Enter, depart and returned to senior living is one CEO’s journey. Hear from Chris Hollister of Pegasus Senior Living as he shares a pioneer’s perspective to current trends and the future of senior living.

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Hear from Chris Hollister in episode 198.

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This episode was recorded at the NIC Fall Conference.

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Produced by Solinity Marketing.

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Become a sponsor of Bridge the Gap.

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Listen to more episodes here.

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Intro

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, The Bridge Group Construction and Solinity. Produced by Solinity Marketing.

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00:38 - 00:49

Lucas McCurdy

Welcome to Bridge the Gap podcast the senior Living podcast with Josh and Lucas here in Washington, DC at the Fall NIC Conference. We have a great guest on today. We've got Chris Hollister, CEO of Pegasus. Welcome to the show.

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00:50 - 00:52

Chris Hollister

Thank you. Thank you. Nice to be with you today.

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00:52 - 01:30

Lucas McCurdy

Yes. Actually. Welcome back. Probably 3 or 4 years ago now. our original podcast with Chris, we had a couple of audio issues, but it still produced. But this is going to be the better version of it because we're going to get a market update and some thoughts on an industry pioneer. Chris, you started when you were actually young people say that I started when I was five. You started young in your career and that little bit of history. Before we dive into the current market trends I find very interesting, because your foray into senior housing is a little bit unique. And then you kind of took some time off and then came back in. Tell us that story.

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01:30 - 02:45

Chris Hollister

Thank you. Lucas. So I've been in the industry since 1986. I, native Texan, Texas A&M undergrad. I went to business school in Duke business School, came back, went into banking for about a year, and my dad one day called me on a landline and said, Chris, you know what's about to hit the fan if you get out of banking, you should.

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So I started looking around and Greystone was moving from New York. They were not called Greystone yet. And this is the senior living developer operator, not the mortgage company. And I went in, in 1986 as a financial analyst for Greystone. Great group of people. A shout out to Paul Steinhoff. McClanahan, John Spooner, Mark Andrews, those guys. I learned so much from them.

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And assisted living was really new. And we were doing classes, but assisted living was just filling up. And so Mike Doyle, who was there, said, I'm going to move to Boston and start a company that just as it's just living, really the only group out there in a big way with sunrise. So we were very early.

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02:45

Chris Hollister

I mean, I helped organize the first symposium on assisted living in New England, and we had Paul and Terry Claussen come up. That was 1990 or 1991. So, you know this, I don't know, maybe my 25th, 30th. NIC, I mean, it's not part of my life. And you get to see friends and and it's been quite a journey.

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02:45 - 02:46

Lucas McCurdy

Well, that's just the little precursor.

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02:49

Chris Hollister

You want me to keep going?

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00:02:50:01 - 00:02:59:06

Lucas McCurdy

Keep going. Because if you would be willing to. For you to tell the story of your kind of rise in the cell and then how you came back to the table.

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02:59 - 06:52

Chris Hollister

So I moved to Boston in 1990 to help start the Standish Care Company, and we did this little IPO in 1991, was the first freestanding assisted living company to go public. And it didn't raise enough money. It was just kind of crazy. This was on the Nasdaq. IPO blew up. That's a whole side of that story.

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We were public for 28 minutes when they pulled the plug so that was a bad day. That's what you call a bad day. But then we redid it. We raised more money to cover the cost of that. That's the whole side story. But, you know, Standish was a pioneer. And sometimes you start going, sometimes down, but I think we were innovative and raised the awareness of assisted living. I learned how the world works, how you raise money. And I wrote a business plan in the North Carolina where my wife's from and wrote a business plan for what became Southern Assisted Living with Steve Martin, Rich Williams, Roger Harper, a lot of wonderful people. It wasn't just me. And we developed the Carolina House platform, which was assisted living and memory care under the same roof in 1995/1996.

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That was a really radical idea at the time. People like, what? Why are you doing that? Memory care is totally different.  No it's not. I've been doing this for like five years. I think this makes sense. We went to the Alzheimer's Association, ALS, Watkins, North Carolina and said, you probably get asked this all the time, but would you help us design this?

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Yeah, well, no one's ever asked us. And we designed a beautiful circular path so people could wander freely with a trellis, southern style outdoor garden, common Elizabethan formal garden. And we filled all those up and went great. We bought out hunt assisted living, and then we were the largest operator in the southeast. And that was 1995 to 2006.

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Had that company in North Carolina. We had about 43 buildings, most of them I think 39 of them were in North Carolina. So we were the largest operator in North Carolina by a factor of three and got bought out by Brookdale. And as you referenced, my exit, you know, it wasn't a federal indictment or anything. We'd been to New Zealand and we liked it, and we decided to move my family to New Zealand.

