Podcast Transcript
Speaker 1:
Welcome to Real Wealth Real Health, the show that empowers you with insights, information, and inspiration to achieve your version of financial wellness. Learn how to balance living a full life today with planning for the future. This podcast is brought to you by Alpha Investing, a real estate centric private capital network that provides exclusive investment opportunities to its members. Now, here are your hosts, AdaPia d’Errico and Daniel Coca.
AdaPia d’Errico:
Hello, and welcome back to another episode of Real Wealth Real Health. Our guest today is Shane Connor. Shane is the vice president of Bull Realty’s Senior Housing Group, and he specializes in the acquisition and disposition of institutional quality, senior housing and healthcare related properties throughout the Southeast. Shane brings over eight years of healthcare industry knowledge, a thousand units of commercial real estate acquisitions, and he supported Fortune 500 clients like Anthem and United Health Group.
AdaPia d’Errico:
Today, we cover all things senior housing. Starting with what we usually think of senior housing, which is nursing homes. So we’re going to take this episode to really blow apart, and get detailed on what senior housing is, defining some subcategories of these senior housing facilities, describing acuities, and then really getting into the trends, and unpacking trends that are affecting the industry. Including the blend of healthcare and housing, increased consolidation, aging in place, and tourism developers, which is that category of developers that are getting into the space looking for returns and quickly finding out that they are getting a lot more than they bargained for.
AdaPia d’Errico:
Because as we dive into in this episode, senior housing is not just a real estate asset to purchase. It is a healthcare business, residents’ lives and livelihood is at stake, and there are many, many opportunities in this space for the right investors, for the right operators, and even for the right developers. All right, Shane, thanks so much for joining us today.
Shane Connor:
Pleasure. Thank you for having me.
AdaPia d’Errico:
Yeah. So this is a big topic for real estate investors and certainly something that here at Alpha we continue to be very interested in as an investor. So today we’re going to talk all things senior living, senior housing from the investment perspective. So I think the best place to start is to define senior living, senior housing? Like first of all, even me, which is it, how do we define it? Let’s talk about that because I think most people, if you say senior living as an investment or anything, they’ll think nursing homes. But as we know, it’s so much broader than that. So what’s your take on that? Let’s define senior living.
Shane Connor:
Yeah. I think a theme that we talk a lot about in the industry, and operators have been talking about for quite a long time, is that we do have an education issue. I think sometimes it’s exacerbated through the media. We usually hear like bad stories about nursing homes. I think for most people when they think of senior living or senior housing, they kind of just have the idea of a nursing home. Obviously it’s much broader than that. If you look at the earliest stages of what could be senior housing, and just an age restricted apartment, 55 and older all the way at the other end with skilled nursing, folks in their late eighties or nineties, you’re talking about four decades worth of demographics, and four decades of aging.
Shane Connor:
So it’s hard to just put one broad stroke on it, but most people when they hear it, that’s kind of what they assume. A lot of nurses running around, very sick people, very kind of dim and dark atmosphere. So you really kind of have that spectrum. We call it kind of the senior housing spectrum as I mentioned in the earliest stages. Sometimes it’s qualified as senior housing. Sometimes it’s not, but your apartments. Apartments that are just aged targeted for folks that are 55 and older. There’s really nothing different about it than a regular apartment multi-family. Just that it’s all folks of the same demographic.
Shane Connor:
Then you’ve got active adult, which is going to be a little more programming and amenities. And some services geared towards the lifestyle of an empty nester. Some resident engage main directors. Maybe you’ve got yoga and wellness, things that those people are looking for at that stage of life, but still no healthcare involved. It’s really still an aged targeted apartment building. Then you’ve got independent living. So as we’re moving across the line, that’s when you’re starting to pay in your monthly rent to get maybe some meals. You have a central kitchen component, you’ve got some transportation. You maybe got some laundry service, but by and large, these people are still coming and going as they want. They’re not really sick at all. They still have all their independence about them. It’s called independent living.
Shane Connor:
Then you’re going to age a little bit more, and then you’re going to get into assisted living where you’ve got active daily living needs, ADLs. That’s where we’re going to start to wrap in some of actual health care component. Today, really getting more to an healthcare environment with assisted living. Folks may have three to four co-morbidities, they’re on a variety of medications. They need help bathing, showering, dressing. They’re much sicker and more acute than they were previously in these other environments. Now they’ve moved along. This could be a freestanding building or these new campus settings are going to have a lot of these in one area. So you build a new building, independent living, assisted living, an offshoot of ADL would be memory care.
