The National Investment Center for Seniors Housing & Care’s Spring Conference next week in San Diego certainly will be timely. That’s because it will bring together capital providers and seekers at a time when money issues are coming to the fore.
When you talk to the insiders in this field, they quietly will tell you that 2019 is shaping up as a challenging year for this sector. For many businesses, margins are going to be compressed.
We are reporting with increasing regularity about operators that are unable to meet rent and other fiscal obligations. That is not exactly what one might call a good omen. And need I mention that this is the worst time in decades for finding competent staff?
In normal times, these might be obvious signs that lenders might want to take five. But these hardly are normal times.
In fact, the NIC’s recent Fall Conference in Chicago blew the proverbial doors off, as far as participating lenders was concerned. Next week’s show in San Diego is looking like more of the same. So what’s going on here?
My hunch is that there is not one simple explanation. Yes, there are some signs that a funding bubble may be about to burst. Or at the very least, that an arguably overdue correction may occur.
Then again, senior living consistently has proven itself to be recession-resistant, if not recession-proof. Moreover, many lenders have done quite well by focusing on certain types of loan packages.
And let’s not forget that we are seeing innovation and disruptive new approaches to senior living at an unprecedented pace. Some savvy investors certainly will want to snap off a piece of what could be the next big thing.
Plus, let’s face it: There are a lot of newbie investors showing up these days, with tons of money to spend. Some of these folks may get very lucky. Others may get a painful lesson, courtesy of the stove. Either way, the loan arrangers will get their cut.
Here’s my take: Barring some unforeseen major development (for instance, a repeat or worse of the 2008 stock market crash and / or lots of operators going belly-up), experienced lenders who work with well-managed businesses will do fine. And vice versa.
Some lenders who take a chance on fledging disrupters may cash in big time. And as for the rest, well, their results are likely to vary.
It should be an interesting three days in San Diego.