Warren Buffet knows a thing or two about investing. At last count, he had amassed a personal fortune of roughly $120 billion, give or take.
And what are his famous words of wisdom for others hoping to achieve a state of financial bliss? Be greedy when others are fearful, and be fearful when others are greedy. Well, senior living operators, it might be time to reach for the antacids. Because optimism is spreading like wildfire.
Everywhere you turn these days, there’s talk of senior living occupancy returning to pre-pandemic levels. And the general view among the industry’s closest observers is that this is going to be a good year to raise rents, as that rare combination of higher consumer demand and a paucity of new startups works its price-point magic.
Then there’s this: A tough financing environment marked by higher interest demands and more restrictive capital access is starting to get better and could improve dramatically in the second half of the year.
The source for this latest prediction is none other than the world’s largest healthcare symposium, which concluded last week in San Francisco. Compared with a year ago, the mood was decidedly more upbeat at the J.P. Morgan Healthcare Conference, which brings together investors, bankers, scientists and various other high-level movers and shakers.
Their general consensus was that capital access will steadily improve. That will no doubt be good news for senior living operators looking to tackle overdue repairs, indulge in renovations or upgrade services. Not to mention possible mergers or acquisitions. (Which are expected to see a notable uptick this year, according to the most technologically advanced Ouija board operators.) No doubt, available funding at reasonable rates could be a game changer for many operators, maybe even the larger senior living field.
Let’s not forget there’s that little matter of whether the Federal Reserve will cut interest rates as a way to spur things on. Last month, Fed Chairman Jerome Powell indicated that as many as three rate cuts could happen this year. Of course, that markdown assumes inflation holds steady. Or better yet, declines.
So, all things considered, it’s easy to feel pretty good about where things stand for senior living operators right now, and where they might be heading. Or as Buffet might remind us, this is probably a good time to start stressing out.
John O’Connor is editorial director for McKnight’s Senior Living and its sister media brands, McKnight’s Long-Term Care News, which focuses on skilled nursing, and McKnight’s Home Care. Read more of his columns here.
