James-Robert Sellinger, Principal. Mr. Sellinger is a real estate executive with over 25 years experience in diverse institutional and entrepreneurial environments. James has a successful career in transactional commercial real estate and a track record in formulating creative financial structures within the capital, property and real estate asset markets.
James has recently become interested in green housing and is involved in funding ground-up land development for senior housing properties as a Principal of SLD.James-Robert is also CFO and Partner in Built Environment, a benefits corporation committed to integrating sustainability and resiliency efforts to safeguard property, critical infrastructure and natural systems from the effects of climate change.
As former Chairman of the Tenafly (NJ) Planning Board, James was instrumental in advocating its Green Agenda; sustainability and resilience efforts to alleviate storm water Runoff.
James’ past positions have included Manager and Senior Underwriter at Merrill Lynch Mortgage Capital, Senior Director at the hedge fund Palisades Financial, Mortgage Banker at Northmarq Capital, and Manager with AT & T Real Estate.
James has a B.B.A from University of MA, Amherst; an M.B.A. from Cornell University. Mr. Sellinger currently is an Adjunct Professor in the graduate program at the Schack Real Estate Institute, New York University.
We cover the topics:
- Creative funding of senior living facilities, trends and issues – post COVID19
- Green development, and how important this is to include in facility design and operations
- And more…
Hanh Brown: [00:00:00] Today I’d like to welcome James-Robert Sellinger to boomer living podcast.[00:01:15] Thank you so much. So being here with us today.
James-Robert Sellinger: [00:01:18] I’m looking forward to it. Thanks for the opportunity.
Hanh Brown: [00:01:21]Great, So could we start by having you share some background information where you’re from? Where does your expertise lie and how did you get interested in this field?
James-Robert Sellinger: [00:01:31] So I am a humble Boston bread person.[00:01:35] I’ve been in commercial real estate and commercial real estate finance in particular for a number of decades. My, my initial formal education was in city planning and I was a city planner, uh, in the middle East for a number of years and realize that at least from my perspective, What was most important was the financial side of the business. [00:02:00] So I went and got my MBA and have been in commercial and on the financing side of commercial real estate ever since, but financing all property types around the country, in all markets, both large and small. And for owners and institutional investors.
Hanh Brown: [00:02:20] With regard to senior living. Does that phrase have a meaning to you?[00:02:24] And what is that?
James-Robert Sellinger: [00:02:27] And senior living from the development side, as well as through the financing side, with a focus on really the supply side of the business, meaning acquiring and developing properties and financing that development. I also have clients who have existing. Properties that they developed here in the New York area and helping them finance or refinance in one instance on many occasions, their properties, as well as the renovation and expansion of their property.
Hanh Brown: [00:03:01] Okay. Now, is this mostly, did you say New York or. But the properties and where you’re located.
James-Robert Sellinger: [00:03:07] So I’m located in the New York tri-state area. I live in Connecticut, but these properties that I’ve been involved with are all over the country. But most specifically in the tri-state area in particular, Connecticut, Where I’ve worked with a group optioning real estate land and in New York.
Hanh Brown: [00:03:27] How do you think COVID will change the trajectory of senior living industry?
James-Robert Sellinger: [00:03:32] Really good question. I think that COVID is just accelerating a number of trends that were in place prior to COVID. But it’s accelerating that accelerating these issues and concerns in a real-time basis. I have sort of two passions. One is about affordability and the other is about sustainable development.[00:03:52] And so in both of those, I think there’s been a real sea change. I have clients who have existing and operating properties that have forever because they’re in infill knit neighborhoods. And because they’re really good operators have always operated at a strong occupancy and the occupancy has forced them to be creative and really forward-looking in how they market. [00:04:19] To future tenancy, as well as what amenities and outreach they’re doing to sustain their occupancy. Unfortunately, they’ve had some difficulties and have had to, um, go through COVID even though they were early in the game and locking down their facility to outside visitors. And being very specific about how their vendors approach their business, as well as the focus on the health and welfare of their residents. [00:04:55] But even in those instances, their population has been impacted in a negative way.
