Brad Kraus, President and COO of Spectrum Retirement Communities, discusses constantly improving strategies for integrated owner, operator, and developer groups. Plus, Brad dives into the importance of creating a corporate and community culture where team members' voices are heard.

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This episode was recorded at the ASHA Annual Meeting. 

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Produced by Solinity Marketing.

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Become a BTG sponsor.

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Listen to more episodes here.

00:19:

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, ServiceMaster, The Bridge Group Construction and Solinity, and produced by Salinity Marketing.

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Lucas 00:45:

Welcome to Bridge the Gap podcast, the senior living podcast with Josh and Lucas here in warm Miami, Florida. At the ASHA member meeting, we got a great guest on Brad Kraus of Spectrum Retirement Communities out of Colorado. Welcome to the show.

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Brad 00:58:

Thanks for having me.

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Lucas 00:59:

We had one of your coworkers there, William on the program back at the NIC Conference last year. Had a great conversation about sales and marketing. I found that conversation to be very, um, insightful, uh, spectrum communities. I've had the, the opportunity to tour a couple of your properties in Texas and also in Kansas City and other beautiful communities, and a a great culture.

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Brad 01:21:

Appreciate that, yeah.

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Lucas 01:22:

And I'd love to personally learn more. I know that our, that our audience would like to learn more. How did Spectrum form?

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Brad 01:28:

Sure. Yeah. It was founded in '03. Full transparency, my father was one of the founders. Um, and, uh, with the idea being that there's very few owner operator developers out there, having all those parts in one place will allow us to, you know, drive the business and do the business better. A big thing at Spectrum and a big thing that we think about is how can we do this better? Is there a better way to do it? And if we're doing well, okay, can we even improve upon that? So the constant improvement, um, mentality is, is something that we take very, very seriously. And by having all those three component parts, the owner-operated developer allows us to really push that forward.

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Lucas 02:03:

So obviously there's a major constraint on development right now.

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Brad 02:06:

There is.

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Lucas 02:07:

I think a bigger focus on more, uh, repositioning and some value add. I know that y'all put a lot of focus in maintaining your properties. You have a very unique internal system for that. Would you be willing to share some?

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Brad 02:20:

Sure. I mean, just having the development arm in place, we've utilized that to re-look at our properties and figure out how to, uh, reinvest and upkeep them or, or change them to, uh, meet the needs and demands of the current market. Not having to rely on an outside third party to do that allows us to move faster, um, procure the right materials, make the, the necessary changes, uh, by having a development slash capital improvement team in-house, working very closely with our operations team, we make the improvement to the right places because we're so aligned as opposed to having somebody from the outside who may not fully know how the building is used on a day-to-day basis.

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Lucas 03:02:

Yeah, that makes a lot of sense.

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Josh 03:03:

For the listener out there that may not understand, uh, the types of communities you have, your footprint, your growth strategy, can you unpack some of that?

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Brad 03:13:

We own 36 communities. Operate 42. Most of our markets, we have three or four plus communities. And uh, it's, uh, it allows us to track great talent, kind of understand the needs of, of those residents in each one of those, those metro areas.

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Josh 03:30:

Sure. So types of, uh, care, the types of care, the types of communities.

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Brad 03:32:

Sure, yeah.

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Josh 03:33:

The spectrum. What do you do there?

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Brad 03:34:

Most of our communities are ILAL memory care. Um, I'd say if I look at our portfolio, half of it's independent living. I'd say 35% AL. And the remaining is memory care. We have a few AL memory cares, um, only one standalone memory care, but, or most of our properties are ILAL memory care.

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Josh 03:53:

Yeah. So forward-looking. Could you give us a little bit of insight? The industry's changed so much obviously since you guys got in the business many years ago. So many people talking about different product types, active adult has been a popular thing. What are the ambitions, goals, kind of strategies forward looking on that development and management arm for you guys?

