Eric Mendelsohn on Thursday provided a peek into National Health Investors’ playbook for helping its operators stay competitive when a new senior living community is opening nearby.
Increasing competition is something that many operators have experienced in a booming economy as developers plan for the coming “silver wave” of baby boomers. Oversupply exists in several markets.
“We have seen a lot of developers who used to be multifamily, who used to be residential, enter our space,” the real estate investment trust’s president and CEO said at the REITweek Investor Conference in New York by Nareit, a Washington, D.C.-based association for real estate investment trusts and real estate companies.
When a competing community is preparing to open, Mendelsohn said, NHI:
- Conducts a market study. “We make sure that [the NHI operator is] positioned and putting their best foot forward,” he said.
- Discusses potential capital expenditures. “The operator would fix up their building, refresh the paint, the carpet, the landscaping,” Mendelsohn said.
- Mystery shops “and make sure that their marketing materials and marketing staff are on their game,” he said.
- Examines the website. “We would crawl their websites to make sure that they’re doing appropriate SEO, SEM [search engine optimization and search engine marketing] with their internet leads and followup,” Mendelsohn said.
Having more operating knowledge or being more financially healthy than the competition doesn’t necessarily protect smart providers from the destabilizing forces that a competitor can bring — for instance, as it lowers prices to try to grab market share. And a failing community also can sour employees on careers in senior living at a time when fierce competition for workers exists.
“Senior housing in particular is challenged because, would you rather work at TGI Fridays or Target and earn $15 an hour, or would you rather be a caregiver?” Mendelsohn said. “The trick for senior housing is finding people who believe in the mission of taking care of seniors. It’s not easy work,” he added.
But having a plan increases the chances for success.