Phoenix Senior Living CEO Jesse Marinko believes that the senior living industry will have multiple years of opportunities in front of it starting in 2025. But it all hinges on “blocking and tackling.”
Phoenix has been busy in the year leading up to that opportunity. The operator completed three acquisitions and expanded its active adult portfolio in 2024 as the organization is primed for further growth heading into the new year, according to Marinko. In 2025, Marinko sees opportunities to grow its active adult brand, known as The Hammocks, while also picking up additional management contracts as ownership groups swap out operators to find the right fit.
To reach pre-pandemic margins, Marinko said the organization must solve staffing issues through increased training and retention of new employees. The completed acquisitions of three metro-Atlanta, Georgia-based properties highlights the company’s ongoing growth strategy that’s paired with the expansion of the active adult brand line through repositioning one of the properties, Marinko said.
“We’ve had to make a lot of strategic decisions about how we grow,” Marinko said during an episode of the SHN Transform podcast. “I think we’ve been much smarter about our growth over the last five years and more strategic about what product types fit our makeup.”
That comes as Marinko said the senior living industry as a whole must continue to evolve to meet the needs of today’s customers, bringing new operational challenges and opportunities to bear.
“We’re witnessing an industry that needs to evolve and view itself differently from the past,” he said.
Phoenix will continue to grow through acquisitions, potential repositionings, and in some cases, new development when conditions are right, Marinko added.
“I definitely see active adult ground-up development as a great opportunity for certain markets,” Marinko said during the podcast. “As with all development, it’s a micro-market play, not a macro-market play. You can try to take it macro, but that tends to cause problems when you apply a cookie-cutter model. The active adult brand definitely has a lot of opportunity for ground-up development, but given construction costs, you’re going to need density that can make it work.”
The Roswell, Georgia-based senior living provider operates 45 communities across the Southeast in nine states.
Listen to the full Transform episode here:
On characterizing operations in 2024:
The theme I would lay out is continued recovery with less volatility, which has been great. We’ve experienced a lot of volatility through many factors—market conditions, capital markets and more. It’s nice to see absorption and occupancy gains continue throughout the year. That recovery started in 2023. We’re still clawing away at margin erosion that really hit us in 2021, though we started seeing its effects earlier.
For the first time in a long time, you can see the light at the end of the tunnel. The industry has a clear path to returning to pre-pandemic expectations. That was half a decade ago, so we can’t keep talking about it in the same way. We’ve had three or four new problems emerge since then.
On priorities for Phoenix in 2025:
I think, like most, the only way we’re going to get back there is through revenue growth. When we look at revenue growth, one of the challenges over the last three or four years is that you can’t just get it through rate or volume anymore. You really have to look at all the levers within our business and figure out how to drive it. We’re going to need revenue growth through multiple levers, whether that’s rate, care, or ancillary.
The only way we’re going to claw back at the margins—especially with expense growth still higher than historical numbers—is by focusing on training and onboarding consistency. That’s going to be a huge operational priority for us. The ability to improve retention and reduce turnover at key leadership positions has monumental financial impacts. More consistent training and onboarding is something we’re going to continue to focus on because those are things we can control.
We can’t control a lot of market conditions, but we can control what we do. That dovetails into one of our biggest priorities: Consistent execution of our processes and systems. One of the things that has plagued our industry is buying the new tool that’s supposed to solve all the problems, only to realize the issue was never the tool, it was execution.
I’m an old football guy. We’re just getting back to blocking and tackling. That’s what we’re doing.
On areas of opportunity for Phoenix in 2025:
All of us operators have to continue to grow our same-store business that we currently operate. I think that’s a key factor in maintaining our investor relationships. For Phoenix, if you’ve followed our story, you know we have grown through all three platforms. We didn’t really become a fee-for-service operator until 2021, we were mainly an owner-operator. But I definitely see us growing in all three aspects.