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Brad 04:14:

It's obviously to grow in the right way, right? Right. You don't want to grow too fast. You could get over your skis and not do it well. Um, and so our, our mentality has been, it has always been to step back and look at a 10,000 foot, you know, and say, are we doing it better than we did yesterday? A certain size allows you to attract the right talent and, and have the right resources to be able to do it even better. But if you get too big, you may lose your way. And so very important for us that we constantly step back and say, how are we doing? Like, you know, give ourselves a scorecard. I think everybody's talking about, oh wow, it's, it's different. It's going to be different moving forward. Well, I mean, if you think about it, you look at it, the business has changed constantly since it started. And so I think it's just more of the same. Uh, we just have to be very nimble and be thoughtful about what our current resident population wants, what the resident population that's coming in wants the adult child cater to all of those, sometimes competing, uh, forces. It's an interesting time. Yeah. Within, I know you mentioned active adult.

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Josh 05:14:

Mm-Hmm.

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Brad 05:15:

I throw it back to you. And what does active adult mean to you? Because there's a lot of definitions out there.

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Josh 05:19:

Yes, there are. And that also with independent living, you know, I even even see like, even with an independent living, I see some people calling what looks like an active adult product. They call that independent living or vice versa. And so, yeah, I think now me and Lucas were talking about this earlier. When somebody even says, I'm in senior living, I'm like, please define that. What, what do you mean by that?

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Brad 05:38:

Totally, a hundred percent. Yeah. Yeah. It's, uh, active adult for me, it's like you talk to five different people and they'll get, you'll get five different definitions and some of it looks like independent living to me, some of it doesn't. I think the biggest obviously difference is the food.

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Josh 05:50:

Well, so I've got a question. So I love, you're constantly improving. Like, what can we do better? Our industry needs more of that. The constant is change, right. And that's kind of that way in life. But I, I think in general, our industry has responded really well to all the curve balls that we've been sent over the last few years. There's not that many like true integrated development ownership management groups that do all that in-house. And I personally think one of the reasons why sometimes there's these conflicting interests, you know, you put on your developer hat and something, a decision sounds good, and then you put it on your operator hat and that conflicts. So have y'all created a leadership team that kind of balances all those unique hats?

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Brad 06:31:

Sure.

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Josh 06:32:

That you have to wear to be able to turn out and make the development win, make the, the management win for the teams, win for the residents. It's a, it's a complex equation and there has to be some balance there that keeps it all in check. How do y'all do that from a corporate culture?

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Brad 06:47:

Well, because we're all in one company and we, and we all sit on the same floor, we, our, our meetings, we have development team and the operations team together. We don't really think of ourselves or describe ourselves as how you're on the development team. You're on the operations team. But the key is, is we all want to provide a great product and serve our residents. And that's success. What makes us all successful and we're all happy about it, right? It's not, oh well the development team, they built the building and now it's, here you go. Success for them. No, they want to see it through. Um, and by having them also part of the operations with the capital improvement, maintaining the building, we're all aligned in, in it together. It also comes down to personalities, right? You have to hire the right folks and great folks that will make a team that want to work together. If you create that team environment, a lot of this stuff falls in line in and of itself. There's a lot of folks that will talk about, oh, you gotta do this, that, and the other. But it does come down to the people, honestly. Right. And, and the personalities and making sure that everybody feels like they're one rowing in the right direction, all the same direction.

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Josh 07:47:

I think it's,

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Brad 07:48:

It's easier said than done though.

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Josh 07:49:

No. Well that's why I was saying it sounds so simple and honestly probably it should a lot be common sense, but I think to deliver on that.

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Brad 07:56:

Yeah.

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Josh 07:56:

Is much more challenging. So, you know, I've gotta give kudos to you guys 'cause you've been doing that for a long time. And as Lucas said, I, I don't think I've had the opportunity to be in your communities, but Lucas has been in a lot of 'em and had the opportunity to partner with you guys in various aspects and, you know, he raves about 'em. So that process of tearing down the silos, not having multiple teams, but a team that all centered around a central mission, that that's kind of what I'm summarizing what you've said.

