Consumer demand for continuing care retirement / life plan communities has remained strong despite the pandemic, Margaret Johnson, director, senior living sector lead at Fitch Ratings, said in a webinar Wednesday.
“There was concern at the beginning of the pandemic that it would have negative implications for demand for [life plan communities] more broadly, but in our experience, the complete opposite has been the case,” she said.
Overall, CCRCs have been resilient over the course of the pandemic, Johnson said. “We maintain a stable outlook for this sector for the balance of 2021,” she said. And demographic trends, residential real estate prices and capital markets continue to support the sector, Johnson said.
Most of the CCRCs rated by Fitch recovered well at the end of the pandemic-related lockdowns, she said, noting that skilled living and assisted living were most affected by the lockdowns. The advent of COVID-19 vaccines helped occupancy as well, Johnson said.
“We’ve seen an acceleration of residents aging in the continuum since the beginning of recovery,” she said.
CCRCs are not out of the woods yet, however, Johnson said. Many operators, she added. are budgeting for high operating expenses, especially related to worker shortages and possible regulatory response to the pandemic, such as vaccine mandates for staff members and residents.
“The pandemic has also accelerated the need for capital investments, particularly in the areas of information technology and dining, as the delivery of services and amenities have changed following the experience of the lockdown,” Johnson said.
She said she expects mergers and acquisition and consolidation to continue across the industry, especially if operating costs continue to increase.
