“Positive signals are palpable in Wave 22 results, which reveal upward shifts in organizations reporting acceleration in move-ins and occupancy increases across each of the care segments in the past 30 days. Data compiled in NIC’s Skilled Nursing COVID-19 Tracker clearly illustrates that COVID-19 cases in skilled nursing communities are now falling at a faster pace compared to the U.S. since the launch dates of the Pfizer and Moderna vaccines in long-term care settings, and more organizations with memory care units and/or nursing care beds reported increases in occupancy than decreases since prior to the fall surge of the coronavirus. The Wave 23 survey, currently collecting data, will explore when operators expect their occupancy rates to return to pre-pandemic levels.”

 –Lana Peck, Senior Principal, NIC

NIC’s Executive Survey of operators in seniors housing and skilled nursing is designed to deliver transparency into market fundamentals in the seniors housing and care space as market conditions continue to change. This Wave 22 survey includes responses collected February 8 to February 21, 2021 from owners and executives of 67 small, medium, and large seniors housing and skilled nursing operators from across the nation, representing hundreds of buildings and thousands of units across respondents’ portfolios of properties.

Detailed reports for each “wave” of the survey and a PDF of the report charts can be found on the NIC COVID-19 Resource Center webpage under Executive Survey Insights. Additionally, the full range of time series data for each wave of the survey by care segment for move-ins, move-outs and occupancy rate changes can be found HERE.

Wave 22 Summary of Insights and Findings

• According to Wave 22 seniors housing and care survey respondents, roughly 80% of residents and 60% of staff of their respective properties—including all care segments across their portfolios–have received the first dose of the COVID-19 vaccine on average, and about 75% of residents and 55% of staff have received the second dose.

• The majority of organizations surveyed have not made the COVID-19 vaccine mandatory for residents and/or staff (81%). Whether or not the vaccine remains voluntary will continue to be monitored in Wave 23 of the survey, which asks how likely organizations will be to consider making the COVID-19 vaccine mandatory for staff members.

• Roughly nine out of ten respondents in the Wave 22 survey indicated that educating and motivating staff to take the vaccine was a challenge. To smooth the way, operators are implementing a variety of strategies to encourage and improve vaccine acceptance. In addition to education/communication campaigns for residents and staff (95%), community and corporate leadership have stepped up and publicly taken the vaccine themselves (87%) and have been personally available with one-on-one support for staff who have questions and concerns (79%). Few respondent organizations have incentivized staff to take the vaccine with financial benefits (15%).

• In Wave 22, the shares of organizations reporting acceleration in the pace of move-ins is higher than those organizations reporting deceleration for each of the care segments. Furthermore, organizations reporting deceleration in the pace of move-ins has shrunk in the memory care, assisted living and nursing care segments over the past three waves of the survey.

• Looking specifically at the assisted living care segment, nearly half of organizations with assisted living units in their portfolios of properties (47%) noted acceleration in the pace of move-ins—the highest in the survey to date. The fewest (13%) noted deceleration in the pace of move-ins in the past 30-days. Wave 22 survey respondents reporting of acceleration in move-ins for the memory care segment is essentially equal to the high reached in the Wave 12 survey (50% and 51%, respectively), reflecting operator experiences in mid- to late-August. It is interesting to note that the pace of move-ins for the independent living care segment has not changed much since the Fall surge of the coronavirus.

• One in five respondents in Wave 22 noted that their organizations had a backlog of residents waiting to move in (20%)—similar to the prior survey, which was lower than at any other time since the question was first asked in late July. Possible reasons may include the previously mentioned, recent increase in the pace of move-ins across each of the care segments taking up some of the slack in pent-up demand, typical seasonality experienced during the winter months, and potentially less turnover of inventory in some properties as the pace of move-outs slowed in the Wave 22 survey. Between 78% and 87% of organizations noted no change or deceleration in the pace of move-outs for each of the care segments, and roughly one-third with assisted living units noted the pace of move-outs decelerated in the past 30-days.

