The News: The Comforts of Assisted Living

Granger Cobb, president & co-CEO of Emeritus Corp., which operates 307 assisted-living communities encompassing 27,000 units and 32,100 residents across 36 states, talked recently with multi-family Eugene Gilligan about trends in the assisted-living sector.Gilligan: How is the assisted-living sector performing?Cobb: It’s a sector that is doing quite well. Occupancy at our properties is holding up. Our occupancy was 87.1 percent on a same-store basis, and for the first quarter of 2009, it looks like that number will be flat or slightly up. From the fourth quarter of 2008, compared to fourth quarter of 2007, revenue per occupied unit increased by 6 percent. At independent-living developments, there is a large, upfront buy-in requirement. Our housing is need driven. There is no large upfront fee, just a move-in fee, which is typically one month’s rent. Rent is paid on a month-to-month basis. Our residents are less affected by the economy, since they are living on social security and a pension. Their biggest asset is typically their home, and housing values have fallen. But that value may be $400,000, but they may have paid $20,000 when they bought it and they own it free and clear.Gilligan: Where are your properties typically located?Cobb: Most of them are located in secondary and tertiary markets. Cities have been harder hit by the recession than these markets. Our target market is typically the middle and upper-middle class, so we look to build properties at a cost that fits this group. We typically aren’t the most expensive assisted-living housing in an area, and we try to build at around $160,000 a unit. We do have some properties in some urban markets, and some of our properties are the highest price-point in the market, but most of our properties serve the middle market.Gilligan: What amenities are you finding to be important?Cobb: We have been adding emergency-call systems that are wireless. A resident can wear a pendant around his neck and alert us if he has had an accident. There has not been too much else of a high-tech nature. We are always upgrading our facilities to make them fresh and clean and comfortable. It’s not the box that is important; it is what happens inside the box. We’re here to give people peace of mind, and they trust that we are taking good care of their mom and dad. That is the most important thing that our communities and others can provide.