EXPERT OPINION: A Conversation with Elias Papasavvas - June 29, 2010

June 29, 2010

Elias Papasavvas 


In this "Expert Opinion", Elias Papasavvas, CEO and founder of Elderlife Financial, discusses with Steve Monroe the issue of occupancy in today's senior housing market and the ways that people can increase and fill their beds and units.

Listen now     Watch the video      Read the transcript

Elias has dedicated his career to enhancing access to senior living. He spent over a decade studying the impact of consumer financing in higher education and numerous other service- and product-oriented industries prior to creating Elderlife and its financial solutions for seniors and their families who seek access to quality retirement and senior living.

Elias launched Elderlife Financial Services to provide convenient financing options for senior living to families in the 48 contiguous states. Elderlife's uniqueness lies in its understanding of the various, and at times competing, needs of the senior housing provider, the senior and if involved, their family, as well as the needs of the institutions providing the credit. Before entering the senior living industry, Elias was a CPA in the Banking and Real Estate Mid-Atlantic Division of Arthur Andersen.

Elias holds a B.S. degree from George Mason University and a Master's of Science in Accounting from the McIntire School of Commerce at the University of Virginia. He has been named a "Leader in Elder Care", has served on the Board of Directors of the Virginia Assisted Living Association, is on the Advisory Board of the George Mason University Assisted Living program, has spoken at numerous senior housing and care conferences, and is viewed as an authority on tailoring and delivering consumer banking programs in order to serve the unique needs of seniors across the nation who want to enjoy a quality life in retirement and senior living communities. Today, over 2,700 senior living communities offer or accept the Elderlife's program.

 
Contact Information:
Elias Papasavvas, Founder & CEO
Elderlife Financial Services
1054 31st Street NW, Suite 340
Washington D.C., 20007
Phone: 1-888-228-4500
EliasP@elderlifefinancial.com

 
Watch the video of the interview: 

 
 

 

Read the interview transcript:

Steve Monroe:
Occupancy has been a real issue in seniors housing in the last year, year and a half.  A lot of people are trying to get their beds and units filled, and it has not been very easy.  There are ways, however, that people can increase their occupancy, and I am here with one of them.  I'm here with Elias Papasavvas.  He's the CEO and founder of Elderlife Financial. 

Elias, your stated goal was basically to bring consumer finance to the seniors housing market with a consumer line of credit to help pay the rent if they couldn't afford the full rent and had their children sign on.  How many communities is your loan product offered in today after a few years?

Elias Papasavvas:
Today we have 2,700 assisted living and independent living communities offering the senior living line of credit.

Steve Monroe:
What do you think that's going to go up to in the next year or two?

Elias Papasavvas:
We see it headed to 4,000 in the next 18 months.

Steve Monroe:
That's not bad.  Once a company, and more particularly at the local level, the executive director, once they fully understand the product, how to introduce it to the residents, at each community where your loan product exists, how many additional residents each year would you say that, by offering the product, move into that community?

Elias Papasavvas:
Execution varies widely.  If it's executed well and it's executed correctly, in an 80-bed community where 40 units turnover or with available occupancy plus turnover you have 40 units out of the 80 in a 12-month time period, you can see 3 to 4 units finance to move in if it is a routine, standard part of the presentation process to the family.

Steve Monroe:
And I mean, three to four when people are losing 200 to 400 basis points of occupancy, to me, that basically stacks that right back up, and to me, that seems to be a no-brainer.  What kind of dollar volume have you done to date, and with your structure, what dollar volume is Elderlife capable of doing in the future?

Elias Papasavvas:
To date, we have taken roughly $20 million in applications in the 48 contiguous states for the senior living line of credit.  We could take it up to $100 million plus through our relationships with a variety of banks around the country.

Steve Monroe:
And you've seen recently the big issue today is the housing market, and seniors can't sell their house, so they won't move anywhere.  You've been piloting a home equity line of credit or a HELOC product for potential CCRC residents who can't sell their home because of current prices or whatever reason.  How is that pilot going?

Elias Papasavvas:
That has surpassed even our wildest expectation and our imagination.  In eight months of providing the product, under 20 CCRCs in a pilot capacity to test it out and feel it out, we have taken $48 million in applications with a 98 percent approval rate.

Steve Monroe:
So, in eight months, that's more than double what all the assisted living was.  No wonder that surpassed it.  I know they're bigger loans because it's the equity of the house, but that's got to be huge.

Elias Papasavvas:
It is.  The average CCRC loan is $300,000 to $400,000, and the average assisted living, independent living line of credit is $23,000.  So, it's easy to get to tens of millions when you're doing them $300,000 at a time.

Steve Monroe:
And the assisted living one is more of a longer-term loan, and the home equity line of credit's more short term until the house is sold.

Elias Papasavvas:
That's correct.

Steve Monroe:
And in doing this in this pilot program, what have you learned about these potential residents, CCRC residents, their particular homes and their decisions to move into the CCRC?  What's been something that kind of surprised you, if anything?

Elias Papasavvas:
Three things, and they have been really new to us and the CCRCs that were participating in the pilot.  We've learned that seniors, whether single or as a couple, that are moving into CCRCs have three primary concerns.  So, they may not necessarily be meeting the need-based definition that the industry has, but in their mind, psychologically they feel they have a need, and the first reason is they are planners by nature.  They want to take advantage of putting all the plans in place, especially if it's a couple.  The husband wants arrangements taken care of as they're moving into the CCRC, because if he doesn't live as long as the spouse, he doesn't want his wife having to worry about things.  That is Number 1.

Number 2 in the case of singles, whether it's a widower or a widow, is the isolation of living in a house by yourself; the kids have left; they're no longer nearby; you're really living alone.  We are seeing high-net-worth seniors that are eager to move into a CCRC because of the socialization that a CCRC can provide.

Steve Monroe:
Even if they can't sell their house.

Elias Papasavvas:
Even if they can't sell their home, and there's real sadness if they can't do it, real sadness, real frustration.  They have the assets.  They have the net worth.  It's just an inability to liquidate at a decent price point.  Even if they're going to lose money, they're willing to sell a house at prices much lower than two years ago to make the move.

And the third component is locking in the life care or continuing care component.  Especially in the situation of couples, one of the two may not qualify for the life care component if you wait three years or two years.

Steve Monroe:
Or six months.

Elias Papasavvas:
Or six months.  So, if you can provide them with liquidity to make the move when they want to make it, you'll get the move-in; they'll get the lifestyle, and both parties benefit.  So, it's not the industry need-based definition as we look at it in assisted living, but it is a personal, psychological need within their minds and a desire to make the move.

Steve Monroe:
Sounds like with the pilot being that successful, some of these CCRC operators and especially the new CCRCs opening up better start taking a look at your product, and hopefully you can expand it to them, because obviously there's a need out there. 

Elias Papasavvas:
We're very excited about the potential because it really is a win-win for everybody.

Steve Monroe:
Good.  Thank you very much, and good luck in 2010.  I hope the loan program keeps on going.

Elias Papasavvas:
Thank you, Steve.
 

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