With the U.S. Presidential election still up in the air on Wednesday, the future direction of public policies that would affect senior living remained uncertain. But regardless of who ultimately wins the White House, tighter federal oversight and regulation of the industry appears likely. “In the months and years to come, we anticipate additional scrutiny particularly as it relates to issues such as reporting, infection prevention and control, and quality care and services,” James Balda, president and CEO of industry association Argentum, said in a statement Wednesday. “And we are acutely aware that it’s not enough to be at the table for these discussions; the industry needs to set the table for those conversations and stand ready to react and respond accordingly.”
A Tennessee-based company has purchased the former Sunrise of Poland senior living center here for $2.72 million. Wickshire Senior Living, based in the Nashville suburb of Brentwood, closed on the purchase Oct. 21.
Henry Ford Village, a 1,038-bed nonprofit continuing care retirement community (CCRC), has filed for Chapter 11 bankruptcy protection. The spectre of financial distress has loomed over the senior living industry since Covid-19 began sweeping across the United States last spring, placing providers under enormous operational and financial pressure. Providers that were strained prior to the pandemic have been particularly vulnerable. Henry Ford Village is another case in point, as Covid-19 compounded existing financial challenges and created a “perfect storm” for the CCRC, according to court documents.
The trend of nonprofit senior housing affiliations snowballed in 2019, and smaller providers now are more motivated than ever to initiate discussions with larger groups. And, more nonprofit providers are diversifying their service lines in order to provide care to seniors off campus. These trends are on display in the 17th annual LZ 200 list of nonprofit providers from industry association LeadingAge and investment bank Ziegler. The list ranks the largest not-for-profit systems providing aging services through senior living in the United States, in order of total owned market-rate units, as of the end of 2019.
Covid-19 continues to adversely affect senior housing occupancy, which reached another record low in the third quarter of 2020, according to data released by the National Investment Center for Seniors Housing & Care (NIC). The average occupancy rate across NIC’s 31 primary markets fell to 82.1% – a 2.6 percentage point decline from the second quarter and 5.6 percentage points lower than Q1 2020. The pandemic impacted majority independent living and majority assisted living in near-equal measure.
The coronavirus pandemic is having a deleterious effect on senior housing and care M&A activity – especially when compared to a historic landscape a year ago when all buyers were in the space looking for opportunities. The third quarter of 2020 ended with 58 announced deals totaling $1.48 billion in transaction volume, according to acquisition data from Irving Levin Associates. That is a 44% decline year-over-year. Private senior care operators are driving the current deal volume, accounting for 63% of deals recorded in the third quarter. They were followed by private equity (9%), real estate investors (9%) and real estate investment trusts (4%). Assisted living communities accounted for 34% of deals, followed by age-restricted communities (12%), independent living (7%) and CCRCs (5%).
ProMedica’s finance chief doesn’t blame people for being skeptical when the not-for-profit health system took on more than $1 billion in debt to buy a massive, bankrupt senior living provider. “So many people were like, ‘What in the world are these guys doing?'” said Steve Cavanaugh, chief financial officer of the Toledo, Ohio-based health system. “They just assumed, ‘It’s going bankrupt. It must be a broken company.'” ProMedica’s leaders say they knew buying HCR ManorCare meant sacrificing—at least in the short run—their debt ratio and perhaps even their credit ratings. Indeed, all three rating agencies have since downgraded the health system, citing its debt ratio. The tradeoff, they say, was made in service of a larger, multipronged strategy that’s just starting to bear fruit.
Carely, Inc., an ecosystem of tools focused on enhancing the caregiving experience for both caregivers and professional care providers, today announced that it has acquired online senior living and care review site Ro & Steve. Carely’s mission is to help families and professional care providers collaborate to give the best quality of life for their loved ones. The Ro & Steve acquisition enhances this mission by bringing its “family first” approach to navigating the senior living landscape to the Carely ecosystem.
In the past six months, many U.S. senior living providers have watched their revenues dry up as their expenses skyrocket. Healthtrust recently prepared for the American Seniors Housing Association (ASHA) a special interest brief summarizing findings from a study examining data representing more than 180,000 senior living units between March 1 and June 30. Healthtrust found that senior living margins were an average of about 21%, which is closer to those typically found in the skilled nursing sector, according to Healthtrust COO and Partner Colleen Blumenthal.
Despite recent challenges, many private equity firms continue to view seniors housing as a good long-term investment, according to panelists Thursday at a webinar hosted by Argentum. “No one can deny that healthcare and seniors housing in particular is the place to be long-term,” said Frederico Lacour, managing director of international investment firm Fosun Property Holdings, “We are short-term skeptics, long-term believers in this sector.” For some private equity firms, the pandemic actually has been a positive when it comes to deal negotiations.
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