Hanh Brown: [00:05:00] Yeah. I think one word comes to my mind, um, in the midst of COVID and how folks in the senior living industry is riding it out is resilience. You have to be because obviously the Asian population, there’s going to be a lot more there’s 10,000 folks turning 65 plus every day.[00:05:19] And having gone through this pandemic, I think it will, it has prepared us for the long run. So the word resilient comes to mind. When I think of the folks, what we’ve been trying to do in the, in the last nine months.
James-Robert Sellinger: [00:05:33] I have a mother who’s. 96 in assisted living in Sarasota, Florida. And, um, the governor has been loosening their regulations and garden testing in her facility and it raises great concerns.[00:05:48] loosening the testing requirements for workers, the, any of the medical practitioners who come into the facility. Oh,
Hanh Brown: [00:05:56] wow. That’s concerning, like when you say loosening, so they’re requiring less testing infrequent. And what kind of results have you seen ?
James-Robert Sellinger: [00:06:06] the experience with COVID is new for everybody around the world and everybody’s struggling to use best practices.[00:06:15] And so when COVID hit. A number of the workers, the employees who can’t, who work in the facility, uh, came down with COVID. So they implemented a very rigorous testing protocol every other week, for all workers who would come into the facility. And recently the governor has loosened the regulations in the state of Florida. [00:06:38] And when they lose it, when the governor loosened the regulations, they were going to end all the testing of their employees. Which obviously is a concern and my mother and other residents raise concerns and hopefully they’re addressing that.
Hanh Brown: [00:06:53] Yeah. Yeah. And now with regard to funding, what issues has it created since the pandemic, in terms of funding new and existing facilities ?
James-Robert Sellinger: [00:07:05] I’m involved on in both fronts[00:07:07] First about existing facilities, there is a scrutiny as to. Best practices in the era of COVID the protections for the residents and really lenders are less focused on the medical aspects, then maintaining census and occupancy, and then therefore the projected cash flow. So they want to know that the operator has plans in place is doing what they have to do. [00:07:40] And then looking through the exposure experience over the past six months to see how have operations been impacted. And if they’ve been impacted, what are they doing on a going forward basis? So that’s really no different than any other real estate transactions, but it just making sure with a focus on cashflow and the underwriting of the loan now, lenders are able to, to make adjustments to accommodate. [00:08:10] Releasing or down downtime, but so then what they tried to focus on, at least in a new, a refinance of an existing facility, is, are there proper reserves in place and most lenders, including both Fannie and Freddie have been requiring up to 12 months of principal and interest taxes and insurance reserves, which makes it difficult for the operator. [00:08:39] Because those aren’t monies they can use to pay off an existing loan or implement a capital improvement procedure.
Hanh Brown: [00:08:47] That’s true. I think right now operation is everything right. And if you’re getting a new loan, that part of the business will be highly looked at in the operators handling the day to day of the, of their other operation communities.[00:09:05] And of course, if there are any labor issues in that local area, if you’re looking at a new development.
James-Robert Sellinger: [00:09:13] so new development has a real focus on how deep is the market. How sustainable is market demand? Where will rent levels be occupancy on a going forward basis has been impacted, um, downward since COVID started, I think fairly nationally as well as locally.[00:09:35] And then just making sure. That the residents have the means the good news is one because a lot of my work is in the Northeast. These are typically infill sites. And so there a lot of, uh, local demand generated with seniors aging in place. We can talk about that if you want to. But in addition, the local residential housing market has been super strong. [00:10:01] So seniors who are transitioning from living on their own to a facility. I have the benefit of having a lot of demand for their homes and then prices that are at a very strong.
Hanh Brown: [00:10:14] Wow, that’s good. Because one of the concern as you are uprooting your home after 50 plus years or so, and. Moving to a new home is what are you going to do with that home?[00:10:26] So it’s good to know that there is a demand and that you don’t have any issues and selling it local to your area right now.