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Both our girls went to high school there. We have dual citizenship now. I was in New Zealand for five years. Some folks down my background, I went on the board of a senior living, operator back home, retirement villages there. So I all and, you know, you understand that it's really you got to understand us society understand what to do in business and in home health care is paid by the government.

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So assisted living has never had the tracks. And there's some freestanding memory care now and some more sophisticated care options on this system front. But it's mainly more of a lifestyle, more like what we would call it. All right. Independent living. became chair of that. The board of that company was called Vision Senior Living. And as you know, I did a few other businesses there.

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I got involved in ecotourism. I have Eco Zip Adventures with two locations now. I met some young guys, had a pizza shop called Sal's Pizza. We have 50 locations now, mainly in New Zealand, but also in Australia. And, you know, I still spend time in New Zealand. Some wonderful parts of the world if you've never been. And I would highly recommend putting it on your list because it was beautiful. But my girls wanted to go to university here. Family, you know, and frankly got a little restless. I wanted to do something and move back in 2012 and went on the board of Sunrise. Welltower had just purchased a minority share of sunrise, and went on that board for about five years.

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And then they asked Stevens and I to take over some communities. And we did that in 2018, 2019. And, Stevens co-founded it with me. But then I bought him out. He had a few health problems. I don't think he minds me saying he's been pretty open about it, but he's better now. He's skiing a lot more than I am. I just saw him this summer. He's playing pickleball and doing great. You know, he's a Hall of Fame guy in the sector and a pioneer. And so we're still friends. It's all good. And we've had Pegasus for about five, five and a half years I guess six years really.

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06:52 - 08:12

Lucas McCurdy

I think that that's great context. That is a great segue into talking about the current state. And as you know, Chris, there's a lot of new people in senior housing, and one of my loves and passion is preserving the history of our industry, and you and I've talked about this, the senior living industry is young, comparatively, at least in my opinion, to other verticals such as multifamily or commercial real estate or, you know, residential homes. The senior living industry is a young industry and there's a lot of new people. And I think preserving the history of the people that really the core people that really got this industry started to me is very fascinating. And it's a privilege to have that, you know, as you know, forever content on the Bridge the Gap network. So that said, you and I have talked about it and you've had a lot of conversations here at NIC.

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There seems to be a better attitude. I think, you know, certainly we're in the senior living industry. It has not arrived yet. There's still a lot of challenges. We talked about the demographics, the boom. and you and I have talked about the kind of supply and demand. There's times where you've said no, there's oversupply. But then we look at some of the NIC MAP Vision data and they're saying there's not enough supply. Can you help unpack that for us?

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08:12 - 12:54

Chris Hollister

Well number one, thank you guys for doing what you're doing with this podcast. I think it's an important part of the media landscape and senior living. So, good on you. As I would say in New Zealand, that's a New Zealand expression. Good on you. When I was trying to raise money for a sister living with Standish Care Company in 1991, I would go into private equity groups, and we probably educated half the private equity groups at the time on “ there's this thing” and you tell them what we were doing and they would they would give you what I call a golden retriever.

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Look, the kind of turn they didn't, they didn't know we were talking about. I mean, like, you mean a nursing home now. You mean like with my grandmother's in a HUD house? No, I mean, it's an intermediate thing. And how many times in your life do you get to be part of a whole new industry? But we are all part of one. And it's great that you have the old people like me and the pioneers. It's great that you have all this new energy coming in. At times it's been a bit of an irrational exuberance, like the silver tsunami has been overhyped.

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And if you look at the MAP data that you referenced, this is a long segue answer to get to your point on the mood. But really, Arick Morton and what they do at [NIC MAP Vision] to show the supply and demand. They have this one slide where we were overshooting demand from 2013 to 2019 every year by 50% or even double. I mean, overall in the country, in some Sunbelt markets like Atlanta and, you know, Dallas, it was worse than that.

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Because  land's easy. Covid hit and that demand actually went negative. But there was still stuff under construction. Right. So I can’t stop it. It's already under construction. So we were still oversupplied in the early 20s, but now it has totally shifted where you're starting to see the demand creep, for the early part of the baby boomer, for the baby boomers after World War II, it really is 2026, 2027.

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I'll give you a stat I won't be exactly right. But the annual demand or growth in that 80 plus population in this country over 20 years averages like 1.2 to 1.4%. Arick Morton could call in to the show and correct me, but that's about right. And then we're building the inventory to grow like 2% a year or two and a half or even 3% a year versus 1.2 to 1.41 now in 20.

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I think this year it's growing 3.3%. And a lot of this new supply is starting to dry up. So next year, I don't think there's going to be much more news five coming in 2026. Virtually nothing because unless we were building it now right, it ain't happening. Right. And in 2027, this 80 plus population grows by 7.3% in one year. So it has never been more I don't think than 2%. It has averaged 1.2 to 1.4. It is going to be 7.3. It is going to be 5x the demand in one year that we've ever seen. Now, when I was on your show, you guys said four years ago, whatever it was I said senior living is not really going to start to boom until The Stones go off tour.

