Meet Patricia Will, co-founder and CEO of Houston, Texas-based Belmont Village Senior Living. From the company’s first community opening in 1998 to today at 24 operating properties and counting, Will has led Belmont Village from the early startup days through the launch of the operating company and first community opening to today as a thriving senior living pioneer. We sat down with Will to learn about why she got into senior living in the first place, some big lessons learned when it comes to entrepreneurship and management of a fledgling organization, and why growth requires a measured approach—and a little healthy competition.
Tell me how you got into senior living.
I was a real estate developer, dedicated to a medical real estate. I was also doing board service for a not-for-profit hospital system, and I was raising my boys. In the midst of all of this, my mother-in-law developed early stage dementia. Although my father-in-law was still alive, her care needs began to predominate our conversations. At that point in time, in the late ’80s and early ’90s, just about the only thing available to us was an Alzheimer’s help line. It was like a spaghetti kitchen with volunteers on the phone. We relied upon the Texas Medical Center, where invariably she would go into the hospital, and a discharge planner who would tell us that it really isn’t a good idea to try to do care in the home.
She wound up in psych hospitals. Upon discharge, wound up with caregivers in the home and somewhere in all of this it struck me: somebody’s got to make something better.
In 1987, Marriott Senior Living opened the first assisted living community of its kind: Brighton Gardens in Houston, Texas. They made a great little building with 100 units of assisted living, 25 units of skilled nursing, and no dementia care. As it turns out, that building is one mile from my first site. I began to nurture the idea of making something different/better. I wanted to make assisted living with memory care. That’s really how I got started.
But it didn’t even exist. Did you just have this idea?
By the time I actually got underway, I had been researching this business every weekend by night. I had an analyst helping me, and we were conceiving a business plan. I was also doing board service as well for an outfit that ultimately got sold to GE but was a private equity firm that nurtured real estate operating companies. I began to talk to them about seniors housing. We decided to collaborate and look at the space. We looked at it for two years.
Were they your first capital partner?
They were my first capital partner.
What’s the name of the company?
It doesn’t exist anymore, but it was called Security Capital Group; a great, great organization. They sent me a couple of their terrific analysts who were really sharp MBAs from Harvard and Stanford who sat in my office and studied the space with us. We spent a lot of time doing that. My lifelong business partner had by then chaired the major hospital system in Houston. He and I stared at the seniors housing industry and finally decided—before Security Capital Group actually committed—to buy the first site.
What helped you get over the hump? Two years is a long time.
The first wave of seniors housing operators, guys like Marriott Senior Living and Sunrise, were beginning to build. You could look at the space and see the eventual opportunity. But, from a real estate perspective, it was a huge risk. These buildings, once you build them, are really not useful for anything else and you’re sticking a lot of capital into them. Basically, the first site was chosen on gut instinct. It was a mile from where I lived, a mile from the Texas Medical Center, with very high visibility and a great demographic and I thought, “If we can’t make something here work, we hang it up.”
There was another method at that time to my madness, which is that I wanted to create something very close to home on the theory that if I were getting calls all the time, we were not ready to take the show on the road. If I could operate in the community where I lived and where I raised my kids, where I had been very involved myself in the medical community, and go through a weekend without resident or family complaints, I would know that I was ready to go live elsewhere. So it was kind of a test.
How long did it take to launch building number two?
Not as long as I’d hoped. I had a very experienced and wise board of directors from Security Capital Group. During the development cycle of the first building, we thought we’d buy or hire a management company. We went out into the marketplace and we kissed a lot of frogs and we kissed a lot of princes who didn’t want us, and at the end of all of that we decided to take advantage of the development cycle and do what I thought was unthinkable, which was to build an operating company from scratch.
Why was that unthinkable?
At that time I was still seeing the world through the prism of the real estate. Real estate developers are inherently very project-oriented, but they’re not necessarily enterprise-oriented. I saw the world through the prism of making stuff. For lack of a management vehicle, we decided to do it ourselves, and made a huge investment in people and in programs. In particular, we mined great academic centers for research and best practices.
All over the place, but also in Houston. The genesis of our food service program was the Hilton School of Hospitality at the University of Houston. Actually, the professor who worked [with us], who we jest that we “brought over to the dark side,” is still with us and runs our food service program. We began engaging with the academic medical centers on what has been a lifelong commitment and passion, which is research and practice for dementia and Alzheimer’s. We had a whale of overhead. A whale. In fact some referred to it at the time as the ‘pregnant elephant.’ We had this big operating apparatus with 50-60 people, no product, and no seniors to take care of.