Shane Connor:
So usually it’s lumped under assisted living, but it’s basically dementia, and Alzheimer’s, which if you peel back the demographics, unfortunately we’re projected to have significant rise in people over the age of 65 that are going to develop a dementia and Alzheimer’s disease. These require very strict units, kind of locked down. A lot of times you have them in either just a square or a hallway through that folks can’t really get lost if they’re out walking around. Then the most severe, and acute environment would be skilled nursing. That’s the nursing home. That’s what people think about a lot. That’s two phase. That’s short term, post acute. So you have a surgery. You need to go somewhere that’s outside the hospital for a short stay.
Shane Connor:
Those are skilled nursing facilities, but primarily what we’re talking about what people think of is long-term care. So you’re going to be in this environment or you’re very sick. You need kind of registered nurses, round the clock nursing care, and that’s the way end of the spectrum. The most sick, the most acute. Then a CCRC, continuing care retirement community are large plots of land. Developments that would have all of this on one site. Ultimately you could enter in at one stage of your life and kind of make your way through the different subtypes, but you’re not having to leave kind of where you are. So the adult children can kind of settle in, or bring you to where their life is and know that mom or dad or grandma and grandpa is going to be in this same area, as opposed to constantly shuffling around testing new communities and figuring out where we want to go.
AdaPia d’Errico:
Thank you for that. That was very detailed. Really, really great to take that across. So one word that comes up a lot is acuity. For those that don’t know, what does acuity mean when we’re talking about senior living?
Shane Connor:
Yeah. It’s basically like the level of healthcare issues you’re having or the level of sickness. So when we talk about hospitals, you think of a big hospital with an ICU and emergency room. In healthcare industry, these are referred to as your acute care hospitals. High acuity is ICU, ER, you need round the clock care. So when we talk in levels of acuity, it’s like, how sick is the person? How many comorbidities do they have? Basically, how much help is this person going to need? How many medications they’re going to be on. As you get older and potentially sicker, your acuity level rises and that’s why you can’t be in the apartment building anymore.
Shane Connor:
You can’t be in the independent living anymore, because you need help with all of these things that only medical and licensed professionals really in a much care environment can give you. That’s why you age into the other buckets.
AdaPia d’Errico:
Okay, great. Thank you. Yeah, that’s really clear. So in looking at this industry from the perspective of investing. As investors, as real estate investors, and one of the what I really wanted to talk about today with you is trends. Because the trends are changing. This is probably the most demographically driven of real estate investment categories. Then there’s also a lot of misunderstanding from potential in direct investors that don’t really understand that it is an operational business for the most part, and a healthcare business, which we’ll talk about.
AdaPia d’Errico:
So let’s unpack these trends, and the first trend that we were talking about is that there’s this healthcare housing blend. So let’s unpack this trend first. Can we talk also when you do this about these average age of move-ins? Because I think the other thing that we are not always clear on is that the ages at which we need this change, and it’s not like a one and done that you’re only going to be in an active adult community. Eventually, most likely as you were saying, you’re going to end up in memory care. So anyways, that’s the first trend.
Shane Connor:
Yeah. So the blending of healthcare and housing, I think is a trend that we’ve seen continuing, and COVID really blew that one wide open. I think it’s quite apparent now unfortunately. A lot of what we saw in skilled nursing with how the COVID cases really ran through early on in those environments. But ultimately what you have is people that are now in assisted living, a lot of the operators that I talked to were reporting average ages of 88 to 90 years old with two or three comorbidities, and a handful of ADLs, active daily living needs.
Shane Connor:
So when you think about that is what’s priorly been developed is we talk a lot about the baby boomers, and the 10,000 people every day that turned 65. That’s why people talk about senior living. But if the average age is 88 in assisted living, that’s 20 some plus years away from when they turn 65. We shouldn’t even really be talking about 65 year olds. A lot of the development that got done had these big pools, and kind of the spa-like amenities, and the beast droves in the bars. But what a lot of people are now reporting on the ground and buildings that are out there with occupancy issues and residents in them is that they’re on medications. They can’t go to the bar and they’re very sick. They’re not using the pool, because they’re moving into these because they have to now. They have no other choice.
