Senior Complex Beyond Assistance

Be.group, a Glendale operator of senior housing that struggled during the recession, is closing down a longtime assisted living facility in La Crescenta and selling off the land. Tenants of Twelve Oaks Lodge, which has operated for about 80 years as a retirement home, were informed last month that they had to move out by Nov. 1. Dan Hutson, vice president of communications and marketing for be.group, said Twelve Oaks is closing because the facility isn’t making money. “Twelve Oaks is just functionally obsolete. We can’t afford to lose money in any community. It has to be profitable because that then impact services at other communities,” he said. The facility began operations in the 1930s and is not a single structure like many retirement homes. Instead, its 50 residents live in cottages spread out on 4.5 hillside acres. This will be the first assisted living community closed by be.group, which changed its name from Southern California Presbyterian Homes in 2011. It operates six continuing-care retirement communities, two smaller assisted living communities and 26 affordable housing communities, with two more in development. The non-profit struggled through the recession, as did other operators in the industry, as many elderly homeowners declined to sell their homes – given the drop in prices – and move into retirement communities. Be.group earned a surplus of about $1 million on revenue of $54.5 million in 2007. It then lost about $10 million over the following three years. And in its most recent reporting year, 2011, the group reported a loss of about $3.6 million on revenue of $68.3 million. Reports for last year are yet to be filed with the state, but Hutson said the non-profit is doing well. “Like everybody else, coming through the recession was a difficult time. But we’re having a great year,” he said. “This was more a product decision than a strictly financial one.” Chris McGraw, senior research analyst with National Investment Center for the Seniors Housing & Care Industry of Annapolis, Md., said it is unusual to see assisted living communities close. He noted that occupancy at such facilities has been recovering since the recession, growing to about 89 percent nationwide. “Occupancy for assisted living facilities is nearing its pre-recession numbers. It has been recovering and steadily gaining traction. From a market fundamentals standpoint, it’s been strengthening,” he said. “We don’t see a lot of closures.” Financial standing The 50 residents at Twelve Oaks pay from about $1,200 to more than $4,000 a month to live at the facility, which offers limited assistance such as help getting dressed or using the bathroom. There are about 25 employees at the facility, most of whom work in the dining room, with no nurses or doctors on staff, Hutson said. Be.group plans to offer residents spots in nearby assisted living communities, such as Windsor in Glendale and Westminster Gardens in Duarte. “For those residents interested in moving, we’ll hold at the rate that is currently being paid and pay for the move,” Hutson said, who added that all Twelve Oaks employees will be offered positions elsewhere in the company’s portfolio. The non-profit was founded in 1955 and began with one small facility in the upscale San Diego suburb of La Jolla. Now it serves more than 5,000 residents in California, with about 600 in the Valley. The group acquired Twelve Oaks about 10 years ago from National Charity League Inc. of Costa Mesa, a non-profit focused on volunteer opportunities for mothers and daughters. Be.group Chief Executive John Cochrane was not made available to comment about the closure, but he told the Business Journal in November that the climate for assisted living facilities is changing. “We’ve been forced to become adaptive and nimble, and while that’s a good thing, it’s a difficult thing,” he said. “This is a time of disruption, and organizations have to respond.” Despite its financial struggles, be.group is still one of the Valley’s largest non-profits, with assets of about $208 million in its last reporting year, according to the non-profit directory published by GuideStar USA Inc. Still, the Southern California senior housing market has become quite competitive, with Belmont Village LP expanding aggressively. The Houston company opened its first facility in Los Angeles County in 2001 and already has six communities in the county, with Valley operations in Thousand Oaks, Encino and Burbank. Development spot? Twelve Oaks looks much more like a summer camp – tucked away from the street in a quiet, hilly residential neighborhood dotted with trees – than a senior housing facility. Indeed, one local broker said it could fetch a good sum as a land sale. “It is valuable and a great location for single family development,” said William R. Boyd Sr., senior managing director at the Glendale office of Charles Dunn Co. “Though there are very few facilities as good as Twelve Oaks, as land gets more valuable, historic uses can get moved out.” The land at 2820 Sycamore Ave. is zoned for low-density residential. Since Twelve Oaks predates any city zoning regulations, it is grandfathered in. Hassan Haghani, Glendale’s director of community development, said he has not been approached by any developers regarding the site. He said obstacles for developing the land include the number of trees that would likely have to come down, as well as demolition of the existing buildings amid a residential neighborhood. “With all the individual buildings on the site and the natural vegetation, I just don’t know,” he said. “But we’d want as little negative impact as possible. And prior to anything happening, we will most certainly require a tree study.”