Welcome to Bridge the Gap with hosts Josh Crisp and Lucas McCurdy. A podcast dedicated to inform, educate and influence the future of housing and services for seniors. Bridge the Gap aims to help shape the culture of the senior living industry by being an advocate and a positive voice of influence which drives quality outcomes for our aging population.
Bridge The Gap

Seniors Housing Valuation and Forecast from Industry Founder Alan Plush

An outlook on ground-up development and value-add acquisition plus construction costs will impact the start of industry products in 2024.


The young generation behind us are savvy. They can piece together these situations. They come at it from a problem solving perspective.

Alan Plush

Guest on This Episode

Josh Crisp

Owner & CEO Solinity

Josh Crisp is a senior living executive with more than 15 years of experience in development, construction, and management of senior living communities across the southeast.

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Lucas McCurdy

Owner & Founder The Bridge Group Construction

Lucas McCurdy is the founder of The Bridge Group Construction based in Dallas, Texas. Widely known as “The Senior Living Fan”.

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Alan Plush

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Operations have always been about tenacity. Remember what your focus is, your mission. Do what you can.

Quick Overview of the Podcast

An outlook on ground-up development and value-add acquisition plus construction costs will impact the start of industry products in 2024. Listen to Alan Plush, CEO/Partner of HealthTrust, explain what he’s seeing from development, real estate, and capital solutions.

This episode was recorded at the NIC Fall Conference.

Produced by Solinity Marketing.

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Welcome to season seven of Bridge The Gap, a podcast dedicated to informing, educating, and influencing the future of housing and services for seniors. Powered by sponsors Accushield, Aline, NIC MAP Vision, ProCare HR, Sage, Hamilton CapTel, Service Master, Patriot Angels, The Bridge Group Construction and Solinity. And produced by Solinity Marketing.

Lucas 00:41

Welcome to Bridge The Gap podcast, the senior living podcast with Josh and Lucas here in Chicago at the fall NIC Conference with a wonderful guest. I'm very excited about this conversation. Josh, welcome to the show. Alan Plush, founder of HealthTrust Valuations. Welcome to the show!

Alan 00:58

Thank you very much. Glad to be here.

Lucas 1:00

We're so glad that you're here. This is not your first NIC conference. Is that correct?

Alan 1:04

Uh no, I think I've, out of all, I was at the first one out of all the NIC conferences, I think I've missed two in the whole, that was during Covid, in the whole time.

Lucas 1:11

There should be an award for that, I think, right?

Alan 1:13

Like a million miler status or something. They should be able to get points or something, right?

Lucas 1:18

Like a tag you put on your, you know, your carry-on or something like. You should have like a lifetime pass to NIC.

Alan 1:24

Free stuff! I want free. Everyone wants free stuff. I want free stuff. Nothing wrong with that.

Lucas 1:28

Well, let's see who we can get to talk to. Yeah, right. Okay, well I digress. Very busy 2023. A very rocky number of past years from what I can tell at least from my little small, small brain. I'm going, what does 2024 look like? I don't know which is the reason why we're here, Josh. Because we're going to talk to people like Alan.

Josh 1:47

That's right.

Lucas 1:48

To try to figure this out. Alan, you have seen the trends come and go. Can you tell us kind of where we are and then what we can potentially look forward to in 24?

Alan 2:00

So I would much rather have answered that question a year ago when interest rates were lower. And I think even the overall enthusiasm on the operator side was better. It's a slog. I talk to operators all the time. I'm an investor in, you know, in properties as well. And I just sense operator fatigue and, you know, if you look at the kind of overall occupancy rates and most of what we see, I mean, there's unicorns where we see higher occupancy buildings, but a lot of 'em are, you know, 78, 80, 82%. And between interest rates going up and margin compression because of inflation and occupancy, where we're at right now is really a place none of us want to be. But we're here and we've been here probably since midway through Q4 of last year. So we're coming up on a year of these, of these headwinds to phrase, you know, fatigue like, you know, operator fatigue or whatever, institutional fatigue.