Shane Connor:
So basically the phrase is they’re showing up older and they’re showing up sicker. That’s why the healthcare blend becomes even more important. So one of the things that we can do, and we did a show about this couple of weeks back with somebody who’s really in tune with value-based care, and contracting with at-risk groups who, whether it be Medicare or Medicaid, or the payers are already kind of being paid to be at risk for a population. They just so happened to be now living in your buildings. But you can be bringing in doctors to do rounds, nurse practitioners to do rounds, to be building care plans for the residents in your building.
Shane Connor:
That’s not you doing the healthcare, but you’re bringing more of a healthcare component in, because that’s what your residents are going to need. If they’re on a government reimbursement, they want to keep them out of skilled nursing as much as they can, because it’s going to be a little cheaper to keep them in an assisted living environment. So they will be paying to bring these healthcare services in. But I think it’s becoming more apparent that these operators understand, especially at AL and memory care, they’re in a health care business, and it is a healthcare environment, and a lot of these amenities and these bells and whistles. I think we got to be thinking about these are going to be built more for these active adult communities, maybe the independence. But you’ve got a large age gap there where we were focused so much on the boomers and the 65 and up crowd. But we’re seeing now in the real data that they’re two decades away from even being in. They’re not going to show up there until they have to.
AdaPia d’Errico:
Yeah. We’ve noticed, and I’m sure that you have is… and we’ll talk about this a little bit later. But really I think the point, the really important points are that it is a healthcare business, and that there’s like a values based approach. Because this is as people driven as it gets. The quality of life of the residents. Not to mention the people taking care of them, the nurses like-
Shane Connor:
It’s an operations business wrapped in real estate. It’s a care outcomes business. A good example actually is I recently had a preferred equity fund reach out to me, and asked me if I could just help them look at a deal. It was a ground up development deal for assisted living. They had never done senior housing before. So they sent over the stuff and I looked at everything and I said, “Hey, can you ask these four or five questions of the operator?” They were surprised because my questions didn’t really have much to do with the market study, or the real estate itself. I was asking like, “Ask them about their turnover, ask them about their culture, ask them about their leadership retention.” It was all these things that really had not a lot to do with the real estate.
Shane Connor:
But ultimately as we went through the process, I got them to understand these are the real are the most important, because if they’re not hitting these metrics and they’re not doing these things well, it doesn’t matter what the demographics study says. It doesn’t matter how nice the building is. There will not be people in these beds. You’re not going to make your performer. You’re not going to be happy. I think it’s a great example of how newcomers kind of looking in are totally surprised that you really have to be putting more and more emphasis on the operator, and what they’re doing to drive good outcomes and good care. Because at the end of the day, if I’m going to put my mom in a building, those are the questions I’m asking.
Shane Connor:
I just want to know how good is the care going to be here. Is the caregiver going to be the same, or are you going to be constantly turning them over there, because you don’t have a good leadership culture, and you’re going to be recruiting the bottom of the barrel. What are you paying per hour? Are you rising with the rising minimum wages? Are you paying above market to recruit and retain? Other real estate asset classes, even though they might have some operations components, none of these things are really as important as they are especially in AL and memory.
AdaPia d’Errico:
Yeah. That’s been our experience as well. So we’re seeing that. I think COVID really kind of blew the roof off of the expenses across the board. So it’s a really good point. The things that is the challenge in this industry for, let’s say from Alpha’s perspective of what we’d like to invest in, and the operators is that there’s this vertical integration between somebody who understands the real estate, and understands how to position it. More importantly understands the operations and what we expect. I know because we’ve had these conversations is some increased consolidation in what is a very fragmented industry. So let’s unpack that trend of increased consolidation.
Shane Connor:
Yeah. I definitely think we’re going to continue to see that. I think as you mentioned, very fragmented. You have a percentage at the top, whether it be 15 or 20% of the very large owner operators. Asha top 100 that owned hundreds of communities. Then you have the mom and pops at the very other end of the spectrum. So time owner operators, where they are the business. They may be the ed themselves. They may be the administrator, and the owner. They’ve ran this community for quite a long time. Ironically enough, a lot of these communities were ones that held up better in some cases than some of the bigger buildings throughout COVID. Remained high in occupancy, but it’s put them through a very big challenge. They’ve been stretched in on expenses. They’re not backed by private equity funds or public equity funds.
