Cohen: Hurricanes may reduce headwinds for senior living
Capital Senior Living communities and others have been affected by Hurricane/Tropical Storm Harvey and may be affected by Hurricane Irma as well. CEO Larry Cohen sees silver linings in the storm clouds for the senior living industry, however, he said Thursday in a presentation at the Wells Fargo Healthcare Conference in Boston.
Although construction starts have been decreasing for the past six quarters, Cohen said, the industry remains challenged by oversupply.
The hurricanes, he said, will have “a major impact on construction.”
“The biggest headwind the senior housing industry has faced over the last two to three years has been concerns about new building and supply,” Cohen said. “It has started to wane. This will definitely accelerate that pace, because construction workers will relocate to Houston and, if Irma hits Florida, to Florida. We already see an increase in components for construction, in increasing cost, so new buildings will become prohibitively more expensive.”
Capital, headquartered in Dallas, owns and operates 129 senior living communities, with the largest concentration of them, 32, in Texas, Cohen said. One community in Corpus Christi and five in the Houston area were affected by Harvey, he said.
Two of the Houston-area communities — The Waterford at Baytown (independent living, assisted living and memory care) and The Waterford at Deer Park (independent living) — were evacuated before the storm hit and sustained some damage, which will be addressed through insurance, Cohen said. The other three Houston buildings and the Corpus Christi community remain operational, he added.
“Prior to the hurricane, those six buildings averaged 91% occupancy,” Cohen said. “We actually have been improving occupancy since the hurricane as we have moved residents from both our communities and other communities to other Houston-based properties.”
The company's publicized offer to relocate older adults to its communities and assist them in moving has been “very beneficial,” the CEO said. “We've had a lot of move-ins, we have great leads, and fortunately, everyone is safe,” he added.
Cohen said he was reminded of 2005, when people migrated to Houston from New Orleans after Hurricane Katrina. “We're seeing that occur now, from Houston to Dallas,” he said, adding that Capital's largest concentration of communities in the Lone Star State is in the Big D.
The company also has a community in Irma's potential path, Cohen said. Veranda Club offers independent and assisted living in Boca Raton, FL. Capital has operated it since 1992 so has seen it through Hurricane Andrew and other storms, he said, adding, however, that Irma “is expected to be much worse.”
The community's inland location may be a plus, Cohen said, but Capital is not taking any chances.
“We already have shutters up. We have preparations for days,” he said. “We have generators. We have fuel. We have food. We have made dorms for our staff to live there to take care of our residents. Families, if they want to take residents out, can do so, obviously. But we are well-prepared with plans and are just hoping that the storm will not be as harmful as people suggest.”