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Brad 08:19:

Yeah.

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Josh 08:20:

But that is a lot easier.

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Brad 08:21:

Yeah.

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Josh 08:21:

To say than to do, uh, for sure.

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Brad 08:24:

Well, I'm, I'm very lucky in that I have our development partner, Mike Longfellow, who runs the whole development team, his close friend and just, I mean, he's very good at what he does and he cares deeply about how the buildings are used. And so he makes it extremely, extremely easy to partner and push our, our agenda forward. Um, without him, if it was a different person of the seat, I, I don't know. Yeah. But he makes it extremely easy to, to make it one effort.

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Josh 08:48:

Sure. So I'm sure you get asked this a ton, but growth goals for you guys. No shortage of opportunities for great seasoned developer owner operators out there. So where do you see you guys putting your energy over the coming years in 2024? What's your focus?

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Brad 09:05:

Finding the right, the right deals that makes sense. Whether it be, you know, there's some deals, there's some properties that are probably functioning obsolescent. There's some that are great, but they just need maybe a different operator that has a, a different focus. Um, so really it's looking at the right opportunities to continue to grow, um, and where we can add to our portfolio with the environment constantly changing and with interest rates where they are, it makes it even trickier. We're always in the market looking for what the, for the right opportunity. Um, that makes sense.

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Josh 09:34:

Yeah.

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Brad 09:34:

Potentially partnering with some other folks too, um, to use their, their knowledge and our knowledge to, to continue to push the business forward from a senior housing perspective. Uh, if we all do well, um, it helps the entire industry. So if there's a poor operator out there, I think it hurts everybody. Um, because we are still trying to educate the public as to what we are.

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Josh 09:57:

That's a great point. Because we've talked about that some, but the penetration rate of age, income, qualified people for senior living, however we want to define that is, is a huge number of unreached Yeah. Folks. And so if we are helping each other out and we can help change public perception, educate people, that immediately fills all the

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Brad 10:17:

You add one percentage point of penetration, it's a crazy number.

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Josh 10:20:

Yeah. We couldn't keep up, you know, we could build as many communities as we wanted if we do, as you said, even a 1% difference job. So that's a huge opportunity.

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Brad 10:30:

And I know everybody here really cares about their residents and operating the business properly. Take it very seriously, right? 'cause we are caring for somebody's loved one and that ultimately what we're doing. But you know, there's some folks that maybe get in for the wrong reasons and we just want to make sure that we're all, you know, sharing best practices to be able to care for these residents as best as we possibly can. 'Cause it does help us all. And there's great outcomes across the, across the board.

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Josh 10:51:

Yeah, well it's encouraging to hear you say that and uh, you know, Lucas, we hear that a lot, Lucas and I, there's probably no bigger fans of the senior living industry. Uh, we work in the industry.

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Brad 10:59:

Yeah, you guys created a podcast.

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Josh 11:00:

Yeah, exactly. And uh, but you know, here at ASHA everybody seems very aligned with the same mission. And so we appreciate,

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Brad 11:08:

Yeah, that's great.

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Josh 11:09:

ASHA, allowing us to be here, uh, put on this great event and to, uh, attract thought leaders like yourself who are out there on the front lines, leading the teams, developing the communities, acquiring, positioning our industry.

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Brad 11:22:

It's fun. It's really fun.

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Josh 11:23:

Yeah, it really is. It's amazing to hear, um, us be able to actually be able to sit down with you. Lucas has been wanting to have you on the podcast for a long time, so appreciate your time.

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Brad 11:31:

Oh, I appreciate it. Thanks guys. Appreciate you inviting me and hope we can do it again soon.

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Josh 11:36:

Absolutely.

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Lucas 11:36:

That'd be great. And to all of our listeners that want to connect with Spectrum, we'll put that in the show notes. You can go to btgvoice.com, download this content so much more. Connect with us on social. We'd love for you to be a part of the conversation. LinkedIn's a great place to do that. And thanks for listening to another great episode of Bridge the Gap.

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11:53:

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.