Welcome to Bridge the Gap podcast, the senior living podcast with Josh and Lucas. We are at an exciting location with an exciting guest here in California. We want to welcome Robb Chapin and he’s the CEO of the Bridge Investment Group out of Orlando, Florida. Welcome Robb. Robb: Great Thank you, Lucas. It’s wonderful to be here with both of you and excited to be part of your podcast. I’ve heard it and know a lot of great people that have been a part of it. So, congratulations on all of the success. Lucas: Hey, that’s a big kudo. We’ll make sure that we put that in a clip and testimony and get it out to Instagram.
Josh: That’s right.
Lucas: No, we’re really thankful. and it’s fascinating to me that we’re practically neighbors in Florida, but we really only see each other when we fly to places like California and Chicago and DC.
Robb: Exactly. All of our conversations take place at baggage claim.
Lucas: That’s right. That’s right. So, you know, Josh, we’ve talked about, uh, the bridge investment group, which is formerly ROC. Robb, can you kind of take us through the thought process of that transition? It was, it was ROC before, but now it’s the bridge investment group. What’s the difference there? Robb: Really nothing, it’s more, more form over function. The platform’s exactly the same. There was some confusion in the marketplace, primarily with our capital markets side of our business with investors wanting to understand. You’ve got Bridge Investment Group and then you’ve got the ROC fund and you’ve got these ROC fund and these fund platforms that are named the ROC Seniors Fund or the ROC debt fund or the ROC multifamily fund. And so really in an effort to streamline and better integrate the branding part of Bridge, you know, like a lot of companies we hired and spent a lot of money on branding and they came up with, well just call it Bridge Investment Group. So we ended up with that.
But ROC was really born out of this, this idea of having a branded set of private equity, real estate discretionary funds in different sectors of real estate. ROC stands for Real Estate Opportunity Capital. And then from there you would use whatever specific real estate sector you were referring to as the kind of to complete this kind of specialized description of the fund platform.
But today it’s really Bridge Investment Group. We currently have about 2,500 associates across five different investment verticals, equity and debt. And we serve investors across the world literally from Australia to the Middle East and everywhere in between. So it’s a pretty big organization with about $15 billion of assets under management in the aggregate.
On the senior’s housing front, we’re about three and a half billion dollars of that. Lucas: And that’s a great frame up before we dive into the main part of the conversation. Robb, we’d love to understand your background. I know I’ve heard from some people that know you, you’re a big guy in the business, but you’re just a big guy in general. You’re an athlete. I’m sure that that plays into some of your leadership roles. Talk us through your trip trajectory in the business. You could work in any real estate vertical, but you’ve chosen seniors’ housing. What is taken you to this point? Robb: You know, seniors housing found me. I was asked to come in. I was working, actually, you mentioned sports, I was a president of a sports marketing company. We had about 80 personalities across four different sports. And I got out of that industry and because of a great relationship with the founder and co-founder of CNL, Bob Bourne and Jim Seneff, they asked me to come in and help them on a few strategic initiatives. And I said, well, I really don’t know a lot about the non-traded public real estate investment trust business, but I know enough to be dangerous. I know a lot about strategy and leadership, so I’m happy to jump in. Love those guys, love what they were doing and all the success that they had. And they said, well, the first initiative we want you to have to help us with is to incept a new seniors housing fund.
They call it a retirement communities fund. And I said, that just doesn’t sound very, you know, embracing for an investor, let’s think of something different. But we ended up coming up with, see now retirement properties is, as you may be familiar in those that are listening to this, we incepted that fun in 1998.
Because seniors housing was relatively new to the investor community, it took awhile for that fund to get traction, to raise capital. About two years before we were able to have enough capital to invest in our first property. But in 2000, we made our first investment. And from there, we grew CNL retirement properties to become the largest and most successful from a return perspective, non-traded public rate in the space. We had a little over 180 assets across both our medical properties and our seniors housing properties in over 35 different states. Josh: Super exciting. So transition us into talking a little bit, and then we’ve talked a little bit about your past and what brought you to senior living and how it found you, but now talking about you’re in the space. It’s an interesting time in the space. Everybody’s talking about this shift between the greatest generation, the boomer generation that’s coming. How’s some of the changes coming to our industry and, you know, shaping your investment strategies and assets that you’re looking for? Robb: You know, it’s really an evolving industry today as you both know and everybody that’s in the business knows and we’re all trying to really figure out where it’s going, right? And I think that’s the biggest challenge we have as an investor is how do we capture this lightning in a bottle, so to speak of this, huge demographic imperative that we’re all familiar with?
