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143: James Graber

James Graber, Managing Director, Seniors Housing and Healthcare, CBRE discusses how we can change the Covid-19 narrative with data. We dive into the numbers and the reality of the virus. 

Lucas: Welcome to Bridge the Gap Podcast, the senior living podcast with Josh and Lucas. We have an incredible show today, and we’re going to ask you to dive into the weeds around some COVID data. I know that that doesn’t sound that exciting, but I’m telling you, we have a lot to celebrate as an industry. When you look at the numbers, it tells a very positive story, as far as success and celebrating the heroes of this industry and what everybody has been working so hard to accomplish, which is to protect and provide safety and infection control in senior living communities. And today we have James Graber managing director, senior housing and healthcare valuation at CBRE, here in Dallas, Texas. Welcome to the show. 


James: Thank you for asking me. 


Lucas: Well this is something that we have talked about more than our typical pre-show planning. We’ve had multiple conversations around these numbers and you’ve found some very interesting things. Just before we dive into these numbers, tell us why you would be qualified to crunch these types of numbers, because I’ll be the first to raise my hand. No one wants Lucas diving into really deep mathematical data. It would probably not be, wellv number one, I would never cross the finish line on it, but you James have more of that analytical brain and have that experience. So tell us.


James: Yeah, I appreciate that. No, so I lead our National Seniors Housing practice valuation for CBRE, as you mentioned. And in that we were analyzing metrics on a daily basis. The market analysis side, and COVID has essentially accelerated that. We’re coming up with a thesis and underwriting and dealing with the investors actively looking at this space, what operators are thinking and how we’re forecasting, not only the last seven months but also where we are right now, where we’re looking to be three months, 12 months, two years and further. And so we get calls from investors daily where they’re asking us, how are we underwriting this? You know, everybody believes in this long demographic story, right? For seniors housing from an investment standpoint, which has definitely been a storyline. But the thought is, well, what about now? What about this next 12 months, two years, three years, where are we? And what is the data really telling us? And there’s a narrative from more headlines stories, right? Where you can get that discussion point from risk boards regularly where they say, well, what about this article or that article? Have you seen this? And so it really prompts you to say, well, let’s dig into that data. Let’s go into the CDC numbers, CMS numbers, and really see what’s happening and in how the operators are responding, right. And the impact on the industry. And a lot of that is our underwriting right now is looking at occupancy right? And it’s been in decline on aggregate for almost all care levels. And how is that projected to continue where we reabsorb? How you reabsorbed and that sort of thing. So that’s really what’s given us the deep dive here.

Josh: Well, James, so that’s that’s awesome for our listeners before we start touching on just some of the points that you want to make that are indicators perhaps from some of the data that you’ve been crunching. Can you tell us a little bit about what sources or, or a source you come from because in this day and age that we’re living in of, I think the average consumer, the average senior living professional, that’s just trying to get out there and do their job every day are being inundated with headlines that just have bits and pieces of information from every kind of source or non source that is out there. So where do you go to find the data?

James: Yeah. So when we’re looking at the COVID impact and analyzing where census is declining due to natural attrition versus whereas it you know, folks just being nervous about going into communities, that sort of thing. We obviously stay away from news media, that sort of thing and there are those kinds of sources. We’re looking at CDC for infection and mortality data itself. And looking at what has historically happened, same thing with CDC, CMS data on what their rates are and bifurcated by age groups and cohorts. So those are the, those are the two primary sources that I think are probably the most reliable under that scenario that we’ve seen. And then there’s just some more global COVID impact and testing resources that you can find. But for the most part, we’re going .org not necessarily .com. You know what I mean?


Josh: So not, not social media, like not Facebook and Twitter?


James: I just try to stay away from Instagram for our research. Yes.


Josh: Okay, awesome. So let’s dive into some of the interesting things. Obviously, we were going to kind of scratch at the surface, our audience can connect with you, if they want to get really deep dives like we’ve been able to do. But start at the tip of the iceberg and start at the high level and work us down into what some of these numbers you find are finding really should tell us, should inform us about what’s going on.