Shane Connor:
They don’t have the power. If you remember PPE when COVID first started, people couldn’t get PP anywhere. I talked to a few people that were backed by some large capital partners that were like, “Yeah, we’re just going to China directly. We’re bypassing the supply chain.” Well, if you’re a 40 bed mom and pop operator, you’re not going to China directly to buy your PPE. You’re having to struggle to find ways to do that, and you don’t have a lot of capital partners behind you. Now, the staffing piece. Some of these states we see are going to 15 an hour. If you’re at 10 or 11 now, that’s a drastic change to your one P & L business. But if you’re a regional operator, you have some purchasing power behind you, you have some scale, you may be able to absorb that a little better. You’re already getting proactive with paying above market because you can afford it.
Shane Connor:
Your partners are okay with that because they’re looking at the longterm. But if you’re an owner operator, you are going to retire anyway in five years. You’re saying, you know what? This whole COVID thing has been brutal. I’m tired. I’m going to get out of the business now. A lot of them have their net worth and their retirement trapped inside the business. So they need the exit to move on to that next stage. I think those are prime candidates for good regional owner operators now that have maybe 10 or 15 buildings to be able to just kind of easily absorb them within their regional management infrastructure that they already have. Maybe it’s three or four hour radius. They can kind of fold those buildings in without too much kind of hassle.
Shane Connor:
They’re a well-known name, maybe already in the community. So there’s not as big of a change because it’s the other thing in senior living. These families have kind of built good trust with that owner operator, and that mom and pop. This one of the reasons their occupancy has stayed so high because they built a great reputation. Some of these people, when they exit, I remember there was a gentleman I talked to. There’s a group of doctors. They bought a 30 small unit, 35, I think it was assisted living up in the Pacific Northwest. They were one of the lowest bids, but that operator cared so much about the legacy that he had built that he knew this group of physicians was going to provide the best care, and keep the legacy on. So when you’re looking at acquisitions of these smaller, long legacy owner-operators, sometimes it’s just price.
Shane Connor:
Sometimes it’s shortage of clothes, but sometimes it’s also a balance because they don’t want to tarnish the goodwill and the reputation that they’ve built within the marketplace. But I think you’re absolutely right. A lot of consolidation. It’s going to be harder to be in this business as like a single site as we move forward.
Daniel Coca:
So given those trends, one thing I’ve always found surprising about the space, particularly given how operationally intensive it is, how important the management is, is why so many of the owner operators sponsors in the space are focused on ground up development as opposed to acquiring mismanaged facilities, and improving them. And so in your experience, why do you think that that’s the case? And just as a point of reference, I talk about this often with some of our investors in senior housing deals. I remember being at a conference a few years ago, a senior housing conference, and just took a survey out of the room of real estate or senior housing sponsors.
Daniel Coca:
How many of you work in development and 98% of the room raised their hand. And how many work on acquisitions, and I think there were three people. One that we invest with and two that were on their first project. So why is that the case given the trends that we’re seeing and your seeing?
Shane Connor:
Yeah, it’s a good point. Fortunately, I just had a call this morning that was just talking to this point, and I’ll kind of use his quote. But basically this is a vertically integrated company. 39 projects to date, and I think 36 of them have been ground up development. And so we were talking about the residents and the care outcomes, and he used the phrase to relate it to kind of software world user experience. He said in user experience, the hardware matters and the software matters. So he was talking about hardware in the sense that they like to develop their own buildings, because they can really have a say and an influence and really put their own footprint on what that building’s going to look like. The design might be different from market to market. It’s not programmatic.
Shane Connor:
So yes, they can acquire buildings, and they can turn them around. But when they’re in it from the infancy stage, from dirt through, they can really get a sense on what building is going to be good for this demographic. Because senior living is so hyper and local. So niche in each sub market to sub market. So if you’re all the way from the beginning of zoning and approvals through completion, your developing your own building, I just think you have a lot more chance of success getting your culture, and your operations to win there as opposed to trying to fit your mold into what somebody else’s vision was for that given market.
Shane Connor:
So I think you’re absolutely right that I think more and more people want to be vertically integrated. They’re going to develop, they’re going to own, they’re going to operate all under one umbrella, and they’re going to continue to scale their portfolios from 2025 to 50 buildings in the next decade. A lot of that will come from ground up development. So I think you’re spot on with that trend.
