Fitch Ratings has revised its outlook on life plan communities to negative last week, reflecting the rating agency’s concern that many of COVID’s risks still lie ahead.
During a webinar hosted by Ziegler Investment Bank, Margaret Johnson, Fitch’s director of senior living, noted that even though occupancy and top-line revenues haven’t been as pressured as was initially feared in the early days of the pandemic, life plan communities are “not out of the woods yet.”
Namely, Johnson said, the agency is concerned about the implications of a prolonged economic slowdown on the industry’s ability to backfill vacated independent living units and fill projects opening in 2021. The risks relative to the reputational effect of COVID-19, the potential for elective procedures to be slow to recover and expense pressures from potential changes in regulation or infection control protocols as a result of the virus also weighed heavily into the decision to lower the sector’s outlook, Johnson said.
“This could continue to pressure expenses even after the initial infection has passed,” she said.