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Testimony to
The Commission on Affordable Housing and Health Facility
Needs for Seniors in the 21st Century
September 24, 2001
William E. Colson
President and CEO
Holiday Retirement Corporation
2250 McGilchrist St SW
Salem, Oregon 97302
telephone 503-370-7070

Holiday Retirement Corp. is the largest owner and manager of independent seniors housing ("housing with services") in the United States and Canada (based upon total number of units). Its rental revenues are derived solely from private financing by individual residents and their families.

From its inception to the present time, Holiday Retirement Corp.'s target market has not changed. It has always been middle income North Americans. For over thirty years we have built and operated our projects to fill this small niche market. Due to our great success within this niche market, we have no plans to move into any other markets. As a manager of independent living retirement housing, we provide three meals per day in a common dining room, an activities program and transportation, and weekly maid service. Residents in our buildings typically live in studio or one to two bedroom apartments within an apartment complex devoted entirely to serving seniors. Manager and co-manager couples live on-site and direct the daily operations of the facility. Our independent living facilities do not provide any medical services. A very small percentage of our buildings has some assisted living wings, though they are but a small part of our business.

Holiday Retirement Corp. (the 'Company'), with its related entities, is the largest owner and operator of retirement housing in the world. Holiday and its affiliates currently manage over 73,000 units of senior housing worldwide and are located in the United States, Canada, U.K. and France. In addition, Peverel, an affiliate of the Company based in the U.K., manages 46,000 general market flats. When added to Holiday's managed senior units, portfolio under management is 116,000 units. Holiday's North America portfolio includes 270 retirement facilities consisting of 32,283 units, located in 40 states in the United States and 7 provinces in Canada. Virtually all of the retirement centers managed by Holiday are owned or controlled by the principals of the Company via partnerships or other entities.

The Company was founded in 1971, as Holiday Management Company, a general partnership consisting of three of the current shareholders of the Company. In 1987, the Company in its current structure was formed and purchased the existing 31 management contracts. Since 1983, affiliates of the Company, including Colson & Colson Construction Co., have developed and constructed retirement facilities through partnerships or limited liability companies. Holiday typically assumes management responsibility for these properties as they are completed and ready for occupancy.

The Company currently employs over 12,360 people with approximately 200 located in Salem, Oregon at Company headquarters ("Home Office"). Approximately 100 employees are responsible for accounting, data processing, risk management, and general administrative functions. Holiday has approximately 60 full-time employees responsible for the day-to-day operation of the retirement facilities, including 5 divisional managers and 29 regional managers. The balance of the Company's staff perform facility maintenance, marketing, resident relations, human resources, finance, property management, legal, and dietary services functions. The Company uses centralized management and accounting systems for its financial reporting and monitoring and decentralized facility management through its divisional and regional manager structure.

Holiday Retirement Corp., with its predecessor, Holiday Management Company, has spent the last three decades developing the infrastructure for the management of multiple retirement projects on a national basis while maintaining a consistently high quality of service for their residents. The key ingredients of Holiday's management success has been a focus on simple systems, common purchasing, dietary planning, consistent operating policies and procedures, and divisional and regional facility management.

  • Holiday Retirement Corp. (Holiday) is the largest manager of retirement residences in North America with 32,283 units under management in over 270 properties located in 40 states in the United States and 7 provinces in Canada.
  • In the past three years, Holiday and its affiliates have closed approximately $2.0 billion in financing, closing more than $625 million in 2000 alone. During the first quarter of 2001, Holiday closed a $133 million pool of 31 seasoned properties with NorthMarq Capital Inc./Freddie Mac.
  • In April 1998, Holiday Europe L.L.C. completed its acquisitions of Hotelia and Sofco Sante, senior housing owners and managers in France. The newly combined entity was renamed Serience in 1999. In April, 2000, Serience completed two new developments in downtown Paris. As of March 2001, the occupancy of these two developments was over 95%. Late in 2000, Serience also opened a new development in Amiens, France, and currently has another facility under construction just west of Paris. With 35 facilities consisting of more than 3,200 units in operation, Serience is the third largest senior housing operator in France.
  • HRC UK Holdings LLC owns 99% of Peverel Ltd. (Peverel). Peverel is the largest manager of senior housing in the U.K., with over 37,000 units of sheltered housing units. Peverel also owns freehold interests in over 23,000 of these units as
  • ground lessor. "Sheltered housing" as defined in the U.K, is condominium ownership in a seniors-oriented community. The Peverel Group also includes O&M Management Co., which manages over 46,000 general market flats, primarily in London, and Cirrus Communications, an emergency call monitoring company, providing service to over 83,000 units.
  • Holiday's prototypical property is oriented towards the middle market senior over the age of 75. Average rent at a stabilized facility is approximately $1,600 per month. This includes: three meals a day, weekly housekeeping and linen service, social activities, utilities and scheduled transportation. All of the properties are rented on a monthly basis. The average occupancy for the entire Holiday managed property portfolio is 90% with more than 30% of the portfolio over 100% occupied.
Target Markets