• The Wave 22 survey data shows an upward shift in the shares of organizations reporting increased occupancy across each of the care segments since the prior survey, and more organizations with memory care units and/or nursing care beds reported increases in occupancy than decreases. The shares of organizations with independent living and assisted living units with declining occupancy in the past 30-days (across their portfolios of properties) continued to exceed those reporting rising occupancy.

• The chart above shows that in Wave 22, 50% of organizations with nursing care beds reported increasing occupancy rates in the past 30-days. However, as shown in the chart below, the majority of the increases were relatively small. The chart below describes the degree of those occupancy rate changes and illustrates that more organizations with nursing care beds in Wave 22 reported smaller increases than in the prior three waves of the survey. (The blue and orange-hued stacked bars correspond to the solid bars in the chart above indicating the degree of change by the saturation of color.) In the Wave 22 survey, 30% of respondents with nursing care beds reported occupancy increases of 0.1 to 3 three percentage points.

• One-third of organizations with memory care units and/or nursing care beds (32% and 33%, respectively), and one-quarter of organizations with assisted living units (24%) reported a week-over-week increase in occupancy. That said, similar shares of organizations with nursing care beds and/or assisted living units also saw decreases (30% and 26%, respectively).

Wave 22 Survey Demographics

• Responses were collected between February 8 and February 21, 2021 from owners and executives of 67 seniors housing and skilled nursing operators from across the nation. Owner/operators with 1 to 10 properties comprise two-thirds of the sample (66%). Operators with 11 to 25 properties make up 18% of the sample, while operators with 26 properties or more make up 16% of the sample.
• Just over one-half of respondents are exclusively for-profit providers (57%), one-quarter (26%) are nonprofit providers, and 16% operate both for-profit and nonprofit seniors housing and care organizations.
• Many respondents in the sample report operating combinations of property types. Across their entire portfolios of properties, 74% of the organizations operate seniors housing properties (IL, AL, MC), 31% operate nursing care properties, and 28% operate CCRCs (aka Life Plan Communities).

Owners and C-suite executives of seniors housing and care properties, we’re asking for your input! By demonstrating transparency, you can help build trust. The survey results and analysis are frequently referenced in media reports on the sector including in McKnight’s publications, Mortgage Professional America Magazine, Senior Housing News, Multi-Housing News, Provider Magazine, and other industry-watching media outlets. The surveys’ findings have also been mentioned in stories by Kaiser Health News, CNN, the Wall Street Journal, and other major news outlets across the U.S.

The Wave 23 survey is available and takes 5-10 minutes to complete. If you are an owner or C-suite executive of seniors housing and care and have not received an email invitation to take the survey, please click this link or send a message to insight@nic.org to be added to the email distribution list.

NIC wishes to thank survey respondents for their valuable input and continuing support for this effort to bring clarity and transparency into market fundamentals in the seniors housing and care space at a time where trends are continuing to change.

Skilled nursing facilities could be curbing COVID-19 sooner than we thought. Sadly, the impact on bereaved families will last forever.

“The decline in COVID-19 cases and fatalities within skilled nursing facilities is particularly notable and corroborates the effectiveness of the vaccine. The promising results of the Long-Term Care (LTC) vaccination program should be building confidence in COVID-19 vaccines among staff and the broader population to get vaccinated and help bring an end to the pandemic.” Beth Mace, Chief Economist, NIC

Seven weeks after the speedy vaccine rollout across U.S. long term care communities, CMS data unequivocally show that new infections in skilled nursing facilities have been, continue to be, and will likely continue to be, in a steep downward trend.

Data just published in NIC’s Skilled Nursing COVID-19 Tracker, for the week ending February 7, 2021, show that new confirmed cases of COVID-19 in skilled nursing facilities fell 83% over the last 7 weeks—from 32,563 on December 20, 2020 to 5,473 on February 7, 2021—while U.S. new cases fell 47% over the span of those same seven weeks.

Skilled nursing facilities reported a per-resident rate of new COVID-19 infections of 0.54% on February 7, a 2.5 percentage point drop since the December peak.

