‘Ready to Re-engage’: How The Springs Living, 12 Oaks, Revel Are Gearing Up for 2024

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As senior living operators wind down their operations for 2023, many can look back and see a year of hard-fought recovery. But the road ahead is fraught with challenges as providers continue to focus on occupancy and margins.

The demand outlook for senior living is favorable for 2024, and the industry is set to return to pre-pandemic average occupancy rates by potentially the end of the year. But occupancy remains a challenge even with looming demand, as do margins.

Since the low point of the pandemic, the industry has made good progress adding new residents and keeping current ones from moving out. Now, with much of the low-hanging fruit having been picked, the industry is rapidly moving toward more normal conditions, according to 12 Oaks Senior Living President Greg Puklicz.


“People are ready to re-engage,” Puklicz said during a recent SHN+ TALKS webinar. “I think there was a lot of pent-up demand earlier in the year and now I think from a marketing point of view, I would call it back to normal while steadily moving up.”

Looking ahead to 2024, The Springs Living CEO Fee Stubblefield said the industry’s fate could resemble stories “A Tale of Two Cities,” or “It’s A Wonderful Life.” By that, he means half of the industry is recovering, while the other half struggles to find their footing. In connecting the industry to the latter film, Stubblefield said the industry was losing good leadership talent too quickly, calling for people like James Stewart’s kind-hearted character George Bailey to enter the industry. 

“At the property level people are getting pummeled and we can’t lose them,” Stubblefield said. “We need to figure out how to make these people that make our residents’ lives special.”


‘Period of temperate growth’

Senior living operators including The Springs Living, Revel Communities and 12 Oaks Senior Living are hoping – and planning – that 2024 is the year occupancy crosses a crucial inflection point.

Senior living occupancy gains have continued for nine-straight quarters, with the industry reporting 84.4% occupancy across primary markets tracked by the National Investment Center for Seniors Housing and Care (NIC) in the third quarter, a jump of 0.8%.

Puklicz said occupancy was one of 12 Oaks’”primary focus points” in 2023, reporting steep gains made in the early part of year before move-ins normalized and remained level for the remainder of the year.

The increase in occupancy comes with some well-deserved victories, such as 12 Oaks increasing its portfolio to nearly 40 communities halfway through the year following the acquisition of turnaround properties.

“A lot of the properties that have come online had been very challenged and stagnated,” Puklicz said. “We’ve transitioned in some properties that needed some extra attention.”

Those new additions notwithstanding, the Dallas, Texas-based operator stands to close December with an average occupancy of 78%, having started the year at 61% average occupancy, Puklicz said. That also comes as a quarter of the company’s properties are occupied at or above 90%, a figure that was roughly only 14% last year and 50% of all properties are above 80%, whereas that was 21% at 80% occupied last year.

12 Oaks operates 39 communities across six states with its primary footprint being in Texas and Oklahoma.

Revel Communities COO Danette Opaczewski said the Scottsdale, Arizona-based company reported a similar trajectory on occupancy this year, with a faster rate of gains in the first quarter of 2023 before slowing down to typical seasonal patterns. Three of the company’s 13 communities are stabilized above 93% occupancy, with the company further looking to increase census in the third quarter.

“We’ve seen various forms of occupancy growth across different markets, with some being better than others and we really worked on our pricing and looking at revenue management,” Opaczewski said.

That focus on revenue management stems from Opaczewski’s time in the hospitality industry to closely monitor revenue streams at all times, she added.

McMinnville, Oregon-based The Springs Living is continuing pre-leasing with success at its new The Springs at The Waterfront community in Vancouver, Washington, according to CEO Fee Stubblefield.

Stubblefield noted the company’s current census is “on track and tracking a little bit ahead” of its projections heading into the year. In order to properly gauge the health of the industry, Stubblefield said operators must report occupancy figures delineated by same-store operating results.

The organization reported 92.5% occupancy going into the end of this year, Stubblefield said, having grown net-operating income from 2019 at a rate of 3%. One example of the company’s quick ability to fill-up new properties,

The Springs recently opened The Springs at Happy Valley in January of 2023. Fast-forward today and the community is already at 70% occupancy with positive rental rates. .

