Building a dream team to help navigate distressed assets in the seniors housing industry is what Tony Yousif, Co-founder of Senior Living Advisors, is leading. Tony highlights the complexities of our sector, the challenges posed by rising interest rates and operating costs, and the opportunities for innovation in senior living transactions.

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Intro

Welcome to season eight of Bridge The Gap, a podcast dedicated to informing, educating, and influencing the future of housing and services for seniors. Powered by sponsors Aline, NIC MAP, Procare HR, Sage, Hamilton CapTel, Service Master, The Bridge Group Construction and Solinity. Produced by Solinity Marketing. Bridge the gap in three, two.

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00:48 - 01:04

Lucas McCurdy

Welcome to Bridge the Gap podcast, the senior Living podcast with Josh and Lucas in a beautiful San Diego. We're with a San Diego resident right now and a big guy in the industry. We want to welcome Tony Yusif, he’s co-founder of Senior living advisor. Welcome to the show.

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01:04 - 01:05

Tony Yousif

Yeah, thank you very much.

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01:05 - 01:39

Lucas McCurdy

Yeah. Excited. We had a chance to meet earlier at a conference at ASHA. Yeah, I don't know, you're just one of those guys. When you talk to, you just feel like this instant connection with. You're very authentic. And not only that, you guys are on a roll. You have a wonderful team formed with a lot of the, you know, big names in the industry. Friend, Tori Russo, and also Dan as well. And we'd love to pick your brain about what your goals are for launching this.

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01:39 - 04:30

Tony Yousif

Yeah. So I've been part of the SVN network. It was formerly known as Sperry Van Ness since 2008. And, since then, I've, I've been focused on workouts and distress and helping a lot of lenders through their issues. During the great financial crisis, there were a lot of issues in commercial real estate, none really in the senior housing related sector.

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But once Covid came around, our lenders started calling me and saying, okay, this is something that there's going to be a little bit of issues that we're going to have to resolve. And we had a very limited amount of exposure to that because there hasn't been any, you know, issues, like I said, in, in this industry for a very long time.

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So because we started seeing and I was starting to learn, I got a call in May 2020 from a very large lender saying, okay, what do you know about senior housing? And I said, well, pretty much that it houses seniors, I didn't know anything. And I said, give me 48 hours. Let me learn. Let me try to be a resource to you guys like I have for other sectors like multifamily, industrial, office.

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And let me point you guys in the right direction because I'm not the right fit. But then I started hearing from other lenders and I started seeing an opportunity to help relationships that we already helped for a long time. And because I'm more of a conductor of the orchestra, I said, okay, I got to go find people that really understand the sector. You know, names like Don, Tori, Mark Myers, who we just recruited from Walker Dunlop, you know, Josh Saltzman from Ex Blueprint Guy, and we're putting together what I believe is a dream team of operators, advisors, investment brokers, folks that can help paint the picture to these lenders about, you know, this is the issue and this is what we think this is worth or what you can do to resolve this issue.

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And so they're bringing us in under the hood early on to look at it from an operational standpoint, from a capital market standpoint, from a broker standpoint, and from a buyer standpoint to then formulate what is the best plan of action, because there's so much that goes into what I've started to learn in the last four years. Five years is a much more complex asset class than even hotels, which are an operating business as well.

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So you know, having folks that really know their stuff with trusted relationships that have seen me as more of an advisory role to say, okay, look, I'm not the guy, but I'm going to conduct this orchestra of musicians that really know their stuff and rely on us to help you guys come up with a plan of action.

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04:30 - 05:34

Josh Crisp

Tony, you understand already the complexity of our industry seems like you've also got a really good pulse on the upcoming opportunities, like, right, the challenges that we have and will have, our great. I would say that that also gives great opportunities out there. So the complexity of your team and, you know, I know all of the guys, they're all legends, I would say in the industry with years and years and years of experience.

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So let's talk a little bit about the near term over the next two years. Obviously, we're looking at there's here at Nick, there's developers, there's owners, there's operators, there's capital providers of all sorts. And everybody's trying to position for what is the next big opportunity in the real estate game. So what do you guys see is that opportunity? I hear a lot of talk about distressed assets and your team seems to be uniquely positioned to assist owners, investors, developers in that situation. So unpack that a little bit for us.

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05:34 - 09:15

Tony Yousif

Well, any time there's a large cycle change. You know, Sam Zell, Tom Barrack with Colony Capital. Others have been able to capitalize on that. And if you're willing to take the risk and jump in before others, that's where you're going to be able to make a huge amount of, you know, opportunistic money. Right. And what we see in that is that because we're well positioned by having the relationship with a lot of these lenders that have issues, rather than having to knock on the front door, and most of our brethren in this industry, you know, from other, advisory roles, haven't dealt with asset managers and people that are in the workout groups of these lenders where we've already been, as we call it, inside the house. We've been helping them with a lot of issues, billions of dollars of assets throughout the country. And it just took me showing them that, okay, my team really knows this stuff, so we're having to educate them. What's the difference between an AL, IL, memory care, you know, etc..

