After a “tricky” time in 2022, English Meadows is putting the pieces together on several initiatives that in piecemeal will help accelerate the company’s growth and evolution in the year ahead.
This year, the Christiansburg, Virginia-based operator plans to focus on stabilizing recently-acquired managed properties, opening new communities and identifying future properties to potentially acquire.
English Meadows and its memory care brand Lavender Hills operates 10 memory care communities, and the company’s property management firm, Twenty/20 Management, manages 26 IL, AL and memory care properties in five states.
Across its fully-owned portfolio, average occupancy is nearly maxed out, with communities ranging between 98% and 100% census and many with lengthy waiting lists, Williams said. While interest rates remain high and dissuade portfolio growth via new development, English Meadows will focus on existing properties, while wrapping construction on in-progress projects that started prior to the pandemic.
Among the company’s current initiatives is a home care pilot that is slated to be rolled out among its various communities and new ways to pay and schedule employees.
“We’re looking to have a true ecosystem in the communities that we work in to where we can offer a host of services outside of the four walls to those communities,” Williams said.
Growth and pivoting to home care
In 2019, English Meadows acquired multiple properties following a $17 million sale-leaseback agreement with real estate investment trust LTC Properties. With construction costs high, new development has slowed to opportunities in mergers and acquisitions. As such, the company’s management has taken an emphasis on turnaround properties.
Last year, Twenty/20 Management partnered with CR Senior Living to take over management of 14 communities, and the company is still determining which properties to purchase outright. And the English Meadows footprint will soon expand beyond the four-walls of a traditional senior living community.
The company’s ongoing home care pilot is slated to be rolled out in communities across the New River Valley area in Virginia this year. If successful, the company’s leaders will expand it to other communities at a later date.
Looking ahead, Williams noted that English Meadows and Twenty/20 Management will continue to focus growth in the mid-Atlantic region with the Virginias and Carolinas as the company’s “key points,” with further growth into Tennessee possible.
“I think when rates start going down and some of the price issues ease, I think we are going to see property values take off and we’re excited about it,” Williams said.
In April, English Meadows will open a Washington, D.C.-area community, and the company has several development contracts ongoing elsewhere. With those projects, the company’s immediate focus is shifting to active adult. They include a 12-story active adult community with restaurant and rooftop park in Virginia, and two sites in the Carolinas set for development in the near future, he added.
“Most of our work comes in taking properties that are not performing well and redoing that culture and reestablishing care while putting resources into existing communities,” Williams said.
On the whole, Williams believes there is much opportunity to be had in the mid-Atlantic region and U.S. Southeast. His thinking stems from a belief that these markets will continue to grow in population, and with that increase the number of age- and income-qualified seniors.
“We really feel like the Carolinas and the Virginias will see a lot of benefit from population growth,” Williams said
With high costs tamping down demand, Willaims said he believes M&A activity in senior living would only continue in 2023, even with interest rates so high above historical levels. Personally, Williams said he has looked at 100 properties in the last six months.
“I think there’s some big opportunity to buy because of the rates and cap rates,” Williams noted. “I think that’s going to pay off in five years.”
But Williams also said construction could ramp up if costs remain down, with emphasis on active adult offerings in primary markets in the region to feed into the company’s system as a regional powerhouse. New development would take off further if interest rates returned to 4% or 5%, Williams added.
Restructuring management, solving labor pressures
The company also restructured its management team, adding Louis Coetzer as chief operating officer, along with restructuring community-level management and implementing new technology to identify efficiencies to improve operations to be completed in 3Q23.
With that restructuring also comes a new ownership structure, with Williams noting the company would become employee-owned, with opportunities for staff to buy in.
“Louis is really trying to build standards,” Williams said. “We wanted to identify that this is our model, and using the same thing at all buildings we own, operate and manage.”
In managing the recently-acquired CR Senior Living properties in North Carolina, South Carolina and Georgia, Twenty/20 Management increased starting wages to match existing properties in the portfolio.
Williams noted management continues to “play around” with three-and-four-day work weeks for employees.
“We see a lot of advantages to that and we’re not alone in trying this,” Williams said. “We’re working on that.”
To incentivize employees to remain under the English Meadows and Twenty/20 umbrella, the management team is currently working on a bonus-pay structure based on attendance. While feeling the squeeze of margin compression from adjusting starting wages to $15 per hour, Williams said the move was the “right decision” and improved labor pressures companywide.
English Meadows has also eliminated agency labor across its portfolio, something that Williams said was a major cost savings.
“We’re fine-tuning all of our management departments so that we have this consistency throughout the company,” Williams said. “Having everyone know each other pays off in the long run and stability and consistency is what we strive for.”