.

What are the things that are keeping you up at night — the issues that can adversely impact a forecast?

I’m worried about my people: they’re fatigued.

If you’re both a developer and an operator, you are in the trenches with your guys and you see the level of effort that it’s taken for worse economic returns. You’re worried about their wellbeing and the fatigue factor. That’s where we tried to come up with [ways to] bolster people as best as we can. It’s concerning.

We have closed rate financing through this pandemic. We have continued to propose projects to our long-term partners. Ironically, although we’re never complacent, capital access is not something that keeps me up at night. It’s all about people and how quickly we can get out of defense mode with respect to this disease.

Belmont Village had recent success hiring for leadership roles from outside the industry, particularly hospitality. What is the secret sauce for getting good hires, especially in these positions?

Our secret sauce is that we do all of our recruiting internally. We’ve got a terrific group that does nothing but that, at the line level and the executive level, and the people in that group were operators in our business with us, so they understand the business very well. They understand our culture and can portray it.

We, especially [Chief Marketing Officer Carlene Motto], recognized that there was a big opportunity out there in a business that is somewhat related, minus the health care. What we found with the people that we’ve hired, particularly from the hotel industry, is that the purpose that we serve is very appealing to them. Whereas you think, “Oh my God. I’ve gone from a glamorous job and hotels to taking care of frail, elderly seniors,” there’s been a real resonance in the purpose that we serve, that is enduring. Also, the demonstration that this is still an industry and a company with a tremendous demand curve. If you’re a relatively young person and you want an industry and a company that is going to grow, it’s a pretty great place to be.

Are there things in 2021 that you are excited about? Is it the new developments, or something else?

I’m most excited about the gift of immunity [with vaccines]. It’s a game changer and why we’ve worked so hard to make it happen. I could not be more excited about that. I took my vaccine with my 90-year-old dad who lives in a Belmont Village. To see the joy that the seniors who’ve been masked, sitting six feet apart after a year in quarantine are experiencing as they know that they’re going to gain immunity, it’s a big plus.

On the real estate side, we see repurposing sites that were intended for other purposes, when participating in mixed-use sites, but where we may not have been the first choice as an adjunct to those sites. We see really rich opportunities there right now, and they are a lot of fun to work on.

Are there particular kinds of repurposing that are most exciting to you or are most prevalent in the market?

Certainly retail centers, as they reposition to mixed-use developments, which is something that is happening around the country. We’ve already done mixed-use retail and multifamily, but we see more of that in our lives right now.

We’ve heard some concerns about out-migration from cities — now that people can work from home, they’re going to move to who knows where and start working from smaller suburbs or even outside of that. What do you foresee for the future of the urban core and downtown living? Prior to Covid-19, everyone, especially the boomers, wanted to be in that spot.

The best market example of that we’re seeing is South Florida. We’re seeing an out-migration from the tri-state area of New York into South Florida that is absolutely unprecedented. We believe that as people move, they’re going to bring their [parents]. We’re excited to be positioned there, not only in Fort Lauderdale and with Baptist in Coral Gables, but on multiple other opportunities that we’ll announce later this year. We think that the demographic migration [trends are] going to favor [us].

The flip side of this is we’ve doubled down on Silicon Valley. What we see there is older people and their adult children are not the ones that are leaving. There is an exodus from Silicon Valley of people in their 20s to Austin, Texas, which is another market that we love and we’re in, and to Miami. Those peoples’ grandparents, if not their great-grandparents, would be more likely to be customers. So we’re not shorting Northern California, but we like to be long in Miami and Austin.

What has been the hardest thing for you to experience as a leader during Covid-19?

[It’s] exhaustion, sheer exhaustion. And it’s why I worry about it for our people. When Covid-19 occurred, we configured ourselves into leadership team meetings for at least an hour, four times a week. We took on tasks, be it combing the globe for PPE, mastering the art of testing, all kinds of things. When you go non-stop for a very sustained period of time, eventually the fatigue factor sets in.

The flip side of it is that both our teams and our seniors have been really remarkable pick-me-ups, because they’ve been very resilient. They’ve shown us the way with respect to not do too much fretting, and to just get after it. That, for me, has been a beacon of light that gets me through.

We’re hearing about signs of post-traumatic stress, especially among front-line staff, and that there needs to be some way for providers to address that. How is Belmont Village approaching this?

[We’ve assembled] a tremendous network of mental health resources, counselors, all manner of things. Interestingly, our staff is a lot more resilient. I think the biggest problem for the staff is the sense of responsibility that they felt; they are the ones who go home every day and come back and could become, at least in their view, the source of contagion. So many people have told me that, [it’s] very unnerving.