“It’s a very positive story,” Stubblefield said. “Our newer stuff is full and it’s the same-store middle stuff that seems to be ones that kind of lag a little bit.”

That tale of new development paying off in an era of slow construction starts was also seen by Revel, Opaczewski said, noting that the company’s newly-opened Revel Folsom community is at 60% occupancy after strong local market interest.

“I think this trend does depend on where you are in your stabilization process and what mortgage you’re in quite frankly,” Opaczewski said.

Overall, Puklicz said he expects “the momentum is going to come back in the new year.”

“We’re going to see positive momentum and the accelerated growth of Q1 and Q2 is in the past and it’s going to be a period of temperate growth,” he added.

Assessing resident pushback to rates

Many operators have had to “press the reset button” when it comes to resident rental rates as they walk a delicate balance between boosting revenue and maintaining occupancy..

From right-sizing rates in specific markets to installing steep rental rate increases, operators are taking different steps to achieve financial prosperity in 2024.

Stubblefield said The Springs Living “backed off” on steep increases this year, averaging an approximate 4% increase in 2024. But the company remains “a lot more aggressive” on market rates with an average 5% market rate increase.

In this context, market rates are used as defining the price of a senior living unit that a new resident would pay to enter a community.

Since 2019, same-store rates have increased about 16% as market rates have increased by around 20% for The Springs Living.

“We’re noticing that we’re kind of at the end of the elasticity curve on rates with the market saying, ‘Hey we’re not going to just keep paying more’,” Stubblefield said.

Revel took a different approach, increasing rental rates at various points throughout the year based on demand, Opaczewski said, with new-resident market rates having been raised between 4% and 8% approximately across the portfolio this year. That flexibility is intentional, Opaczewski added, in order to not price-out residents or scare off potential residents.

For in-place rates, Revel saw about a 4% to 6% increase this year, coming out of two years during the pandemic of no rate increases.

“We’ve been successful on the rate growth and overall the portfolio’s had an average of about 5.4% increase for this year in general,” Opaczewski said.

Market rates for 12 Oaks increased slightly this year by 1.7% on average, while increasing renewal rents about just over 10% this year, Puklicz said. For 2024, that figure could be cut down to 5% to quell any animosity among current residents and to continue to attract new residents.

All three panelists told SHN that they wanted to see greater rate transparency across the industry akin to renting a hotel room or multifamily dwelling in order to bring more people into the senior living fold.

“I’d love to see the industry do a far better job at transparency on rates because there’s plenty of demand out there for everybody and we could all do a better job if we had better information,” Puklicz said.

One of the company’s biggest expenses is on capital, Stubblefield said. By improving rate transparency and pay transparency, operators can work closely with capital partners to define clear objectives in order to achieve fiscal health.

“If we want to as an industry grow up and join the rest of the world, then we need to start considering these things,” Stubblefield said. “We need to be vulnerable to compare ourselves against other industries because capital is making decisions of where to put their money, and until we get more consistent, we’re not going to move the needle.”

Playing offense on margins

Senior living operators have dealt with elevated expenses and challenges on labor for the last four years, and many have reported improved margin growth.

The Springs Living reported an increase in its operating margin of roughly 3% this year, having been able to increase revenue by around 8.5% through occupancy and rate growth. All the while, the company held expense growth to approximately 5%.

“The only way you can recover margin is offense and you can only play defense so much,” Stubblefield said.

Puklicz said 12 Oaks was able to moderate staffing issues and keep expenses in-line with budget projections but noted that margin wasn’t the company’s primary focus due to the turnaround nature of a majority of the portfolio.

“It’s paying attention to details and the culture of the community and making sure we are fully-staffed,” Puklicz said. “We’re going to look at the manifestation of those successes in 2024 in better margin.”

He added that 12 Oaks has “high expectations for 2024” and restoring margin in the near-term.

By stabilizing wage growth and expenses in 2023, Revel has been able to build a pipeline for future leadership development to reduce turnover. The company also recently launched a membership-based program that incorporates amenities and dining.

For next year, Puklicz said he envisions an increase of 8% to 10% occupancy in the year ahead that will be a “continuing restoration of margin.”

While Revel communities remain in lease-up, Opaczewski said she’s shifted her gaze to 2025, the company’s target for stabilization across its portfolio to “get that true stabilized margin.”

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