Were some of them in your current building though? Or did you have a separate operator for the other building?
This was before the first building opened. Once we opened the first building, the board said “Whew, when against all odds it did well.” There were a lot of rough spots and a lot of re-dos but basically, it did well. Then the board said, “You know, with you mothering this and your whole team being on the ground there, all the operating protocols that you are inventing may or may not be sustainable. Why don’t you go find three more sites in comparable prime markets, that are not as difficult as our ultimate goal?”—which was [building in] Chicago and Los Angeles—to get entitlements.
We went out and bought a site in Green Hills, Nashville; one in Memphis at the border of Memphis and Germantown; and one in Louisville in the city of St. Matthews. They were all very prime demographics and hard-fought sites for those markets. We went under construction on all three before we ever opened the first building. It was what I call our ‘kamikaze’ phase. Very, very daring.
[Our second, third and fourth sites] were all very prime demographics and hard-fought sites for those markets. We went under construction on all three before we ever opened the first building. It was what I call our “kamikaze” phase. Very, very daring.
Were you nervous?
Nervous is not the word. In fact, I can tell you that until this year, we had a very strange rule in Texas whereby when you open a building, you go through a life safety or physical inspection and then you’re entitled to take three residents. You keep those three residents and wait for essentially the operating part of your inspections. I built right out of the hopper 156 units of standalone assisted living and memory care on what was, at that point, a pretty expensive corner of Houston, Texas. We’d never done it before. Bill Marriott was a partner with Security Capital Group in another venture and he literally called the chairman of Security Capital Group and said, “That blonde woman that you’ve got has no idea what she’s doing. You can’t put that much capacity on the ground and fill it.” So was I scared? Yeah, I was.
Did that make you mad when he said that?
It was a warning, so no. I think many times, many things that we’ve done have been critiqued heavily by very knowledgeable people and I think that is important, actually. We’re competitive, sure, but there’s also a piece that gives you pause to say “you know, these are really successful people who’ve built great companies, and what do I know? Let’s re-think this a few times and get sure of ourselves.” I wasn’t so sure.
When we built that first building, we had 156 doors. The largest thing Marriott ever did was 100 units of assisted living, and Sunrise was building a model of 60-80 units and doing very well, thank you. We brought our first three residents into our building—I call them our “originals”—and I was there hanging pictures on their walls. We still have some of the employees in our kitchen in Houston who unpacked the cutlery with me.
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Really! We still have almost the whole night shift who were the original caregivers from when we opened the Alzheimer’s section in that building.
But when we opened, I met with these three residents, and greeted them and helped hang the pictures on the walls. Then, I walked around the building and counted the other 153 doors that were empty, and I went out to the parking lot and I cried my heart out.
Was that moment the hardest moment you had since starting the company?
No? What was the toughest moment?
Oh, gosh. How long do you have?
We’ve got an hour!
I’ll tell you what I consider to be my toughest moment. My capital source, Security Capital Group, went public and their stock tanked in ’99. We had four communities, two of which weren’t even open yet when I did my first outside-of-Security Capital Group equity raise. This is 1999. The sex appeal of seniors housing for Wall Street, if it was ever there, was gone. We had just come through a cycle where there had been a fair amount of overbuilding, most public stocks had tanked, and there was something called the internet. Everybody was absolutely in love with that.
Meaning that investors weren’t excited about senior housing at that point?
Oh my God, no. First of all, nobody knew what to do with us. To the health care guys we were too capital-intensive. To the real estate guys we were too operating-intensive.
This was ’99. I also had adolescent kids. The guys who had come with me, many of whom were responsible for their families, had left places that were stable and sensible. I felt a tremendous sense of responsibility to them. I was having a real tough time raising money, [yet] I was cheerleading our guys as though this was easy.
I was also pretty frayed at home because I would wander in after a week away and say, “Pick up your stuff,” and my family was [thinking], “Who are you?” It’s tough. I realized that I was either going to have to give it up altogether, find a different way to live or get a therapist. I did the latter. I didn’t end my marriage or my life at home. I learned a very important lesson and I’m willing to share the lesson: Learn how to be good to you. That was my missing ingredient. I would get on an airplane to be back at home the same day thinking there was nobody else who could drive carpool in the morning, or make the sandwiches. I would wander [back] from the day trips to California, where we had already begun to prospect for our first round of sites.
