Early in 2021, Oaks Senior Living operated a portfolio of nine communities as a family-owned business. Now, the operator is more than four times that size, and it has a new CEO priming it for growth.
Oaks, which hit its 25-year anniversary in March, is opening its 39th building in the latter half of 2023 with an additional three communities in the development pipeline in the next two years. The majority of the communities in its portfolio came from Diversified Healthcare Trust (Nasdaq: DHC), which transferred operations of 26 communities from Five Star Senior Living (NYSE: FVE) to Oaks in 2021.
In January, Bear Mahon ascended from the COO role to the role of CEO after a years-long succession process. And he is preparing for the company to continue growing in the years to come.
“While the company as a whole is trying to grow, we’re trying to keep things simple and keep them scalable,” Mahon told Senior Housing News.
When its most recent community opens this summer, Alpharetta, Georgia-based Oaks will have a portfolio of 2,556 units – more than two-thirds of which is assisted living and a little more than a quarter of which is memory care.
When the opportunity to manage a handful of Five Star communities arose in 2021, Mahon decided it would be better to onboard them all at once instead of in phases.
The communities that Oaks Senior Living brought on from Five Star had an average occupancy of less than 50%, while the occupancy of its existing communities at the time exceeded 90%, according to Mahon.
The company’s newest communities, 11 and 14 months old, respectively, have been leasing up faster than expected, bringing the portfolio-wide occupancy to about 80%.
Mahon cut his teeth at Brookdale Senior Living (NYSE: BDK) where he served as VP of operations from September 2016 to April 2018. He also worked with Emeritus, the company that merged with Brookdale in 2014, for more than ten years.
“I was with Emeritus when we went from 80 buildings to 550 and I was with Emeritus/Brookdale when we merged and took it to more than 1,100 buildings,” Mahon said. “I was fortunate to be a part of the transitioning team – running through what it takes.”
So when the chance came for Oaks to take over a sizable portfolio, Mahonopted to leverage that experience and have the whole enterprise on the same wavelength of the onboarding process at the same time.
Still, those buildings present challenges for the operators that are taking them over, Manon said. For one they are more than 20 years old. And, they are small, with 14 of the 16 former Five Star communities having more than 50 units.
But a revamped building design during repositioning can still create a thriving community, according to Mahon. “
“It is a little different today when you’re competing against the new and shiny [communities],” he said.
Despite the challenges of taking over the management of older communities, Oaks is not currently looking to scale up via new development.
“It’s too expensive to build,” Mahon said. “There are a lot of communities, unfortunately, that have not weathered the storm or their ownership groups are looking to exit the industry.”
And Mahon believes that growth, done with culture in mind, has benefits beyond the bottom line. The transitioning of a large portfolio made the management of its legacy communities feel empowered to operate without needing to be guided.
“It frees them up to say ‘hey, you believe in me,’” Mahon said.