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I don't know if you remember I said that until the Rolling Stones stop touring. But Mick Jagger is like, I don't know, man. The guy's like a machine. And, you know, good on him. Willie Nelson just produced his 75th album, and he's 91. So, I mean, I think that's what this industry needs to be all about is this vibrancy and that you can come into this living and still make music or do whatever you were doing, and you're just getting the help you need.

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But I do think the mood here is much better than it was last year. I mean, last year it was just doom and gloom, a lot of capital problems on the on the balance sheet side, a lot of slower lease ups and plan and really the whole fallout that's coming on the end of what it seemed like forever, like three years of Covid before that, in the aftermath of Covid, I think we got finally have Covid in the rearview mirror. Hopefully there's not another big epidemic or pandemic coming. So that's all the good news, but I think we're in a moment where we'll look back on it and where we're getting to on the cusp of fundamental economics of being able to develop an assisted living that can come anything close to a middle market price point?mand really, you gotta look at home sales and network more than income. Christmas 100 grand a year to spend on their loved one. By 2027, I think we are going to be, frankly, in sort of a demand crisis. and it's really going to be about how well can you operate? There'll be places that are full that are having operational problems. But, it just puts the onus on us to do an excellent job because the demand is going to be.

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12:54 - 13:15

Josh Crisp

Well, you've given us not only a brief history, but also dropped some incredible names. there's so many stories to unpack there. We don't have enough time in the day, but I'm curious. So what you're saying, where do you see yourself positioning in all that? I mean, you've accomplished so much, but there's no way you can be done yet. I mean, what do you want to do? Where are you positioning yourself and Pegasus and all this?

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13:19 - 15:41

Chris Hollister

Well, we're doing some acquisitions. We just took over a brand named Legacy. The ownership group is Live Well, they sort of use both those brands. They have eight buildings, seven in Texas, one in New Mexico. I've known him for years. In a strange bit of serendipity or coincidence or like The Truman Show, one of the owners came and did my zipline in New Zealand.

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I happened to be there. If I'd have been there five minutes later, I'd never would have met him. So I got in and he said, oh, I'm in assisted living, I go, right? I mean, that's mainly what I do. And so we, I went to Houston like 2017 and kind of consulted with them for a day and have just stayed in touch with them.

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And, you know, it's kind of a tough number with the clinical demands now of the business and, we were fortunate enough to get under trustee to get the management contract starting September 1st. Great buildings there. They were very, very excited about native Texan. We want to get more dense in our home region of Texas. So now we'll have about 16 buildings in Texas, including New Mexico.

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You know, one of the things I do that's cool, just as a sideways, we went to the one in Lubbock and they have these beautiful courtyards, and there was a pair of glasses, like black glasses sitting on in a sculpture. It's like eight feet high. Yeah. Like, what the hell is that? Yeah, it's Buddy Holly. So they were doing it as an ode to Buddy Holly, who's a Lubbock native, and they had a Buddy Holly mural.

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They had a guitar. They'd had a guy who played with Buddy Holly as a resident. Yeah. So everywhere we went in El Paso, they had a miner's pad. And, you know, it's just cool. I think it's so cool when you have those local touches. Yeah, I just applaud them because they were new to the sector. But you know, these are local businesses. The more you can connect. And, you know, what we're doing in Houston is making it a space thing. You know, Space City, we've got NASA memorabilia. And so that's the fun part of the business is to try to do that. But, you know, I do think the window on acquisitions is going to close. I mean, we bought for others at a very low price in Texas.

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But that's the initial couple of years after that, you know, I don't know, I mean, I, I would like to develop I just think it's getting harder to get it to pencil. Yeah. I really really do. So I mean, we have some ideas. We're working on some things from a feasibility standpoint, but we've also been trying very hard just to make sure we do the best we can for Welltower and our other capital partners.

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15:41 - 16:38

Josh Crisp

I look forward to and I know our listeners do too, following you because, you know, I think back to some of the stories you're telling, what you were doing in the 90s as a pioneer, even as you were talking about memory care. I remember I didn't arrive in the industry until 2005, and of course we were doing memory care and we thought we were pioneering.

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You were doing it ten years before us. but that leads me to think, okay, so you're kind of seeing 2027 and all that will happen if we use that year as a marker. But do you think the product that we're trying to develop or they're we're envisioning now and you see all these people pivoting to active adult, is that product even going to be relevant in 2027, or are we going to have to radically change the communities that we're, I mean, to live out in? Oh, you can still make music as Willie Nelson and all that. Is that going to be something that really happens in our communities? Are we going to be that, or are we just going to care for the sickest of the population?

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