Seasoned multifamily real estate developer Lynn Carlson Schell had an epiphany about senior housing in an unusual place. Arriving at a dated and dumpy hotel about 10 years ago, she grumbled about why her assistant booked it. But when she entered and saw it was a Westin, Schell was relieved, assured that she would enjoy the high-end service, contemporary design, and amenities found at all of its hotels.
This experience prompted a question and an idea: Why don’t developers of apartments or senior-living buildings brand them like hotels? Most builders use different names for each of their offerings, ignoring the real estate mantra that bricks, sticks, and mortar act as an effective billboard for attracting residents. Ignoring this unspoken rule leaves consumers in the dark about levels of service, quality, and features.
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Schell, CEO of Shelter Corp. in Minnetonka, already was looking for ways to expand her company beyond its traditional multifamily housing projects. The more she researched the demographic potential of the “silver tsunami,” the more she realized the senior market would be the perfect place to test a new concept. By 2035, one in five people in the United States will be 65-plus, with the population segment expanding from 48 million to 79 million, according to a Harvard Joint Center for Housing Studies report.
First came the brand: The Waters. Later came the company, spun out from Shelter in 2015 as an independent entity flush with capital from outside investors. From the first building in 2013, in Plymouth, to its 11th opening next year, The Waters has built its reputation as a pioneer and player in the Twin Cities senior-housing sector.
It grew from startup to $56.5 million in annual revenue last year—the third-largest woman-owned business in Minnesota. And as its three new buildings open this year and next, revenue is estimated to top $80 million annually by 2020. “If the building says who we are, it’s a big next step to create an experience and brand that we can communicate to garner customer loyalty and then more customers,” says Schell, who owns 65 percent of The Waters Senior Living Group and serves as president and CEO. “We were out front on that. We had an innovative, creative perspective and a unique idea, and I think we’ve executed on it exceptionally well. Now the industry has really moved in this direction.”
A living model of wellness
Schell and her Shelter team started developing The Waters brand in 2010. It would exemplify lively communities that help seniors age in place with independent apartments, assisted living, and memory care. The brand also pairs hospitality with senior living, featuring hotel-style services and amenities, including restaurant dining with chef-prepared cuisine, regular housekeeping, and spa and concierge offerings.
This separates The Waters from a clinical, one-size-fits-all mindset often found in nursing homes and assisted living, Schell says. The Waters, focused on private-pay residents, offers high-end, personalized customer service with an emphasis on holistic health and wellness.
Most people pay out of pocket for senior housing, says Jeff Vrieze, chief industry officer for health care at CliftonLarsonAllen (CLA), an accounting and professional services firm in Minneapolis. (Medicaid waivers are more commonly used in nursing home facilities.)
Within this marketplace, The Waters prices at a premium. The National Investment Center for Seniors Housing & Care (NIC) reports that in the Twin Cities metro area, average monthly rent for majority independent living units is $2,233 in 2018. By comparison, at The Waters Highland Park in St. Paul, monthly rent for a one-bedroom unit averages $3,888. Schell would argue that The Waters’ model is inclusive rather than unbundled and fee-based. Waters rent includes a $375 monthly food allowance at its restaurant or café, weekly light housekeeping, an emergency pendant and “I’m OK” checks, cable and Wi-Fi, utilities, and programming.
As Schell was noodling on concepts for her new line of senior communities, she connected with Mary Jo Kreitzer, director of the Earl E. Bakken Center for Spirituality and Healing at the University of Minnesota. They collaborated on executing Schell’s health and wellness concept at The Waters.
The company adopted the Bakken Center’s well-being model that addresses the whole person—mind, body, and spirit—in six areas: health, relationships, security, purpose, community, and environment. Everything that happens at The Waters, from programming to hotel-style architecture and senior-friendly lighting, springs from this model, Kreitzer says.
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“I think The Waters really offers a comprehensive whole-person approach, where residents are part of a community and build connections with people,” says Kreitzer, who is also a registered nurse. “They’ve been an early leader in taking this well-being approach and are developing a lot of depth with integrative therapies and healing practices.”
It’s a mutually beneficial relationship, Kreitzer adds. The Waters has become a training ground for nursing students, a living lab for professors to conduct research in senior care, and an employer where many graduates of the U’s doctor of nursing practice program put their integrative health and healing education to use in leadership positions.
The Waters’ well-being model plays out in myriad ways. To address seniors’ high risk of falling, the buildings offer classes in tai chi, laughter yoga, and balance. Residents can participate in volunteer activities, attend group discussions or classes taught by college professors, or learn baking and drumming. They are examples, Schell says, of how rich programming provides purpose, keeps residents engaged, and forges friendships.
Then there is the health side of its model, with higher-than-industry-average resident/care-staff ratios. When residents first move in, they meet with one of The Waters’ registered nurses to share their life story and flesh out the health care services they need. Every building has a licensed nurse on-site around the clock. Plus, residents may pay for additional services to help them with daily living activities, such as medication management, bathing, or nebulizer treatments.