We have got an unprecedented amount of people that are aging. We do not have the infrastructure, obviously, to handle the care of this aging population. We’re all living longer. That’s good and bad. As we live longer, I don’t know a lot of people that are getting a lot better with their health. You know, it’s a relative thing. But I think, you know, the opportunity for us in seniors housing is really one to engage with the resident and the perspective resident at an earlier age for them to see the opportunities of having a great quality of life, but also have the opportunity to age in a community with a consistency of environment and friendships that allow them to also have the care as they need it, as you know, as their acuity level grows over time. So I think, you know, peace of mind is a big part of why people choose seniors’ housing today. And I think we need to expand on what that means and how we capture a younger generation going forward. It was talked about in an earlier session here at the Seniors Housing 100 Conference about probably the most important element that we have in seniors housing is really socialization. You can get all the other stuff in other formats, but the one thing that technology can’t provide is socialization.And so, as seniors housing industry, we have to do a great job of engaging residents and those resident families from a lifestyle perspective and the benefits of that and having a great quality of life as you grow older. Josh: So, I was doing a little research on you guys and for our audience that may not fully understand, I mean you guys have a very broad spectrum of investments, asset types and things like that. I was seeing labor force type-housing. You know, I saw the full continuum of care in senior housing and a lot of of our topics on our show to date has talked about how you bring a lot of these things together on a centralized campus. And by that we mean multigenerational intergenerational programming. Do you guys at the leadership suite have thoughts on that, on how that may become a factor in how you’re either maybe aggressive on looking at that or wait and see what happens? Are there any thoughts along that? Robb: t’s a great lead into probably our most successful product in our portfolio of seniors housing properties is with our CCRCs- continuing care retirement communities- where we have that age in place model, where you can move in and have all of the amenities and benefits when you’re in your late sixties or seventies. So, this intergenerational thing, Josh, that you just mentioned, but know that you have the ability to be cared for all the way through a skilled nursing environment as that is that need arises as well.
So, those particular communities, outperform everything else in our portfolio. They are all 95-plus percent occupied. And, in most cases, we even have waiting lists for a lot of the units. The villa-units in particular are very popular with our resident markets. So, I think it’s an ongoing discussion. I think it’s going to be a big part of how our industry evolves over the course of the next two to three decades going forward. As we, you know, as we look to continue to make sure that we are well in front of all the different interrupters are going to be there.
Josh: Yeah. So along the CCRC model, it’s not necessarily a new model in the industry. Those had been around. I get asked all the time as an operator, helping to try to guide some decisions from developers, new developers coming into the industry, is CCRC model still relevant? How has it changed on lease and buy-in structures and things like that? And I think by evidence of what you were just saying with your fill-up rates and your waiting list, it’s still extremely relevant model. Are you seeing growth in these CCRCs as far as new development and those going on the map still and you guys are still investing in that? Robb: It’s the growth in the sector is still relatively small compared to the overall kind of private pay seniors’ housing sector, as we like to call it. I think it’s primarily because it is a different, it’s a different model. it’s a different financing model. It’s a different capital structure; it’s a more complicated structure. Very few institutional capital investors like ourselves understand the CCRC model. But I think it’s one that we’ll continue to, I think, garner a lot of attention because of the performance of it and I think it’s a very attractive part of the asset class of seniors housing.
