Senior Housing in the Midwest: A talk with New Perspective CEO Ryan Novaczyk

The family-owned company has recently entered the Indianapolis market.

Ryan Novaczyk, CEO, New Perspective

Ryan Novaczyk, CEO, New Perspective. Image courtesy of New Perspective

New Perspective has been a major player in the Midwestern senior housing industry for more than two decades. With properties across Minnesota, Wisconsin, Illinois and North Dakota, the family-owned firm serves aging adults across the memory care, assisted living and independent living spectrum.

Late last year, the developer and operator partnered with Boldt Capital to enter the Indiana market with the purchase of a total of 482 recently built units in three different suburban areas of the metro. 

To find out more about the company’s upcoming moves, Multi-Housing News asked CEO Ryan Novaczyk to share his thoughts on the recent expansion into Indiana and talk about his views on the region’s senior housing market. Ryan stepped into the footsteps of his father, Todd Novaczyk, who founded New Perspective driven by his family’s personal experience with Alzheimer’s disease.

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What is New Perspective’s current investment strategy and did the pandemic influence it in any way?

Novaczyk: We continue to focus on identifying underserved markets in our target geographies to pursue development and acquisition opportunities.

Pre-pandemic, our investment strategy was 50 percent development and 50 percent acquisition. Construction cost headwinds and tighter capital markets—as a result of the pandemic—and the current inflationary environment have shifted that mix to 25 percent development and 75 percent acquisition. In the last 12 months, we started one new construction project in Arden Hills, Minn., and acquired four assets in Indiana and Illinois, so those goals are playing out in real time.

Why did you decide to enter the Indiana market? What attracted you to the metro?

Novaczyk: We have been eyeing expanding our footprint from Illinois down through Indiana for some time. The right opportunity presented itself and we acquired three very new assets in fantastic markets, at price points below replacement cost.

What is the current state of the Indianapolis senior housing market and what are your predictions?

Novaczyk: At the margin, Indianapolis has performed a bit better than the rest of our portfolio occupancy-wise. Based on where we are today, this market will likely reach 90+ percent occupancy before some of our other large markets like Minneapolis and Milwaukee.

How is the Midwestern senior housing market faring? Are you considering any new markets?

Novaczyk: The Midwest occupancy trends have mirrored the national averages. We are looking to expand into new markets and are evaluating numerous deals in states adjacent to Indiana or one state over, as well as Florida.

Are there any properties in your current portfolio that stand out?

Novaczyk: We opened two projects during the pandemic and both of them are off to the fastest lease-ups in company history. New Perspective Franklin and New Perspective Waukesha have beaten all the odds and performed brilliantly in the midst of a very challenging environment. I believe this is a great sign for our industry. The right buildings in the right markets, with the right demand profile, coupled with strong execution, remain the ingredients to success, pandemic or no pandemic.

What are the most sought-after amenities and services in your senior living communities?

Novaczyk: Everybody has their favorite amenity. Some love the bar, others love the bistro. Swimmers are into the pool. Some people just want to hang out on the porch. The gamers can be found near the poker table. Arts and crafts are a big draw. But the most important and sought-after services in any senior living community are the care being provided to the residents, the dining experience and activities. All of the factors contribute to an environment where seniors can live life on purpose. 

In your view, what are the sector’s biggest challenges at the moment? 

Novaczyk: The biggest challenges in our sector are finding and retaining talent and the cost of inflation.

Are the pandemic’s effects still felt across the industry?

Novaczyk: The construction cost profile of a building has completely changed. Tight labor markets and big increases in materials costs will force developers to rethink the physical plan. In addition to higher building costs, operating costs have increased dramatically, which means lower NOI at a time when construction costs are high. The building has to become more efficient while maintaining a community setting that allows seniors to thrive and live life on purpose.

Many projects that were penciled out two or three years ago are unbuildable/financeable in the current environment. Nevertheless, our team is meeting the challenge and we expect to break ground on a couple of projects later this year. We are also thrilled to have started a new construction project late in 2021. New Perspective Arden Hills will open in the winter of 2023.

Which senior housing care types have been most affected by the global health crisis and how are they recovering? 

Novaczyk: Every category got hit, primarily due to a slowdown in move-ins, but independent living and assisted living are both up 14 percent from the low point and memory care is up 5 percent.

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