As of February 9, the status of vaccination clinics shows that about 88% of skilled nursing facilities participating in the CVS program have received their second dose of the COVID-19 vaccines. The status of clinics from Walgreens shows that 14 states have completed their second clinic in skilled nursing facilities (clinics through February 8). See exhibits 5 and 6 at the end of this blog for more details.

Exhibit 1 – Weekly new COVID-19 cases in SNF vs. U.S.

Data compiled by NIC’s Skilled Nursing COVID Tracker also show that fatalities are down 65% in skilled nursing facilities since the launch of the LTC vaccination program on December 20. Unfortunately, the U.S. weekly new COVID-19 fatalities increased by 17% over the same period, according to the CDC.

The new fatalities in skilled nursing facilities as a share of total fatalities in the U.S. appears to have varied between 21% and 43% on a week-over-week basis since CMS began reporting data in late May 2020. However, for the first time, the reported new fatalities within skilled nursing facilities accounted for approximately 14% on January 31 and 9% on February 7 (data for the week ending February 7 is preliminary).

Although the number of people who have died from the novel coronavirus on a week-over-week basis has been declining in skilled nursing facilities, it is still high. Each number is a person, a family member, a friend, and a loved one. Sadly, the impact of the COVID-19 pandemic on bereaved families will last forever. A recent study published by the official journal of the National Academy of Sciences estimates that about 4.5 million people have experienced a family bereavement in the U.S. due to the pandemic. This provides some sense of the true scale of this pandemic tragedy but does not take into account those who have been infected and very sick, some with lasting symptoms.

Exhibit 2 – Weekly new COVID-19 fatalities in SNF vs. U.S

Exhibits 3 and 4 depict the drop in cases and fatalities within skilled nursing facilities across the four regions of the U.S.

Exhibit 3: New COVID-19 confirmed cases as a share of residents within skilled nursing facilities – By region

Exhibit 4: New COVID-19 Fatalities as a share of residents within skilled nursing facilities – By region

Source: NIC’s Skilled Nursing COVID-19 Tracker – CMS Data as of February 7, 2021

To gain in-depth insights and track the week-over-week change rate for new resident cases and fatalities of COVID-19 within skilled nursing facilities at the state and county levels, visit NIC.org. You can also access the Skilled Nursing COVID-19 Tracker along with a rich trove of analysis and insight on the NIC COVID-19 Resource Center.

For more reading on the effects of vaccines in skilled nursing facilities, see the following blogs:

Rate of New COVID-19 Infections in Skilled Nursing Facilities Continues to Plummet* (Published on February 17, 2021)

COVID-19 Case Counts Falling in Skilled Nursing Properties Following Vaccine Rollout (Published on February 9, 2021)

NIC is committed to provide timely data, analyses and insights that increase transparency and understanding of the sector, especially in this difficult time of COVID-19. We strongly support all actions and efforts that prioritize distribution of COVID-19 vaccines, testing, and availability of PPE to protect frontline workers and residents.

Exhibit 5: CVS – Status of clinics in skilled nursing facilities, assisted living and other LTC facilities

CLICK TO VIEW FULL PDF

Exhibit 6: Walgreens – Status of clinics in skilled nursing facilities, assisted living and other LTC

facilities

CLICK TO VIEW FULL PDF

The per-resident rate of new COVID-19 infections continues to plummet in skilled nursing facilities, with a two percentage point drop and a likely continued downward trend.

“There is light at the end of the tunnel, and we don’t think it’s a train,” said a participant in a recent NIC Community Connector™ Meetup.

NIC’s Skilled Nursing COVID-19 Tracker, featuring the latest CMS data updated as of January 31, 2021, shows that newly confirmed COVID-19 cases within skilled nursing facilities continued to plummet. For the week ending January 31, the per-resident rate of new COVID-19 infections dropped to July levels as skilled nursing facilities reported a two percentage point drop in infections from 3% on December 20 when the Long Term Care (LTC) vaccination program was launched to 1% on January 31. The chart below depicts this decline.

