NIC Chats Podcast with Kathy Sweeney

What do Bill Clinton, Pierce Brosnan, and the founding of one of the leading woman-owned businesses in seniors housing & care have in common? Listen to NIC Chief Economist Beth Mace interview Kathy Sweeney, Managing Partner and Co-Founder at Blue Moon Capital Partners LP, to find out! In this NIC Chats podcast episode, hear about Sweeney’s approach to business, the importance of having a personal perspective in investing, and how the industry will grow in the coming post-pandemic years.

Introduction: (00:00)
Welcome to NIC Chats, ideas and inspiration from senior living leaders with host Beth Mace, NIC’s chief economist, and director of outreach. Get to know some of the people influencing senior living today and perhaps learn a thing or two from their experiences. This episode of NIC Chats is brought to you by Capital One. As one of the top 10 financial service providers in the US, Capital One can offer a unique combination of financial strength, personal attention and flexible products.

Beth Mace: (00:32)
Hello, my name is Beth Mace, the chief economist at NIC, and I welcome you to today’s NIC Chats podcast. Thank you to Capital One for sponsoring today’s NIC chats podcast. I’m very pleased to say that I have Kathy Sweeney with me, co-founder and managing director of Blue Moon Capital, and also its chief investment officer. Today’s podcast is going to be set up in the following way. We’re initially going to have what I call three statements, two of which are true and one which will not be. And then we’ll talk about those throughout the podcast. Then we’ll have some standard questions that I’ve been asking in each of our podcasts. Initially though, I’m going to start with talking to Kathy a little bit about her personal story. So Kathy, why senior housing? Of all the opportunities and career paths out there, why did you choose to devote most of your career to this sector? I might add that given your passion and your enthusiasm, the industry is very lucky that you chose this path, but why senior housing?

Kathy Sweeney: (01:33)
Thank you, Beth. Well, I’ve been asked this question before, because obviously seniors housing is a relative newcomer to the commercial real estate space. And I did spend a long time in my career in the traditional food groups of real estate; office, industrial, apartments and retail, and all of that. What inspired me, however, was in about 1990, my maternal grandmother passed away after spending the last four months of her life in a Medicaid skilled nursing environment. And it was really painstaking to watch her decline in that environment. And it was not an environment that really valued dignity, which, was painful. And, as those of us who are now in today’s modern seniors housing industry can appreciate, there was no assisted living back then. And my grandmother was somebody who would have absolutely thrived in today’s modern assisted living environment. And, it wasn’t until 1997, where that became an opportunity for me in my professional career. But at the time in 1990, the spark had been lit and I was on the lookout.

Beth Mace: (03:05)
Wow. That’s a great story. I think all of us have those kinds of stories of our parents or grandparents that sort of inspired us to want to make it better for them.

Kathy Sweeney: (03:12)

Beth Mace: (03:13)
So you and your partner, Susan Barlow started Blue Moon Capital Partners in 2013. Why were you inspired to take such a huge leap, establish a brand new company?

Kathy Sweeney: (03:24)
It’s funny. We oftentimes, while we were, launched and in between the time where we formed the company and we actually had received our first private equity investment, we called ourselves two girls and a computer, which is essentially what we were, but, it really was a combination of my personal story, professional experience that I had amassed up to that point. And then Susan had spent time in the 1980s, helping institutional investors invest in multifamily. And so she saw seniors housing as another offshoot of multifamily and that investors would be as interested in seniors housing as they were in multifamily decades previously, and felt that she could play a role in that.

Beth Mace: (04:15)
So tell me a little bit about your career path and what led you to establishing Blue Moon. And we have a lot of people that will listen to this podcast afterwards so are there any lessons that you want to share with younger women listening to this call and obstacles you’ve overcome or…

Kathy Sweeney: (04:29)
Well, it’s a great, great question. And I feel a sense of responsibility to provide some words of wisdom. I’ll talk about my career path in a second, but first, you had given me a list of questions in advance and this one really struck me, particularly with regard to advice for women coming up in their career. And what I will say is that women and really everybody should be looking for ways to distinguish themselves in their organizations and in their career. And what that meant for me was taking the hard assignment, taking the assignment nobody else wanted. So when I was asked to do seniors housing, no one really wanted to touch it. And again, I had that personal story and my background, I still said no several times when it was presented to me because I didn’t understand seniors housing, I knew skilled nursing and I didn’t want to make more of those communities available.