Holiday's target is the middle income North American senior; 83.3 years old and single. About 10% of our residents are couples, 20% are men, and 80% are women.

Level of Penetration

Our target residents comprise 3-6% of the entire retired population of North America.

Who we serve

We serve the private-pay market, with some residents receiving financial help from family. Within our market share, of the people who reside at our properties approximately 20% are upper income and approximately 20% are below the government's established poverty line. The remaining 60% represent the typical resident and precisely what we base our business on.

One of the most remarkable results of this combination of upper, middle, and lower income brackets is a general homogeneity of residents where class and social status no longer matter. This is one of the only places in the world where those lines seem to diminish and disappear, leaving only a harmonious and nearly perfect mix of people from varying financial and social backgrounds living and interacting within a single retirement community. Despite the differences that may have existed prior to entering a retirement community, this mixing seems to work perfectly within the individual communities.

Who is not served

As stated above, Holiday specifically targets a very small part of the market of retired persons as a whole. Our residents are primarily middle-income, private pay residents (60% of total residents). Retired persons who receive public or government assistance, and those considered to be upper income are the lesser numbers in our resident demographic. These two groups comprise only 40% of our entire resident population.

Regulatory Issues

As a provider of independent living retirement housing, there are no regulatory laws that we need or want. Our greatest anguish arises from overzealous state regulators who want to put licenses on us. We do not provide any healthcare; we are simply an apartment complex which provides services to its residents, different from other property managers of apartments by virtue of our target resident and the amenities included in the monthly rent.

There are no regulatory or licensing requirements that would in any way benefit our residents. The existing housing codes ensure a safe domicile for all renters, whether it be within a general apartment complex or one expressly dedicated to senior citizens, such as ours.

Future of the seniors housing industry and conclusion

What I have observed recently in the seniors housing industry as a whole, including CCRC's, alzheimer's care, assisted living, and independent living, is a change in mentality. There has been a transition from the industry being directed and built by developers without consideration for operations, to it being directed by operators, as it is now. As a result, the seniors housing industry has gone from very high and speculative growth in the recent past into something that is now a rational and planned business venture. After many years of uncontrolled growth, the focus of this redirected industry has become controlling costs and creating a good value for the consumer, the end result being affordability and a good quality of life.

Growth within the seniors housing industry, and especially the private sector, will be controlled by supply and demand, and financing. Specifically for Holiday Retirement Corp., our development plans remain modest and sustainable at 20 new projects per year. Given our huge market of North America, we feel that this expansion is extraordinarily conservative. It would be my hope that other industry leaders would keep to this same pattern so as not to have another period of unleashed growth without considering the daily operating issues. As such, this "restrained" growth will nicely meet the current and increasing demand for private independent seniors housing. As you may be aware, the real increase in the market will not occur until 2009, at which time development could certainly be adjusted.

With regards to serving the seniors population, there is a very large void, and will continue to be, between those who can afford total private pay within any of the housing options currently available, and those who cannot. At this point it does not appear that the government, state or federal, will have the resources or operations experience to completely finance and direct housing and care for seniors.

What I see as a solution this problem, as a reasonable option, both for the government and for seniors who would need public assistance in order to reside in a seniors' residence, would be "topping off" each individual senior's own resources. If rent were $1,600 per month with all services, and the prospective tenant has $1,100 available, why not have the government provide the difference?

The page was last modified on October 2, 2001