It’s this complete package of care and purpose—a mission-driven for-profit—that inspired Tami Kozikowski to “unretire” for the second time after high-profile jobs at Life Time Fitness and Advance Auto Parts. She started as COO of The Waters this April, attracted by its branded hospitality model and potential for growth in the rapidly expanding senior sector
. “I think The Waters combines wellness with safety and environment and community, and puts it all together to help our seniors age with purpose and dignity,” says Kozikowski. “It’s about marrying hospitality with care. We’re providing community and outlets and a staff that knows your preferences; all of that helps you to thrive and hopefully live a little longer and enjoy the days of your golden years.”
Seniors with resources have bought into The Waters concept, filling buildings to a 95 percent average occupancy. CliftonLarsonAllen’s Vrieze believes The Waters has grown quickly and steadily in the private-pay, preventive care arena thanks to its model.
“Their approach around this holistic, wellness type of care is really where the difference is,” Vrieze says. “When it’s about the person and not just the real estate, I think there is a high degree of probability for success. Their strategy is one of the reasons driving the success of their business.”
Keys to growth
Since The Waters opened its first building in 2013, it has added about two communities a year on average. Generally, cities have been receptive to the zoning changes required to create senior care on an infill site, though getting approvals for projects often takes longer than expected, says John Hunsicker, vice president of capital markets at The Waters.
To meet demand for senior housing and propel its brand, The Waters first pursued growth by building a critical mass of properties in the Twin Cities. This approach helps operationally, allowing executives to travel easily among properties to check in and to pool staff who can rotate among venues when needed. It also builds brand recognition as the various properties serve as billboards, which makes marketing efforts more effective, Hunsicker explains.
The company targets its marketing to two groups: seniors in their 70s and 80s and their children (especially daughters). The Waters prefers to build infill in established neighborhoods, flush with affluent residents of both groups. Typically, Kozikowski says, The Waters’ populations break down into three groups: people who grew up in the area, those who once lived there and moved back, and people with children or grandchildren nearby.
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It places facilities near community services, religious institutions, and amenities that residents continue to use, bucking an earlier trend of putting senior buildings in pastoral settings. This way, residents stay connected to their communities, and family members can pop in and join relatives for visits, meals, and activities, Hunsicker says.
This discriminating eye toward location, as well as offering seniors the services and amenities they want, helps The Waters attract and retain residents, says Herb Tousley, director of real estate programs and the Shenehon Center for Real Estate at the University of St. Thomas. “Their locations tend to be in upscale areas where there is demand for that kind of housing and people have resources to pay for their housing, which isn’t necessarily the least expensive alternative,” he says. “They provide a lot of amenities at a good value in good neighborhoods where people want to be.”
The Waters will continue looking for opportunities to grow in the Twin Cities, but it now has stiffer competition for high-end senior housing from nonprofit developers like Ebenezer and Presbyterian Homes & Services and for-profit competitors like Minneapolis-based Ryan Cos. and Brookdale Senior Living, a national developer based in Tennessee. They all face increasing competition for land from multifamily developers as the building boom continues unabated in much of the United States.
One aspect that differentiates The Waters, though, is that the company builds, owns, and manages its properties, giving residents and investors confidence that the company is in it for the long-term, Tousley says.
Confident in its approach and aiming to maintain its growth rate, The Waters started investigating new out-of-state markets for expansion about six years ago. The company disclosed few details, but The Waters has attracted private capital from investors. Construction loans from banks and institutional private equity also play a role, Hunsicker says. Each project costs roughly $30 million to $40 million to develop.
Schell and her team have sought places that don’t stray too far from Minnesota geographically or culturally, with similar demographics of seniors, income, supply and demand, and economic vibrancy.
The Pittsburgh and Milwaukee areas became the first targets for The Waters, with openings this fall and next spring, respectively. They are the opening forays in the company’s plan to add one to three new complexes a year, and about four in each market, Hunsicker says. Chicago’s northwestern suburbs are up next. The Waters will consider markets like Kansas City and St. Louis as potential next steps in a year or two.
“When the time is right, we’ll look at fifth and sixth and seventh states—whatever it takes to continue to expand,” Hunsicker adds. “But our goal from an operational standpoint is not to have one in Pittsburgh, one in Milwaukee, and one in Kansas City. We want to build out our markets. That’s the most efficient for our brand.”
The Waters continues to innovate, incorporating what it’s learned from previous projects and residents’ changing desires. Most sites now have a pub for social gatherings, while others offer respite care for people who are recovering from an illness or hospital stay. It’s the opportunity to evolve and grow that drives Schell after decades in the real estate business.
“What’s next for The Waters intrigues me. I think we’ll continue to perfect what’s working really well for our residents, and we’ll continue to innovate and look for partners that will help us focus on people’s strengths and well-being,” she says. “We want to make sure residents feel they belong here and can live healthy here.”
That’s been her mission all along: filling a pressing gap in the housing market while providing invigorating, safe, welcoming communities where seniors thrive.
Source: https://t-tees.com
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