Five Questions with Epoch Senior Living CEO Larry Gerber
Last month, partners Epoch Senior Living and National Development opened the doors for the first time to their new $120-million Waterstone of Westchester luxury senior housing project in Downtown White Plains.
The independent living facility for those 62 and older offers everything a five-star hotel would offer and more. The 132-unit property is located across from Bloomingdales and just down the block on Bloomingdale Road from Whole Foods and the headquarters of the Hudson Gateway Association of Realtors. Monthly rents at Waterstone of Westchester range from approximately $8,000 to $12,000 depending on the size of the unit and services rendered.
With the property so close to HGAR, it seemed only appropriate that Real Estate In-Depth take a closer look at this property by asking “Five Questions” to Epoch Senior Living Founder, President and CEO Larry Gerber.
Gerber founded Epoch Senior Living in 1997 and since then the company has opened 14 senior assisted and independent living properties in Connecticut, New England and now New York with a few others in development. The Waterstone of Westchester marks the Waltham, MA-based company’s entrance into the New York marketplace.
From 1991 to 1997, Gerber was President and CEO of the Berkshire Group, a privately held firm with subsidiaries in long-term care, multifamily real estate and mortgage banking industries with more than $10 billion in assets under management. From 1984 to 1990, he served in various senior executive capacities with Berkshire, with responsibilities for real estate acquisitions, mortgage banking, fundraising and strategic planning. Under his direction, Harborside Healthcare, the long-term care subsidiary of Berkshire, successfully completed an IPO and grew to more than 5,000 long-term care beds. While at Berkshire, Gerber also served as President, Chief Executive Officer and Director of Berkshire Realty Company and Chairman of Berkshire Mortgage Company. Prior to joining Berkshire, he was a management consultant with Bain & Company and a senior tax accountant with Arthur Andersen & Company.
Real Estate In-Depth: Epoch Senior Living and National Development recently opened its 132-unit, 62+ Waterstone of Westchester independent senior living facility in White Plains. Can you explain why you chose White Plains for your first independent senior living facility in New York State and how has interest been in leasing at the property?
Gerber: In answering that I would say that we really chose Westchester County as a target and we are finding that we draw from throughout Westchester County, obviously more from Scarsdale and White Plains and the nearby towns. We have residents coming from Southern Fairfield County, CT, including Greenwich, and we have some coming from believe it or not Manhattan and Florida because they have children living in the Westchester area. We try to do the Waterstones in what I would describe as an ‘urbanized suburban setting.’
When we have people considering another property other than a Waterstone, most often they are considering a CCRC (Continuing Care Retirement Community) and the reason is there are not many rental communities that are of the caliber that we offer. You tend to find the CCRCs are big so they get some economies of scale and are operated by an independent not-for-profit or some religious-affiliated group where there is some charitable giving that pays for the cost of the building. They tend to be located at these lovely isolated, pastoral campuses. We try to do Waterstone where our residents are part of the community we are (located) in. They are near stores and restaurants, banks and medical care and culture and are walkable or within a very short drive. As you know we offer transportation services for our residents. So, White Plains had undergone a great resurgence in residential life with high-end apartments and condos that have been built. We are across from Bloomingdales and diagonally across from The Westchester and we thought that was an exciting, vibrant community. The first two Waterstones we built—one is in Wellesley, MA and the other is on the Boston-Brookline line. They are also very convenient to retail and there are a lot of busy streets there. So that is also what attracted us to White Plains.
Also, our partners at National Development knew the owners of the office building. It was a pretty complex deal and it was helpful to have parties that knew each other and trusted each other. We wound up basically taking the parking lot for the office building (next door) and building the garage. While the garage was being built, we leased (parking) spaces at Bloomingdales across the street for the office building employees and then when the garage was done, we built our building with additional parking for our residents underneath. It was a complicated deal that took a long time getting done, but we are very proud of it and excited about its opening.
Interest (in Waterstone of Westchester) has been very good. It was slow when we first opened our sales office about two years ago during the worst of the pandemic, so nobody went anywhere. It has really heated up in the last six to eight months or so. Now that the building is open, it is phenomenal. We are ahead of our pro forma in terms of occupancy. Physical occupancy is about 30% and there are dozens of other lease commitments (pending). Editor’s Note: Gerber expects Waterstone of Westchester to be near or at full occupancy in the next year or two.
Real Estate In-Depth: Based on a tour your firm provided recently of the facility located across from Bloomingdales in White Plains, there is a definite feel of hotel living. Can you explain what you hope to offer residents at Waterstone of Westchester and what sets it apart from other senior properties in the area?