AdaPia d’Errico:
Speaking of like of trends and another one, which could be seen as a challenge to what we’re talking about. Which we’re kind of talking about a little bit more up the kind of mid acuity scale is the in the independent living. If I’m not mistaken, that’s where they saw the vacancy increases during COVID. This idea that, well, if I don’t have to go there, then I may as well stay home. So what I’m getting at is aging in place. And is that a headwind to this industry that clearly has a spectrum, but let’s talk about the aging in place. Because a lot of people will say like, “Yeah, but I’ll just stay home.”
Shane Connor:
Yeah. I think it’s a good point. I always like to say, when you sit back and you actually stare into the sheer demographic growth from now until 2050, then it slightly tops off. I think, don’t quote me, but I think it’s pretty accurate. 2034 I think is the year when there’s more people over the age of 65 and under 18 in the US. So we will need all solutions. I don’t believe that senior housing or bust. I don’t bash home health. I think we need all the solutions for a variety of reasons. One, we just need that much solutions because there’s that much demographic. Two, there’s going to be a lot of personal choice. I think aging in place is good. I think home health is good, but I think they can all marry together.
Shane Connor:
So if you look at assisted living now, that’s the needs based. Like you said, AL have the most vacancy. People are still showing up to AL now because they have to. Even if you add home health and you have technology and services, you could still get to a point where it may be more expensive to be at home, because you’re paying for two caregivers around the clock to be in your house, or the social aspect, which doesn’t get talked about a lot when I think it was Biden’s infrastructure plan came out. There was like 400 billion towards home-based and community-based services, which is fantastic.
Shane Connor:
We need more investment there, but then you get the headlines that say senior housing is dead. 400 billion in OML infrastructure. But the reality is that’s not the case. And there is the social aspect also that you’re getting in the one space product, and you have it in the need-based product too. You have very specialized dementia and Alzheimer’s programming that’s based on research, and experts that know how to best stimulate the environment for those people. You have social engagement. So I look at like my mom who she’s 62 or three, unfortunately, a widow with my dad passing away a couple of years ago. She lives at home. She’s healthy. She probably stay there for a couple of decades, but she’s already experiencing some issues of loneliness. One thing that doesn’t get unpacked is that loneliness really accelerates the decline in someone’s health. So just because we could get all the bells and whistles and somebody could live at home, if they’re literally at home by themselves, is that really the best environment for them?
Shane Connor:
So I think aging in place will help people that don’t want to go into the one lifestyle active adult community there that’s not for them. That will help them stay there until they get to that, “Okay. I need to be in assisted living. I need to be in a healthcare environment.” Others will say, “Yeah, I want to age in a community. I want to live around empty nesters. I’m a widow. I want to maybe meet new people who are also at that stage or point in their life.” We want to travel and do things together. Well, you can only get this living in that kind of community, because it’s curated for you and it’s kind of put together. So that’s usually my feedback to that is I think it’s great. I think we need all of it.
Shane Connor:
We need all of these solutions because when I talked to a lot of developers, they even say, yeah, it’s probably 15 years out, but when we really get into the demographic growth, we probably won’t even be able to keep up with all the supplies. So we need more people to age at home. If you look at the penetration rate, the national penetration rate on senior housing is what? Eight, nine, 10% today. So we still have a pretty big industry and we’re barely even scratching the eligible population that could live in these communities.
Daniel Coca:
If you think about all of that in the context of affordability. Because you don’t have the at-home caregiver to the same degree you did historically. I think some of the numbers I saw, like the ratios dropped from seven to one to four to one recently, meaning there are more women in the workplace. They’re not the primary caregiver for their husbands, for partners at home. You have younger generations that are scattering geographically from where they were born. So that just creates more need and more demand. But at the same time, those groups have affordability issues that are more extreme than in prior generations. What’s the end result? It seems like a really challenging situation to deal with, but I’d be really interested to hear your perspective.
Shane Connor:
You hit the nail on the head. The middle market, and we just did a show on this with a leader in that space and unpacked a lot of this, because you’re absolutely right. The first point that you unpacked, I could not agree with more. I’m an example. Born and raised in Philadelphia. I moved to Atlanta 2012. My mom is still in Philadelphia. We’re years ahead of when this would have to be a thing, but if all things to equal, we won’t be there to kind of take care of. My wife is from Phoenix. We’re in Atlanta. We’re not there to potentially caregiver to her parents when that time gets right. If I look around, a sampling of the friends that I’ve made here, they’ve all moved away from where they grew up. That’s a new kind of phenomena that we have that prior generations didn’t have.
