Spending at CCRCs highest in eight years

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Capital spending at continuing care retirement / life plan communities is at its highest level since 2008, according to a new report by Fitch Ratings.

“The bump in capital expenditure is reflective of higher demand and occupancy across the sector, sustained core profitability, an attractive interest rate environment and greater confidence of management,” Emily Wadhwani, director at Fitch Ratings, said in a statement.

Core operating performance has been steady despite the fact that volatility in the investment markets in 2015 suppressed excess income, according to the report. The broader housing recovery also has bounced back, Fitch said, with home prices and home sales increasing.

Fitch's rating outlook for CCRCs is stable for the fourth consecutive year, although the firm expects rating pressure.

“Rating pressure will likely result from increasing leverage and project risk over the near term and operating challenges, including reimbursement stress and labor expense growth, over the longer term,” Wadhwani said.

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