Even as all of this was going on?
Even as all of this was going on. In retrospect, what were we thinking? I don’t know. I would get back from New York, I would go out to California and I would take the redeye home. Even my dog wouldn’t get up to wag his tail and say hi. I didn’t go off a cliff and I didn’t end the company. I got the money, but that, I think, was the toughest time and it was very early on in the company. There have been a lot of great lessons learned, but the biggest lesson learned had less to do with the business and more to do with me.
Can you tell me more about that lesson?
Instead of taking the redeye, go and do something you love; read a novel. Also, learn to take those terrific people that you’ve got around you and delegate to them. We’re control freaks as a company. Especially if it’s your baby and especially if you’ve got your entire net worth invested in it, it’s hard. Early on, that was a very hard period for me personally and professionally. We were kind of hanging in the balance. There were great lessons learned.
So once you took care of the personal, did it help with the business?
Of course! Basically, it’s organic. If somebody’s having a rough time, everybody around them internalizes that. If you’re in a good place, that’s also true.
Was it hard for you as a leader to put on a good face for all of your people? Or did they know?
I was cheerleading. Like it was ‘a piece of cake.’ That was part of the problem.
In hindsight would you have done it differently now? Would you be more open with them or do you think that’s part of your job, to be the cheerleader?
I don’t know, I think it’s a terrific question. Leadership in an entrepreneurial venture can be lonely. I think that’s one of the reasons that many of us who founded companies or who run companies with skin in the game talk to each other. You have a responsibility to be as transparent as possible with your colleagues, but at the same time, part of our job is to cheerlead and to celebrate.
So who ultimately invested?
It’s kind of a funny story. I brought two private equity investors, both very accomplished, together. We crafted a deal.
Can you tell me who they are?
One was J.P. Morgan Asset Management, J.P. Morgan Chase. The other was a private equity firm, and by the time we got done crafting our deal—a $75 million raise—Security Capital Group was able to come up with the capital itself.
Oh wow. That had to give you confidence.
It was extraordinary. We had a great run, and then in the winter of 2002, I had our chairman of Security Capital Group come and address NIC. He did a great job; he talked all about why he was invested in the business and so on and so forth. I came home to host our company Christmas party to the news that Security Capital Group was sold in its entirety to GE.
Everybody arrives at the Christmas party and the board members of Security Capital Group were calling me saying, “We’re sorry, we couldn’t say anything to you before…” Once again I’m going, “Guys, it’s going to be okay, trust me, it’s going to be fine.” There ensued a period that was really pretty extraordinary, where our very first act was to try and buy the company out of GE knowing that GE certainly hadn’t bought Security Capital Group to get us. GE had bought Heller Financial a short time before Security Capital Group to do basically health care financing and some seniors housing financing.
They took a look at us and kicked us across the org chart to the real estate guys who took a look at us and said, “Too operating-intensive.” We were kind of the black sheep floating around the mortgage yard. But the guy in charge wouldn’t sell the company to us, and that was my second great lesson learned. When you’re acquired and you haven’t really done much yet, and you go to very smart people and say, “I’ve got the investors put together”—some of whom were from the former Security Capital Group board, no conflict—“we’ll take the company out at book.” No. “Okay, more than book.” What does he [the GE guy] say to himself? He says, “They know a lot more about this business than we do. If they’re willing to pay more than book, I want to keep it.”
That’s kind of fair, though.
It’s kind of fair! So I’m like, “Oh damn.” So there ensued a period, I call it the period where they had the stock and we had the company, and it turned out to be pretty brilliant. It was very, very hard because we were still an entrepreneurial company, and I think everybody knows GE has a certain way of doing things. We were in the real estate business and we wound up staying part of GE Real Estate, but the operating component is very significant. In retrospect, they invested a lot of money, both in our pipeline and in our mother ship, and also our operating software.
Yes, we all had to learn how to do Six Sigma, but we got some real insights out of that. We learned how to run an office that could cope with Sarbanes-Oxley before anyone in the seniors housing industry knew what it was. The benefit of the rigor that came from what I call the ‘GE Period,’ where at first we bristled and people were calling me saying, “They’re not going to let you keep the coffee machine.” To GE’s credit, I spent a lot of time working side by side with senior executives at GE. They populate the industry now; if you look at the people at Welltower and HCP and many other companies, they’re all ex-GE guys who know how to do Six Sigma, too. Many of them were colleagues who kind of watched our company grow up within GE.