Alan 2:52

I think the investor are angry you know, upset that objectives aren't being realized. So it's just a tough time. You know, I don't want to be a naysayer, but I try to, appraisers are supposed to reflect things as they are. And I can't really put a lot of sparkle dust on it right now. There's challenges. There's challenges and I think different sectors we've seen in real estate, different sectors are affected differently. And I think we, because of the operational component we have, it's just hit us kind of between the eyes.

Josh 3:18

Is this going to get worse before it gets better? Are we going to be kind of at this wave for a while? I mean, what's the bright side? Is there a silver lining for us?

Alan 3:26

Point to the demographic wave, which has kind of been pointed to in my 35 year career, a lot. I've been through like three or four. The wave is coming kind of, but then the industry tends to overbuild in anticipation of the wave. So it's not really as lucrative as everyone expects, but that is a thing and it is going to become a more material thing as we go forward. I read Chairman Powell's comments and I read an awful lot and I really sense, you know, we're probably getting towards the top of the rate increases I hear, you know, higher, longer. And I believe in that. I think we're going to be 2024, I think is going to look a lot like 2023. And, you know, having come to the end of this and being told that, you know, the pundits by the end of the year will be largely out of this. And we're not at all, we're not even close. So unfortunately they always have kind of the similar effects and, but they're caused by different things, different outcomes, whatever. So unfortunately that's, you know, I just see next year I'm living for, you know, hopefully recovery in 2025.

Josh 4:30

Well, transactions in 2024, where are going to be the sweet spots?

Alan 4:35

Institutional stuff is very interesting. Properties that have maintained occupancy even through Covid or largely maintained occupancy. Maybe they've had some margin erosion, but they're out there. And that's obviously going to be really a positive spot. There's going to be a lot of workouts and things where capital structures are, you know, think about it, if you were doing floating rate debt, which a lot were, your cost of servicing that has doubled or even more, there will be areas of acute pain and I think that's going to drive some of the transactions. And then there's institutional money that still sees the space attractively and wants to buy good stuff. So you, it's a really strange bifurcation. That's what I see for 2024.

Josh 5:15

So if you're giving advice to operators here at NIC, what are you telling them as far as how to weather this, how to be prepared, how to recover for those that are still trying to bounce back from the occupancy and so forth?

Alan 5:26

If you can retire, no, I'm kidding.

Josh 5:29

In one word, just retire.

Lucas 5:31

We'll get our producer to edit that part out.

Alan 5:31

But no, you know, it's a tenacity business. Operations have always been about tenacity other than just remember what your focus is, your mission. Don't let it raise your, you know, your stress level, your blood pressure, whatever. Just do what you can, do what you can do. Because a lot of this is out of our control and just like we do in the appraisal company, just adapt.

Josh 5:54

Yea. So I have a very macro question. Maybe I can make this make sense. So I'm in the southeast, and I don't know if this is happening all over the country or not, but I've long since studied the stats of the small single or mom and pop operators that might have one to let's just say five, right? For sake of argument.

Alan 6:14

No economies of skill.

Josh 6:15

That's correct. And for a while I think a lot of them have, you know, with Covid and all the different things, they've just gotten tired and they're just like, I'm done. You know, I've been doing this a long time, but it seems like this year in particular, I've heard of more of that group just holding and saying, I'm done. You know, I'm done with this industry and I can't weather the storms anymore. If you look at that group as a population of beds in the industry, it was pretty high group. I think at one point I heard it was like 40, 43%. I was hearing numbers. But when you look at all the volume of beds in the industry, that's a pretty large number. And I'm wondering, most of them seem to be in the tertiary and secondary markets, which already seem to have limited accessibility of this type of care. With that happening right now, what do you think that, what kind of implication does that have long-term on our industry when a lot of the fabric of these smaller towns, do you think that's all just going to be gobbled up by the big operators and they're going to go in there and actually try to make a play in these smaller markets? Or are we going to see accessibility to care just kind of wither away in those markets?

