Life plan communities held their ground throughout the pandemic by using various forms of emergency funds to offset increased expenses and pressured cash flows during the public emergency, according to a Fitch Ratings special report issued this week.
“The sector remained resilient during the coronavirus pandemic, which is reflected in the sector’s 2020 financial results,” said Fitch Director Margaret Johnson, CFA.
As of Aug. 4, Fitch maintained public ratings on 161 life plan community providers, of which 151 are included in the medians report. The median rating is BBB; 77 communities earned this rating versus 34 in the A rating category.
Based on the data, Fitch revised its sector outlook on life plan communities to stable from negative last December, with the expectation that the sector will remain stable for the remainder of the year.
“While the pandemic has created some uncertainty in the sector, the key drivers of fundamental credit quality in recent years — favorable demographic trends, healthy residential real estate markets and good access to the capital markets — have been sustained in 2021,” according to the report.