New COVID-19 confirmed cases within skilled nursing facilities continued to fall at a faster pace compared to the U.S overall new cases. Notably, new confirmed cases within skilled nursing facilities are down 49% from 32,521 on December 20 to 16,701 on January 24, while U.S. new reported cases are down 24% over the same period.

Since January 31, U.S. COVID-19 cases have continued to fall steadily. On February 16, the rolling daily average of new infections hit its lowest level since October. In addition, the count of people receiving two doses of the COVID-19 vaccines as reported to the CDC in the Federal Pharmacy Partnership for Long-Term Care (LTC) Program nearly tripled in the first two weeks of February, from 641,561 on January 31 to 1,711,846 on February 16.

This continuing decline in U.S. cases along with the increase in vaccine supply and administration spark hope and suggest that new coronavirus cases in skilled nursing facilities are likely to continue trending lower in the next two reporting weeks ending Feb 7 and Feb 14.

The Skilled Nursing COVID-19 Tracker also shows that the share of properties reporting new COVID-19 infections fell from 34.5% on December 20 to 24.4% on January 24. Additionally, newly confirmed cases among staff are declining at the same pace as the new cases among residents.

“The drop in new cases is becoming evident in CMS data since vaccines have been administered and distributed in skilled nursing properties. While data suggest that we are entering the beginning of the end of this pandemic, it is still important to realize that we need vaccinations in combination with other interventions, including more frequent testing, greater emphasis on physical distancing, and adherence to masking guidelines. These interventions continue to be an effective and vital weapon against the rate of mutation of the virus and the spread of current virus strain until vaccines are widely accepted and distributed and herd immunity is achieved,” said NIC Chief Economist, Beth Mace.

* Blog and graph updated as of February 19, 2021

Skilled Nursing News’ Payments, Policy, and Capital Summit brought together executives, policy professionals, and capital providers to share their thoughts on the recent past, present, and future of the skilled nursing industry. Highlights and key takeaways from the three-day virtual event are summarized here.

The summit included sessions on capital and one main topic of discussion was private equity and skilled nursing. In regard to investor interest in skilled nursing, private equity has been the bright spot in terms of buying skilled nursing properties even as the sector endured its most challenging year on record in 2020. One theme, however, has been the flight to quality as investors are interested in the best operators and properties in order to mitigate risk when allocating new capital. Private equity is still excited about the opportunity in the future as long-term care needs will remain given the fact that a very large population will be very sick with multiple illnesses and will not be able to afford private pay assisted living and unable to receive care in the home 24 hours a day.

However, in the short-term private equity does have concerns given the challenges, hence the flight to quality operators and properties. Indeed, the difficulty in operations continues. Skilled nursing occupancy was at 74.2% as of November 2020 based on data from the recent NIC MAP Skilled Nursing Data Report, representing a 11.2 percentage point drop from February 2020.

Despite the operational challenges, some owner/operators and families with plentiful capital have been the main buyers throughout the pandemic. In fact, according to preliminary fourth quarter 2020 data from NIC/RCA private buyers closed on $4.2 billion worth of seniors housing and care transactions for the year of 2020, which represented 57% of the volume. In addition, and perhaps an example of the flight to quality, skilled nursing (nursing care in the graph below) property price per bed has held firm according to NIC/RCA price per bed data (see graph below for details and sources). This pricing trend below is a national rolling four-quarter measure and it is not same-store; the mix of properties could impact the results. However, it does reflect what is trading in the market albeit with relatively lower transactions closed in 2020 due to the pandemic.

One of the comments made during the summit was that there were many transactions closed over $100,000 price per bed. So, what does this say as price per bed holds firm during this time of crisis? For one, the properties trading could be higher quality with good operators, as stated previously. In addition, there is still a very attractive expected spread in terms of the interest rates on debt and the expected long-term cash flow of a high-quality property, which may be supporting price levels.

