One piece of big news this month in senior living is that one of the largest real estate companies in the United States, Blackstone, is shedding its senior living portfolio after 7 years of big investment. According to the Wall Street Journal and other sources, Blackstone is selling its $1.8 billion senior-housing investment, and in doing so, it will incur losses of more than $600 million. They are so eager to sell that in some cases they are taking a hit of 70 percent less than the purchase price.
In its typical real estate play, Blackstone is said to “buy, fix, then sell” properties. That may work in multi-family housing, but it turns out that senior housing and care is clearly more complex. What they learned is that senior housing and care are much more intensive, involving larger staff payrolls, food service operations and most importantly, the care of the seniors who live in these communities.
Does this mean that senior living is an industry in distress? Absolutely not. In fact, after holding on during the challenging Covid-19 years, senior living is rebounding quite nicely. The National Investment Center, which keeps close tabs on the senior living trends and data, is reporting that for the 17th straight month, occupancy levels in senior living have risen to nearly 88% overall, a big jump from about 80 percent in 2021.
Part of the industry turnaround was the trust the industry built during and after Covid-19. While having to visit loved ones behind glass windows during Covid, the industry embraced technology that helps families and loved ones stay connected, and the industry continues to evolve to appeal to aging boomers, the “silver tsunami” experts have talked about for the last decade. Additionally, construction slowed for several years due to rising interest rates, factors that led to less available inventory.
When Blackstone entered senior living, it turned to national operators such as Brookdale Senior Living to oversee and market its operations. They have pivoted from that approach as they felt a national operator just didn’t have the local connections and touch to succeed. Instead, Blackstone turned to local or regional operators who were more dialed into the referral networks of those communities and better understood how to position senior communities that would resonate with the local population. While that helped, it wasn’t enough in the end and Blackstone moved on.
One industry insider made an astute observation about the Blackstone exit, saying that when you enter senior living, you are buying an apartment inside of a restaurant inside of a medical clinic. In other words, it’s operationally intensive and you better know what you are doing.
The lesson suggests that to succeed in senior living, your approach has to integrate today’s best practices and focus on local. What you are selling in downtown Boston or New York is far from the product and services you need to feature in Omaha or San Diego, and your brand story and marketing approach should be specific and appropriate to attract local prospective residents and their families.
The operators we work with take this approach. Keep it local, know your customer, keep it smart.
Pivot Communication is a senior living marketing firm established in 1998. The company has supported senior living operators from Boston to Washington state in developing brand stories and lead generation strategies that connect prospects to their new homes. www.Pivotcomm.com.
