MBK President: We Are Back in Growth Mode After Break in Dealmaking, Still Aim to Triple Portfolio Size

MBK Senior Living’s growth has historically been through acquisitions — and that is still the company’s modus operandi in 2022.

In fact, the company plans to acquire four to six properties in its next fiscal year, which begins on April 1. However, doing so won’t always be easy, according to MBK President Jeff Fischer.

MBK tends to focus on buying Class A assets in more popular primary and secondary metro areas, meaning that there is typically a surge of interest in every new opportunity that comes to market, which can drive up valuations.


“Pricing on the acquisition side is still a little bit frothy and it can be hard to find the right opportunities in the right areas,” he said during a recent appearance on the Senior Housing News podcast, Transform.

In November, the operator acquired Mariposa Point of Mesa; an 83-unit assisted living community in Mesa, Arizona, that now operates as Sky Vista. It was the company’s first acquisition deal in about a year and a half.

“I’ll be the first to admit we were a little rusty,” Fischer said. “But since then, we’ve circled our team up, we’ve talked through the proper steps, and made sure we have what’s needed day one, week one, month one.”


Meanwhile, the Irvine, California-based operator has recovered nearly all of the occupancy lost during the pandemic at its 35 communities across the U.S., and with pent-up demand exhausted, “it’s back to the grind” for the company’s sales teams, according to Fischer.

“We’re really focused on our day-to-day sales efforts, our outreach, really working the database to the fullest extent and making sure that our sales directors and our executive directors are focused and zeroed-in, day-in and day-out,” he said.

Highlights of Fischer’s podcast interview are below, edited for length and clarity. Subscribe to Transform via Apple Podcasts and SoundCloud.

On MBK’s ongoing recovery:

Our goal was to hopefully recover everything in a year that we’d lost in the prior year. We’re not quite there yet, and when I say year, I mean our fiscal year, which starts April 1. But we are about 90% back to where we were with our pre-Covid numbers at this point.

We experienced the highs of some of our occupancy gains upfront, it was just a lot of that pent-up demand that had occurred during the pandemic. We rode that wave, and were able to recover quite a bit early on. Now, a lot of that has been spent, and it’s back to the grind, so to speak. We’re really focused on our day-to-day sales efforts, our outreach, really working the database to the fullest extent and making sure that our sales directors and our executive directors are focused and zeroed-in, day-in and day-out.

A lot of folks with dementia or that have family members with dementia, it’s very needs-driven and they just can’t take care of them at home any longer. We’re seeing some of those types of residents. [We’re also seeing] AL residents that just need some care, and … some IL as well, maybe who needed a change in lifestyle. I think … some of those residents are making a lifestyle choice versus maybe having a care need.

I think people are a little bit more comfortable moving into the setting. We may have to shut down the dining room or some activities on a short-term basis if there are a couple of cases, we have to do some masking, testing, things like that. But for the most part, I think people have gotten into the normal routine and are experiencing a little bit more comfort around the fact that we can control the environment.

On workforce challenges:

I don’t think the overall workforce challenges and pressures are going away anytime soon. Maybe it is easing a little bit, and we’ve seen a little bit of an uptick in hiring in the last couple of weeks or so. But we have our challenges everywhere, and certain markets are tougher than others. We’re seeing it most heavily with our frontline team members, with caregivers, servers with housekeepers, those type positions.

There is no simple solution to it. It’s hard work by our recruitment team to go out and identify candidates — maybe identify different segments of the workforce that aren’t familiar with senior living — and try to educate them and get them in tune with the fact that this is a good career choice. And we’re just out there grinding trying to find candidates.

I don’t think [hiring] panned out with hospitality workers to the degree we had hoped for. But it’s still a focus for us. Again, there are still a lot of hospitality workers displaced, and hotels have shut down and have not reopened — as have restaurants, and so forth. So, we are still focused on hotels, restaurants, those types of workers.