We’ve always been opportunistic on the acquisition side. This year, we closed three properties in a very tough acquisition market, and I think we’ll continue to be opportunistic. I’m pretty bullish that in 2025 we’re going to get a couple of shovels in the ground. Looking at the supply-demand metrics, we know we need more supply over the next 20 to 30 years, but definitely over the next five to 10.
We’ve always been methodical. We had a science and a process, pretty much from the inception of the company to 2021, where we got two to four shovels in the ground every year with a real science and methodology. I’m looking forward to getting that spooled back up again. Capital solutions will always be our biggest hurdles, whether it’s debt or equity.
I see the biggest opportunities for us being management contracts over the next 12 to 24 months. I see publicly traded REITs recognizing the success we had with a large portfolio we took over in 2022, where we 12x’d NOI over three years. I anticipate many of the larger REITs approaching us about potentially taking on assets where they’re breaking leases or breaking historical capital structures that used to work but no longer do.
For us, it’ll be about whether those opportunities match our footprint and makeup. We’ve had to make a lot of strategic decisions about how we grow. I think we’ve been much smarter about our growth over the last five years and more strategic about what product types fit our makeup.
Details on the company’s recent growth:
The three acquisitions were a strategic buy from a publicly traded REIT, all in the Atlanta market. They made sense for us. One of them was a great repositioning play where we took an [assisted living] memory care and repositioned it into our active adult brand, which we call The Hammocks. That was a great opportunity to take a product and reimagine its use.
We’re big believers that if a building isn’t succeeding, it’s usually due to one of three problems: people, building type, or market. Sometimes buildings go through enough reputational damage that they may never work again as their existing use. One of these acquisitions made a lot of sense to rebrand. It was in a very affluent Atlanta metro market, and we’re now halfway through the renovation to convert it into a fully active adult product. I’m very excited about getting that product up and launched in the spring of 2025.
One of the acquisitions was a “blocking and tackling,” steady, solid performer. For the other product, we’re looking at the opportunities it offers, whether through repositioning, divesting, or whatever makes the most sense.
It was a strategic acquisition that, at the time, made a lot of sense, and we had the right capital solutions to execute.
On the company’s active adult brand growth:
We actually started in 2015 with specific branding lines from day one. You’ve got our Phoenix brand, our Retreat brand, and our Pearl brand. We even created a couple of smaller, tertiary product brands for more rural markets: The Neighborhood and The Bungalows. This new brand, The Hammocks, which is standalone active adult; focuses on serving a huge need in local markets where there are no apartment options that balance affordability with a la carte services.
We’re creating inviting social spaces that allow seniors to interact with one another while still having enough discretionary income to choose the services they want to support their lifestyle. At the same time, they don’t have the hassle of maintaining a house or grounds. We see a huge need for this. My gut tells me that over the next 10 years — thinking about my father, who’s about to turn 80 and still lives in his own home — seniors will want independence to be very clear. They’ll want to feel like they’re still in charge of their domain.
For many seniors moving from a 3,000- or 4,000-square-foot home, I believe the active adult [independent living] component will have the least barrier to transition. We’re very bullish on that. With the creation of The Hammocks brand, we’re delivering what you’d expect from any Phoenix property: very nice amenities and well-appointed full-service offerings. Our Hammocks properties include outdoor pavilions, extensive amenities, gyms, and social bistros.
The goal is to encourage residents to lead the lifestyle they want. We’re essentially creating a platform for them to build their own community, drive activities and support what matters to them. We’re still taking a multifamily-style staffing approach and management style but remain aware of the need for social programs. We’re also leveraging technology and resources to help residents socialize and create a cohesive environment where they can truly see themselves aging in place while enjoying an independent lifestyle free from the stresses of single-family home management.
Charting the company’s development and active adult brand growth:
I think if you’re really talking about the Hammocks brand as a standalone active adult product, it wouldn’t be part of a campus. We have campus products that we label as the Phoenix, like Opelika, our recent development near the Auburn campus in Alabama. It has 56 active adult cottages, 80-plus [independent living] units and memory care. That brand represents more of the continuum play, which has historically been the development style you’ve seen from larger institutional operators and owners.
