Fitch predicts occupancy gains, stability for CCRCs in 2016
U.S. nonprofit continuing care retirement / life plan communities will see an uptick in occupancy and a focus on expense control in 2016, according to the latest Fitch Ratings outlook report for the category. The research also predicts that the cycle of increased capital spending will continue.
Operating profitability and factors in the broader housing market should help ensure the stable performance of CCRCs, according to Fitch. “Housing market growth appears set to level off, which should keep occupancy levels and net entrance fee receipts for CCRCs stable or slightly improved in the coming year,” Senior Director Jim LeBuhn said in a statement.
Capital spending among Fitch-rated CCRCs increased dramatically in 2015, and Fitch expects the trend to continue in 2016. “More CCRCs are likely to pursue major renovation or expansion projects next year with favorable access to capital to remain in place,” LeBuhn said. Negative rating actions in the category will be concentrated among CCRCs that assume significant debt to finance renovation or expansion plans.
Over time, additional challenges related to post-acute care services and changing healthcare reimbursement models could arise, the report notes. External factors such as a significant downturn in the equity or fixed-income markets or a material change to or reduction in reimbursement by Medicare for post-acute rehabilitation services could pressure margins.