Also, it was mentioned during the summit that government support has been a positive and private equity may be reassessing the “stroke-of-pen risk,” which is the risk that reimbursement rates are cut by the government. However, given the support of government funds during the pandemic investors may reassess the risk of government involvement as it has helped the sector stay afloat during this particular crisis. Lastly, there are some small private investors, owners and/or operators looking to expand regionally and have strong long-term views about the sector.

Much of the investor interest discussion, and the success of the sector, was certainly based on the quality operators but much of that quality is based on top talent and staff. It was mentioned that staff turnover was a top leading indicator of a successful operation before the pandemic and the belief is that is still the case. Staffing will continue to be a challenge now and after the pandemic and it should be a priority for both investors and operators alike to ensure the proper staffing is in place for all stakeholders.

As for what to expect on the policy and regulatory front, panelists covered labor and workforce topics such as the potential increase in minimum wage and mandatory staffing ratios, as well as what the future holds for PDPM, value-based purchasing, and risk-sharing models.

The Path to a $15 Minimum Wage

There are several states where a significant portion of the CNAs make less than $15 per hour – often starting at $9 or $10 per hour depending on market. With the new administration, there is certainly more discussion around a $15 minimum wage, which is a concern for many operators. As you might expect, states with the lowest CNA wages are the states that have really low Medicaid rates. As a result, providers simply do not have the resources to pay more than they are paying. Mark Parkinson, President & CEO, AHCA/NCAL emphasized that “if you do the minimum wage, you have to create a Medicaid mechanism that helps these states to pay for these wage increases.”

The upcoming stimulus bill will be passed with the reconciliation procedure, which requires only 51 votes. As a result of passing through reconciliation, there are only certain things that can be included in the bill, and currently, the prevailing view is that a minimum wage increase cannot legally be included. There is still a slim chance it’s ruled that the minimum wage increase can be included in the bill, but even if that is the case, it’s not clear that all Senate Democrats would vote for it. Additionally, the Biden proposal on minimum wage does increase the minimum wage to $15 per hour, but it is done with a gradual, phased approach, meaning the $15 wage would not be realized until 2025.

Other Regulatory Implications to Staffing

There’s good data available that indicates buildings with significant amounts of RN coverage, relative to buildings that didn’t, fared better with regards to COVID-19 cases and deaths. This may mean that there could be minimum staffing requirements established for the skilled nursing sector. Less likely, but still possible, could be including infection control experts within each of these sites as well. The caveat to successful implementation of these staffing minimums, however, is that these need to be funded under Medicaid for operators to be able to actually execute on these.

Enforcement – What Will be Scrutinized?

Given that nominated HHS Secretary Xavier Becerra is an Attorney General, it’s almost inevitable that oversight of skilled nursing will increase. One of the first things Seema Verma, former CMS Administrator, did was to issue a proposal that slowed down much of the requirements of participation that she felt had gone too far. The proposed rule was never finalized, and it is unlikely the Biden administration will finalize the rule.

There was a noticeable drop in civil monetary penalties (CMPs) under the Trump administration, but there may be pressure to get them back to where they were under the Obama administration. Right now, without an identified CMS Administrator and several important positions at CMS still open, there are a lot of unknowns, but that is likely to be on the table. The Biden administration is also going to take a close look at arbitration to see what can be done to decelerate its use.

There’s going to be a real push by the states to get rid of multi-resident rooms, specifically those that house 3 or 4 residents in a single room. This was brought to light as particularly problematic during the pandemic and private rooms are not only important for infection control, but also for quality of life and resident satisfaction as well.

Patient Driven Payment Model

The Patient Driven Payment Model – PDPM – has been one of the bright spots for the skilled nursing sector over the last year and a half. Despite concerns that the new payment system was not budget neutral, there were no substantive changes made to PDPM in 2020. This was in large part due to the COVID-19 pandemic overshadowing the concerns that some may have had about PDPM, and that may wind up being the case for 2021 as well. At some point the dust is going to settle and CMS will look again at the budget neutrality of PDPM.

