Distinctive Living CEO: ‘Tide Has Turned’ for Senior Living Operators in 2024

Distinctive Living has seen rapid growth in the recent past, along with up to 16 communities currently in various stages of development as more opportunities for growth appear on the horizon.

While there’s no specific portfolio number in mind, Distinctive Living CEO Joe Jedlowski told Senior Housing News the Freehold, New Jersey-based operator is continuing to seek new capital partners while furthering relationships with the ownership groups the company already works with. 

Jedlowski said Distinctive is currently exploring the possibility of launching a capital fund to unlock new growth opportunities in the future, from acquisitions to new development.

Distinctive Living operates over 45 communities. Last month, Distinctive acquired Validus Senior Living to grow its corporate support efforts.

“We are excited to pivot from transition to stabilization and fine-tuning the rest of the portfolio,” Jedlowski said during an episode of the SHN Transform podcast.

With multiple sites under development and plans to break ground on a handful of properties this year, Jedlowski said that in 2024 the “tide has turned” for operators to regain pre-pandemic margins and grow occupancy.

Highlights from Jedlowski’s podcast appearance are included below, edited for length and clarity. Subscribe to the Transform podcast via Apple Podcasts, SoundCloud or Google Play.

On the recent acquisition of Validus Senior Living:

This was a significant undertaking for us, one that took over a year to plan and execute. I have previously spearheaded mergers and acquisitions of other management companies, but this acquisition was particularly important. It not only added communities, geography, and resources in our field, but it also provided an opportunity for Distinctive to strategically ensure we have the best talent at our support center. Additionally, it allowed us to expand our resource offerings to our current and future communities on the Distinctive platform.

This acquisition was highly strategic, thoughtful, methodical – and quite honestly, slow. We were very intentional about blending the culture of Validas into the Distinctive culture, ensuring cultural alignment and system integration on both sides. We approached this without preconceived notions about whether Distinctive or Validas did things better. Instead, we aimed to evaluate and determine the best systems and processes for our company, team and investor base.

Over the past year, we tackled people, processes, and systems, conducted pilots and evaluated the outcomes. On April 1, we integrated Validas properties and their management team into Distinctive. The transition has been going well, with cultural assimilation and organizational enthusiasm. There has been a lot of energy and new systems added to our existing structure.

We are now 54 days into this transition, and everyone is pleased with the results so far. We are excited to pivot from transition to stabilization and fine-tuning the rest of the portfolio. Our team recently concluded a two-day senior leadership meeting in our Tampa office, where we focused on results. Starting today, we have a structured strategic business plan for our company and each of our communities. Over the next several months, we will be laser-focused on executing this plan.

On integration between Validus and Distinctive:

First, there’s the process and experience from an operations standpoint. This includes everything from a potential resident’s first digital or marketing interaction with us to their eventual move-out. How do we ensure a uniform experience while maintaining the local flair essential to each of our communities? Our communities must be community-based, and it’s crucial to retain that local feel.

We began as a boutique management and development company – not boutique in size, but in the unique and welcoming atmosphere of our buildings and among our team members. From an integration perspective, we approach this in several ways.

First, we consider the customer experience from the moment they sign the lease. This process is integrated into our electronic lease system, which connects to our accounting system and then our clinical system. This ensures we have a single source of truth. Many companies struggle with multiple data points across different systems — sales CRM, clinical, financial — which can be frustrating for capital partners and business owners. We’ve focused on ensuring all data points align to the same truth, creating a seamless process. Lindsey Hacker, our executive vice president and chief financial officer, has worked with our team and vendors to achieve this integration.

Next is our digital marketing and the use of a senior housing call center for handling all inquiries. This has been a topic of extensive discussion among operators. At my previous company, implementing a call center significantly increased our conversion rates, and we’ve adopted this best practice at Distinctive Living with continued success.

The call center also provides accurate data points within our sales process, tracking the initial contact, speed to lead time, and follow-up actions. Integration also extends to our team members, probably the most crucial aspect.

With a significant number of employees, our People and Culture team, led by Kate Wentworth, has excelled in integrating our HRIS system and improving communication. We solicit real-time feedback from our employees and have implemented tools like goHappy. This system sends text messages and emails regarding welcome messages, health benefits enrollment, and other important updates. Employees can respond, providing feedback that our senior leadership reviews monthly.