Kathy Sweeney: (05:39)
I wanted a different solution. So when I was able to convince myself that a different solution is what seniors housing was and would become that is what made me, raise my hand and say yes, but in looking back on it, look at ways that you can distinguish yourself, take on the hard assignment, do the thing that nobody else wants to do, and don’t wait for it to come to you, be on the lookout for it and volunteer. I think those are, when I look back on my career, those are the moments of real professional growth and where I was able to distinguish myself from others.

Beth Mace: (06:24)
Well volunteering, that’s a really interesting subject because I don’t know if our audience knows, but you were at one point the chair of the NIC board and that was a total volunteer position. And you had to work hard to get to that position. So a few thoughts on that.

Kathy Sweeney: (06:38)
It was volunteer?

Beth Mace: (06:40)
Yeah. I was on the board too as a volunteer. So yes, I appreciate that thought.

Kathy Sweeney: (06:45)
Yes, well the connection between my day job and NIC was very clear. I was in a role where I was expected to attract capital to the seniors housing industry, and that meant having the investment rationale to make ongoing investments. And as you well know, AEW at the time being very research oriented, it was hard for me to find data and research that would be completely supportive of the senior housing investments we were considering. And so as I very early into my seniors housing investment career at AEW and understanding the role that NIC could play in facilitating the capital formation, I raised my hand, not only to say I’d be willing to be on the board, but also once I was on the board, in fact, I think I was only on the board for about two months when the whole concept of NIC Map was born. And so I raised my hand again inside NIC to help co-chair that effort.

Beth Mace: (08:03)
And that was a big effort. So to the folks out there they may not know, Kathy helped to really charge the movement to develop the NIC map database, which is now the NIC MapVision database which basically has inventory and supply demand, characteristics and rent rates and things like that in the database for over 140 markets today. And when we started, cause I helped Kathy start it as well, I think we had Cleveland, I think was our first market. So we’ve come a long way, baby, I guess.

Kathy Sweeney: (08:35)
We have and Beth you were absolutely instrumental. NIC could not have done it without your help.

Beth Mace: (08:42)
So let’s just do a little sidebar here. And one of the things I like to do in the podcast is I’m going to say three statements and two of them will be true. So I’m going to say them now. And then you get to reveal one of those, which is true. So the first one is Kathy Sweeney has met both Bill Clinton and Pierce Brosnan that could be true or false. Kathy Sweeney has traveled to all seven continents, true or false, or Kathy has two children. So Kathy tell our audience one of those, which is true, two children, all seven continents or Bill Clinton and Pierce Brosnan,

Kathy Sweeney: (09:18)
Bill Clinton and Pierce Brosnan.

Beth Mace: (09:21)
You’ve met them both.

Kathy Sweeney: (09:22)
I have, yes.

Beth Mace: (09:23)
So in just a quick, a minute or less. Can you tell us about that?

Kathy Sweeney: (09:29)
So I met Bill Clinton a year and a half ago at an Epic event, which is a professional development event run by Twain Clark at HS living and Bill Clinton was the last day speaker and the celebrity speaker. And I had an opportunity to have a picture-taking with him. I decided that I wasn’t going to just stand there and get my picture taken, but that I was actually going to engage him in conversation. And so, I quickly told him that I was the co-founder of a woman owned business. And then as in typical Bill Clinton fashion, he would not stop talking about his support of women owned businesses via small business association loans and so forth. I mean, the man had facts and figures at his ready. He had no idea he would be meeting me, but he was very well armed with information

Beth Mace: (10:30)
And Pierce Brosnan.

Kathy Sweeney: (10:32)
Pierce, was the, so now we’re on a first name basis here. He was the keynote speaker at my son’s college graduation and, did a fabulous job, had just a great message. And when my husband and I and our daughter were heading back to our hotel, we got off the elevator and a man who had his back to us, had gotten off the, adjacent elevator just before us. And he looked rather familiar from the back and I said to him, would that be Pierce Brosnan? And he turned around and said in his wonderful Irish accent, it is I, and, we had just the most lovely, lovely conversation. We talked about the college. We talked about his love for the environment and all of his efforts all while we were walking down the hallway toward our respective hotel rooms and, each put our keys in the door and turned out that he was in the room beside us the whole time we had been there. So who knew. Very fun.