James: Yeah, no. So I would say I want to start with a couple of different things. So first of all, when you’re talking about illness and mortality statistics there has to be an understanding that there’s real pain tied to each of those statistics. These are real human beings that we’re talking about. And so I think that, you know, it’s part of really our responsibility in the centric industry is to take a deeper dive and an objective dive into this parable data. But with that, understanding that look we’re talking about loved ones, right. And our grandparents and our parents. And, and so I think that’s worth saying, and I think it’s definitely necessary. As you start looking at the data and how the life cycle of seniors housing is short it is typically, especially when you get into higher acuities. So I think that’s something we need to, we need to recognize early on. And so with that understanding really digging into the COVID side. We have skilled nursing has been mislabeled as many things over the last seven months. But I think if you look at skilled nursing in general, it really is a solution for end of life in the United States. And it’s been that way 30 to 35% of folks. I think mortality in the United States has been in skilled nursing and mortality so far this year from COVID is about 4.5%  of their census. And if you look at four and a half percent of their census, that’s less than half a percent a month in typical attrition due to mortality within skilled nursing is in the three and a half percent range monthly. So we’re still talking below that and I feel like it aggregated numbers. Those numbers ended up being where they have gone down on their census levels. But we’re seeing that at this point, those that are in negative decline are reducing. And a word I would say that right now is aggregate. We’re hitting a trough. So we’re hitting that bottom on the census decline and really it’s from a need-based standpoint. Right? So as folks, if you’re trying to hold off on sending a loved one to skilled nursing assisted living memory care, we in the last and the great recession, we pushed the median age about as far as we could from an affordability standpoint, right? And so now we’re at a point where folks that need that they truly do need that this isn’t a lifestyle choice.

And so in that we have some, some attrition due to COVID, but I will say on an overall, I mean, skilled nursing COVID mortality, and COVID involved mortality even more specifically represents less than 10% of mortality in skilled nursing this year. And so when you look at it that way, even from an operator standpoint, the focus has been one thing from a media standpoint. But from them caring for those weakest among us and most in need their challenge has been this massive focus on 9%. But that 9% includes comorbidities, right. And especially at this age cohort, and I think the CDC says about 6% of the actual COVID involved mortality does not have strictly COVID or solely COVID. So in that really less than 1% of mortality in skilled nursing is only COVID directly, right. And it’s involving other ailments. And so that’s something that operators are very well adept at dealing with because those aren’t new, right. But there’s just a whole new dynamic here where we’re focused on this 1% to 9%. However, calculating that, and there’s still 90 plus percent of the census that’s turning over. And that’s a consideration. I think that the operators should be celebrated for that for several different reasons. But I think that’s a heavy lift to get your staff to completely change everything and while keeping those rates low. Even looking at the overall mortality this year, being on par or actually well below what it has been historically. I think it’s evidence itself of how well they’ve done. And I think in the skilled nursing side not to focus too much, but it’s really the high acuity component that we’re seeing. 


It’s interesting, we just were this week, we’re coming out with our seniors housing investor survey. And in that the only care level that did not increase in cap rates, was flat, was skilled nursing. And most folks that aren’t familiar with the industry or aren’t that deep in the industry; that’s somewhat shocking to them because I see the headlines, and they think skilled nursing is just getting crushed. But I would say that even early on in the, in the pandemic first month or two really, getting to the three months in we were already seeing that be the most demand from the bias. And so, it wasn’t a shock to us to see that. And it takes some explanation as to why, and those are properties that are operating with no margin, maybe negative markings. That’s really the concept of its need base. It’s not going away anytime soon. And you know, there’s not another alternative and is a selected alternative in our country for taking care of our elders.


Josh: Well, you know, Lucas, James, I’m listening to this and it’s very different. It paints a very different story from what a newspaper or a headline that we’ve probably all witnessed over the last several months is painting of what we call our industry. As you mentioned, the skilled nursing sector of our industry, I think it’s a very important message. What you’ve just said, and really it should be a wake-up call to all the operators out there that when we really dive into the data and really understand the sources, it’s amazing really what a great job these senior living operators have done this year overall in spite of everything that’s been thrown at them. So a couple of questions that I have for you and I’ll just start with one. So you picked out the nursing sector, the nursing home sector, is there similarities in the statistics, in the data, the trends, when we go maybe a little further downstream in the acuity, and we look at the maybe if you could classify it as the more assisted living or memory care acuities or is data even being tracked as well in those types of communities?