I do see opportunities in both, candidly. The basis and acquisition price will always determine whether or not you can convert a product from an [assisted living] memory care or another usage product, as I say, “take it back left on the continuum” and drive it to the active adult brand. It really depends on the makeup of the product and what a seller can afford from a disposition perspective. I think that will be opportunistic, and there will be opportunities out there.
It’s not hard to see that there’s a lot of investor fatigue across our sector. You’re seeing people finally handing over keys or moving on in different directions, and that’s going to create opportunities. But like everything in this world, it’s a conundrum. You’re starting to see the acquisition market heat up again. Some people are really trying to put together capital stacks and get—not aggressive—but more aggressive than we’ve been in the acquisition space. So, I think there will be opportunities, though it’s hard to say how plentiful they’ll be.
I definitely see active adult ground-up development as a great opportunity for certain markets. As with all development, it’s a micro-market play, not a macro-market play. You can try to take it macro, but that tends to cause problems when you apply a cookie-cutter model. The active adult brand definitely has a lot of opportunity for ground-up development, but given construction costs, you’re going to need density that can make it work. Rates will be at the lower end compared to what we historically charge.
One thing we’re focusing on—and I’ll expand on this later—is taking cues from how other industries like multifamily and hotels have grown and matured, analyzing their models in detail. Within PSL, we’re really discussing things like rate per square foot and what that means. For the active adult product, you’re likely in the $2 to $3 per square foot range, whereas for an [assisted living] memory care product, you’re closer to $20 per square foot. With [assisted living] memory care, you don’t need as much density to hit the margins and profitability historically achieved. However, for active adult at $2 to $3 per square foot, you need significant density to offset development costs and hit your margins and numbers.
It’s going to be an interesting challenge to make that work, and I think it will really limit the number of markets where active adult new development can succeed. It’s going to require highly dense, major metro markets for that product to work. I think that’s the only way to make it viable.
On active adult as a bridge to the wider continuum:
I think it’s going to be the path of least resistance for seniors making a move. It’s going to feel the most like home, the most familiar to what they came from. I’m a big believer in campus settings. When we look at all our product types, those campuses that offer full services have maintained operational consistency over time.
So, I see active adult, as the primary form, being a part of a campus. There will be niche markets where it makes sense as a standalone. I really see active adult allowing for a higher percentage of movement through that channel. I also think you’re going to see lengths of stay increase because that’s something that’s been contracting across the [assisted living] Memory Care platform.
There are stats showing lengths of stay ranging from as low as eight months up to 15 months for [assisted living] Memory Care, which pre-pandemic was around 24 to 28 months. The average age of move-in is 83, so it’s just sheer math.
Your gut is right: active adult is going to be a great conduit. But I think there’s a fine line in that if it’s a standalone active adult, some people may struggle with what happens as they continue to age. Is there another move? Another decision?
So, I think in the active adult play, you’ll really have to be strategic about moving the move-in age left considerably by five to seven years. How do we capture that 75 to 78-year-old senior who probably doesn’t need to be in their home, where an accident might occur? How do we get them into a setting where, although accidents may still happen, there will be more people around and supportive services to reduce the severity when an incident occurs?
On staffing conditions heading into 2025:
Wage rate growth has slowed, which is great, but it’s still creeping at rates higher than historical levels. So it’s still something we’re trying to figure out—what the future is going to look like. It’s funny, though, sometimes the same problems persist. Nurses are still hard to find, and good, solid ED leadership remains a struggle. Getting people to run a restaurant, home care, and a hotel under one roof is a tough job, 24/7, 365 days a year. Filling those positions remains one of the biggest challenges.
Frontline staffing has improved, but nationally, the numbers are clear: there’s still a deficit across the country. A recent article highlighted that four of the top 10 fastest-growing jobs in the country are in healthcare. Going further, specifically, care aides are projected to make up 12% of the net job growth over the next decade. That’s an estimated 821,000 jobs forecasted to come through care aides—many people to hire in a society that at times does not have a strong demand for people to pursue that field, which is a hard struggle.