James-Robert Sellinger: [00:10:36] Single family, resi markets have been pretty strong throughout the country. And that is one for a couple of reasons. Interest rates are very low. So buyers have the ability to buy more home, but there’s also been a movement from the cities to the suburbs.[00:10:54] So again, maybe a model that in the past decade hasn’t been that exciting for millennials or generation gen Z years suddenly has more appeal. Some of those prompted by COVID to just get out of the cities.
Hanh Brown: [00:11:10] So I know that you are involved with funding ground up and then development for senior housing properties.[00:11:16] So what gets you excited about developing a new property from ground up?
James-Robert Sellinger: [00:11:21] Background on the ground up side has been w with both the development team or a bunch of investors where ultimately we’ve been, we were initially going to develop ground up and do long-term leases with not for profit operators.[00:11:39] And at the end of the day, the tax exempt benefits of the not-for-profit. Own the property themselves and develop on their own. It was more appealing. So we ultimately move to a model where we would option land tickets through the approval process, and then flip it. I also have a client who also got a piece of land under option four, really now, a second parcel where he’s going to do a ground. [00:12:08] These with, with some national or regional operators working with. So the financing structures and ways to facilitate the transaction to make it more appealing as well as. To really get it done in a sort of an uncertain times. It it’s very exciting to me, but I also am excited by the opportunities of looking at new models for senior housing and how to make them affordable as well as allow residents of community to stay closer to their family.
Hanh Brown: [00:12:49] You share with me, you have a major interest in green housing. So can you give me a brief explanation of what that is and how did you get interested in green housing and how do you think that may be in parallel to affordable?
James-Robert Sellinger: [00:13:04] Sure. Part of my interest in green housing. And when I talk about green housing, I’m talking about using a term that you, you had already used, which is a resilient and sustainable is to create a physical environment that is one energy efficient, but two is healthy for the people who live and work there.[00:13:27] And then we’ve seen in the era of COVID sustainability officers, having a greater role in finding a low volatile, organic compound cleaning supplies, having better HPAC systems, figuring out a way to heat and cool properties that are one energy efficient, but to have a better quality of living for them. [00:13:51] Really what prompts me to focus on this is that I have two teenage daughters and I want to be able to leave a planet that’s healthy for them and one that they can enjoy. And at least in the New York area, the built environment represents 75% of the global greenhouse gas emissions. So. Either greening existing properties or building new properties with an eye to making them more energy efficient and healthier are both drivers of reducing that carbon footprint.
Hanh Brown: [00:14:28] For the listeners and myself included, Can you explain how can elements of green development be included in facility design apparition for an existing facility?
James-Robert Sellinger: [00:14:37] It is to improve the operations. Through installation through better windows, through more efficient HPAC system, using things like cogeneration, where you’re generating both heat, electric, and cooling, but for also for ground up, it’s just using best practices in the New York area.[00:15:02] The state government. Implemented some laws of approximately a year ago that are focused on changing the building codes to require more energy, efficient buildings and part of, so that’s the stick and part of the caring part of it. Is to be more creative in the financing approaches, including what’s called pace funding, which is using the taxing authorities, the finance, some of the improvements for existing properties to just make them more energy efficient, but also in an era of climate change, we saw at least in the re in the reaction to hurricane Sandy and the New York area were seniors. [00:15:46] Have to shelter in place in some areas where they were impacted by the storms, but they couldn’t relocate the seniors. And I think the same issues are happening in the West with fires and the South with when the hurricanes and flooding. To just to take into account what the impact of climate change will be when designing a building and making sure that they’re safe. [00:16:14] And in fact, to not have to up in the residence, if there are some extreme weather events, That’s whether having redundant energy sources, more resilient energy sources. If the power grid in a region is out and helping them to bounce back quicker.