That’s why the vaccine is so welcome. Because it takes away not only the fear of getting Covid-19 yourself, but the fear of being responsible for your colleagues, your family members, and your seniors. You have to remember that people who work in our communities have a calling. If they didn’t really care about what they’re doing, they wouldn’t be doing this job. They see a higher purpose in it. It’s a real responsibility. And I think that weight has definitely been on them.

Another trend that accelerated this year is greater integration between Medicare Advantage plans and senior living providers. What are your thoughts on MA, and is this something you may consider with the Baptist Health partnership?

To be honest with you, it hasn’t played a part. I can’t tell you that it won’t. But that has not been part of our payer mix anywhere in the country to any degree. Over time, that may occur.

Can you give us any hints as to what’s percolating right now? Is there something you want to try in the future?

The great thing about being an entrepreneur is that you can experiment and continuously reinvent yourself. As I mentioned earlier, these joint siting and development opportunities are very exciting to me. You take a developer with a skillset that is unparalleled, combine it with our skillset, and see if you can make something together that is enduring and qualitatively different than what either of you did before.

Also, we’ve been having a lot of fun reinventing our existing communities. We have put a lot of thought into the community of the future and how you take that back to the existing portfolio. In Welltower, we have a wonderful partner who has partnered with us in making that happen and keeping us as current physically as we are programmatically. That’s a lot of fun.

Is expanding Belmont Village to middle-market price points of interest to you?

If you look at the markets that we’re in, we have products at different price points already. What it costs to live in a Belmont Village in Burbank, California, is not the same as what it costs to live in Westwood. But you won’t see us in secondary and tertiary markets; we’re a large market player.

Belmont Village has been successful in recent years with university partnerships. Can you share some tips?

This is something you can’t make happen overnight. We’ve had deep and rich relationships with a lot of university systems, since the founding of the company. The projects that we’ve done in affiliation with universities or on university land, in the case of UC Berkeley, are projects that evolved from the long-standing relationships that preceded them. There is a lot of richness in the academic medical environment — nursing schools, schools of social work, and centers for longevity.

We began by tapping that and putting that research into programs years ago. That is what led to the university affiliations that we have and their continuing evolution, both with respect to projects and the kinds of things that are embedded in our programs.

Going back to your concern over staff fatigue, are there any other strategies or approaches to scheduling or time off, you’re thinking of doing to alleviate some of this burden?

The most important thing you can do during Covid-19 is to celebrate your people — all day long, every day. It’s very difficult. We compete with a lot of other industries for people. Beyond that, we compete with one another. The promise of our longevity is attractive to staff. Having fun with what we’re doing and being very celebratory in a variety of ways is a very important ingredient.

One of the things that’s been most difficult is to the extent that travel was restrained. We have a team of leaders that thrives by being in our communities. And we’ve made it a point throughout Covid-19 to continue to be side-by-side with our teams in our communities. I’m not going to tell you what I look like in PPE, but I’ve done it. The important thing here is that we’re not armchair executives. We’re out there supporting them in every way possible. It goes a long way.

You’ve got a community in Mexico City. Was there anything different about the experience of Covid-19 in the international market versus United States, and any lessons learned there? And do you see further growth in Mexico?

It was different for us in Mexico City: in some ways better and in some ways worse. We are in a mixed-use [development] in Mexico City, [connected] with a skybridge that takes us to the top hospital in Mexico City. Obviously, having that resource on the opposite end of our skybridge is valuable.

[This development also] has a Hyatt hotel that sits above us, [which] was largely empty. We were able to put our staff members into the hotel so that they didn’t have to come in a two-week rotation, test them, have them there to take care of our residents, and then rotate them out. They didn’t have to commute through the city traffic during all of Covid-19.

The more difficult part comes now; it’s vaccine availability. There is nothing like it is here in the States. Here, we are all looking at a moment in time where we’re going to get immunity into our buildings for our staff and residents. We’re a far cry from that in Mexico and that obviously has us concerned.

With respect to future growth in Mexico, that is an idea that we’ve had for a very long time. Over time, baby boomers will go to the places in Mexico where they vacationed. They’ll be a segment of the market for senior living; a very large number of them that are down there already in homes, second homes, condos and timeshares. When it’s time for senior living, we think that part of the solution, both from a cost perspective and a sheer enjoyment perspective, will be Mexico. It’s a slice of the market, it isn’t going to be everyone. We felt it was important, if we were going to get in, to develop an operating organization in Spanish. It turns out that the skillsets are useful in other places. Even though many things about our countries and our cultures are similar, we learn a lot from operating in another country, in another culture. It’s not just the language. We think that this experience will lead to others at the right time.

The other thing there is we’re partnered with a great hospital system, across the street. That richness is there. That building, more than anything we’ve done so far, put mixed-use on steroids, because it’s got one of everything.

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