Beth Mace: (11:34)
What fun. That sounds great.

Kathy Sweeney: (11:36)
My brushes with celebrity. Lots of fun.

Beth Mace: (11:40)
So, it’s interesting when you were talking about Bill Clinton, in terms of knowing about women owned businesses, so yours is a woman owned business. So why is that important in the context of serving seniors and have there been any unique challenges or opportunities provided by being a woman owned business?

Kathy Sweeney: (11:55)
Yeah, I would say one of the benefits of Susan and myself being women owners of this business is that we bring a different perspective, a more personal perspective to the investments that we make. Obviously the investments are all at the root level about serving seniors and its serving mostly female residents. And it’s interfacing mostly with adult daughter decision-makers. Both Susan and I also fall in that category. We are both adult daughters. Her mother happens to be living in one of our communities. My mother happens to be one of those 89% of seniors who will never live in a senior living community if you use the 11% percent penetration rate. So we both bring that personal awareness of how one makes those decisions and also what is the level of care and service and attention that we should expect our operators to provide to the residents they serve and families that they serve?

Beth Mace: (13:12)
Well, you know, I was actually recently awestruck by one of the recent quotes or advertisements that I saw about Blue Moon Capital. And now I’m going to quote, here “we are just as committed to delivering returns to our investors as we are to improving the lives of our valued residents. In consultation with FFP, we’ve pursued a strategic financing with the potential to accelerate our vision of what our investments can do for our residents, as well as for our investors.” And I think that a lot of groups in organizations sort of think that, but few go out and publicly state that if you are as passionate as I know you and Susan are about this, can you comment on that?

Kathy Sweeney: (13:52)
I mean, as I said earlier, the root of the investment returns that we can produce for our clients all comes down to the families and the residents in our communities and the ability to bring capital to improve the lives of residents and families, to high quality operators is something that both speaks to my passion, Susan’s passion and is absolutely necessary. If we want to move that penetration needle from the roughly 11% today to 15, 20%, which it should, we need to be able to bring capital to bear and reward the highest quality operators who are really paying attention to that level of service and care and attention to the most really precious demographic of our society. I feel.

Beth Mace: (14:59)
I’m going to switch a little bit to more of a little bit more about Blue Moon and an industry perspective. How have you been able to create partnerships with best in class operators? You’re a fairly young organization yet you have some of the best operators in the nation as partners. So how do you do that? What’s your secret sauce there?

Kathy Sweeney: (15:20)
Well, I’ve been in the industry for a long time, so I have a lot of relationships and our team, as well as we’ve brought together a team of folks, many of whom have been in the industry for a long time as well. And what I will say to you when we’re in discussions with those operators, the parts about Blue Moon that really resonate with them is the fact that we are 100% focused on the industry. And that is rare. We are not distracted by what’s going on in any of the other niche sectors. We’re not distracted by what’s going on in commercial real estate. We are all in on seniors housing and they are too, all of our operators are providing services and housing only to seniors. So, the connection and the ability to think deeply about the business together and collaborate together is absolutely, imperative to them

Kathy Sweeney: (16:26)
and to us. The other is that we are generally interfacing with the operators at our senior level, which is our investment committee. And so when operators are interfacing with us, they are talking to the actual decision makers who are going to be voting at the investment committee table. And that is important to them to know that what we say we can deliver. And then the last piece I’ll say is, the management committee, which is really our investment committee, all personally co-invest alongside our investors and alongside our operating partners. And that’s important to our partners that we have skin in the game alongside them.

Beth Mace: (17:13)
Very good. Thank you. I think, yeah, not to have a middleman in there when you’re making an investment and kthe operator knowing that is important, very important. So I consider you one of the industry’s visionaries and wondering with your crystal ball in mind, where do you think the industry will be five years from now? We’ve just gone through a horrific year with the pandemic. Of course had horrible impact upon residents, of course, and then the number of people that have passed away because of COVID on our operators and our operations on the investors, on the debt providers. There’s a lot of stuff to filter through here. So where do you think five years from now will we be back, has the pandemic hurt our industry or has it helped the industry ultimately?