We’re also trying to see if we can target maybe stay-at-home moms that had to stay home with their kids that were being schooled at home, maybe some semi-retirees who, with the ‘Great Resignation’ maybe are retiring from the careers, but are looking for a few hours here and there to supplement and give them something to do. So, we’re looking at every segment of the workforce possible to try to attract some new workers.

I still feel like there’s a lot of pressure on our industry and pressure on our team members, our department directors and our frontline team members caring for our residents in a difficult setting. The challenging workforce only adds to it and the pressure of people calling off, or just open positions, and others having to work a lot of overtime and such.

That concerns me in the sense that we could continue to see that burnout, and continue to see some people that just say, ‘You know, enough is enough, I’m either going to retire or I’m going to try something different that might be a little bit easier.’ So, we’re really focused on that here at MBK. We’re trying to stay in touch and in tune with our team members, and listen to their needs. If they’re feeling burned out, can we get them some time off? Can we get them maybe a change of assignment? Anything to try to ease that pressure in the short run so that we can prolong their career with us.

We’ve had tremendously high overtime usage, and we’ve had to use a lot of agency hours — which of course, back in the day it was taboo to even say that word. But now, it’s almost commonplace, and we don’t take it lightly. We stay focused with our teams that we need to try to eliminate the agency usage first and foremost, because those aren’t our team members and they don’t have the same vested interest that the MBK team has.

In the last two to three weeks, we’ve seen a little bit of an easing in overtime usage. It’s still high, but I would say we’ve seen a little bit of an easing of the agency hours. We have some communities that don’t have any at all, and we have others that have used it but they are expected to hopefully limit it by the end of this month. So, we’re seeing a little bit of light at the end of the tunnel. We’re not out of the woods yet, but we’re still focused on it.

On the company’s culture, which is rooted in a Japanese concept called yoi shigoto:

Yoi shigoto means good, quality work, and that is our kind of our mantra.

We focus on culture as a daily thing. We talk about the MBK family — and we use the word ‘family’ very purposefully. We want them to feel respected, we want them to feel good about where they work, we want them to feel proud of what they do.

So, in addition to the normal things we do like our annual surveys, we do a lot of pulse checks with our teams just to see how they are doing. I or a lot of my key leaders will make random calls to our communities and talk to our teams and, and just touch base with them to see how they’re doing, what they are feeling, if there is anything we can do differently to help them to make the day-to-day job easier.

We’re also focused on trying to find ways to make the work-life balance better, and to find ways to make their jobs and their daily tasks more efficient, if at all possible. And then specifically, regarding, yoi shigoto and the good work, we put a lot of emphasis on … looking at what they can do to support and be productive members in their outside communities. That includes doing a lot of volunteer work, donation projects, fundraising — whatever it takes to help their outside communities near them, which makes our residents and our team members feel better.

And it’s not just our team, we get our residents involved as well. So it’s a great effort and makes for a lot of camaraderie, and builds that overall culture throughout our entire company.

On growth and maintaining culture:

We haven’t tripled our portfolio yet. It’s not a magic number or a magic formula, it’s going to be a very long process to, in essence, get to about 10,000 units. It’s a long-range goal for us.

Since the time we talked [in the fall of 2021], we have taken on three additional communities through acquisitions, and one through a management contract. We have another offer out on a potential other acquisition right now. And we are currently underwriting probably another half-dozen opportunities out there that we’re looking at. Not all those are going to pan out, but we are actively looking and searching for acquisition opportunities across the western half of the U.S. from basically Texas to California. That’s our primary focus. We would even go further than that if we found some critical mass where we found a cluster of properties that we could purchase and drop a regional team in that area.

Like I said earlier, our fiscal year starts April 1. So we’ll be starting a brand-new year for us here in a few weeks, and bring on another set of goals for us to acquire hopefully another four to six properties in the coming year.

The history of MBK has always been in acquisitions, that’s where our growth has come from. And it continues to be our primary driver.

