Veteran developer of retirement communities says the industry needs to listen more closely to its customers.
By Matt Valley
Wilson Worley, president of National Retirement Corp. (NRC), has four simple words of advice for his fellow seniors housing developers — listen to the marketplace. All too often projects are funded based on key metrics and not on qualitative analysis, he says.
“I will go to my grave believing that you have to be face to face with your consumer,” says the 75-year-old Worley, who has more than 40 years of development and management experience in retirement communities and healthcare facilities. “You’ve got to talk with them, you’ve got to hear what they are saying and not rely solely on great sites, penetration rates and demographics. That’s not the whole picture.”
Founded by Worley in 1980, Greenville, S.C.-based NRC has developed several active adult communities in the Carolinas and acted as development consultant for organizations seeking to enter the retirement living industry, as was the case with the Alumni Foundation of Iowa State University.
One of NRC’s earliest projects was the Clemson Downs retirement community in Clemson, S.C. The continuing care retirement community has offered independent living, assisted living and skilled nursing options to the Upstate market since 1980, according to the community’s website.
In the mid-1980s, NRC specialized in working with hospitals seeking to develop or sponsor development of a retirement community. The company became a fee developer on several projects for non-profit hospitals as well as for-profit organizations such as American Retirement Corp. (In 2006, Brookdale Senior Living acquired American Retirement Corp. for $1.2 billion in cash.)
Over the past seven years, NRC has been working with Brookdale on developing 65 therapy clinics in the Carolinas, Georgia and Virginia. NRC is currently working on the feasibility of a full-service, mixed-use retirement community on an abandoned golf course site in metro Baton Rouge, La., for a Charlotte developer.
Additionally, Worley is also a principal in Robycross. The Charlotte, N.C.-based firm specializes in the renovation and new construction of retirement community and healthcare facilities.
In 1990, Worley wrote a book titled Retirement Community Development, The Comprehensive Guide For Professionals. In the last chapter, he made 31 predictions regarding housing and healthcare for seniors. Seniors Housing Business recently sat down with Worley at the LeadingAge Conference in Nashville to discuss his company’s evolution and to reflect on his predictions.
Seniors Housing Business: How did you get involved in the Clemson Downs project near Clemson University?
Wilson Worley: In the late 1970s, there was a group of retirees in Clemson that identified the need for a retirement community. They were the folks who said, “We want something different. We do not want the communities with large upfront entrance fees, but we want to have the same kind of services. In 1978 and 1979, entrance fees were about $50,000 to $75,000 for communities.
I’ve always been opposed to the front-end entrance fee commitments myself, and the Clemson folks were as well. I have found that market resistance to be true everywhere that I’ve conducted a feasibility study, especially today when we have so many different options in existence.
I saw a blurb in the paper about what this group of retirees was looking to do, and I contacted the leaders of the group. Many of them had retired from Clemson University. A number of them had moved to Clemson from other parts of the country. At the drop of a hat, they could bring 300 to 500 retirees together to talk about what they were looking for in a retirement community. In that process, that instilled in me that you have got to go to the marketplace to determine what you should be developing. I’ve lived by that rule for the last 40 years.
For example, we initially thought most of the Clemson retirees would choose to live in apartments with the availability of healthcare and other services being available to support their independent living. Not so. About half wanted apartments and the other half wanted to continue to own their own home.
SHB: How was the project financed?
Worley: Initially, there was no equity or development capital available. The president of the university owned about 130 acres of land. He put the land into the deal. We sold an intrastate stock offering that raised about $2 million in equity. Then we put a consortium of savings and loans together to provide the long-term loan on the rental and the skilled nursing facilities. My company was under contract with the stockholder group to develop the rental apartments and skilled nursing.
Around the periphery of the rental housing and the skilled nursing center, my company bought the land from the president of the university as we sold units. We developed about 50 acres on the periphery with attached and detached patio homes. We built about 110 attached patio for-sale homes, fee simple. The community, which really got started in 1979-1983, is still in existence, thriving and expanding today.
SHB: How did you incorporate what you learned from the Clemson Downs project into subsequent developments?
Worley: We would not only hold sessions with seniors to ask them what they were looking for in a retirement community, we advertised that we were going to hold a Retirement Living Options Conference. We might have 200 to 300 people in the audience. We told the seniors what we were thinking about building in a particular location, and we conducted verbal and written surveys.
We let them rank what they felt was most important to be included in the community. We were listening to the marketplace, but at the same time we were pre-selling the community that was going to be developed. This process also allowed the marketplace to take ownership in the community.
SHB: Are there any other particularly noteworthy projects NRC has developed?
Worley: My second project was Green Hills retirement community near Iowa State University
in Ames, Iowa. I was a fee development consultant on that project. The Alumni Foundation of Iowa State University had heard about the Clemson Downs community. They called me and came out
to see Clemson Downs.