Kathy Sweeney: (17:56)
It’s a very, very good question. So I’m glad you’re asking me about that for five years out, not five months out. I think the pandemic really forced the industry to take a good hard look at itself and understand where are we in the life of a senior and, and what is it that we actually provide? We always talk about housing and care services, but I think what became evident through the pandemic is that we are very much an integral part of the healthcare system. And so what I think in five years we’re going to start to see is some real partnerships. Now we’ve seen this with, for instance, Lynne Katzman at Juniper, who has created a Medicare Advantage plan in collaboration with her healthcare partners. And I think we’re going to see it. It may be Medicare Advantage. It may not be, but I think we’re going to see true partnerships.

Kathy Sweeney: (18:58)
I know Patricia will has a partnership in Florida with Baptist Health System. And I think we’re going to see more of that. I also think we’re going to see some consolidation. The pandemic really had an impact on smaller operators and there were some operators, there are some operators out there that have been doing this for decades and while they may have thought that they had another decade in them, I think that the pandemic may have been just about enough for them. So I think in the next couple of years, we’ll see some consolidation taking place. And then lastly, I would say, and this is somewhat on the heels of the integration with the healthcare system. I think everybody throughout the whole healthcare industry recognized that telehealth is here to stay. I talked to doctor friends of mine, lab friends of mine, people in the healthcare business beyond seniors housing. And they all agree that tele-health, which had really struggled to take hold, the pandemic did the industry a favor by accelerating that. And so things like Medicare payments for telehealth visits are no longer at a discount they’re at absolutely the same rate as in-person visits, things like that.

Beth Mace: (20:21)
And another topic that’s certainly come up in the last 12 months has been, DEI and, ESG. So I know increasingly that, pension funds and large institutional investors are asking questions about ESG and DEI to their investment managers. Has this been the case to Blue Moon as well?

Kathy Sweeney: (20:41)
Absolutely, to Blue Moon. Well, first we are DEI. We are a woman owned business, 100%, but you’re right, it’s a movement, it’s a movement nationally, and it’s a movement with institutional investors. They want to make sure that their dear dollars are being deployed in a responsible, careful, sensitive way. And to be able to cast a wide net to a broad swath of people is necessary to get the difference of perspectives and viewpoints, across all areas of the investing universe and beyond. And we’ll be better off as an industry from the diversity of talent and perspectives and solutions, for people we bring in to our space. And I can tell you, and you may know this, but that, a collection of seniors housing industry associations, NIC and ASHA being two of them have committed to form a task force, a DEI task force, where we will be working with a consultant to do a study on where are we currently on DEI and then have a facilitated series of meetings on where do we need to go with DEI and then of course there will be gaps and therefore, how do we build the bridge to get to a place where we are much more diverse, much more inclusive to people of all walks of life. I’m very excited about that.

Beth Mace: (22:18)
Hence the DEI, the diversification, equity and inclusion for them.

Kathy Sweeney: (22:24)
Yes, absolutely. Absolutely.

Beth Mace: (22:26)
Very good, and ESG?

Kathy Sweeney: (22:28)
Yes. Well, you know, seniors housing has always checked the S box, you know?

Beth Mace: (22:33)
Can you define that for us?

Kathy Sweeney: (22:35)
Oh yes. Well, ESG is environmental, social and governance, and that is something that I have seen on RFPs (request for proposals) and other documents within the institutional world for decades, but it has only been in the last, I would call it 18 months that ESG has just really taken hold. I would tell you that in particular, on the “E” part of ESG, environmental, and the recent climatic, huge climatic events that have taken place in the world has really forced investors and managers and individuals to take a look at their own practices and make some significant changes. And so Blue Moon is investing its second fund right now. And half of that fund will go toward development. And we have made the commitment that not one development will be made without it achieving some silver, gold platinum, be it LEED or NGBs building standard, which of course will incorporate a lot of environmentally sensitive features.

Beth Mace: (23:52)
That’s fabulous. Okay. We’re going to go back to our three statements. Two are true. So one statement was that you had met Bill Clinton and Pierce Brosnan and we now know that to be true. The second was that you have two children and the third one that you have traveled to all seven continents. So which of those other statements is true?

Kathy Sweeney: (24:12)
I have two children.