There are some reasonable arguments to be made that could protect the gains that were realized under PDPM. First and foremost is that, as a whole, Medicare spending was down in 2020. Taking a step back and looking at the overall system puts PDPM in a better light.

Value-Based Purchasing

With the COVID-19 pandemic taking the full focus of the skilled nursing sector in 2020 and continuing into 2021, discussions about value-based purchasing and unified payments systems were not as prominent as they had been in the past. Once the pandemic is finally behind us, however, these conversations will once again become a more pressing topic.

As Scott Pilgrim, CEO, Diakonos Group points out, skilled nursing operators can secure additional Medicaid dollars, but must promise increased quality in return. Pilgrim notes that there are four mechanisms to increasing reimbursement rates under Medicaid and that policymakers see value in tying value-based purchasing to each of these four levers: base-rate increases, add-on rates, provider tax implementation, and inter-governmental transfer programs.

Risk-Sharing Arrangements – Medicare Advantage & Special Needs Plans

Medicare Advantage continues to grow, and that will continue to be the case. Market share for Medicare Advantage is approximately 35% and increasing each year by another 1%. I-SNPs provide an incredible incentive for operators to keep residents healthy. The COVID-19 situation was an incredibly difficult situation to navigate for I-SNPs, especially to those in the northeast. They were responsible for the entire risk of these residents, and in some cases were responsible for massive hospitalization bills. In other parts of the country, even with COVID, I-SNPs had done reasonably, as other medical expenses were down so much. All that being said, it’s clear that when the pandemic is finally behind us, risk-sharing type of arrangements are going to be an absolute must for providers that want to thrive.

Listening to all the potential policy and regulatory changes on the horizon made it clear: calls to reform post-acute and long-term care following the COVID-19 public health emergency, along with a new Presidential administration, mean the climate is ripe for potential regulatory changes to be implemented.

Hundreds of investors, owners, operators, analysts, and other industry stakeholders attended the latest in NIC’s new series of Leadership Huddle events Wednesday. In the webinar portion of the event, which was sponsored by National Health Investors (NHI), they were treated to a virtual smorgasbord of insights and expert discussion around financing markets in seniors housing and care. Attendees who had opted to participate in the Zoom discussion breakout session that followed, continued the discussion, adding their own thoughts and experiences in small groups.

Seniors housing financing markets have evolved over the course of the COVID-19 pandemic—as lenders and owners both adapted in real-time—to unprecedented asset-level revenue declines exacerbated by operating expense increases. In a “fact or fiction” Q&A-based format, an expert panel, including both lenders and borrowers, explored what really occurred during 2020 from a lending perspective, how transactions are being quoted currently, and what the near- and long-term future will hold for seniors housing debt. Co-facilitators Joel Mendes, Senior Director, JLL Capital Markets, Seniors Housing, and James Thompson, Senior Vice President, Director of Senior Housing Investments, BOK Financial, came prepared with a variety of “fact or fiction” questions, designed to elicit honest, insightful responses on how lenders, owners, and others in the industry are thinking and behaving during this extraordinary time. Panelists Robb Chapin, Chief Executive Officer, Bridge Seniors Housing Fund Manager, LLC, and Steven Schmidt, National Director, Seniors Housing Group, Freddie Mac, fielded the questions.

On whether COVID-19 has reduced investor interest in seniors housing funds, Chapin responded, “that’s a hard fact, for sure.” He said that his group shelved those funds in the first six months of the year, focusing instead on the operational challenges brought on by the pandemic. For the rest of the year, he saw “10% to 15%” of normal flows of investment.

Mendes, responding to a question on non-recourse acquisition financing in 2020, suggested that the most-used term within the industry last year was “hit the pause button.” Permanent lenders such as Fannie Mae and Freddie Mac underwrote fewer loans as in-place cash flows, which they require to support their loans, declined throughout the year. Further, the non-recourse bridge debt market, according to Mendes, “did not fully materialize until later in 2020.”