Shane Connor:
They were all kind of right there in the same town, everybody could chip in. So I think you’re absolutely right that the caregiver ratio is not there. But on the affordability piece, you hit the nail on the head. A lot of people are not going to be able to afford these 5000, 6000, 8000 dollars a month buildings, but they may have more assets or more income that would qualify them from where they don’t want to spend down their assets to go to Medicaid or be on true income subsidized housing. So what does that mean? We need something in the middle. Some of the things that I think are working there and operators are looking to do is, okay, let’s strip out what we don’t need.
Shane Connor:
If we go back to the earlier conversation, if they’re showing up odor or showing up sicker, do we need all the other bells and whistles? No. If we’re looking at a blue collar workforce generation, one of the operators said what they do with food is their food programming is pretty basic. It’s good. It’s beans and rice, meat and potatoes, that kind of thing. Then they’ll do it for special occasions, because that’s also what this particular demographic was used to in their life. They kind of pretty basic. Then they had a celebration for a birthday or a holiday. We were comparing that to some of these newer luxury type buildings that it’s five-star meals, and shrimp and lobsters and all that stuff. Well, you can strip a lot of that out and just get down to a good bones of a building with a good culture and good caretakers. That’s what these people are going to need. I think the price point that they were talking about was like 2000 to maybe 3000 a month, which is drastically different than 4,500 to 6,000 a month.
Shane Connor:
So you’re absolutely right. People are still recovering in that demographic a lot from the oh eight, oh nine 401(k) crisis that a lot of their net worth was dropped and there they’ve been rebuilding that. So a lot are not going to have a five to $800,000 nest egg that they can convert to then live in these buildings for a few years. We’re going to be seeing dollar stretch a lot thinner. I think to me, that’s the biggest both challenge and opportunity in senior housing, is how do we get more affordable quality middle-market product out into the marketplace?
AdaPia d’Errico:
Yeah, it’s a lot to consider. As we’re looking to work with more senior living operators that kind of fit this standard that we have. We have a unicorn basically that we work with. Kevin had tightened, and we’ve done some podcasts with him, but we’ve talked about this. How there will be more companies that maybe a little bit newer to the space, like a few years old. But if they can really get all of this right, there’s a huge opportunity. We believe there’s a huge opportunity. I wanted to shift just slightly because as part of this, there’s the real estate, there’s a healthcare component. There’s a tech component that I think we don’t talk about a lot. I know that you have some insights into that.
AdaPia d’Errico:
So could we spend a few minutes on is a category senior tech? I know there’s health tech, lots of health tech, but there are people and companies out there that are building solutions to help from the healthcare side, but all the way to the operational side. I’d love to touch on that and the impact that you think it’s going to have in the overall space of senior living.
Shane Connor:
Yeah. I think tech is an interesting space. So I think operators are really looking at embracing these kinds of solutions. I think some are more ahead. If you look at the company that I spoke with a few weeks back, they actually had… somebody’s job title is like head of innovation. So all they’re doing is thinking about what are the products, what are the services? How can we be building the buildings differently, bringing in sensor-based technologies, consolidating EHR platforms, taking legacy cost systems, and doing away with them or upgrading them. Because yeah, a lot of the mom and pops, a lot of these buildings don’t have any technology. I think one of the issues that some of the operators have expressed is that they’re overwhelmed with not really knowing what’s a good solution, what’s a bad solution. There’s a lot of money getting thrown into this space, and a lot of products being built.
Shane Connor:
But yes, I do think things like sensor-based technologies looking at helping to reduce falls, or cutting down the response time from falls, caregiver and kind of operating type systems that can link all of the workforce within a community onto one central application. So that if something happens, they can load a message and it goes out to everybody. They can respond. That’s kind of all captured. You have some audio based technologies that are being put in, whether it be Bluetooth or another way that they can kind of… the resident can kind of call out and activate the commands, whether it’s I need help or emergency.
Shane Connor:
There was one, I forget the company, but there was one example where they were able to kind of monitor that. Okay, Mr. Smith gets up every morning at X, he opens the fridge. He eats his breakfast and that creates a routine. Well without actually knowing what’s going on, but just sensing today there’s a disruption. This is an everyday routine. There’s a disruption in the routine. They can kind of intervene and get ahead of, “Okay, maybe we need to bring in a physician or a house call.” What ultimately may have been a hospital visit was stopped because the technology helped them notice a disruption kind of in their patterns. So I think tech is going to play a huge role of whether it be from building these buildings to be equipped for communication. We saw that now with the lockdowns. No visitors in, nobody out. Well, how do we keep these people connected within the community? If they all had to stay within their doors because COVID was going in the building, but also with their families.
