With seven consecutive quarters of NOI growth, pre-pandemic occupancy levels and staffing challenges moderating, leaders with Sinceri Senior Living see the company on good footing to tackle margins in the second half of 2023 and beyond.
Vancouver, Washington-based Sinceri is building on its current platform of 72 communities through acquisition opportunities rather than development due to the constraints in the debt market and interest rate pressures, according to CEO Chris Belford.
“We have a pipeline of activity that we are looking at from a joint-venture perspective,” Belford told Senior Housing News.
The company had had plenty of evolution since its 2021 rebrand from JEA to Sinceri Senior Living and diversification into services other than standalone memory care. While those efforts are now behind the company, there are still other hills left to climb in the coming year — but Belford is optimistic about the progress it has achieved so far and is looking forward to the coming period.
“Our 2024 goal in a nutshell is margin improvement through occupancy and top-line growth and expense discipline with different offerings,” Belford said.
‘More effective and efficient’
For Sinceri, 2023 has been a year of steady progress in many domains, both in terms of operational improvements and in growth.
The company is making progress on multiple communities it brought into the fold during the darkest days of the pandemic. In 2021, Sinceri acquired from Healthpeak Properties Inc (NYSE: PEAK) eight communities in North and South Carolina. At the time, senior living occupancy was rebounding from pandemic lows. Fast forward to 2023 and the communities are now stabilized with regard to occupancy, Belford said.
Elsewhere in the company’s portfolio, Sinceri has achieved pre-pandemic occupancy levels in the assets it owns. Census across its stabilized portfolio is “hovering in the low 80s,” Belford said, with 90% occupancy being an “ideal” number to shoot for in the months and years ahead.
In May, Sinceri appointed April Young as COO after years with the company in both sales and operational leadership roles. That has helped to boost operational results, according to Belford.
On the staffing front, Belford said that Sinceri has made progress with regional recruiters locating new workers and has had many successes retaining current ones. And he noted that staffing improvements have served as a “secret sauce” to trim the use of agency labor and boost operational results.
He credited the company’s in-house recruitment team’s with filling a good amount of frontline positions in various markets. Digital outreach to prospective employees was crucial to that progress this year, he said.
“I think our agency [usage] is the lowest it’s been over the last four years,” Belford said.
Belford said the company looks to remain competitive with frontline workers by offering quarterly wage increases. He also credited the company’s benefits package, coupled with the ability for staff to earn incentives and bonuses at their respective communities, with helping to improve employee retention.
“Labor retention is key, and really getting people to consider assisted living and memory care as a career opportunity,” Belford said. “It takes a special person to work in senior housing, and putting programs that make it worthwhile for them to come work with us is going to be a key element.”
Last year operators nationwide saw a spike in expenses as inflation shot up the price of goods and materials. Belford said Sinceri was able to find cost efficiencies within each community’s operations to reduce spending.
Sinceri has worked more closely with various procurement partners and vendors to trim expenses. That, coupled with occupancy gains this year, has led to growth in the company’s margins for the last six quarters.
“Many of the things that we were surprised with between 2021 and last year — along with inflation, the pandemic and the cost of that — made us more effective and efficient operators,” Belford said. “So that we can focus on margin and ensure our investors get what they paid for.”
As for where the company is looking to grow next, Sinceri is looking in certain states where it already has clusters of communities, including Oregon, Washington, Georgia and Florida.
“We’re going to stick with our footprint that we have,” Belford said.
Future new growth could take the form of revitalizing or adding onto existing communities for new construction and adding additional service levels — for example, memory care to standalone communities, Belford said.
In the next two to three months, Belford said the company is “close” to inking deals on new portfolio additions in those markets, with additional opportunities popping up in Tennessee all the way up through the Dakotas.
“We see some smaller markets up there that have some opportunity for us, as well,” Belford said.
Belford added that Sinceri’s ability to identify new real estate opportunities would not have been possible without its partnership with Access Industries, which helps identify potential properties for the company.
The senior living industry is in a period of low levels of construction and high interest rates. Although that will moderate any new growth as long as those conditions persist, that also means operators will stand to capitalize on greater demand, as there will simply be fewer new communities to move into in a given year.
That has left existing operators in a favorable position with which to capitalize on the looming demand from the baby boomers, Belford said. It also gives them a period of time with which to experiment and get creative.
Fitting into that theme, Belford said Sinceri next year plans to run “various initiatives on our clinical side” to improve the company’s product lines and provide new services.
Belford also said he felt there was “an opportunity” to improve senior housing regulations to help “control our destiny from a regulatory perspective.” That concern on the regulatory side of the industry, Belford said, stems from some of the wide-ranging regulations implemented on senior living operators during the pandemic.
Already, senior living operators have discussed ways to get in front of regulators and lawmakers on a variety of issues, from immigration to federal reimbursements. And looking ahead, Belford believes that will and should be an effort the industry carries into the coming months and years.
“It would ensure we’re taking care of our residents but also work with regulators on various things and ensure that it’s not overkill on regulations,” Belford said.