By Susan Saldibar
Steve first met Jacob Gehl, Founding Partner and Senior Managing Director for Blueprint Advisory Services, at a “terrible conference, maybe the worst he has ever attended” (Steve’s words), that does not exist anymore, where they bonded, in a scramble for participants in a session, moderated by Steve.
Blueprint is primarily a sell-side advisory firm, focused on senior housing and healthcare real estate (they also have a large REIT business). Their story is cool for a few reasons, but mostly because their growth has largely been due to successfully anticipating and leveraging the changes and growth in the senior living space over the last five years. Steve invited Jacob to tell his story to Senior Housing Forum readers on video and you can watch the entire podcast video below. First, a bit about Blueprint.
Jacob founded Blueprint in 2013 along with partners, Christopher Hyldahl, and Ben Firestone. All three had been with large national firms and dreamed of doing their own thing. They were also fortunate to have the support of Richard Lerner, Executive Vice Chairman at HHC, a friend and mentor to Jacob.
Blueprint is thriving and growing. As of the podcast, they were reporting revenues of 1.45 billion (about 208 deals) with roughly 60% in SNFs and the remaining 40% in IL/AL/Memory Care. They have 47 full-time employees throughout 5 offices in L.A., Chicago (headquarters), Salem, Denver, and Baltimore.
“We work with all kinds of people from regional 'mom and pop' local operators all the way up to the most sophisticated private equity guys,” Jacob tells Steve. “As an example, we had someone recently who was a regional VP for a large AL. He came to us and said, ‘I’d like to buy a building, I don’t care about geography, just looking for capital.’ We said, ‘Okay here are the mandates we have, here’s where they are located, let’s introduce you to capital.’”
Steve asked Jacob to give his take on why some operators complain about being “one step away from bankruptcy” while others seem to be thriving.
“On the SNF side, the deconsolidation story carried the day in 2018; and we had a great run from about 2010 to a year or so ago,” Jacob says. “We sold primarily to REITs and some of the public REOCs. But now, they’ve shifted gears and are leading the disposition charge,” he adds. Ultimately, on the SNF side, with the exception of a few REITs, Jacob predicts we’ll continue to see the high network, private client market come back.
To Jacob, the AL market feels “somewhat schizophrenic”.
Yet he sees the inverse occurring in the AL/IL/MC sector where the buyers have been driven predominantly from institutions. “A lot of the sellers have been regional folks, some of the larger real estate operators. Many bigger AL operators are shedding non-core assets,” he tells Steve. And then there is all the new construction. Jacob reports having 426 facilities, in his California database alone!
But building, especially in California, comes at a cost. And as interest rates go up, so will the cost of capital, along with other factors like labor costs, higher construction costs, tariffs, etc. “We talk to operators who are on the ground, and who are dealing with staffing challenges, competition, high labor costs, price wars with new operators, new buildings, etc,” Jacob says.
There is plenty of capital, however, much of it coming from foreign senior housing investors as they continue to re-load their coffers with cash. And private equity fundraising continues to be successful, not just for the big players like the Blackstones, but also the mid-tier PEs, Jacob notes. And, as long as they are able to generate all this new capital, the investor sentiment is going to continue to remain frothy, according to Jacob.
“So, you’ll continue to see this duality,” Jacob says. “On one hand, many existing operators are fighting their own uphill battle. And yet the tone at the last NIC has been very bullish. A lot of people were flush with money and came shopping with big checks,” he tells Steve.
Any last words of wisdom for our readers?
“There is still a lot of capital out there chasing deals,” Jacob tells Steve. “You should encourage your readers, if they are looking to grow or change their management company, we can do that for them.”
Finally, as with everything, there is the personal side to this business. Jacob finds helping get an operator their first building really rewarding. “It feels good to have someone who was working for Brookdale, ask us, ‘How can I get my own?’ Feels good to play a role in that,” he adds.
Note: You will hear reference to the Senior Housing Forum podcast. It has taken a different format making it impossible to use this interview, but it was a great interview and we wanted to share it here.