Shane Connor:
So we were doing Zoom and we were doing FaceTime, but how do we make more of a solution within the community? How do we wire up these rooms to make them tech enabled so that they can easily engage with? Because that was one of the things that people were hesitant to move in. Even after the community start to open up, people were like, “I don’t want to move mom or dad in if all of a sudden we’re not going to be able to see them anymore.” And so as older people have gotten more used to using technology that maybe they didn’t before, I think it’s going to be the new standard now that these buildings are equipped for all kinds of communication. Virtual face and stuff like that. But I think the biggest impact is probably on the prevention, and sensor-based, and kind of bringing caregivers and management all on one platform to respond to things, and be reactive or proactive as opposed to reactive.
Shane Connor:
But I think the challenge is going to be getting through, because a lot of these operators, especially the smaller ones, like you mentioned, they don’t have a head of innovation. They may have somebody that’s wearing three or four hats and now evaluating technology is one of them. Then two, how do we get the cost down to a point that it’s going to be easy to install where it’s not going to hit the bottom line too much. And it’s not something that’s too big that they try to pass on to the resident. Now all of a sudden it makes the rental rate something that they can absorb. So how do we bring solutions that are going to be easy to use? Will it make an impact, and will be cost efficient? Because we don’t want to install the tech just to install the tech. No one’s going to use it. I think that’s the other feedback that I’ve gotten is we want to make sure that this is actually something people want, and it’s going to make a difference.
Daniel Coca:
Yeah. That really my question in practice. How receptive are the current generation of seniors to, you know what I imagine they think of as invasive technology that’s taking their private information? I think about my own father in his sixties, and turning the wifi off every night thinking someone’s going to hack us. And so how does a 85, 90 year old think about technology playing such an important role in their life going forward?
Shane Connor:
Yeah. You hit the nail on the head there as well. I think the privacy concerns are huge, not only from the residents, but also really evaluating this technology, and saying what’s our compliance issues here? Are we crossing a line that we shouldn’t be crossing. But yeah, the adoption has to be there. I think an education piece is going to help with that. I heard one operator that they actually hired a, I think part-time, but they were moving towards full-time kind of like a tech. Forgot what the job title was. It was basically, they built a little onsite tech center. So if residents that were having trouble with their computer, and a virus, or they didn’t know how to use this application, they could just walk down, and meet with the onsite tech guy. I think through that, having somebody there to talk through the issues with them. Let them know it’s safe, it’s encrypted. Here’s how we’re keeping your data safe.
Shane Connor:
I don’t think it will be an on and off switch. I think it’ll be a slow adoption. Some people will adopt at first. Others will be very hesitant, but as the demographics grow, when we get years and years later, it will eventually be the norm as people now who are older adults that are 15 years away from moving in, this will be the standard for them. So I think the folks that are in the buildings now, yeah, I don’t think it’s going to be, “Hey, guess what? We’re installing all these centers in your room tomorrow.” That’s not going to go well. I think it’s going to be a slow gradual implementation that will end up 10 or 15 years down the line. You’ll be a dinosaur if you don’t have stuff like this.
AdaPia d’Errico:
Yeah. There’s a so much to consider, and when we kind of step back and take a look at it from the perspective of investors as we are, and investors with a focus, like it’s really important to us. I would say like with heart, that the quality of life is so important. And so much of this again, is about healthcare. It is quality of life. It’s so many multiple things. We know that there’s a lot of opportunity in the future, probably shorter term. We’ve talked about this fragmentation and this consolidation is probably going to start to accelerate. That’s what we expect too. And even though we take this perspective of investing, and building wealth, which is really important, it highlights to me at least how much is fundamental basically to everything.
AdaPia d’Errico:
You can’t have wealth without health, and I think it’s really important for all investors to understand the nature of this business. So that they’re also not too many degrees removed, and thinking, “I just only want to invest in something for the cash, for the returns, because there’s so much more.” There’s so much more there, and I’m glad that we talked about all this, unpacked a lot of that. Because even as people might be out considering other types of investments with operators, developers, those are all questions that they need to be asking to do the right thing.