Hanh Brown: [00:16:33] Now, what you describing are these more applicable to something let’s say 16 to 20.[00:16:40] Beds or is it applicable to 80, 90 assisted living units? Is there even a criteria?
James-Robert Sellinger: [00:16:46] I think it’s applicable to everything. I am a adjunct professor at New York university in the graduate real estate program. And I talk to my students about looking at investment metrics beyond the typical five or 10 year investment horizon.[00:17:04] And so sometimes energy improvements like a new, more efficient HPAC system has an easier to discern payback than maybe some other kinds of improvements that may create a better quality of life, but may not have the immediate payback. And so therefore that’s where some government funding programs can help underwrite either through tax credits or grants. [00:17:31] Underwrite some of the energy improvements for owners of both small facilities, 20 isn’t, small, but on the smaller end or large facilities where they can creatively finance some of these needed improvements and really go beyond just. Sort of replacing an existing, uh, unit to something that is really more energy efficient and also has a better quality of heat.
Hanh Brown: [00:18:00] You mentioned pace now. I’ve never used pace, but I’ve heard of it. Can you explain what that is? How do you qualify interest rate? The terms could highlight it.
James-Robert Sellinger: [00:18:10] Sure. So pace financing is a fairly new concept. And a required, and it is a lien on the property using the taxing authorities to service the loan as opposed to a banker or a lender, getting a first mortgage lien.[00:18:28] So if the debt comes before the first mortgage debt, And because of that, it requires on a County by County, uh, uh, process across the nation for counties to approve using that mechanism to service the loan. It also requires lenders. To improve, approve it because even though, um, it’s going to fund building wide improvements, it puts the lender, at least from their own perception, um, behind a larger amount of money. [00:19:02] So in some ways it’s easier to use for a new refinance than an existing loan, because sometimes you have to get the existing lender to approve it. And that’s not always easy. But it is specifically to, to improve properties in the South is some of those mandated improvements would be, uh, structural and wind resistant improvements on the West coast. [00:19:30] Historically, I think in San Francisco, every small commercial building needs to improve its seismic and structural integrity. And so it’s the fi finance that. I’m in the Northeast. A lot of it is for solar heating or window improvements or a new HPAC system. It allows the borrower to finance some of those improvements that may be more difficult to find to fund.
Hanh Brown: [00:20:02] I think it’s a valuable alternative. Other than HUD
James-Robert Sellinger: [00:20:07] for larger facilities. HUD is obviously the go-to entity and Fannie Freddie and HUD have remained active throughout COVID when a lot of banks or non-bank lenders, non-traditional banks, non I’m, sorry, non traditional lenders have been holding back financing until they understood where the capital markets would end up at.
Hanh Brown: [00:20:30] I know it firsthand. A few of my projects are on hold right now for the reasons that you described. Let me ask you on a personal level, have you given any thought about your own aging and, or your, your own senior living options? Once you get to the stage?
James-Robert Sellinger: [00:20:49] At the moment I have two teenage daughters I’m focused on the present other than I have committed myself to a lifetime of sort of health, of healthy living, healthy food activities, sports as well as mindfulness. Oriented practice to help in my own longevity. And in fact, my general practitioner told me that meditation helps elongate certain parts of my DNA, which will help in the aging process.[00:21:24] But I assume because of the nature of your podcast, you’re thinking more in terms of the structure, I’ve had a good role model and my mother. Who really made her own decision. Ultimately, when she decided to move my siblings and I helped her find a facility to is living in Sarasota, but I’m in the Northeast in Connecticut. [00:21:48] And most of my siblings are up here. But so she made her own decision in her own time. She had been living on her own, but having seen other friends or colleagues, living situations where their parents have been less willing to think it through, it makes me think that it’s very important does make those kind of plans and to figure out there and what time I would have to do that. [00:22:17] Although it is, at least at the moment feels that it’s over the horizon, but probably as a bloomer is probably less over the horizon.