Josh: So, affordable, the term affordable gets a lot of buzz in our industry and half the time we’re talking about what do we mean by affordable, right? That can mean a lot of different things to a lot of people, but I think most folks are saying, how do you capture more of that middle market? You know, typically our industry has gone after the top of the market with the boomers coming in over the next few years, realizing that a lot of them haven’t prepared for a retirement and things like that as income streams are going down. What do you see as a potentially really exciting opportunity to tap into that middle market as far as facility type or funding types? Is there anything like that that you would be pointing operators and developers to say and this is a model we should be looking at to tap into the affordable markets? Robb: You know, I would first start by saying that I think affordability in seniors housing is somewhat of a misnomer. I think it’s a very, very affordable way to have a very high quality of life, as you age, and you don’t really have the, the infrastructure personally to care for whatever your needs might be. I kind of think about it in the context of, you know, a commercial jet travel, Lucas as you and I were talking about, versus private jet travel and both are great because they get you from point A to point B a lot faster than driving in a car or riding on a bus. But there are there compromises to that. But you know, my flight out yesterday to L.A. like yours was very comfortable and very convenient. It was really a quality experience for me. It wasn’t a private jet quality experience.
But I think that’s really, you know, if I could use any kind of a word picture or an analogy that, you know, for those that we, we like to say that, you know, service enriched and service enrich care seniors housing is really for the massive affluent. If you have between 250 and $500,000 of assets, you can afford to live in private pay senior’s house. I think part of it’s an educational process. Will there be segments just like in everything else where there’s the very high end, highly amenitized with concierge or this, that and the other? Uh, yeah, there’s going to be that. We have a couple of those in our CCRC products that, that really cater to a higher-end market and they do very well. But in other markets they wouldn’t do very well.
We have a great product in the Glendale, Arizona market that’s really set up for more of a value play. But as we talked to our residents there, they tell us that they are living the best that they’ve ever lived in their entire life. And I ask them, I say, ‘Why is that?’ And they say, ‘Well, I’ll wake up and I go downstairs and I’ve got a full breakfast prepared for me. I didn’t have that, you know, my whole life. I’ve got laundry service that takes care of my laundry. I never had that before in my life. I’ve done my laundry my whole life. I’ve got a social director, I’ve got a list of things that they have us doing everyday if we want to do those. The dinner we can pick. We can have room service if we want it in our room. This is as good as it could ever be. I could have never dreamed that my life could be this good.’
And this is really, you know, the setup for this from, you know, from a cost perspective is very, very attractive or more of a middle income, you know. Lucas: So, I’ve been enjoying talking with, the former COO, Rick Steinberger, and I know for a fact that culture is one of the top buttons for you guys as far as developing, not only within your own organization, but as you look to the different operators that you partner with. Talk to us a little bit about that. Robb: Yeah, culture is key and culture really represents everything that has to do with the outcome of success in a community. And as we talk about the outcome we’re ultimately looking for is great care, quality of life for our residents and our residents’ families knowing that their moms and dads are cared for really, really well. And so being able to drive that culture all the way through to each one of these communities is really the secret sauce of our operators.
And we work with 24, 25 different operators across 27 different states. So, to get that consistency of culture, it can be challenging as an owner sometimes. But that really is the key to the success of every community. Without that, you know, you’re not going to be the employer of choice, because you know, people that work in that industry want to work for a high quality employer that has a great culture, that treats their staff and care, you know, their teams well. And then that feeds right into, you know, how all the residents, experience, their life in the community as well. So culture is foundational to the success of an investment seniors housing. Lucas: Yeah, we love that.
Josh: Well, one question on that. That is wholeheartedly believe with you and that culture, sometimes, I think operators and asset managers, they have a hard time creating these key performance indicators around that. And so you guys working with that many operators to keep that at the forefront, are there some things that you guys have on your dashboard that gives you a good indication of your culture across all the different communities that you’re part of? Robb: I think, you know, the biggest thing, resident survey and resident family survey and we do that quarterly and all of our communities. Some do it annually. We do it quarterly. It’s a big deal for us. You know, we do, sometimes, we do spot surveying. Like if you’ve been to an airport and you walk through a screening process, there might be a quick survey. Was it good? Was it bad? You know, or you push good or bad and you walk on, so, it’s an instant thing. We have some of that coming out of our dining venue. So a resident can walk out and go, was your meal good or was it bad? And so we’ll have instant feedback to know.