So how did you end up buying it out then?
It was year-end 2007. The leaders of Security Capital Group played a very formative role in pension fund investing and private equity investing in what are today known as the core asset classes. Pension funds didn’t invest in multi-family much before the early-mid ’90s. The idea that we always had was that we would prove our model and then recycle capital by re-capitalizing into private equity funds with pension funds or endowment investors. GE didn’t need the money necessarily; I think at the time they came in they had $15 billion in free cash. But they liked the idea of re-capitalizing to get the earnings. We did our first private equity re-cap into AEW/Calpers in 2004. We did subsequent deals in 2005 and 2006, while still a part of GE, into J.P. Morgan Asset Management. We delivered terrific earnings. All the while we were investing in a pipeline. At that point in time, it was a good juncture to come to GE and say, “Rather than being a stock owner, how would you like to be a private equity partner and let us buy the operating and developing company? We’ll stay in as investors, side by side with you.” That’s what we all agreed to do. We went on to build with GE through 2009 when the world stopped. The relationship maintained, and in fact, it maintained even beyond that, because we’ve been selling their positions in re-caps and I think we only got done with that maybe in 2012.
Is that when Welltower started to come in?
So you’ve been finding these capital partners all along the way?
All along the way.
How did the Welltower relationship start?
The Welltower relationship started actually over two communties that we opened in 2009, both in California, the most expensive projects we’d done [to that point]. One on Wilshire Boulevard in Westwood, and one down in San Diego in Cardiff-by-the-Sea; a great community, about a mile from the Pacific Ocean. We built those with GE. We opened them in January and July of 2009. That was another scared-to-death moment.
The capital markets had imploded, but it turned out we had record lease-ups.
Wow. Even during that time?
Even during that time—especially during that time—we had record lease-ups with respect to velocity and rate growth on both of those buildings. We took the remaining land we owned with GE into another private equity venture and we took the Cardiff and Westwood communities, the two big ones, out in our first RIDEA joint venture with Welltower. Very fun.
So what now? What’s next?
Well I think one of the things that we’ve talked about a lot is how we capitalize the company.
Seems like you keep finding new investors along the way.
We’re small to have a whole lot of investors, but we’re smart enough, especially after the GE experience, to never sole-source. Things change for large companies and for private equity investors, and markets are fickle. The uniqueness in how we’ve capitalized the company is that we’re still owners in every asset that we ever made, and we don’t work as a third party management company. I think that allows us a certain luxury with respect to the big end of our business, which is not the capital or even the buildings themselves, but the culture and the relationships that we have both with our customers and with our associates.
Have you ever thought about getting into third party operations with other people?
We’ve thought about it and we’ve been approached many times. We have a certain luxury in that by dedicating the talent that we have, and the resources, programs, protocols, people, to communities that we own with partners, we’re able to concentrate on the value creation.
There are a lot of people starting their own operation companies, whether they’ve spun off from Brookdale, Emeritus or elsewhere. Do you have any advice for them?
I think the one thing that I would say is: be very measured with respect to growth. This business is not an arms race. You can’t throw one of these on every corner. I find, even today, with 80-85 corporate associates and close to 3000 employees, that every time we open a building, we’re stretched. We’re excited, but we’re stretched. You may have the capital, but do you have the infrastructure?
This business is not an arms race. You can’t throw one of these on every corner. I find, even today, with 80-85 corporate associates and close to 3000 employees, that every time we open a building, we’re stretched. We’re excited, but we’re stretched.
Do you think that you were successful partially based on the fact that you didn’t have a lot of experience?
Back then, not a whole lot of people had a lot of experience. If you look at the timeline, other than perhaps a Marriott or a Sunrise, or the first version of Enlivant, which was Assisted Living Concepts, those were the experienced companies. If you look at Brandywine or Benchmark or Silverado or Belmont, it’s not a happy coincidence: we’re all about the same age. I think we’re kind of the first generation growing up in the business. To some degree, we had to make our own. Now, there’s a lot of great stuff to look at, and yet I hope this new generation of product prods us to really re-think it.
So you’re actually looking forward to the competition?
Absolutely. I think the real competition is sitting in their houses. As an industry, we’re about 90% occupied across the board. Of that 10% vacancy, some of it was never meant to be. It’s either in the wrong place or next to the sewer plant or on a street where there’s no access. If we were to move the dial 1% on penetration to those who aren’t participating, that’s more than the entire vacancy of the industry. I think we have a responsibility to do that, and I’m very excited being a part of spreading the word. Our competition only makes us better.