Lastly, there’s the resident experience. Integration here means ensuring all systems are interconnected to foster good morale, reduce turnover, promite effective communication, and efficient management of physical resources. This holistic approach aims to create a happy and supportive environment for our residents, which is the ultimate goal of all our integration efforts.

On future acquisition opportunities:

There are many opportunities available right now. Our conversations have primarily been with large institutional investment groups. They have been evaluating their operator base since COVID-19 and are looking for regional operators. They want operators big enough to have adequate resources for institutional reporting and to make tough decisions in a community while ensuring that community’s needs are met.

Our capital partners are seeking a balance in what they are looking for, and we have been focusing on capital groups that geographically fit where we operate. While we aim to expand our business, we only want to do so where it makes sense. For instance, expanding to a 30-unit community in Idaho doesn’t make sense for us from a resource and geography perspective.

I often get asked about our desired size, and my answer is that today’s size is right for us. If we cannot be successful with our current communities, we don’t want to grow. This is a frequent topic in discussions with our senior leadership team and partners. We may pass on opportunities, but we always encourage partners to keep us in mind for future opportunities. It may not be the right time or portfolio for us, or we may have evaluated an opportunity and found it unsuitable.

We ensure that whatever we undertake, we have confidence in our success. Our team needs to feel confident, and the data from the markets we are considering must support our potential for success. Our selective approach has served us well, enabling us to demonstrate results to our capital partners and grow our portfolio over the past three and a half years.

On the evolution of Distinctive Living’s portfolio:

We currently have around 12 buildings in various stages of development and are entering letters of intent (LOIs) for four or five additional properties. This would bring us to approximately 16 communities in development.

Part of our portfolio includes our cottage model, which we refer to as pocket neighborhoods. These typically consist of eight to 12 cottages arranged in a circle with shared amenities like a gazebo, front yards, and driveways. Each campus spans about 20-acres and includes a fully equipped clubhouse. Our business model not only includes these attractive homes but also offers home care services within the cottages, targeting the middle market.

This model allows us to build and lease the cottages simultaneously, unlike traditional developments that take 24 months to build and stabilize. This unique approach has generated significant interest from investors.

In addition to the cottage model, we are also developing more traditional community types. Over the past few years, we’ve diversified our portfolio to include active adult communities with high-end amenities, independent and assisted living and memory care models. These developments are focused on high-barrier-to-entry markets such as the Southeast, Northeast, Florida, and areas outside the [Washington] DC beltway.

Despite higher capital costs, the limited supply of new developments over the past 36 months and increasing demand in these high-barrier markets present great opportunities. We are confident in our strong development partners and our ability to capitalize on these opportunities.

We are excited about the future, including organic growth within our company, which adds to our overall enthusiasm.

On priorities for Distinctive for the remaining six months of 2024:

We have continued to see steady month-over-month portfolio growth in terms of occupancy, revenue, NOI, and margins. These are the key indicators that we are really focusing on.

We are very focused on execution both clinically and from a sales and marketing perspective for two reasons. First, we want to continue capitalizing on low product entering the market. So, we are investing where necessary from a digital standpoint and also focusing on our boots-on-the-ground teams in the buildings. This is where the rubber absolutely meets the road.

While we have a great support center, infrastructure, processes, people, and systems, all of that means nothing if we don’t have great team members in our buildings selling our communities and taking care of our residents and team members. We are very focused on elevating and continuously evaluating the quality of our team members. We are also focused on our sales and marketing initiatives.

We recently brought on additional resources with the Validus acquisition, which was very strategic for the rest of our plan to execute in Q2, Q3, and Q4. We aim to continue being a data-driven company, looking at data points, and providing our operations teams with insights. Despite operators looking at 10,000 things every day, identifying the key three data points can drive better performance in our assets.

Our focus is on becoming better operators and partners to our capital partners, which ultimately means achieving better results. We are very proud of our progress and are already looking into budgets while thinking about how to continue driving revenue. We have discussed our levels of care and our increases over the years, and we are already planning for Q4.

We are thinking about our interactions with residents and team members to set clear expectations months before they take effect. We are planting the seeds early. We are very happy with how 2024 is shaping up and expect to finish the year strong.

On staffing and leadership development:

So, and it’s part of why this Validus transition was so important for us. In a couple of areas, certainly from a data perspective, how do we become more efficient? How do we get more efficient for our team? That was one thing that is a big undertaking, and we’re continuing to evolve efficiencies from our staff perspective.