James: Yes. So, the assisted living, you start, you break away from CMS and CDC requirements, right, for how their reporting. But I would say that if you break out by age cohorts and you look at COVID based mortality from 75 plus in you’re talking it’s 5% of that age population. And I would look at skill either, assisted living memory care is about a million folks right in the country out of a population of 22 million. But we don’t have the actual data from communities. I would say we have reported data. So Vintas came out last week that it was a third quarter. They mentioned that I think they have 93% of their communities, which represent about 35,000 units, have no no sign of COVID or no positive tests in the last several weeks.

If you look at all the portfolios that we track along the way, and as we’re underwriting, we’re not seeing the penetration to the level that you may make here, right. And I think some of the headlines that you may be referencing, they’ll say seniors housing and skilled nursing when they really are just, there’s a lack of understanding outside the industry of what those actually are, because they’re really referencing skilled nursing, right. So I think there’s two different things here where we’re saying we’re supporting the industry and still nurses. We don’t want to break away and say, no that’s the skilled nursing problem, right.. we’re seniors housing. I would say, no, still nursing is actually doing a phenomenal job given the task that they’ve been handed. And that saying that the data supports that I think you know, the negative absorption or the nutritional not occupancy over the past seven months would be more of a perception and a holding off. So folks are not going in and getting their wellness checks. So of course this is one of those items that they would say we’re going to push it as far as we can. 


But back to the assisted living, I would say the properties that we track and we appraise and work on over 2100 properties a year. So in that, and we managed our portfolios and we’re seeing declines, and some on aggregate and they’re more bifurcated by operators. There’s really one location geography that’s being hit hardest on the occupancy side, it’s the Northeast just on an aggregate level. Overall though, there’s not a geography that we’re seeing that there’s a specific decline, more property-based. Right. But in all, it’s not necessarily due to COVID mortality, right. So we’re seeing it’s more in assisted living, it’s more need base. But it’s lower acuity, so you can hold off a little longer. And I think that’s what we’re seeing folks too. And I was saying, I was speaking with an operator actually yesterday, instead of really at the end of the day, if you’re allowing the adult children to visit, but until that happens and that’s starting to happen now and starting to be CMS guidelines, but it’s not, it’s not permitted everywhere. And so, as that happens I think that you will start seeing the positive absorption which we’re already seeing and were one of the portfolios that we manage that has the most significance in Northeast space and most significant decline on aggregate of any portfolio that we’re seeing. They, about two months ago, started seeing positive cases,kind of hit a trough. And so we’re seeing that just overall. And in some areas it never went down, where some it went down a hundred, 200 beds on their occupancy, but I wouldn’t say it went down because of mortality or COVID impact. It was more perception and lack of folks moving in. And so I think that’s something we see very regularly. I was talking with an operator here in Dallas last week, and one of the positives that I’ve seen is that the industry is very small in reality. And folks do take care of themselves and take care of each other. And so this operator has a handful of properties in the DFW area. And they partner with other operators where they can protect the residents when they have someone test positive. They can transport them to a community where they may need to provide even better care.


Because now we have very specific care for COVID. Remove them from a property that does not have many instances of COVID, and then they can transport them back after they’ve quarantined and been taken care of at even a better level. And being able to do that collaboratively, that’s actually a very common story that we hear. I think that those kinds of stories need to be celebrated and need to be brought to the top. And I know operators are definitely trying to do that, and so I think that’s part of this, is trying to get that message out there. Because I think that operators have been bending over backwards to make sure that they’re on aggregate. And of course everybody had, there’s a story out there of somebody that maybe not, but that’s, I would say for the most part most operators have just been working their tail off, right. To make sure that the seniors are taken care of. And and that’s, that’s really what the story is saying.