But you know, other things that we do from a cultural standpoint is recognition. We want to make sure that our staff and team members are recognized on a frequent basis across a variety of kind of performance metrics as well as, kind of time that they have worked in a community. So that kind of recognition communication, back and forth with our residents and what they want, what they need in the communities, making sure that they know that they’ve got the right formats and venues and then also with the families. That’s another key part of this, as you know, making sure that we have the right type of, you know, workshops and forums for them to be engaged, to have a voice, to give input to what they see because it’s really important. Josh: So I’m assuming on that culture piece too, big focus in all those same areas on the labor front, right? I know that’s a big topic. I think there’s a panel discussion here on the labor force. How are you guys doing that and really focusing in on culture in the communities as it relates to the labor? Robb: Well, again, I wish I could say that we have a lot of secret sauce around. If we did, we wouldn’t be sharing it, but, no, but we really don’t. I think it’s like, what a lot of people are trying to do is we want to make sure that we have a very, very healthy culture. And when, you know, we have a sense that the culture is not well that we get in and make changes quickly. You know, we kind of work in this, kind of a mindset of bad news doesn’t get better with time. And so if we do have a bad culture, we want to get in there and do what we need to do to take away whatever cancer might be causing that culture. But, you know, some of the things that I said my previous comments about, you know, how we treat our staff, we want to make sure that, what does it mean to be the employer of choice? You know, in Scottsdale, Arizona, in looking at the peer groups, talking to people that work in the industry, what other opportunities do they have? Who are they with? What do they get? What don’t they get? You know, those are parts of how we want to attract the best and brightest to work in our, our communities. But then, you know, how do you keep them there? Because a lot of these caregivers, you know, they’re constantly looking for an edge, because they’re living on the edge. And so if they feel like they can get an edge somewhere else, they’re going to move quickly to do that. So we want to make sure we’re in touch at every level, uh, with our, uh, with our teams in the communities and, uh, affirming them.
I’ll give you a great example: I spend, along with my partners Phil Anderson and Blake Peeper, probably two weeks a month just in our communities.
Robb: I take pictures with all of the, you know, people that have been recognized by the executive director and I put them on my own personal social media and I’ll talk about them and they all give me permission to do that. But I want them to know how important they are just from my chair and uh, and let them understand that we couldn’t be successful unless they were here doing what they do and doing such a great job. So that affirmation, that we, I think, provide as owners, that kind of can be detached from what’s going on at the community level, is one way that we kind of bridge that gap and differentiate ourself to make sure that, you know, if it’s a 27-year employee that’s been working in this community since, you know, she got out of high school, I want to make sure she knows how much we appreciate her or him in whatever role that they serve as. And those are special people and it’s really, really fun to do that. And they really light up around it. Lucas: And I can really appreciate that you’re one of the very few CEOs in the business that is active on social and when we have these conversations, our podcast, it tends to bring in a lot of younger listeners and especially new people in the business. And I think that that’s going to be a big thing moving forward when we talk about culture change is for the leaders of the business to actually put their faces out there.
Josh: Well, yeah, and thank you for sharing that as a veteran in the industry that you’re investing time cause we know that takes a lot of time and intentionality. So for our young listeners, our young leaders that’s that next generation that’s being groomed, that’s coming up, for them to hear that emphasis that you guys place on that that has led to your success. I know that’s super, super cool. Lucas: Yeah. So I don’t want to let you go before one more final topic. As we round out the show, I know that you, you guys are heavily involved in acquisitions and value add plays. I know that you’re also doing ground-up development. Josh has been, has a long track record of both. So I can’t let you guys not talk about this because I know it’s been a core aspect of your scale up. Talk to us about the, your, I mean, we can talk about the past of acquisitions and value add renovations in the space and how that’s worked, but I would be more interested to hear your words about what the future of that looks like and if that’s something that you’re going to continue to push for. Robb: Yeah, I think at the roots of Bridge Investment Group is a value add investor and it really starts with driving kind of that alpha at the property level. And we do that, you know, through the operational side of our business by being able to differentiate our communities in whatever venue that we’re in, but do it at the local level and do it by taking great real estate in very defensible locations. And it might, the real estate itself may not be very relevant, but looking at where we can make it relevant and being consistent across the board on where are we know, you know, dollars that we spend, we’re going to get the return on those in a maximized way.