Beth Mace: (24:14)
Ah-ha, so you haven’t traveled to all seven continents, but I think almost…

Kathy Sweeney: (24:19)
Almost…five, five out of the seven. So I think that we have Africa and South America. So obviously that might be a few years out as the world recovers from the pandemic, but we are excited to get back out there and see more parts of the world.

Beth Mace: (24:33)
Yes, I think we all are. So thanks for that. So I have three standard questions that I also ask and, just be mindful of time, not to talk too long about these, but what is one of the largest challenges facing our industry today?

Kathy Sweeney: (24:49)
Well, I would say right now it is pandemic overhang and we’re seeing occupancy build back up, but I think the industry is still reeling from the headlines and the drastic impact to the business that occurred in 2020. But one other that I would say is debt capital. Debt capital has been much slower to adjust to the recovery that is absolutely happening out there. And I’d like to see that improve.

Beth Mace: (25:19)
Interesting, yep. Okay. And, what is one way that we can grow talent in our sector? We know that labor and labor shortages are of paramount importance. This was the case before the pandemic, as well as today. So what’s one way that you think we could actually start to grow talent.

Kathy Sweeney: (25:39)
Well I think we’ve got to get down into the level of people beginning to think about careers, which is high schools. I think we’ve got to introduce programs that allow high school students to see the opportunities that they could have inside a senior housing community. The other is getting to the hospitality school programs. And of course, Beth you and I know that BU is starting a program this fall around senior housing in their school of hospitality. And as hospitality has really taken it on the chin through the pandemic and will be slow to come out the ability to really convey to those students, the opportunities that exist that in many ways are parallel to their hospitality training into seniors housing is something we need to focus on.

Beth Mace: (26:39)
Yeah, there’s also a bigger initiative, going on: Vision 2025, if anyone’s on the call listening to that where there’s a huge effort of leaders in the senior housing industry trying to really address some of the talent issues in our sector.

Kathy Sweeney: (26:53)
And I think we could actually improve by inviting some of these students who may have interest to our conferences. We’re in major cities. And I think there could be a little bit of scouting effort to find groups of young people who could attend our conferences. And they may or may not, of course be interested in the networking piece or they may, but certainly the big group plenary sessions and some of the breakout sessions I think could really introduce them to the opportunities.

Beth Mace: (27:26)
That’s a great idea. Thanks for that. And then another question, what is one innovative idea on how to strengthen our industry in general?

Kathy Sweeney: (27:35)
Well I think we have a lot of passionate people and that is a strength and an innovation other than embracing healthcare and finding ways to make connections with healthcare through the healthcare delivery system is someplace we need to spend some time, telehealth is that one obvious piece. That’s just the aha moment for everybody in the pandemic, but having medical directors for every community that is more than just on paper, but actual practicing physicians who come into your building and provide services and care to your residents above what the community can do. Having hospital privileges, bringing in the learnings that they bring in when they come into the community is an area we should be focusing on.

Beth Mace: (28:39)
Great. And I think with that, we’re almost out of time, but I do want to ask one last question and I think this could help a lot of our listeners. I mean, you’re a very busy person. How have you learned how to manage work versus family life and then just volunteering and other interests that you have? Is there a secret that you figured out, or how do you balance that? It’s always a challenge for me.

Kathy Sweeney: (29:05)
Well, it’s a lot easier now then when we had little ones right? Under foot. So from that standpoint it’s easier. But what I would say is, supportive husband, someone who helps significantly on the home front and staying focused, I don’t spread myself very thin. So all of what I do, you pretty much see, I’m not involved in a lot of disparate things. And then the other thing I think that’s helpful is to be focused on recharging yourself as well, which was particularly important last year. So finding ways to stay connected with family and friends, which is now easier to do, but even through the pandemic, finding creative ways to do that, and then sticking to the basics like eating right, getting rest, exercise, read a book, listen to music, whatever it is, just have some times in your day or your week where you can unplug and do something that restores you.

Beth Mace: (30:04)
I totally agree with that. Downtime is really important. So Kathy, I want to thank you. This has been really fun. I’ve learned a lot. I think we’ve shared a few aha moments, especially to some women that might be listening in on our call. So thank you very much for your time,

Kathy Sweeney: (30:18)
But thank you, Beth. It was a pleasure.

Beth Mace: (30:20)
Thank you. And thank you Capital One again for sponsoring today’s NIC Chats podcast.

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