Executive returns to her old position at a time of explosive growth
for the owner-operator.
By Jeff Shaw
Tana Gall is returning to a familiar role at a familiar company.
Gall took over the reins at Seattle-based owner-operator Merrill Gardens at the start of the year, replacing the retiring David Eskenazy. Strangely enough, one of Eskenazy’s predecessors was… Tana Gall.
Gall served as president from 2013 to 2015, before leaving to pursue other job opportunities. This was during a period of major divestment for the company. Her second stint will come during the opposite — a period of massive growth.
As of June 1, 2019, Merrill Gardens was the 40th largest operator in the United States with 33 properties totaling 4,241 units, according to the American Seniors Housing Association. The company held a 95 percent occupancy rate through 2019, well above the industry average.
In just the last two months of 2019, the company made two major acquisitions:
• Merrill Gardens purchased Portland,
Oregon-based operator Blue Harbor, where Gall was CEO, including its 21 communities in 13 states.
• Merrill Gardens formed a RIDEA joint venture with Toledo, Ohio-based private REIT ReNew, under which Merrill will be operator and part owner of 26 communities that ReNew recently acquired from New Senior Investment Group. (Some of these properties overlap with the previous acquisition, as Blue Harbor was already the operator.)
As a result, the company’s portfolio nearly doubled in size in very short order. The company now boasts 65 communities totaling 7,328 units. Approximately 65 percent of the portfolio is independent living, with the remainder assisted living and memory care.
Seniors Housing Business sat down with Gall to discuss what it’s like to return to her former role and how the company plans to manage its ballooning portfolio.
Seniors Housing Business: Take me through your original tenure at Merrill Gardens, where you were in the interim, and how you ended up coming back.
Tana Gall: I joined Merrill Gardens in 2013. At the time, the company was selling about two-thirds of its portfolio and we were working on building back a leaner, more technologically advanced platform.
We reviewed software applications, which were a patchwork that had evolved over 20 years. Some were integrated but most of them were not. We selected top-rated applications in human resources, comprehensive training records and systems, lead management, electronic health records and staffing systems. This has delivered direct entry and far superior risk management and staffing management at the community level.
We sold older buildings at premium prices, reduced the number of team members that had to be trained on all of the new technology and used the proceeds to seed new development funds to refocus the portfolio on Class A buildings early in the development cycle.
Between 2007 and 2013 we sold 64 buildings in three different transactions to three different buyers.
We also rebranded the company during this time. It was a time of great change for the organization. There was great energy in the company and we accomplished a lot in a short period of time.
I really enjoyed my role at Merrill Gardens. However, a long-time business partner approached me about starting my own consulting business. I, along with Jason Childers, started 2Ten Consulting. I really enjoyed the new venture, but missed the day-to-day operations.
From there, Fortress Investment Group approached us about taking over Blue Harbor. I have served as the CEO of Blue Harbor for the last three-and-a-half years. We have built a great team and I am proud of the work we have done.
And that brings us to today. We have an exciting opportunity to merge these two great companies together. We have a lot of work in front of us, but I have a great team and we are looking forward to what lies ahead.
SHB: How are you and David Eskenazy (who left the company at the end of 2019) working together exactly to ensure a smooth transition?
Gall: I am just trying to absorb as much as I can. Dave has been helping me get up to speed on the opportunities at each community as well as the status on all of the major initiatives the team at Merrill Gardens has underway. The company has built a great platform and things are running really well.
SHB: Merrill Gardens is going through some explosive growth right now — nearly doubling your size with the Blue Harbor acquisition and the ReNew joint venture. How do you expand so rapidly while ensuring there isn’t an erosion of on-the-ground service quality?
Gall: That’s the challenge. However, as I mentioned earlier, Merrill Gardens has built a really great platform. The investment we have made in technology over the last few years has been very impressive for a company our size. That investment is part of the reason I think we can make this a smooth transition.
We will also succeed with our people. I have been fortunate to have a great team around me at Blue Harbor. Merrill Gardens has an extremely talented team, too. I get to merge those two teams to build something truly special.
SHB: You’re planning to put the Blue Harbor properties under a new brand. What are the positives and negatives of having multiple brands under the Merrill Gardens umbrella? What will be the differences between the two brands?
Gall: There are a lot more positives than negatives. The hospitality industry does this well.
The two-brand strategy is really driven by an opportunity to serve two different senior audiences. The Merrill Gardens brand is strong and has been built over many years. The Merrill Gardens communities are Class A products in top-tier markets. It’s a beautiful product, but something that is out of reach for some seniors financially.
The new brand will focus on a more moderately priced product. We will offer a great experience for our residents, a more flexible service package, and a great quality of care at a price point that is attainable for a wider range of seniors.
SHB: How will the Blue Harbor brand appeal to that middle-income senior?
Gall: We’re going to go after it is what we’re going to do.
Some of these communities we have under the Blue Harbor brand, many were the Class A product for many years. Now that they’re 30 years old they’re trying to compete with the shiny penny. This is the opportune time to scale back the service package, but still provide outstanding service at a price point that more people can afford.
We don’t know everything we’re going to do yet. It’s not an easy thing — if it was we would’ve done it years ago.