Gerber: Waterstone offers the sophistication and design elements in the common areas that one would see in a boutique hotel or luxury condo building. When people move in or spend any time at a Waterstone, they feel like a very warm, welcoming and nurturing home. What sets it apart from others is that due to its urbanized setting, it will attract a more active resident who probably skews a little younger than other independent living communities or is more fit and can take advantage of the location and walk across the street to Bloomingdales and things like that. But, what we really offer is a lifestyle of convenience where we offer meals, housekeeping, social and lots of educational activities, a fitness program and an indoor pool. I have heard residents say that they are no longer worried about managing a home anymore and 65 vendors coming to their house.
What we are offering is a care-free lifestyle that fosters wellness and greater independence among our residents than if they were living in a place that didn’t have the supportive services that we have. I think that it is very rare and the level of services and quality of building are not found in most of our rental competitors. … Editor’s Note: Among the services and amenities available at Waterstone of Westchester include: gourmet cuisine, a movie theater, fitness center, indoor pool, lobby bar, art studio and salon. Services include chauffeured car service, garage parking and on-site concierge and access to home care services through an on-site partnership with VNS (Visiting Nurse Service) Westchester.
Real Estate In-Depth: Earlier this year, your company opened the Waterstone on High Ridge in Stamford, CT, an independent living/assisted living facility. You have a total of 14 properties in Connecticut, New England and now New York. Can you tell us what other properties you have in development and are you looking to expand with other facilities in the Hudson Valley, New York State and the New York metro region in the near future?
Gerber: We currently have two properties under construction in Lexington, MA, one is a Waterstone and one is Bridges by Epoch Memory Care, a stand-alone memory care building. We are a regional company. We have four properties now between Fairfield County, CT and Westchester. We continue to look for other opportunities in Westchester, but we haven’t seen anything that we have gotten excited about or could work. As a company, and with our terrific partners at National Development, we are really about quality, not quantity for senior housing. I really have no targets for how many we are going to build or how much we are going to grow. We are privately-held. We don’t have a capital partner at the corporate level. We have capital partners on individual buildings. As a regional company in New England, our southern boundary is Westchester County. By design, we want our regional corporate management team to be visiting all of our properties often and be able to get there quickly if necessary. We only consider opportunities where our team (from its headquarters in Waltham, MA) can drive to. If they have to get on a plane or the drive is too long, we rule it out. Editor’s Note: Gerber said that during the COVID pandemic, the firm was focused on opening the facilities in the pipeline and by the end of 2022 will open four new facilities—a record for the company.
Real Estate In-Depth: Your luxury properties are catered to a certain market segment. Your property locations are in affluent suburban locations. Can you describe your typical resident and what prompts them to lease at your properties?
Gerber: There is no simple answer to that question. I mean, they include people who are in their early 70s, sometimes even late 60s, and it includes people who are in their late 90s and we have a few who are over 100. … Our residents typically have some financial means. Many were doctors, lawyers, business owners and professionals. However, there are others that have not made as much money through their careers, but through good saving and investing (are able to afford to live at a Waterstone property).
Also, if someone is 85 or 88 years old, and they decide to sell their home in Westchester or in some other nearby suburban locations, a home almost always sells for more than $1 million and often several million dollars. I’ve had retired school teachers who had a house that they bought for $40,000 and sold it for $1.8 million and moved into a Waterstone. So, it’s a more diverse group than you would think, which is very nice. ,,, I think our residents typically are people who appreciate the finer things in life, who are cultured, who are focused on continuing education and who for their generation probably had more of a focus on fitness than some of the others who didn’t make it to that age.
Real Estate In-Depth: Has rising inflation, which has caused material and labor costs to soar, impacted your expansion and development plans now and in the short term? The Waterstone of Westchester was estimated to cost $120 million to complete. Your firm did receive some incentives from the Westchester County Industrial Development Agency in connection with the project’s construction. If you were about to break ground now on this project, what do you estimate the cost would be and would Epoch Senior Living actually break ground on the venture or delay its construction?
Gerber: The question what the project would cost today to develop is a difficult question in the hypothetical. … There are so many cost components that go into a project that have been inflated at different levels. Without sort of spending a couple of months that it takes to budget construction accurately, factor in construction interest and lease-up reserve and furniture and other things, (it is difficult to calculate). I’d say that since we locked in our costs on this project, material costs have skyrocketed, interest rates are up about 50%, labor costs have increased and delivery costs for everything have pushed prices up. I would venture a guess that costs are up at least 20% to do a project like this. Then there are the operating costs of a community—energy, food and labor are all up by so much. I very much doubt that a project like this would pencil out right now.