How Oakmont, Juniper Communities, Solera Senior Living Are Building Back Occupancy and NOI

Occupancy and net operating income are two operational metrics senior living operators have worked to increase since the pandemic sent both tumbling in 2020.

While the industry is not out of the woods with regard to either, forward-thinking operators have devised effective strategies for increasing occupancy and NOI in the past two years and change.

Oakmont Management Group’s occupancy rate in particular is a testament to the effect that these strategies can have. The company has achieved an occupancy rate of 95% for its portfolio of stabilized communities, according to CEO Courtney Siegel. She attributes this to several factors, including better data collection and more targeted marketing practices.


“Figure out your niche in the market, teach and train and live by your value proposition, and regardless of the age of the asset or new supply in the market, you’re going to have a competitive edge,” Siegel said during a panel discussion on growing occupancy at the 2022 NIC Spring Conference in Dallas.

Occupancy gains are also big parts of Juniper Communities’ and Solera Senior Living’s strategies to boost NOI, as both companies are still predominantly private-pay operators at the end of the day. But both are also wielding strategies to maximize their revenue: for Juniper, through carefully planned care integration and offering services through Medicare Advantage (MA); and for Solera, through a slow and steady focus on rate and margin growth.

“Seamless, integrated care makes a difference in terms of outcomes,” Juniper Communities CEO Lynne Katzmann said during a panel on increasing NOI during the NIC conference. “And those outcomes have an impact on NOI.”


Oakmont’s occupancy strategy

Oakmont’s lease-up portfolio is as well-occupied as some operators’ stabilized portfolios, with an average occupancy rate in the “low to mid-80s,” Siegel said. As such, other operators often ask how the Irvine, California-based company can grow occupancy so quickly in newly opened communities.

Siegel said the operator’s strategy for community openings revolves around two things: casting a wide net at first and collecting lots of data on prospective residents, and holding sales teams accountable while giving them all of the resources they need to be successful.

When Oakmont opens a new community in a market, the company’s sales teams first vet that market to make sure it can support an Oakmont community. Then, when inquiries and leads begin to pour in, the company tracks “every single phone call, what ZIP code they’re coming from, and how they heard of us” in order to create a marketing strategy and find the niche customer, according to Siegel.

“Make your team high-touch,” she added. “And know that your marketing plan is going to evolve every day based upon your vacancy, and your strategies to fill them are going to evolve as new players come to the market.”

As for holding sales teams accountable, Siegel said it is a two-way street, and can only occur with support from the company’s home office.

“It’s … doing our part to give them every dollar and resource to be successful,” she said. “And then on their side, holding up the deal and delivering the results.”

Because occupancy gains hinge on the employees who are providing those services, Oakmont’s home office also puts a considerable amount of time and effort into quickly staffing up communities. The company takes the philosophy that its recruiting practices should be as sophisticated as its marketing department.

To that end, in addition to its normal in-house recruiters, Oakmont also about a year ago created a full-time role focused solely on job fairs. Now, the operator routinely gets anywhere from 25 to 70 applicants at its job fairs — all in California, which is a difficult state in which to hire, according to Siegel.

“We as an industry are full-time recruiters now, and we have to start thinking strategically,” she added. “Our … recruiting efforts need to match those of our marketing.”

Solera’s 3-year horizon for margin growth

Many operators have leaned on occupancy and rate growth as the primary driver of NOI in 2022. Though both operators are working to grow occupancy this year, Juniper and Solera have other tools in their NOI toolbox, too.

For Solera, growing NOI is not as simple as growing rates by as much as 10% or more in 2022. CEO Adam Kaplan’s view is that, because the Denver-based operator does not have a legacy portfolio and is continually taking on new communities, it has less room to enact large upfront rate increases.

“We don’t want to come in, and then all of a sudden rent increases from 4% up to 10%, because we believe we would lose the trust and goodwill of the consumer,” Kaplan said during the NOI panel. “We want to earn that and demonstrate the value that we’re providing to people.”

Given inflation and the rising cost of doing business as a senior living operator, Kaplan believes 2022 is not the year when most operators will recapture their pre-pandemic margins. Instead, he believes it’s going to take as many as three years to do so — and the company is taking that mindset when increasing rates.

“We’re looking at this over a three-year horizon, and we’re saying we have to be patient, and we can’t get greedy,” he said.

Although taking a slower approach will likely erode margins in the short-term, Kaplan is taking a longer view. And he is bullish, given that the operator is growing occupancy at a good rate while experiencing a more favorable operating environment in the form of muted construction starts and the prospect of a demographic demand wave around the corner.

“Our new developments are outpacing our underwriting in terms of census growth and in terms of rate, so we’re seeing good payoff on the top line,” Kaplan said. “As we underwrite these deals and project out in the future years, we’re seeing we’re able to recapture margin … but it’s just going to take some time.”

Juniper finds value in care integration

For Juniper, offering integrated care through its Connect4Life program has long been a centerpiece of its operating model. 

Since launching the program, the Bloomfield, New Jersey-based operator has demonstrated it can lead to better outcomes for residents, including longer length of stay and lower hospitalization rates.

Although the program carries cost savings, it is also a revenue source when layered with the operator’s Medicare Advantage plan, Perennial Advantage, which is an operator-owned set of Medicare Advantage plans born out of the Perennial Consortium.

Juniper has been able to slash hospitalization rates for residents by about half, and readmissions by about 80%, compared to a similar population of older adults not living in one of its communities. When it was implemented, the program also expanded the operator’s length of stay by about 12%, and its occupancy rate by 4% to 5%, according to Katzmann.

That longer length of stay in particular resulted in an increase in care charges by 11%, “which is considerable when you think about where your revenues come from,” she added.

Running the math on how that would affect a hypothetical 100-bed community with rates of about $4,000 per month, Katzmann said that would translate into about $113,000 in added NOI every year. Assuming an 8% cap rate on the property — a conservative estimate, according to Katzmann — its value would rise by about $1.4 million.

“You’re increasing current cash flow by increasing length of stay and increasing care charges,” she said. “If you can increase the value of the property by another $1.4 million, I think that makes sense.”

Companies featured in this article:

, ,