What’s your definition of leadership?
I was afraid you were going to ask me that. I think it’s a composite: Mother, mentor, coach, decision-maker, cheerleader.
What’s the biggest risk you’ve taken in your career?
Starting Belmont Village.
What’s the best piece of advice you’ve gotten in your career?
First I’ll tell you three great pieces of advice that came from very different places. My original mentor and first boss in real estate taught me to never believe in a pro forma beyond the first year. Be very analytical, but if at the end of the day it doesn’t make sense on the back of an envelope, then it probably won’t make sense. Great lesson learned.
What was his name?
Walter Mischer, Sr. A phenomenal man. The second was through my mother, who taught me to be anything that I wanted to be. She was a businesswoman. She was an entrepreneur, and it never occurred to me that I couldn’t do or be whatever I wanted. She’s still a great, great advisor.
The third is my husband, who has been in a very different industry but is a great businessman and has been so patient and thoughtful with respect to things that happen in my world when I hit a rut. He’s a big company guy, he’s been in the C-suite of a Fortune 500 company—a very different world. When I had a tough time with that when I was at GE, his very sage advice, which really has nothing to do with the content but more to do with how enterprises work, was invaluable, and still is.
What is that piece of advice? How do you understand that?
It really has to do with how you navigate people.
Who would you consider to be your mentor and why?
I named three. But in addition to that I’ve had a couple of people, one in particular who was an executive at Security Capital Group who had worked with me previously.
What’s his name?
Ron Blankenship, without whom I would have never been able to build the business, along with my partner Walter Mischer, Jr. Those two have been incredibly influential in my capabilities as an executive.
What kind of advice have they given you?
How to navigate failure. How to wake up and be resilient. Where to invest and why.
What would you say some of your greatest strengths are as a leader?
I’ve been characterized as tough, but fair. I care tremendously about our people. I’m very high touch. Yes, take in all of the analytics, but if I had to sit in the office three days in a row and read reports, I would die. I think that I’m very participative, transparent and visible in our world and our communities and the communities at large where we operate.
What would you say your greatest weaknesses are?
I can be tough, and sometimes that’s a weakness, not a strength. Anybody who knows me knows I’m not the world’s most patient person.
One of the things we’re noticing this year is that the industry is finally starting to look at how they attract talent. Say I’m about to graduate from college. What would be your pitch on why I should look to senior living as a career?
I give it all the time because I do a lot of recruiting. First of all, if you’re truly a generalist—that is to say, somebody who doesn’t know whether they want to be an operator, marketer, or a financier—I can’t think of a better business to be in, because we do it all. If you’re like me and you don’t know what you want to be when you grow up, the breadth that our industry offers, as opposed to getting pigeonholed into a discipline, is tremendous. Everybody knows about the demand drivers. When it comes to taking care of and housing my generation, we can’t cope.
There are going to be more than a million jobs to be filled, even more if we think globally. The industry is very young overseas, and for people who have an interest in being part of the formation of the industry and then maybe pursuing international careers, I can’t think of a better place to be.
Speaking of international, how’s business in Mexico going?
It’s very exciting. We’re opening a community in the fourth quarter [I hope] and we’ve got an awesome team on the ground. I was happy to see that our marketing center is teeming with people.
This is Belmont Village Mexico City, opposite and connected by a sky bridge to the finest hospital system in Mexico, and some would even argue in Latin America. It’s on top of mixed-use space where the ground floor contains retail and restaurants, and there’s a Hyatt Hotel on 8 floors above us. They actually did a spread of it in Architectural Digest Mexico already. It’s a fabulous project.
Do you think the industry does a good job at taking people on the front lines and giving them a path?
I don’t think we do a good enough job, and that’s something we’re very focused on inside our company. Our buildings and our business are kind of flat, so people who come on board have to be able to see a way to either grow financially or grow personally, or both. In addition to our training department, we have a full time Director of Professional Development. We have our own very accomplished former ED who’s an in-house recruiter. She’s looking at career paths for not only people we’re bringing in from the outside, but to help us meet our goal of filling half of our professional jobs from within, over a five-year period. Basically, that’s the goal. That not only helps us develop our own talent pool as we grow, as opposed to just borrowing from one another. It also gives our people the opportunity to know that they can grow within the company.