Hanh Brown: [00:22:27] Yeah. Yeah. I’m with you, I’m with you right there. So it sounds great that your mom was open and also very decisive. And she seems like she made a decision. She knows what she wants to do.[00:22:38] My old journey is the opposite of that. They didn’t know what to do and having. So many people in the family, my family, it was just too many people, too many input and not having that discussion earlier on when they were well and trying to bring that up when they’re in that Brown and having to make it timely, you just compounded with multiple layers of emotions and stress and anyhow, and that is the reasoning behind that question. [00:23:06] It’s a really bring light to folks. Hey, have you considered yourself or maybe your parents health and living arrangements and obviously the cost associated with that, because I think the sooner we know plan the better off that we’ll be and not be under multiple crisis.
James-Robert Sellinger: [00:23:23] At the time you asked a question about COVID and accelerating trends.[00:23:30] My daughters don’t live with me and when COVID hit. I sent to them as well as to my executives and my family members have I’ve assigned like living wall has making them decision-makers. I thought very hard and clear in the eventual, in the, I don’t want to say eventuality because I’m healthy, but in the era of COVID, if something were to happen, that the people who are responsible for that. [00:24:00] As well as the, my kids understood that they were provided for, and that there are arrangements in place. So I’m really thankful many years ago that I put that in place. But I think that’s also in addition to making financial arrangements for future and physical arrangements, having those kinds of legal arrangements in place, I think calls are go to your question.
Hanh Brown: [00:24:24] Very true. Very true. Now, what are your thoughts about aging in place? And affordable housing. I know those two are very near and dear to your heart as well.
James-Robert Sellinger: [00:24:35] Affordability is really very complicated because development costs are fairly fixed and at least where I live in the Northeast, it’s hard to accommodate affordability.[00:24:51] Just because even cause and finding the right kind of facility, aye, don’t think I will age in place. I am here because of, you know, family situation circumstances, but ultimately we’ll probably at some point in my life, down the road, relocate to a place, a state that’s cheaper to live in and probably would have more affordable living. [00:25:19] But affordability is an issue for people at all levels on the four on the income spectrum. And my in fact, got this email today from the Harvard joint center of housing studies and they were just talking about many senior communities are lacking the ability afforded choices of affordable living. And that’s really unfortunate. [00:25:48] And I, I think without getting too political as a society, I think it’s really important to begin to think through new models of housing, service deliveries, as well as things that are affordable. And then just lastly, on that point, and I can’t point to specific models other than some developers who had contacted me, but intergenerational. [00:26:17] Th their vision was to have intergenerational communities where there would be a cross-pollinization. So opportunities for services for workers, for shopping, for intellectual stimulation or activities.
Hanh Brown: [00:26:35] I think that’s a great idea. I would love it. I would be more inclined to moving into a place inter generational, like you described, but like my.[00:26:43] Parents and grandparents, they love it when they’re surrounded by the grandkids. Great grandkids. So each generation provides something that’s beautiful to each other. It’s wonderful. It’s for the socialization, but I also want to be around younger kids too. Thank you for that. So do you have any other thoughts that you would like to share?
James-Robert Sellinger: [00:27:09] I’ve been watching your podcast. And I think it’s really interesting, the wide range of speakers that you’re getting involved and really approaches, because I think this issue takes people from all aspects of, of this industry. I’m not an operations person, so I really applaud you and welcome the opportunity.[00:27:31] And to share this with any of your listeners.
Hanh Brown: [00:27:35] Thank you. Thank you for noticing. And it’s an honor to have you on here and to shed some light to the listeners, and I really appreciate it. And I’m so glad that we connected too.
James-Robert Sellinger: [00:27:47] Absolutely. Thank you for the opportunity. I appreciate it too.
Hanh Brown: [00:27:52] Thank you so much for joining us this week on Bloomberg living podcast.
James’ LinkedIn: https://www.linkedin.com/in/jamessellinger/
The Natural Resilience Foundation: http://natresilience.org/