The combination of higher costs to protect residents and an inability to generate incremental revenue through new admissions due to the coronavirus pandemic is placing many senior living communities and nursing homes in “financial turmoil,” according to a research report published Friday by Moody’s Investors Service.

The firm noted that since March, at least nine seniors housing borrowers have drawn from debt service reserve funds, violated their bond covenants or requested a discussion with bondholders to renegotiate debt terms. A separate Moody’s analysis of the multifamily and commercial real estate market release Thursday also reported that senior housing vacancies have risen to a record high of 10.1% as of the first quarter of 2020.

“No other sector has seen the singular confluence of both revenue and expenditure difficulties as the elder housing sector,” the rating company wrote.

Although it remains to be seen how to industry recovers in the long term, Moody’s noted that, with an estimated one-fifth of all deaths from COVID-19 in the United States happening in nursing homes, the rating company is concerned that households will hesitate or permanently sour from bringing their elderly relatives to these places in the future.

“The future [of seniors housing] really hinges on operators finding a way to credibly convince households that these are safe, reliable places in which their elderly loved ones can live out their last years – even given the possibility of another pandemic in the future,” Moody’s concluded.

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