It’s one of the things we’re also excited about from a development standpoint because we have the ability to create these brand new buildings. How do we make them efficient for our staff? How do we build them to be efficient operationally? One of the things that we’ve been doing with every one of our initiatives is with the mindset that it’s not to add another task to our community teams but to figure out how to layer onto a system that we already have, fully integrated. That’s why the integration question we talked about earlier is so pivotal.

Because our staff is at breaking points. Let’s be honest, it’s a fight every day to keep staffing agencies out of our communities and to keep our staff happy. In these communities, they have the hardest job. Our frontline community staff members have the hardest job with the most demands. For us, we have really talked about how they’re feeling at certain points within their tenure with us. Secondly, what are we asking them to do? We’ve been evaluating all of those tasks.

For example, I’ll talk to you a little bit about our care staff. You don’t have to be a certified care staff to make sure that all the apartments look good, and the beds are made, and that things are in tip-top shape.

We have been saying, “Okay, well, we can get a non-licensed person to go make beds and do those things.” We really look at tasks related to our staff and think, “Okay, out of a pool of 100 staff members in this community, we need 30 care staff members. What do those 30 care staff members really need to be doing from a licensed standpoint, and what can we take off their plate to make their job better and more efficient?

So, we’ve been thinking about how we make our team member experience better? And the way we’ve been evaluating that, quite honestly are those resources that we brought in. It helps us collect data and then brings to the forefront truly, at the end of the day, how do we execute on this data?

From an accounting standpoint, can we bring accounting more centrally? From an HR perspective, we are now working to have a company-wide orientation. So, using some technology, I’m talking about our support center staff actually working on frontline orientation, rather than taking the business office manager or taking the 10 department heads out for five days to do orientation for all new staff.

There’s still a piece of that integration, but we’re trying to take a lot of that off of our team members. Our focus has been allowing them to do the blocking and tackling of the important things of driving our business and taking care of our team members and our residents and removing those mundane tasks as much as possible. So, that’s really been our focus from a staff perspective, from adding team members to the support center perspective, what can we take on rather than leaving at their communities to do?

On supporting new growth with technology:

I believe a couple of things are crucial: first, business analytics. It’s absolutely paramount as we continue to expand our community. While we’ve always prioritized business analytics, we now have the opportunity to involve more team members and improve communication directly with our operators. So, for us, investing in business data analytics has been essential. We recognized its importance early last year and dedicated our time, energy, and efforts to it.

The second component is our sales and marketing. It’s vital to ensure that our sales and marketing platform is aligned seamlessly. From day one, when we take on a new community, our call center and CRM integrations are already in place, fully integrated with our billing and electronic lease systems. Additionally, our support center ensures every lease is properly validated and signed.

This focus has been instrumental in allowing us to expand and scale our business. It ensures we have a comprehensive understanding of the key details driving financial performance, clinical outcomes, and licensing. Ultimately, by excelling in these areas, we’re well-positioned to scale our platform when the time and resources align with the right capital partners.”

On evolving relationships with capital partners and outlook for 2024:

Things have definitely improved between capital and operators, and quite honestly, we couldn’t operate without capital. It’s very, very important. We really value that relationship. I think our outlook is very positive.

We intend to break ground on three or four new developments throughout the year. We are currently exploring the possibility of raising a fund that will help us organically seize growth opportunities.

Certainly, we are very focused on performance. Honestly, even if we don’t take on another asset for the rest of this year, our focus is on executing what we have and driving our business organically internally. That’s the message from our leadership. We’re very excited about all the market demographics and the lack of supply.

We are very much a top-line focused organization. We’re really, really optimistic. I spend a lot of time talking with my peers and other CEOs in our space. I can tell you that a year ago, coming out of NIC coming out of ASHA, it was all doom and gloom. The tide has turned now, even though interest rates may not have shifted yet. Capital is certainly becoming more comfortable with projects and figuring out how to get creative because they also recognize the opportunistic time. However, operating CEOs are also starting to adopt that optimistic perspective, that we’re turning the corner. So, I think as we head into potentially 2025, we’re poised for a lot of success.

It has been a struggle for everyone to figure out how best to move forward, but now figuring out how to capitalize on it all, I think it’s all going to start blossoming and blooming soon. So, let me just say this: I’m cautiously optimistic.

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