Published November 2003

Business in full bloom
By focusing on residents’ needs, Merrill Gardens has become a leader in senior housing

Photo courtesy of Merrill Gardens LLC Reece Lewis plays the piano daily for other residents at Merrill Gardens at Mill Creek. The philosophy of a “central core,” with activity and meeting space centrally located within a retirement community, is one Merrill Gardens puts into practice at each of its facilities, said Bill Pettit, company president.

By Kimberly Hilden
SCBJ Assistant Editor

Ten years ago, Merrill Gardens LLC was little more than a concept: providing retirement housing that would take into account the lifestyle of active, independent seniors.

Snohomish County Business Journal/ KIMBERLY HILDEN At Merrill Gardens at Stanwood, General Manager Lynda Wagner (sitting) leads a team of 58 employees, including community relations directors Karen Conway (left) and Karen Carlson. “Our staff turnover is really low, just under 10 percent,” Wagner said. “We have several folks who have been here since the building opened —we’re a family.”

“It was an opportunity to provide a new form of housing for seniors that allowed them to maintain independence and dignity outside the traditional models of senior housing, which, at the time, tended to be institutional,” said Bill Pettit, president of the Puget Sound-based company.

Instead of licensing a set number of rooms for assisted-living care, all rooms would be licensed, enabling independent seniors to remain in the same residence should they need more assistance over time.

And instead of an institutional setting, seniors would enjoy a warm atmosphere throughout the building, including a “community core,” a centralized area where residents could socialize and take part in planned activities.

That same year, 1993, the young company acquired its first retirement community, an independent- and assisted-living facility in Seattle, and began putting its ideas into practice.

Today, Merrill Gardens owns and operates 66 retirement communities in 14 states, including four in Snohomish County. It is the fifth-largest senior-housing operator in the United States and the second-largest private operator, according to the latest survey by the Assisted Living Federation of America.

With a business plan that includes the addition, on average, of five properties annually, either through development or acquisition, Merrill Gardens could very well move up the list in the next few years, but that’s not the company’s mission, Pettit said.

Rather, its mission centers on its residents: supporting their independence, meeting their needs and providing high-quality facilities for independent living, assisted living and Alzheimer’s care.

“It’s not by accident that we put the Merrill Gardens name on every single property we have,” Pettit said. “It’s a mark of confidence for our seniors that come to live with us.

“Beyond that, it’s really a challenge and reminder to our staff that we have a commitment to delivering quality service that we can be proud of,” he said.

‘A new opportunity’ arises
In 1992, the R.D. Merrill Co. underwent a change in leadership and direction.

That year, Charles Wright III, a fourth-generation member of the Merrill family, took the helm of the century-old timber holding company, which over the years had owned timberland across Western Washington and Canada. He decided it was time to create a new opportunity for R.D. Merrill and a renewed presence in the Northwest.

The opportunity: senior housing.

“There were a lot of things about senior housing that were appealing,” said Pettit, who joined R.D. Merrill in 1992 after 18 years in the banking industry. “First and foremost, it’s an area (in which) trends point toward a healthier, longer-living generation of seniors and ones who are more active well into their 80s and, in some cases, their 90s.”

By the same token, he said, the aging process does take its toll on a body, making some daily tasks — grocery shopping, house cleaning — onerous.

The combination of promising demographics and a lack of housing tailored to that population and its active lifestyle was attractive to R.D. Merrill, Pettit said.

Add to that the early 1990s landscape of “mom and pop” organizations lacking the resources of a more organized corporate structure, and the concept of a new company, Merrill Gardens LLC, took shape, he said.

First came the acquisition of the Seattle retirement community in 1993. By the following year, Merrill Gardens owned and operated three communities in Washington state — two through acquisition and one developed from the ground up in Monroe.

“Then we looked at other Western states and found that there were other senior companies starting up at the same time and attempting to serve the same markets that we were,” Pettit said. “So we shifted our focus a little bit and started looking at states where there were a lot of seniors and what we considered to be unmet needs. We settled on five states. One was Washington; another was California, then Arizona, Texas and Florida.”