We are in the beginning stages of talking about potentially doing some co-investment on development, maybe a minority ownership interest, and doing some ground-up development to bring lots of new communities. Not only cost, but the ability to get materials — I think all of that continues to be very challenging, especially on the development side.

Pricing on the acquisition side is still a little bit frothy and it can be hard to find the right opportunities in the right areas. We typically tend to focus our efforts on primary and secondary markets, which a lot of folks do. So, there is a lot of interest when a property comes to market and it does tend to drive pricing up.

Again, we’re going to make sure that — even though we say we want to grow, and we would like to triple the size of our company in the coming years — we’re not going to do it just for the sake of saying, ‘Look at us, we’re bigger.’ We want to find smart deals, opportunities that are Class A products or that we can put some CapEx into and turn them into a Class A product.

In November, we took on our first acquisition, which was the first one in a year and a half or so, and I’ll be the first to admit we were a little rusty. It was a little choppy as we got going with the integration of that community, but since then, we’ve circled our team up, we’ve talked through the proper steps, and made sure we have what’s needed day one, week one, month one.

[We need to] make sure that our integration process is very smooth, that we have the right level of support without overdoing it. Because you can bombard a new community or a new team and overwhelm them with too much information and too much new stuff all at once. So, we’re trying to make sure that we have a good cadence to it as we go, that we’re there to support, that they know who to call, when to call, or just to call if they have a question or are not sure what to do.

And then, we’ll work through a very succinct schedule and checklist to make sure that we can onboard them appropriately, and so that we can, in fact, keep that culture strong. We need to make sure that we do some upfront meetings with them just prior to the acquisition being finalized, that we make sure we introduce me, my key leaders, our HR team … so that they feel comfortable reaching out.

And then once the deal closes and we’re officially the owners, on day one we start the process and a stream of activities and duties to make sure that that new team feels a part of it all.

On piloting and adopting new technology:

I think all of us realize that this industry tends to be kind of behind the times, we have a lot of manual processes.

Still, we have piloted a handful of products and different systems over the past couple of years, especially. Many of them just ultimately did not pan out or did not give us what we thought were the advantages that they proclaimed they did.

A couple other things we have adopted to try to improve the quality of life of our residents and the engagement with them. And again, we’re still looking for ways to try to improve the efficiencies of what our team members do on a day-to-day basis.

It’s not easy because, again, we’re a midsize company at 35 current communities. So, we don’t have the time and the resources or the money to go out there and test everything out there. We’re partnering with other companies like Direct Supply and others that are looking at technologies and finding ways that we can learn from what other people have already tested.

If we do pilot a new program, we’ll ask for references and we’ll talk to the companies that are actually using those programs. We’re not looking necessarily to be the first one to use new technology, we want to find things that we feel are solid, that do produce the results that the company may claim they do.

We make sure we aren’t just haphazardly throwing too much at our teams, because again, they’re stretched thin as it is, and they can only do so many new projects or tackle so many new tasks. So if you throw too much at them, even if you’re trying to help or be innovative, it could ultimately cause more pressure and more burnout along the way. So we’re trying to balance all that as we go.

On the biggest opportunities and challenges ahead in 2022:

I think the biggest concern continues to be the staffing. How do we see our way through these workforce challenges, and hopefully restabilize our workforce to where we don’t have the level of overtime, and certainly the level of agency usage.

What’s exciting to me is, as things continue to open up, just helping seniors and their families, taking that pressure off of them.

We had our leadership retreat this past September, so it’s been a while now. But we had a resident’s family come in and speak to our team, and speak about her experience at our location near San Diego. And it was such a heartfelt moment for her. What she spoke about mostly was how much pressure was lifted off her shoulders. That enabled her to go from being an adult caregiver and allowing her to go back to being a daughter again. It was just such a powerful statement, and that’s what we’re here for.

We’re here to obviously take care of our seniors, but we’re here to take care of their families, to ease that pressure so that they can be a family and not be worried. So, that’s where we get our reward, and that’s where the ‘second paycheck’ is, as a lot of folks refer to it.

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