Asked whether Freddie Mac’s senior housing portfolio has fared well, Schmidt responded, “relative to what we’ve heard from other lenders, that is predominantly true.” However, he said that the pandemic caused more stress in the seniors housing sector than did the global financial crisis. Freddie Mac instituted a three-month forbearance program, which he said was taken up by twice as many in seniors housing than in multifamily. The good news, according to Schmidt, is that most of those borrowers are now current. “We feel the program provided the necessary relief during the worst part of the pandemic, and we feel very good about that.”

Another line of questioning concerned the impact of regulators throughout the pandemic. Generally, panelists were positive, lauding the CARES Act, the Federal Reserve, who took action to temporarily ease balance sheet requirements, and PPP loans, all of which helped stabilize the sector throughout 2020.

Other questions focused on the present situation. The first of these concerned whether debt markets are a hindrance to the desire to buy and build new assets. Chapin labeled this one as a fiction, indicating that his organization was generally pleased with the response from lending relationships. He said, “we anticipate that we will continue to have very good outcomes with our lenders as it relates to refinancings and new acquisitions in 2021.” He continued, saying, “What we’re generally seeing is more conservative underwriting on debt service coverage ratios, lower LTVs, increased underwriting expenses for PPE, labor, insurance, and all the typical things that we’re all experiencing right now that have to be factored in.” He said that, although his company isn’t planning any new ground-up development projects for 2021, they expect to have shovel-ready projects in 2022.

Another “fiction,” according to Mendes, is that “new development financing terms are so conservative as to render them non-existent.” On the contrary, he said, “we closed new development debt financings all through 2020 and continue to do so today.” He said, “If I could pick one financing term that has changed the most since March 2020, I’d say it’s ‘recourse.’ Lenders are requiring more of it. Non-recourse debt financing, particularly that starts with a six on the loan-to-cost, is pretty hard to come by.” He continued, “If you’ve got a solid project it can get financed today, no doubt about it.”

On current lending, both Chapin and Thompson indicated optimism, particularly as vaccinations continue to reach millions of residents within seniors housing. Thompson said, “Lenders are learning what to ask when it comes to underwriting and due diligence. I see more lenders willing to dig in and do the due diligence than earlier in the pandemic. It’s early in the year so, from a practical standpoint, lending groups have loan-growth goals that they have to deal with.”

Some questions probed into the near future. Mendes, explaining his optimism, said, “a theme in the senior housing capital markets in 2020 and through to today is that in-place performance at the asset level is usually declining month-over-month. You engage a deal in September and, come December, the numbers look worse, which has caused ongoing stress in the transaction process. I believe what we’ll see later this year is just the opposite. The numbers are going to start looking better as the transaction process progresses. This trend, in my opinion, will be accelerated by the decline in construction starts, and also combined with the growth in the 80-plus demographic.” He pointed out that growth in that demographic from 2021 to 2023, “is projected to be twice what it was from 2017 to 2019.”

Mendes continued, saying, “from an equity perspective, dry powder in the United States for real estate in December 2020 was over $200 billion, that’s uninvested private equity, which is close to a record high.” He explained that, with so much liquidity in the market, “lenders can expect high quality sponsors, like Bridge for instance, with the ability to invest meaningful equity into transactions.”

Looking ahead, the panelists generally foresee a gradual return to pre-pandemic business practices and performance. They discussed the impact of numerous factors throughout 2021, including the regulatory impact on banks, the potential for improved occupancy, and the attractiveness of the sector to investors. On that point, Schmidt pointed out that big pre-COVID challenges, such as labor shortages and oversupply of new properties have eased. He said, “Operators will have to recognize, and I think we are, the new normal and not revert back to the old normal and continue to evolve. That creates the real opportunity. The owners and operators that do that really well will attract a lot of investment capital going forward.” The webinar portion of this NIC Leadership Huddle event is available, in its entirety, on NIC.org. Registration is now open for the upcoming February 24 Leadership Huddle, titled, “Is There an Investment Case for Skilled Nursing in the Intra-and Post-Pandemic World?” Spaces for the follow-up discussion group are limited, and are offered on a first-come, first-served basis