Stroud Properties Inc.: Jim Stroud, President, and Will Stroud, Director

by HCE Exchange on May 9, 2013

Stroud Properties, Inc., was founded in 1982 as a real-estate acquisition and land-development company. Eventually, Stroud’s primary focus would be on the development and operation of senior-living communities. However, Jim Stroud, president, will tell you that the road to assisted living was a long one, and it began with a very personal experience.

A son remembers his father

Back in the eighties, Jim’s father, a resident of the Texas panhandle, suffered his second stroke and was told that he had to enter into supportive care.

“The only care that was available in the panhandle was the old World War II, flat-roof, linoleum-floored, single-story, skilled-nursing homes,” Jim said.

Nevertheless, he and his brother consented, only making one request of the supportive-nursing community. They asked that their father not receive tray service in his room. To do so would lead to isolation, and they feared that their father could lose his spirit of living.

“Sure enough, six months later, he was getting tray service,” Jim recalled. “One year later, he wasn’t doing anything physically.”

Eventually, Jim’s father lost the ability to communicate and soon passed away.

“I thought if I could ever do something different and create something that was more consumer friendly, that really matched the level of care with the level of need, I would do it,” Jim stated.

A focus on resident choice

In 1990, Jim joined with others who shared his vision for senior living to form a trade association that is known today as ALFA or the Assisted Living Federation of America.

The group would develop a senior-living model largely based on one that had been present in Holland for decades and introduced to them by Paul Klaassen.

From the beginning, the group knew that senior living had to change its focus to resident choice, which Jim sums up in the following way: “The resident has the ability to choose their living environment. The resident and their family have to be able to choose what type of care program they want. It shouldn’t be something that is mandated.”

This was reflected in the four pillars of the organization. First, the group determined that they would remain private pay so they could avoid the limits imposed by state and federal law on Medicare reimbursements. The second pillar followed the first—consumer choice.

The third pillar was oriented around providing senior-friendly programs that would combine the benefits of home with supportive care, avoiding “one care fits all,” and instead matching the level of need with the level of care.

The fourth and final pillar was centered on hiring people who had the right heart and  were passionate about serving seniors.

By 2009, this company, Capital Senior Living (NYSE: CSU), was seeing record growth with over 2,000 employees and 65 properties nationwide. Jim resigned from CSL in 2009 and returned to the holding company, Stroud Properties. That’s where his son, Will, who had been working in senior living at various levels since he was 14, entered the picture, bringing his youth and expertise with technology and love of business to the table.

Making Stroud Properties more senior-focused

The questions before Jim, Will, and their team were, What type of product, what type of design, and what type of building method would be able to launch Stroud Properties into the senior-living market for the next 20 years?

“We realized there was a better way to do things as far as the way we approached markets, the way we approached land acquisitions, the financial modeling, the actual product itself, and the actual customer we were appealing to,” Will said.

Even today, most market analysis is basic—start with a simple analysis of census data and look at the number of seniors in a market; determine the number of units already in that market; and determine if there is a demand by comparing the two in a ratio.

However, Will was able to apply new technology, such as state-of-the-art mapping software, satellite technology, and census-tracking data to the process of land acquisition and building development.

Through these tailor-made tools, Will and the team also developed a grid of 15 different variables that would indicate key markets and the viability of a project in each one. By forming a land-acquisition network of people who could inform Stroud of the specific traits of that market, they were able to figure out the areas in which Stroud should develop senior-living facilities, down to the most attractive census tract, zip code, or even block.

“You see a lot of product that has to be turned around due to low occupancy,” Will observed. “Seventy-five percent of the time, they probably built it in the wrong location. The other 25 percent of communities have ineffective management in place. We feel that through our systematic approach to development and our attention to the daily needs of seniors, we have created a successful business strategy.”

A typical development process involves Stroud looking at 20 to 30 Primary Market Areas of four miles each before deciding which ones to be in. Once those PMAs are identified, this system allows them to collect and process huge amounts of information almost instantaneously.

Currently, Stroud has two different product types under development. Orchard Park is the brand name of their 75-unit Assisted Living and Alzheimer’s community that is under development with the McFarlin Group throughout Texas, the first of which will open to the public in late February 2013 between Midland and Odessa, Texas.

Five more of these communities are under construction and will open in the next 14-18 months.

Sonoma House Assisted Living is their new prototype that has broken ground in Carrollton, Texas, with an even greater focus on resident-centered living. They use smaller buildings with higher staff-to-resident ratios to give the resident a truly homelike environment.

Through this development, Stroud has the ability to tailor each resident’s daily living experience uniquely to them, just as if they had live-in care, but without the enormous expense that comes along with it.

“What we’re doing is creating purpose,” Jim said. “Yes, they’re aged. Yes, they may have physical and mental impairments. But they still have a day. Every day should have a purpose.”

-by Pete Fernbaugh

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