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And then once we've educated them, we can paint a path forward with some of the issues that they're dealing with. And our plan was, let's take advantage of this situation. Let's help these folks and use it as a foundational tool to gather market share to deal with other developers, borrowers, buyers, and of course, the lenders to capitalize on this cyclical change that your industry hasn't been through since.

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I think it was 2001 when there was distress, you know, last. So because we're in that house already, they already look to us to help them do valuations. I mean, we valued about $2 billion of potentially distressed assets in senior related care facilities just last year alone. So, you know, there's a lot of that. And now because there's increased interest rates, you've got issues with operating costs have inflated and insurance costs have gone up.

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There's a lot of things that, you know, I think you're going to have to reset your thinking in terms of, okay, what makes sense for some of these assets that could be antiquated? They're old assets that don't cater to the aging baby boomer generation. That has a lot more money. Sure. Right. So there are some assets that we have to look at from, because I do other, because most of my background has been office related retail, multifamily, self-storage, whatever it is, we may look at this asset and say, okay, we don't look at it as a senior housing related asset.

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Let's reposition it as something else and we resolve it that way. So, you know, again, the whole team said, okay, wow, this is a good foundation for us to be able to take on these portfolios, help these lenders. And because no one in this industry has heard of Sven, you know, we're we're I think we're making a splash because we're beating out others for some of these large pools that we're taking out for the likes of KeyBank or whoever. And then we're using that to get the attention of sunrise and, you know, the or whatever it is. Right? The people that I don't know, but my team does. So we're able to capitalize on that. And then we see it as this is such a long term opportunity for us, and we want to do this for a very long time by taking on more of that market share.

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Mid-Roll

As the exclusive data partner of the Bridge the Gap podcast, NIC MAP delivers unparalleled insights to senior housing professionals for better decision making. Their extensive database of over 35,000 properties provides critical data supporting operators, investors, lenders, developers and other industry stakeholders. NIC MAP delivers comprehensive nationwide coverage of demographics, migration trends with rate and occupancy data of 140 metro markets. NIC MAP equips you with the information needed to confidently navigate market complexities and uncertainties. Visit NICMAP.com to learn more and speak with a product expert today.

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09:15 - 09:33

Josh Crisp

Well, how long do you think, sort of this under the term of distressed assets is a lot of people are talking about that's that's the next big opportunity. What do you think the runway is for? You said you need to be like, take the risk early. Yeah. That's scary. Any time you're talking about what is earlier we know or.

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09:33 - 12:45

Tony Yousif

Well yeah it's difficult because you have the election year that happened last year. You have new, you know, folks that are kind of running the country. And right now they're trying to deregulate. They're trying to take away the powers of the FDIC. And to me, and not to be an alarmist, but I focus on personal debt. I look at corporate debt, I look at bankruptcies, I look at the amount of unrealized losses on the balance sheet of our financial institutions.

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And there's a lot. And the issue now is that you have an industry that is hopeful that interest rates are going to go back to the levels that they were, you know, a decade ago or five years, six years ago. Personally, this is my own opinion. I think that interest rates were kept too low for far too long, and that was what created this issue of gluttony. And a lot of people didn't underwrite. They didn't take in risk adjusted returns. And what you have and I was at a NIC three years ago and I learned one of the buyers said, well, I'm going to try to find another lender that really doesn't know how to underwrite our business, because that's when it was the moment.

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This is an operating company that happens to be within real estate. And a lot of these lenders unlike, say, multifamily, you know, apartments. The break glass in case of emergency is we’ll foreclose. We'll deal with it in a much more aggressive nature. Right. When senior housing you've got headline risk, you've got licensing issues, you've got other things that the financial institution does not want to deal with. And I don't know if a lot of the lenders thought about that. So to your original question, it could take a year. It could take five. Because there's a lot of issues right now that, you know, the lender doesn't want to take a lot of these assets back. They want the borrower to deal with their issues. They want them to be lockstep in terms of, okay, you put in your capital requirements, you continue to operate this thing because we don't want it.

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But if you don't make things better, we're going to deal with it. But then on the other side, they're having to take impairments and charge offs and losses, and that is going to affect how they're publicly traded. You know, the bank is doing. And so it's right now and it's all commercial real estate. There's a lot of things that I'm seeing where I'm saying, okay, pull the Band-Aid off. If you've got a cancerous limb, cut it off before it spreads to the rest of the body. And sometimes they will listen and sometimes they don't. And by the time they come back a year later, two years later, well, we want to get the number that you brought to us two years ago. And it's like, well, now the CapEx is worse, there's more deferred maintenance issues have become worse.

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And so it's a matter of and I tell my team, I say because they're now starting to deal with the asset managers in the lending institutions that I deal with. I say, listen, you've got to be patient in biblical terms, you know, because it takes time. There's investment committees. It's much more complex.

