President of Anthology: Retirement Home Industry Offers ‘Huge’ Opportunities Despite Great Development Challenges


When CA Ventures launched Anthology Senior Living 2018, Justin Dickinson thought the company’s new president, Ben Burke, wouldn’t be going anywhere for a while.

In 2021, Dickinson joined Waterton, the parent company of Pathway to Living, eventually leading the senior living operator following the departure of co-founder and former CEO Jerry Finis.

Then, earlier this year, Burke left Anthology to start his own active adult business, leaving a vacant executive position at the company. Soon after, Dickinson realized it was his destiny to join his former employer; and in October, he became a “boomerang employee” with Anthology returning to lead it as president.

“I was approached with an opportunity that I really couldn’t turn down, to come back to CA, which is a place close to my heart,” Dickinson said during a discussion at the 2022 Senior Housing News BUILD conference. in Chicago. “It made sense for me to come back to the platform – I couldn’t be happier.”

Chicago-based Anthology operates a portfolio of approximately 46 communities in 16 states. The company plans to increase that number with seven communities currently under construction and six more projects slated for completion in 2023.

Dickinson takes the reins of Anthology and its portfolio ahead of a potentially difficult year for seniors housing developers due to exorbitant costs and other headwinds. But he remains optimistic about the future of the retirement home given the opportunities on the horizon. and the good nature of the work.

“There are a lot of negatives that we’ve talked about as an industry,” Dickson said. “But at the end of the day, when I lay my head down, I think about how people need care and we provide care. That’s what we do as an industry.

Survive the “storm”

Like other 2022 senior living developers, Anthology is struggling to fund deals. As the practice colloquially known as stretch and fake comes to an end, capital providers’ patience has “diminished to its absolute maximum”, resulting in a “perfect storm” of conditions, according to Dickinson. .

“Lenders and financial partners just raise their hands and say, ‘Enough is enough, we can’t fund any more capital calls, we need to get bad debts off our books,'” Dickinson said.

He added that even Anthology, a vertically integrated company with strong relationships with respected institutional investors, is struggling to capitalize deals at this point in 2022. One of the company’s financial partners is Harrison Street, which formed a joint venture with Anthology to develop two additional communities in Boston and a third project in Boynton Beach, Florida.

At the same time, rising interest rates and cost inflation are putting pressure on senior living operations and metrics. With such a large percentage of its floating rate portfolio, Anthology is “very sensitive” to interest rate increases.

“Any time [Jerome] Powell takes the mic, this has a significant impact on our operations as it puts upward pressure on occupancy,” Dickinson said.

When interest rates were at zero, an operator’s effective borrowing rate was 3%, which meant they had to achieve an average occupancy rate of around 60% to cover operating expenses. operating and 70% to 75% to cover the debt.

Now, with all the cost pressures eating away at margins, operators need to hit occupancy rates of 85% to 90% on a floating rate basis to achieve the same result.

“You’re hit with inflation, you’ve got very high pressures on the occupation and you’ve got financial partners who just raise their hands,” Dickinson said, “It’s a tough environment right now.”

On the day of Dickinson’s appearance at SHN’s BUILD conference, inflation slowed to 7.7% in October, down from the 8.2% increase in September and the 9 .1% since the beginning of the year reached in June, according to the consumer price index.

While all of this is a source of pain for Anthology and other senior living developers, these conditions are expected to slow construction. And even if the pain lingers, it bodes well for future supply and demand dynamics, Dickinson said.

“Who is going to survive this storm, I think, is the question,” he added. “But we have to believe that things will improve.”

“A huge amount of opportunity”

As he alluded to, Dickinson owes his optimism to the ongoing supply-demand dynamics in the industry.

“There’s going to be a huge amount of opportunity in the market in the very short term – it’s already there,” he said.

The opportunities Dickinson sees today are in distressed assets that companies like Anthology can acquire at a steep discount and flip. He also sees a bright future in affordable housing for seniors, and he added that Anthology has 10 such acquisition deals either in contract or in the process of being contracted.

Anthology communities average about 130 units and offer independent living, assisted living, and memory care services. The company typically dedicates 60% of its space to residential units, with the remaining 40% to common areas with amenities.

The company typically chooses sites that are visible to senior residence decision makers, often the adult children of potential residents.

New developments will help the company deepen its footprint in markets where it already has a presence, which Dickinson believes will create operational efficiencies at both the corporate and community level in markets such as Philadelphia, Washington, DC, Boston and parts of Florida.

With a parent organization as diverse as CA, it stands to reason that Anthology would venture into multi-generational/academic projects. But, despite the consideration of the possibility, this kind of project is not on the horizon anytime soon.

“CA is diverse in its food groups and senior life is very distinct and different,” Dickinson said, adding that active adult is also not an asset class Anthology will enter in the near future.

However, there is an adjacent type of product that caught his eye: behavioral health. Over the past few months, he’s been working with consultants to learn about the space and think about how it might fit into what Anthology is already doing.

“I think time to go to Malibu for treatment [substance use disorders] is over,” Dickinson said. “Patients and payers are looking for a more affordable option, which means their backyard.”

For this to work, an operator and a developer would have to be associated with an approved beneficiary, according to Dickinson. For now, he remains focused on fine-tuning Anthology’s operations and its current pipeline, which could still grow beyond the six deals yet to be completed.

Although conditions are tough right now, Dickinson believes the new generation of baby boomers will ultimately serve as a “saving grace” to occupation and income. And it’s an outcome he’s preparing for as president of Anthology.

“Despite these macro real estate issues, which are scary and not fun to talk about, the bottom line is that people need to be taken care of,” he said. “We’re doing it well as an industry and it’s not going to change, it’s going to grow. So how do we position ourselves for this? »

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