The alumni foundation said that it wanted to build something similar. (Today the 30-acre campus includes 58 condominiums and 80 townhomes and an assortment of amenities including restaurant-style dining and a browsing and leisure library.)
We also developed Swansgate Retirement Community, an active adult community on 30 acres of land near Greenville Memorial Hospital in Greenville, South Carolina. The development, which includes about 175 detached for-sale patio homes and condominiums, is still going strong today.
The hospital installed, to my knowledge, the first emergency call system in the country from its emergency room area connected to all the homes.
When someone utilized the emergency call in his or her home, a light underneath the eve of the overhang outside the garage would start blinking. When the emergency responders arrived, they didn’t have to look for an address. They just had to look for that blinking light.
We developed four other active adult sister communities tied to hospitals for support services in the Carolinas.
SHB: You are a principal in Robycross. Can you explain how your affiliation with Robycross came about?
Worley: I was semi-retired in 2007 when Brookdale started developing a number of physical, occupational and speech therapy clinics in its existing communities. Brookdale needed some assistance in getting those clinics built. Over a five- to six-year period, I developed 65 or 66 of those clinics for Brookdale. I needed one company to handle the construction side of the projects.
To ensure quality control, I didn’t want to have a different contractor in each city. I interviewed many firms. I eventually chose Andrew Roby, a 64-year-old, family-owned construction company in Charlotte, North Carolina to do the renovation work. They did a great job with the highest quality of work while working around seniors living and staff working in the communities.
Recognizing that there are a number of communities and healthcare facilities that are 30, 40 or 50 years of age in need of either upgrades or expansions, I suggested to Roby a couple of years ago they should concentrate on the healthcare and retirement industries. They decided to expand into the retirement and healthcare sectors. Robycross is a sister company of Andrew Roby.
SHB: In 1990, you pointed out that the greatest need facing the elderly, developers and service providers was “providing a continuum of affordable housing and services to the aging population, offering the greatest degree of independence while at the same time providing profits to the health providers, developers/builders.” How are we doing as an industry in fulfilling that mission nearly 25 years later?
Worley: I would give the industry an “A” for development of the type of housing and services that the senior population needs to continue to live independently. We’ve certainly put the product in place. According to the American Seniors Housing Association, the 50 largest U.S. for-profit seniors housing owners collectively own 538,141 units.
Most of the product has been for the middle to upper-middle and upper-income retiree. While there are some HUD housing units being developed, I haven’t seen a large concentration in that. I’ve looked at it. I know that other developers have looked at it. It’s such a red-tape process of getting a project developed with federal funds that most organizations have shied away from it.
SHB: We’ve seen the average age in many independent and assisted living communities increase over time. What are the implications?
Worley: If the assisted living component of seniors housing had not become so predominant over the past 20 years, many of those folks with a higher acuity level would be in a nursing home. Instead of paying $3,500 a month, they would be paying $5,500 or more a month. In that sense, we have certainly provided housing at an affordable rate.
SHB: If today you were to list 31 predictions or trends to watch for the industry much like you did in 1990, what would top your list?
Worley: If I were an operator, I would be looking at how we can provide services in the home for seniors. Now that Brookdale and Emeritus Senior Living have merged, Brookdale has 1,100 communities in its portfolio. Organizations like Brookdale (and others not as large) are ideal organizations to undertake home-delivered services from their communities to the largest segment of the retiree market wishing to remain in their existing homes as long as possible.
Certain highly populated areas of seniors create the potential to provide not only home health services, but also transportation, food service, housekeeping, sitters, emergency call, home maintenance, activities at the providing community and other services to allow seniors to remain living independently in their homes for as long as possible.
The operators may not be equipped to do it all themselves, but they might contract with a local organization to provide some of those services.
What does this accomplish aside from providing other community income streams? It provides a bonding between the community and the seniors and their families. When seniors can no longer remain in their home, where will they most likely choose to live? Naturally, they will choose the community serving them.
SHB: Are there any other projects that developers should be pursuing?
Worley: Further, I would consider developing some multi-generational communities where some of the amenities such as fitness centers, pools, tennis courts could be used by both age groups. Many seniors say, “I don’t want to live in a community with just old people.” They don’t necessarily have to live across the street from each other, but they can interact. I think multi-generational communities could be a thing of the future.
I would consider doing more development with colleges and universities. I just did some quick research a few weeks ago regarding some of the universities in the business. The list includes Duke University, Holy Cross College, Dartmouth College, Oberlin College, University of Texas, University of Florida, Penn State, Furman, Iowa State University, Davidson College and University of Alabama. They either own or have the community sitting on their college campus or contiguous with the college campus.
SHB: Why are colleges and universities getting into the seniors housing business?
Worley: The continuing education opportunity for seniors is certainly a draw for the senior marketplace, but the emotional ties seniors have to their alma mater is very strong with the alumni of many colleges and universities. You’re looking at millions of dollars that could come, and have come, from alumni endowments. At the same time, these projects utilize college or university lands that may be sitting idle.