Shane Connor:
A hundred percent. Yeah. I think you look at the people that have been in the… there’s a lot of multifamily generation operators in this business. You can tell that they’ve… what stood the test of time because they care, they’re about outcomes. They’re about health. They’re about the residents. They’re not just some real estate investors that thought, “Wow, this is a sexy asset class. Let me get in.” So I think those are great examples of the type of operators, and the type of investors. It takes operators and investors to successfully do this. The capital is just as important. Operations might be a little more important, but the capital can’t work. One can’t work without the other.
Shane Connor:
So I think people that are going to be attractive because just like I say, with home health, we need all solutions. We do need more people getting into this business. We need more operators starting and growing portfolios. We need more investors coming over to the space, but they need to be aware of what this business is, what it really means, really the pleasure you have in providing a space, and a place to live for older generations. But also that that comes with great responsibility. I think COVID may have started to weed out some of the ones that weren’t as committed to that side of the business, or maybe just they had great intentions, but realize it’s more than they want to chew on. I always encourage people because I came from LP Investing in multifamily. That was my first exposure to real estate.
Shane Connor:
So I know a lot of people kind of in that world and people talk about all the time, it’s just silver tsunami, the baby boomers, the demographics, I’m going to get into senior housing. People are getting older, but it’s like, I always kind of just encouraged them to listen to podcasts like this, do your research, because it’s not about just throwing dollars in and getting dollars out. If you want to do that, there’s lots of other asset classes. Go do single tenant net lease or go do whatever. But yes, there is great opportunity and yes, we need more people in, but please take time to get educated, and have the right reason that you’re doing this. Because you can do good and do good financially.
AdaPia d’Errico:
Yeah. I love it. We believe the same thing, the exact same thing. So Shane, last question that we ask all of our guests, and that is what does wealth mean to you?
Shane Connor:
Yes, that’s a good question. I think they’re all the life experiences I’ve had in the last few years. I think wealth to me means health. Being able to get up every day, and do something that you enjoy, and have a passion doing, but also time. I think if anything, through COVID we’ve seen that whether it’s the acceleration of working from home, or hybrid working and the blending of work and life. And how quickly things can change and people were here one day, they were gone the next and people didn’t even get to have a funeral. So I think for me is kind of realizing what is important. I’m an investor, I’m trying to build my actual bank account wealth, but at the end of the day, that won’t go with me. Only kind of experiences will. And so try and do good through the work that you do, but ultimately realizing that it’s shared experiences and time with family and friends that should really supersede just everything, everything else.
AdaPia d’Errico:
Yeah. Beautiful. Well, Shane, thank you so much for spending so much time with us today, and like really digging into it. So informative and we’re going to include the links where people can find you and connect with you. For those listening, when Shane mentioned the show is because he does Clubhouse every Tuesday at five Eastern.
Shane Connor:
Wednesday at 5.
AdaPia d’Errico:
Sorry, Wednesdays at five Eastern. He puts out great content, great guests. So for those that are even more interested in the nuances, that’s where I first found Shane. So we’ll include some links, but any kind of last maybe words about where else people can connect with you?
Shane Connor:
Yeah, absolutely. I think we should get you guys on to talk about investing, making the journey from multi-family to senior housing investing. I think that would be a great show. They could find me pretty easily. I spent a lot of time on LinkedIn. I’m on Twitter. My email is just Shane S-H-A-N-E @bullrealty.com. Happy to get in touch with anybody, help them evaluate a project they might be looking at, or certainly help sell or buy any of their buildings.
AdaPia d’Errico:
Awesome. Thank you, Shane.
Shane Connor:
This was a pleasure. Thank you.
AdaPia d’Errico:
Thanks for tuning in to Real Wealth Real Health. We hope that you’ve enjoyed today’s episode, and found it both informative and insightful. We welcome all your questions, and your feedback about today’s episode. Especially we welcome your questions about specific topics that you would like us to cover. So shoot us an email at podcastatalphai.com. And if you have a moment, we really appreciate ratings, and reviews as it helps us grow our online community, and our interactions with you. We’ll also be linking to a number of relevant articles on topics that we might’ve touched on during our conversations. Some of them are broad, some of them are technical, but we’re always aiming to provide information that helps you better understand the mechanics of building this healthy financial foundation, especially if you’re looking to do this with real estate.