In those states, he said, were 27 percent of the nation’s seniors over the age of 70 and where 40 percent of growth in that demographic was expected through 2025. And in those “high value” states Merrill Gardens began to expand nationally, owning and operating 23 communities by the late 1990s.

Then came the purchase of 18 senior-housing communities from Torch Health Care in 1999. That move alone put the Merrill Gardens brand in seven more states.

By early 2003, Merrill Gardens had 11 retirement communities in Washington, nine in California, three in Arizona, 11 in Texas and 10 in Florida, with the rest in Alabama, Colorado, Georgia, Indiana, Louisiana, Nevada, New Mexico, Oklahoma and Tennessee.

This past summer, the company acquired operational control of four additional assisted-living communities in Washington: three in Seattle and one in Marysville.

For the Seattle properties, Merrill Gardens purchased an ownership interest through a joint venture with Stone, Rivard and McGonigle Development, a Spokane-based construction and development company. For the Marysville property, formerly Windsor Pointe, the company purchased the facility from Campbell-Hogue & Associates of Bellevue.

“We are committed to the Puget Sound area, and we are pleased to add these properties to our portfolio,” Pettit said upon announcing the deals in August. “These transactions expand our operations in our home state of Washington, where we already have a wealth of resources and successful communities.”

To build or to buy
Of Merrill Gardens’ 66 communities, two-thirds have been acquired, the other one-third developed, Pettit said.

When deciding to build or buy, the market’s ability to support a retirement community comes into play, of course. But the decision to acquire a property also rests on the facility’s ability to fit into Merrill Gardens’ design model, he said.

While every community’s appearance is unique to its environment, there are internal design expectations for every Merrill Gardens facility, Pettit said.

Windsor Pointe, for example, was a good fit because of its mix of studio, one-bedroom and two-bedroom apartments, giving residents a choice, he said.

“In addition, the building has a good central core and operates efficiently within our sense of service model for the resident. Its dining room and kitchen allows us to operate our ‘Anytime Dining’ program, in which residents can eat anytime that choose. That was important to us,” Pettit added.

Beyond that, the Marysville community is located halfway between Merrill Gardens’ Stanwood and Mill Creek facilities, enabling it to grow its Snohomish County presence without the threat of overbuilding in a market that has seen its share of expansion in the past few years, including development of The Village at Granite Falls in 2001 and Garden Court in south Everett in 2002.

So instead of developing new properties north of Seattle, Pettit said his company is looking at acquisition, such as that of Windsor Pointe, and expansion, such as the project to add 36 apartments to Merrill Gardens at Stanwood.

The project, which got under way in early September, is expected to be finished in June.

“We expect that to be a very successful addition,” Pettit said, noting that apartment reservations have already started coming in.

Staffing for growth

As Merrill Gardens has grown, so, too, has the need for experienced personnel.

That was a challenge during the company’s early years, Pettit said, when the industry as a whole faced a dearth of qualified leaders at the local level — people who could take a property and provide an effective operating environment that would take care of seniors and run a good business.

During the late 1990s, construction of senior housing was growing by 30 percent a year, according to reports from the American Seniors Housing Association.

“With all the new construction that occurred, there was a shortage of trained leaders at the community level,” Pettit said. “That was one of the reasons we decided to grow at a more moderate pace.”

“After ... years of frontline experience, we now have a really good group of people willing to assume leadership,” he said.

Folks like Steve Delmore, who was the general manager at the first community Merrill Gardens purchased and now is the executive vice president of operations, working with a regional operations team to oversee the day-to-day operations of all 66 retirement communities.

Or Lynda Wagner, who has been general manager of Merrill Gardens at Stanwood for three years, having worked at Merrill Gardens at Cordata in Bellingham before that.

She credits the company’s support of staff for high employee morale and retention.

Among the tools the company uses are interactive training tapes that outline Merrill Gardens’ philosophy and standards. Merrill Gardens also has instituted a bonus program, rewarding the staff of retirement communities that have 100 percent occupancy during a given month.

The result: “In Merrill Gardens, there are some general managers who have been with the company for seven to eight years, and it’s only been around for 10. That says an awful lot about a company,” Wagner said.

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