It’s kind of a chicken-and-egg problem. That’s why when you ask about our goals, training, onboarding, retention, staff development, and pouring into our staff are key. You can either pay them more or invest more in them—our choice is to invest more into our associates from a growth and development perspective, aiming to provide meaningfulness and growth within their job.
On solving recruitment, hiring and retention:
We’ve had in-house recruiters for, I don’t know, about six years—however long we’ve had them, they’ve been with us for a long time. We definitely recognize that communities need support and assistance in that area.
I think the consistency of conducting weekly group interviews and making sure we’re constantly bringing in new staff—laying eyes on them and meeting good people with servant leadership qualities—is key. The one thing I’ve learned is that no single solution will solve training and onboarding. Some people need a mentor, some need to be left alone, and others just need a manual to follow.
Like most training and development programs, you have to address all phases of how people learn and grow. This means incorporating visual components, teach-show-mentor-training methods, and online criteria content that allows people to access training materials when they need them. This is normal because it’s a lot of information to absorb in 90 days.
Investment in your [human resources information system] is crucial. Mentors can never be replaced—they are key to personal growth and career trajectories. Success stories show that people who’ve had great mentors often reference them as their greatest influence. Leveraging these success stories and having those types of mentors is huge.
The most important thing is being authentic with your staff, honest, transparent, and communicating clearly about their progress. Tracking their development along the path is crucial. Consistent communication is essential, but these are busy jobs with many distractions. However, if you invest on the front end … the outcomes will follow. You have to put in the work.
On the senior living industry’s biggest challenges in 2025:
I think staffing is always like an easy answer, but we’ve always faced staffing challenges. We had staffing challenges in 2004, staffing challenges in 2008. It’s just a part of our business, right? We’re trying to grow a business in a sector where not many people are pursuing careers.
One piece I wanted to emphasize is that career maps are really helpful. For example, showing a non-certified CNA—just someone who has a good heart—how to progress: “Let’s get your CNA training. Now let’s get your med tech training. Great. Now let’s do leadership and supervisor training. Hey, have you ever considered nursing school? If that’s not for you, have you thought about back office support? HR, maybe?” Laying out a clear career map is how you can help solve some of these challenges.
Going back to the question you asked earlier, I don’t think that problem is going away. We always have to address it.
The capital markets are going to be the biggest driver and challenge in 2025, whether it’s investor fatigue, better debt solutions – though still not great –, or equity and investor expectations remaining high. I see that as a big challenge. Companies with financing, the right solutions, and long-term invested partners will likely find opportunities in 2025.
One of the largest challenges facing our industry is its maturation. We’re witnessing an industry that needs to evolve and view itself differently from the past. We had a strong run from the 1980s to now, with a few hiccups along the way, but 2020 to 2024 was the biggest hurdle we’ve ever faced. Anytime you’re presented with a challenge, it either forces a company to grow, mature, and pivot in how they operate, or not. The latter choice isn’t a positive outcome. We’re seeing many operators exit the space, consolidate, or get bought out by larger players. This industry maturation and our need to rethink how we conduct business are going to be key in 2025.
On the outlook for 2025:
I’m very optimistic about where the industry is headed. I think supply-demand metrics strongly favor us. The current capital markets, oddly enough, also support this trend because they’re increasing absorption. Getting new deals done is very difficult right now. Given these market conditions, I see at least a nice three to four year period of strong performance. I believe that within the next 12 to 24 months, we could achieve occupancies that are above or even potentially challenging historical highs.
I see the biggest opportunities in our industry through innovation. As the industry matures, I think trial and error will be essential. Leveraging new resources like AI tools and meaningful data points—such as fall detection, nurse call systems, and better med management—along with HR systems, will be crucial. Taking these data points and driving strategic key strategies from them will be pivotal for future opportunities. Challenging the norm is, in my opinion, key to success for the coming years.