Lucas: And, you know, this is another good example where the headlines is literally the opposite of reality. You know, we see these headlines where it’s just kind of like low hanging fruit for a big media outlet to just slam senior living. And it creates this perception in the marketplace that you would literally want to put your parents or your grandparents anywhere, but in senior living. And in fact, the data shows that they’re much safer in these environments. And what people don’t understand is that senior living and skilled nursing, they’re all prepared for this. They have gone through many bouts of very difficult pathogens, viruses, flus, SARS. This is not new to them. Of course, COVID for obvious reasons have added an even greater level of challenge in these environments. So I’m not minimizing how hard this is, but they’re prepared. My point is that because they’re prepared, they were able to step up to the plate and be able to meet this head on. And in fact, the data is showing that it’s a very safe place and possibly the safest place. You could put someone who is immunocompromised or in these categories, that’s what the data is showing. And again, changing that narrative back to the celebration that we should be having in this industry because of the accomplishments that they’ve been able to do.

James: I think one thing we’ve seen too, I mean, and this is to operator’s credit either working around the clock to find how do we protect testing in our country on aggregated or weekly testing has gone up 43% since the beginning of August. And here we are mid November. And the senior population mortality, the weekly mortality has dropped from little over 4,000 weekly to below 2000. And even at the end of October, which was the most recent data was around 300. So you have this massive divergence in a positive way between, you have the testing increasing that way there, like I mentioned you’re being able to quarantine seniors at a community where the care can be elevated, right. Meaning taken care of even at another level, and that we can do that sooner. It’s becoming something that the operators can afford to do. So I think things like that, we’re seeing that really the care is just increasing exponentially. And the understanding is there too. So it’s exciting to see it. It’s exciting to see how quickly, because in reality, while it’s been a very long seven, eight months. I guess we’re eight or nine months in, at this point. It’s hard to keep track. But that’s very quick in the scheme of what was asked. So I think it’s a positive indication.


Josh: You know probably a part two episode with you, James. I know we won’t have time to dive into it today, but we’ve been really diving into the data around resident care and mortality and things like that. But really the heroes that we have to think for that, I would love to see some data around many of the things that have given our industry black eyes on. Which is things like employee turnover, data around missed shifts and things like that. Because I can tell you from all the community operators that I’ve talked to across the country, almost every single one, their employee turnover has gone down drastically during this pandemic time. And I think it’s just a testament to show the commitment level of the workers in our industry that show up every day, even during a pandemic and double down. Gosh, even on this show, Lucas, we’ve had story after story of people leaving their families and moving into the communities, just so they didn’t bring anything into those residents right there on the front line. So in all of this, I think there’s so many things that we can infer about the industry that’s so positive. We love to talk about those positive stories and James, this has been really enlightening for me.


James: That’d be great, both adding some data on the resident care site. That’s a great idea.


Lucas: Well, James, thank you so much for doing this hard work of getting into these numbers and then sharing it with us. I think it’s been eye opening to make these comparisons, especially to other years. And so I know that our listeners are gonna want to connect. So for our listeners, we’ll make sure that we connect with James in the show notes so that they can reach out to you and then go to and you can download the transcript of this show. You can go back and listen to it. You can go back and watch the video and then connect with us on our social sites. Give us your thoughts. There’s a lot of people out there that are in these communities and have experienced exactly what we’re talking about in real time. And have also had the experience of then reading these headlines and probably shaking their heads and saying, this is not an accurate depiction of what our industry is actually accomplishing. And so we just want everybody out there, as we’ve said from the beginning, all the frontline workers, all the executive directors, the administrators, the staff, the executives, these operators in the business, which is the core of our audience and our listeners. We want you to know that we are continuing to root for you. We’re continuing to think and pray for you. You’re doing amazing work and you are not forgotten. And we’re going to continue on the Bridge the Gap Network to bring good guests, good content related to the truth around this industry, which there is a lot to celebrate and there is a great path forward. And it’s because of the people in this business that we can do that and that we can celebrate. So with that being said, thanks to everybody for listening to another great episode.

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  1. Great Podcast with James Graber!!

143: James Graber