Fourteen years ago, William B. Kaplan, chairman and CEO of Chicago-based Senior Lifestyle Corporation (SLC), was completing a condo conversion when he noticed a trend. Older adult residents wanted rental apartments with certain services and amenities, such as restaurants and transportation, and not many developers were addressing these needs.
Intrigued, Kaplan - then managing partner of Romanke-Golub and Co., a Chicago-based real estate firm - decided to look into the seniors' requirements and the older American market. His research determined there were too few living choices for older Americans, a situation Kaplan set out to change.
Along with Partner James B. Klutznick, Kaplan formed SLC - with a goal of bringing choice, quality and service to the nation's older adult population. Kaplan sought to create a company when the seniors housing industry was still "young." Those in the industry say he has succeeded. Today privately held SLC has more than 10,000 units in operation or development around the country.
FROM VISION TO REALITY >From the start, Kaplan has taken a unique approach to senior living. The >company's first project was a facility that offered premium services such >as restaurant-style dining in an atrium room, along with transportation >services such as vans, daily exercise programs, as well as activities and >day trips - just about everything a senior could possibly need.
"Our company began operations in 1985 with the ground breaking for The Breakers at Edgewater Beach, a 476-unit retirementliving community on Chicago's lake front," Kaplan recalls. "Since then we have expanded to include ownership and operation of more than 60 senior living communities throughout the country."
In 1998, SLC was the ninth-largest seniors housing owner and manager in the country, with interests in 7,206 seniors housing units and 49 properties, up nearly 40% from the previous year, according to American Seniors Housing Association (ASHA). Two years ago, SLC merged with Integrated Living Communities, a provider of assisted living, to create one of the nation's largest owners and operators of independent and assisted living communities.
SLC's aggressive strategy has been to maximize its return on investment by applying its savvy property development and acquisition skills and by leveraging its considerable operational expertise. To achieve its goals, it has developed a strategic alliance and joint venture partnership with New York-based Whitehall Street Real Estate LP, a combined group of discretionary real estate investment funds established as an affiliate of The Goldman Sachs Group LP. In addition, key joint ventures and strategic partnerships with construction companies, local developers and operators of seniors housing enable SLC to expand quickly without adding to its internal development staff.
However, Kaplan isn't looking to expand simply to grow larger. "We're seeking opportunistic acquisitions that will be a good fit for our company," he says, adding that the company has some 10,000 units in 17 states. "If the acquisitions are 500 or 1,000 units, so be it. We'd like to expand in markets where we have a real presence, like Florida, New England, the Midwest, and Chicago."
Kaplan believes strongly in innovation, evidenced by concepts such as Senior Suites. A more independent style community in the affordable seniors housing mode, the concept has been successful from the start. "Senior Suites were developed in response to Chicago's need for seniors housing at affordable rates," Kaplan explains. "It's been very popular, and we hope to expand the concept to other areas."
THE RECIPE FOR SUCCESS Serving all segments of the seniors housing market has been one of the goals of Kaplan and SLC. From the start, he has used creativity and hard work to overcome community obstacles such as parking shortages and land-locked locations. Marketing strategies including a unique, one-on-one relationship selling approach and strong community outreach were also instrumental, as was a heavy emphasis and investment in the food and beverage operations.
"What sets us apart from other companies in the industry, is that we believe we are only as good as our last meal," he says. "If people have one area in senior living to complain about the most, it is usually in food service. That's because they eat in the same restaurant, day in and day out. So we strive to keep our food innovative, creative and lively. We like to think we do a pretty good job because we emphasize high-quality food and beverage."
Leonard Dionne, SLC senior vice president of food and beverage, describes the food service program as the heart of each community, with the employees who provide the service and prepare the meals as its soul. "The ability of all food service staff to truly understand what an important role their position plays in the lives of our residents is critical - from their first waking hours to their evening snack."
In fact, employees have been the cornerstone of SLC's success. Early on, Kaplan sought to create a unique corporate culture. The company continually recognizes members of the SLC family for their dedication and passion for residents. Kaplan adds that their knowledge of the industry, their innovative attitudes and their positive dispositions make the company unique.
SLC has sought to create an environment where employees enjoy coming to work, believe in what they're doing and receive support and recognition for their efforts. Such an environment translates into satisfied residents, happy employees and higher occupancy rates, Kaplan explains.
Kaplan believes in recognizing and rewarding his employees for upholding company values such as working toward the same common goals and dedicating efforts to enhancing the quality of life for others, by supporting the local community and the seniors housing industry.
TOMORROW'S CHALLENGES There will be challenges ahead. Kaplan notes that America is aging. One out of every six Americans will be 65 or older by 2006. Researchers say that, by the year 2030, the segment of people over 85 will be triple what it was two decades ago.
"We will see a lot of great things in this industry in 2000 and beyond," Kaplan says. "Every day 4,000 people turn 85, and that indicates that people are living longer. They will need some help with their daily activities somewhere down the road."
At the same time, he notes SLC will continue to create and implement new products and services."You have to remember that the senior of yesterday is not the senior of tomorrow," he explains. "Today, we're dealing with a more sophisticated and health-minded senior, so we're coming up with a program that deals with wellness, health and fitness."
Mel Gamzon, president of Senior Housing Investment Advisors, a Newton, Mass.-based national investment real estate brokerage firm specializing in the seniors housing industry, says that SLC is one of the best positioned seniors housing firms for the coming millennium.
"The diversity of their operations, combined with the financial clout associated with their partners at Goldman Sachs, represents a solid basis for this company to grow," he says. "In addition, we have found in our merger and acquisition work with SLC that their ability to perform in a timely manner with a clear understanding of the investment dynamics associated with this business has proven to be favorably received by their business partners."
With a market size currently at $86 billion, Kaplan notes the demand for quality seniors housing is expected to grow independent of overall economic and business cycles. Seniors housing will remain one of the most promising industries in the world, he says.
"The growth and promise will bring new challenges, since consumers are becoming more sophisticated in evaluating lifestyle options," he emphasizes. "SLC will continue to respond with innovations that will meet the rising expectations of today's market, and we will continue to help shape the future of the industry."