Alan 7:23

Well, I would define big operators first.

Josh 7:25

Bigger than like a regional, let's say 30 or more.

Alan 7:28

Okay, 30 or more. So to me, I look at that not as a big operator. I look at that more as a kind of right in the sweet spot operator, you're big enough to have economies of scale and you're not so big that you've lost touch with communities. And that's important. So to me, I'm like the senior generation, right, in the industry, I call myself, you go down to 10 years younger and there's kind of the intermediate and then 15 years younger is a lot of who we see here. And it's exciting to me because they, that generation and even the generation behind ours has a lot of enthusiasm and they look at the world differently. So I view it rather than saying, you're going to see those young groups get in and it, and that to me is the most heartening thing. I have more faith in that than I do the silver tsunami, quite frankly, because you bring this several generations of new, young, tech savvy and I'm the first one to tell you, I mean, I carried a Motorola flip phone and I thought I was the bomb.

Alan 8:25

So, you know, those generations are going to bring such a different focus and perspective. I don't think it's going to be a problem. I think it's actually going to be beneficial because you get to a point where if you're a mom and pop running, if you, you can't invest in the tech platforms that you need to manage your workforce, that you need to market your building, that you need to even keep track of economics in the building, right? It's more like an evolution. And I'm kind of really excited about that.

Josh 8:48

Lucas, there is your bright side for NIC, takeaway from NIC. We were looking for a bright side for this year. So that's a forward looking thing that excites me.

Lucas 8:56

Absolutely. So transitioning and kind of rounding out the conversation, let's talk about ground up development versus value add. It seems like the obvious next step for most people is, look, we're not able to do the ground up that we've been wanting to do, then let's go into value add. But then even that poses problems with finances and just financing, right? The capital stack for that. The interest rates. What does that look like in 24, do you think?

Alan 9:21

New construction, unless it's a project that just makes so much sense. There's a lot of activity in these groups. I'm talking about like the young, the generation behind me are savvy. They can piece together these situations. They come at it from a problem solving perspective. Now, value adds tough. I've done, I've invested in value adds myself over the years and it's certainly higher risk, but there's also higher rewards. A lot of those older buildings have structural limitations, you know, narrow hallways, short ceilings, small closets, small kitchens, things that people don't want. But what they do have is the opportunity to be a price point that you really widen the market. Typically located in many cases, like in A locations that you couldn't build on, you can't get today. To me, I look at that as probably what we'll see the most activity.

Lucas 10:07

Very fascinating conversation. So last word to you, Alan, what do you think the majority of your conversations are going to be like, what's going to dominate the things that you talk about while you're here?

Alan 10:16

Economics. So that's interest rates and margin compression and over under on how long this lasts.

Lucas 10:22

I gotcha.

Alan 10:22

I think everyone I've talked to so far, you know, stagnant, there's a lot of deals out there that are just building up behind the dam and it's going to burst. And there's a lot of uncertainty about when that happens and what form that takes.

Lucas 10:36

Well, to the Bridge The Gap Network and the Bridge The Gap listeners, you got to hear it here at NIC from Alan yourself, even if you weren't able to get a meeting with him. Great conversation. Thank you so much for spending time with us today.

Alan 10:48

Enjoyed it. Really appreciate both of you and the questions and everything. Thank you very much.

Lucas 10:52

And for those of you that want to connect with Bridge The Gap and with Alan's team there, we'll put that in the show notes and you go to btgvoice.com, download this episode and so many others. And thanks for listening to another great episode of Bridge The Gap.


Thanks for listening to Bridge The Gap podcast with Josh and Lucas. Connect with the BTG network team and use your voice to influence the industry by connecting with us at btgvoice.com.

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