So, we think we’re really good at being a value add investor. We think that that is a, you know, a big differentiator for us because you know, this industry, even when you’re buying a fully-stabilized property, it’s still not easy, because it’s all about operations and a lot of capital still doesn’t understand how operationally intensive seniors housing is. But when you also can combined, you know, your abilities around being able to transform a community, transform the operation to that community, that’s the magic in creating that alpha value at the property level. And I think we do a good job at that and that will continue to be at the core of being an investor in this industry. And candidly, I think it’s where, you know, probably the least amount of capital flows. They like the, you know, they like the new development, you know, for all the reasons we know, They like the fully stabilized assets and core markets. Those are easy.
The harder ones are the value adds. So we have built a team, it’s a purpose-built team that is, that’s very collaborative and really understands both operations and also how to do the transformational process. Lucas, you know this and you’ve worked with our team before in buildings and in helping us transform those buildings. So, as you do that and you make those buildings relevant and you bring in the right operational focus, that culture, all the things we’ve talked about in, you know, in a location where you just can’t build this kind of product anymore, you’ve got something very special. So we see that is our secret sauce, so to speak. It takes a lot of time to build that in what we’ve done, but, you know, we recently acquired an operating company, some will be senior living, so we’ve got the fully integrated operational side to help with some of those types of value at places they go out and do the, you know, the triaging of, you know, what could we do to make this operationally more effective and efficient than what’s being done today.
So again, a very big part of what we do, but we also are, you know, we, we want to be that trusted capital provider to work with operators across all spectrums of their capital needs as it relates to new construction, uh, acquisitions where they feel like they’ve spotted that value add deal and they can turn it around with our capital and our expertise and resources to help them. And so that’s really how I think we set ourselves up. Josh: So what about on that value add play, what’s your kind of opinion on the forecast for those value add opportunities over the coming years? It seems like with the market, the way it’s been, the prices on a deals, it seems like it’s, it’s really tightened their, their value add opportunities. But what, what’s your opinion on that?
Robb: No, I think you’re spot on. I think, you know, we just had an investment committee call this morning and our head of acquisitions was talking about that very thing deal. The deal pipeline is pretty thin right now for value add. So, it’s, you know, it doesn’t concern us. We know that there is a lot of aged inventories and matter of fact, most of the inventory of seniors housing is aged over 15 to 20 years. So, there’s a lot of obsolescence both internally and externally in these buildings. And most of these buildings are in great locations though where you just couldn’t build this or get permitted or licensed for it any other way. So there will continue to be, we believe, opportunities, we’ve just got to make sure we’re out in front of them. Josh: Yeah, well it’s, it’s been super challenging, from our standpoint to find and identify those, that I would call it the low hanging fruit where you can, you can see a good opportunity and with so many people, I feel like right now looking for those opportunities in such a thin pipeline, it’s a real challenge. So be interested to see what that shapes out over the next three to five years, including, you know, this new generation that’s coming in of seniors that have totally different expectations and those repositions are going to be vitally, vitally important, I think.
Lucas: Yeah, interior design, space planning for that new boomer marketplace over the next five to 10 years, we’re going to have our finger on the pulse of that as we know that you will Robb and your team. We can’t thank you enough for your time today. It’s been an exciting interview with you. You are a fascinating guy in work and outside of work and we appreciate that. We love following you along on your Instagram and your travels and all of those things. So, we’ll make sure that we at least connect to your LinkedIn page, your website. Maybe we won’t put out your Instagram just yet. Robb: That’s probably a good idea. Thank you. I appreciate it. It’s been great. And again, congratulations on all your early success and continued success along the way. Lucas: I appreciate you, Robb.
Josh: Thank you.
Lucas: And thank you for everyone listening to another great episode of Bridge the Gap.