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12:45 - 13:30

Josh Crisp

I have now followed your success and heard about your success, not from you, from others and, in other verticals, you seem to have a knack for unpacking a problem and building a team toward solutions, that's what I perceive, and that's what I've observed. For your average NIC attendee, that's you're hearing all the talking heads, talking about all the things we're talking about right now for your average owner operator that's here. You see these challenges, as well as opportunities. What would you be saying to those people? What kind of team? What should they be structuring and positioning to be in a position of success going into the next few years?

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13:30 - 15:24

Tony Yousif

Yeah. So those who I think are going to survive and do really well after the Covid issues that happen is look at your entire portfolio, try to carve off the fat, keep expenses to a minimum, you know, be very effective and deal with legacy issues first before you start trying to grow again. And I'm starting to see that now this year, that a lot of people just got back into the trenches and they said, okay, we've got to deal with our own issues first before we start looking at anything else on the horizon.

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And I think those are the folks that are going to do extremely well. And, you know, continue to reach out to folks like us. We're going to be reaching out to them. I mean, the team that we've been able to assemble, they're the ones that are going to be contacting buyers and folks that they've known for 20, 30 years. And so these opportunities here, but, you know, continue to communicate and just be adaptive, right. Be nimble because it could be Q3, it could be Q4 where, you know, we've got to look, geopolitical issues right now. We've got interest rate issues. We've got a lot of external factors that we're not in control of. And just like with Lehman Brothers and other things, the S&L crisis that happened in the 90s, you know, it's just be nimble, be prepared and be ready to go to, you know, execute when the time comes.

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Because right now it's few and far between. But I do believe like we're working on fairly large portfolios right now, that we believe we're going to be taking out to market. And I think that's going to be a catalyst because what you're going to see is that new comps are going to affect other deals that aren't being sold because of paralysis or whatever it is. So, you know, I would say, again, deal with legacy issues so that you can be healthy to work on what's on the horizon.

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15:24 - 15:37

Josh Crisp

Yeah. You guys seem like you have such a well-rounded team and just so much horsepower. You could help just about anybody. Be curious, who's your ideal target? You know, who's your who's your customer? Your nick?

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15:37 - 16:59

Tony Yousif

Yeah. No, I think it's the lenders. Right. That's our because it's those who look at these complex assets. But don't they have a limited experience of operating them? They've lent on them, but they really don't understand the, the, the positives and negatives of how to, you know, navigate through the murky waters of senior housing. I mean, it's much, much more complex than an apartment community.

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Yeah. So for us, it's like, come to us, we'll be able to advise you, we'll be able to look under the hood, we'll be able to, you know, maybe help you underwrite if you're even acquiring stuff. We'll, we'll be able to because of Dorn's background, because of Torrey, because of Mark. I mean, we've got such horsepower in our team that we would be able to look at it from a buyer standpoint, tell you what the strengths, weaknesses, opportunities and threats are of this portfolio or these assets. And we'll look at it, you know, kind of because we were exposed to so much because we did the valuation of $2 billion of assets just last year. We are seeing it from a nationwide standpoint, and we can apply that to the things that they're looking at. And we can kind of predict, okay, this is where we think you're going to be successful or not.

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16:59 - 17:10

Josh Crisp

Well, Lucas, we're pretty lucky, you know, and appreciate you sitting down with us, taking a few minutes. Very valuable time of yours here at NIC. I know you've been all over San Diego. Just today, you know? So, taking a few minutes for us is super special. Lucas, kind of a treat getting insight.

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17:17 - 17:36

Lucas McCurdy

It's good. This is why we, you know, come to these events, to get this information, to sit next to guys like this so that we can, get this information out and people can benefit from it. And, really appreciate your time. Final words, any encouragement for those going into 2025 that are trying to set goals, anything to encourage them?

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17:36 - 18:19

Tony Yousif

I think the positive of this is that any time we've gone out to the market with assets, whether they're senior related or not, there is a lot of activity. People want to do deals. You know what was scary to me in 2010, per se, was the elevator was stuck between the floors because there was so much volatility and no one could predict.

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Right now, we feel like interest rate levels are going to stay here. So there's a lot less volatility. And people are saying, okay, let's roll up our sleeves and get things going. Yeah. And so to me it's just be nimble. Be prepared and go execute. And you're going to do well that's that's to me it's a positive thing.

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18:19 - 18:23

Josh Crisp

Well exciting. NIC, a good start. Thanks, Tony, for your time today.

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18:23 - 18:24

Tony Yousif

Yeah appreciate you guys taking the time.

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18:24 - 18:25

Lucas McCurdy

Thank you.

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18:25 - 18:39

Lucas McCurdy

And so for our listeners you can go to btgvoice.com. You can download this content and so much more connect with us on LinkedIn. We'd love to hear your perspective on this and these great conversations that we get to have. We look forward to seeing you there. And thanks for listening to another great episode of Bridge the Gap.

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Outro

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.

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