It’s about meeting expectations. What is your price point? Where do you want to be? Do you need housekeeping every week? Do you need three dining venues? We’re going to look at every department and find where we can scale it back to be high quality, but not at that price point that you can’t afford.
I want to serve my neighbors. I want to serve the teachers and policemen.
SHB: Are there other marketing tools we can borrow from other real estate sectors?
Gall: We’re probably trailing behind every segment out there. Hospitality is what I spend most of my time studying because it’s so parallel.
I’m staying at a Residence Inn. I know what I’m going to get there — it’s going to be a good breakfast, but not a silver tray.
Hospitality definitely has the most parallels, as they have their brands so well defined.
What’s been fun as I research this: People in hospitality have been very open to sharing with me. It helps to step outside of what you do every day, look at other segments and glean what you can.
A change in strategy
SHB: In your previous tenure as Merrill Gardens president you oversaw a large divestiture. Now you’re overseeing a major expansion. What happened in those few years that prompted such a dramatic change for the company? Can you compare and contrast the two moves from your point of view as president?
Gall: It’s really about timing and the cycles we see in our industry. The large divestiture was a strategic move that had been in the works for some time. That was a portfolio that Merrill Gardens had grown and stabilized. The timing was right for a transaction and the proceeds helped fund future growth in Merrill Gardens’ development platform, as well as investment in technology to position the operating platform for the future.
The transaction also positioned the company well for what we are about to embark upon. I look at the expansion as an opportunity to really leverage the Merrill Gardens’ platform and find a way to serve a larger population of seniors.
SHB: Do you consider Merrill Gardens to be a value-add company? Do you have a plan to build/acquire, then stabilize and sell?
Gall: I think of Merrill Gardens as more opportunistic. What Bill Pettit [president of the R.D. Merrill Company, parent company of Merrill Gardens] has done through the years is pretty amazing.
I’ve worked with private equity funds that want to dispose of a community in their portfolio. We don’t work that way. We look at cycles and when it makes sense. We do what’s right at the time. That’s the benefit of being privately owned and in it for the long term. We’re not basing decisions on this quarter or the next.
When we had that big divestiture, it made sense at the time. Now we’re getting into more expansion and development. We’ll open six new buildings next year.
So while we don’t consider ourselves a value-add company, we are looking at value-add acquisitions that make sense.
SHB: Merrill Gardens has an ownership stake in over 90 percent of its properties. What do you like about both owning and operating?
Gall: For most of my career I have been a true, third-party manager. It has never mattered to me who owned the communities, I always treated them as my own. That said, I do enjoy being on the same side of the table as our partnership groups. Having skin in the game is a good thing. However, in both scenarios, a strong alignment in regard to vision is important. It’s a great business. It’s not always easy, though. There are days we are going to celebrate successes and days we are going to have tough decisions to make. It’s important to have great partners.
A family mentality
SHB: Merrill Gardens made the Fortune list of “Best Workplaces in Aging Services” for the last two years. As a major labor crisis looms in the industry, what is Merrill Gardens doing right to earn that designation and how does it help you attract/maintain quality front-line staff?
Gall: I think it’s the culture at Merrill Gardens that has helped the company earn that recognition. We talk a lot about family in our business and we have tried to really foster that family feel throughout both the Merrill Gardens and Blue Harbor.
Our teams are a family and we serve seniors and their families. That approach creates an environment where our teams will go the extra mile for our residents and each other. There is a spirit of teamwork and support that is infectious, especially at the front-line. It helps make what can be an emotionally draining workday extraordinarily rewarding.
SHB: Can you give me specific examples of what you do for your employees?
Gall: The focus is on the employee 100 percent. The descendants of the Merrill family still own this company, and we treat everyone like family.
When that’s really who you are as a company, everybody feels that. I never start a meeting with an employee if I haven’t asked how his or her family is or how his or her daughter’s recital went. It makes a difference.
Everyone can give the same benefits, or better pay, or more vacation time, but I really do care. I know every executive director, manager and department head personally. That’s fun to me, too, because I’m coming back to buildings I already know. The reception [to my return] has been overwhelming in a positive way. We can continue to have this family mentality.
If we take care of the employees, we never have a resident issue. They will take care of their residents. It’s been proven through and through.
One of the specific things we do is the Hero Program. It’s employee recognition, but we take it one step beyond.
Each month at all the communities they submit an employee recognized as a hero. We have a committee that reads through every application and selects a monthly hero for the whole company. That person gets $150. It doesn’t sound like a lot, but if you’re a dishwasher it is.
Then we have one for the year and that employee get recognized in front of the whole corporate team. There was one woman from Mississippi who never missed a day of work. To see her get recognized with her mom, there were tears all around the room. It was really cool.
This program helps everybody see what great people are in our company.
People are really watching for those going above and beyond, taking that one more step. It’s beyond the program; it’s part of the fabric of who we are.
SHB: What’s something people in the industry would be surprised to learn about you?
Gall: I have been in the industry for some time now and made a lot of friends. I am pretty much an open book. I don’t know if there is really anything all that surprising.
I guess it might be surprising for you to learn that I have the same sense of humor as a 12-year-old kid. And I love hamsters. I also love holding babies — I might grab a baby right out of your arms if you let me.