Headshot of Margaret Johnson
Margaret Johnson

The general operating environment for nonprofit continuing care retirement communities / life plan communities looks like it should remain stable in 2021, according to commentary released Wednesday by Fitch Ratings.

“While the coronavirus pandemic has created uncertainty in the sector, the key drivers of fundamental credit quality that have benefited the sector in recent years should remain in place,” said Margaret Johnson, director at Fitch and sector lead for senior living. “We expect continued favorable demographic trends, healthy residential real estate markets and good access to the capital markets.”

The ratings agency noted that it expects to see a continuation, if not an acceleration, of the increased trend in mergers, acquisitions and system consolidations among CCRCs. Competitive and cost pressures — the main underlying forces driving this need to join with a larger partner — appear likely to remain present in the sector over the next few years, the firm added.

Fitch also expects to see an even more pronounced use of digital tools such as websites and social media when it comes to marketing efforts in 2021. 

“As the use of digital marketing tools rises, a competitive gap could develop between LPCs that are sophisticated in their use and those that are less effective or have not made investments in a digital strategy,” the commentary noted.