Do you know about - 2009 Largest Providers, a Turbulent cheaper Slows But Can't Put the Brakes on Assisted Living increase
Heights Finance Corporation! Again, for I know. Ready to share new things that are useful. You and your friends.With 2009 well underway, many enterprise sectors continue to feel the stress of the economic downturn, along with the mortgage accident and new reputation crunch. But this year's 70 Largest Providers list-an yearly Assisted Living executive exclusive-suggests that assisted living providers so far have not taken as heavy a hit.
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While growth has slowed from the past few years, more than half of providers surveyed by Assisted Living executive still narrative increases in licensed assisted living resident capacity, as of January 1, even if it's only due to adding one to three new structure to their portfolios.
Modest Gains and Losses
During 2008, no assisted living associates merged and full-company acquisitions were rare. The only enterprise to grow by acquiring stupendous competitors was Five S tar Senior Living, formerly Five Star capability Care, which bought New Seasons Assisted Living Communities (No. 49 on the 2008 list) and Somerford Corp. The moves helped raise Five Star Senior Living from No. 8 to No. 6 and increased its assisted living capacity by more than 45 percent. However, despite a year featuring no big deals, the 2009 list shows some reshuffling due to small acquisitions and building. Possibly not surprisingly, the biggest gains remain with the biggest players and are in hard numbers rather than major rank changes.
Sunrise Senior Living continues to top the list with an approximate assisted living resident capacity of 32,560 units. (Actual numbers should be somewhat higher due to building last year but were not ready at press time.) Emeritus Senior Living and Brookdale Senior Living maintained the No. 2 and No. 3 spots, but also prolonged to grow by 8 percent and 20 percent, respectively. Assisted living resident capacity increased by 20 percent at Atria Senior Living Group (No. 5).
In terms of ration growth, Senior Care Inc. Raised its assisted living capacity by nearly 44 percent, a gain that moved the Louisville, Kentucky-based victualer from No. 17 in 2008 to No. 11 this year. Senior Services of America (No. 29) grew 27 percent and moved up seven places. Affordable assisted living victualer Bma administration only moved up three spots to No. 24 but also upped its capacity by 28 percent due to new construction. Mt. West seclusion Corp. Changed its name to Bonaventure Senior Living (No. 25) and raised its capacity by 22 percent.
In contrast, the largest rank-changing operation was in the lowest half of the list and did not reflect high actual capacity numbers since 60 percent of providers on the list have less than 2,000 assisted living residents. The biggest mover was Senior administration Advisors (formerly Adult Care Group), which jumped from No. 67 to No. 51 by gaining 298 new assisted living residents and a 42 percent gain in capacity. Bell Senior Living jumped 10 places from No. 46 to No. 36, thanks to 28 percent capacity growth or 309 new assisted living units. Erickson seclusion Communities also raised its position by nine to No. 50, adding 196 units or 24 percent. Brightview Senior Living/The security Group went from No. 70 to No. 62 with just 149 new units and a 22 percent capacity increase.
The Top 70 had only three new entrants. Grace administration leaped to No. 37 after growing almost 57 percent to 1,399 residents, thanks to 10 new administration contracts in 2008. Ccrc victualer Mbk Senior Living joined the list at No. 60 after more than doubling its assisted living resident capacity in 2008 to 842. And Milestone administration Services (formerly Our House Senior Living) entered at No. 69 with 709 residents, a 23 percent growth from 576 reported last year.
Only six providers reported capacity losses, but actual numbers were low, indicating again the sale of only one or two communities. The largest decrease was 259 residents by Kisco Senior Living, reducing its rank by 13 spots from No. 41 in 2008 to No. 54 in 2009. However, because Kisco has new projects under development, the enterprise is likely to fee back up the list in 2010. Only one enterprise that made last year's list, Harmony Living Centers, dropped off-not due to a capacity loss, but simply maintaining its 2008 resident capacity of 705. In addition to the three already-mentioned name-changers, Oakdale Heights administration enterprise renamed itself Northstar Senior Living (No. 28).
Obstacles and Opportunity
When the banking accident came to a head last September, virtually all growth operation grinded to a halt due to lack of capital and uncertainty about either cap rates reflected true property values, says Steve Monroe, managing editor of the Senior- Care Investor newsletter. The only excellent operation at year end was that a major expected deal did not happen. In December, condition Care Reit withdrew its offer to buy Arcapita Inc.'s 90 percent interest in 29 Sunrise-managed properties at what ordinarily would have been seen as a very aggressive 3.5 million price.
Still, despite the rocky economy, assisted living entered this slowdown in much good shape than it did the last big recession, which coincided with immoderate overbuilding around the year 2000, agreeing to senior housing experts. Despite concerns that inability to sell homes, shrinking assets, and laid-off house members who can give care at home will spur seniors to delay moves into assisted living, occupancies trended down but not precipitously in the third quarter of 2008, says Robert G . Kramer, president of the National speculation center for the Seniors Housing & Care industry (Nic). While fourth-quarter occupancy data was not yet ready at press time, other data indicated that the most troubled markets, such as Florida, California, and some definite metro markets-Phoenix, Las Vegas, Chicago, and Riverside, California-have started to lowest out, he adds. "Also, keep in mind that occupancy is advent down from historic highs in the 2006 and 2007 timeframe," Kramer says.
In an additional one arresting spot, earnings growth in the third quarter of 2008 still remained in the 4-5 percent range, he adds. If it drops to 3 percent, investors will still see senior housing as a good defensive speculation compared to other real estate asset types.
Additionally, while many of the major market finance associates that had been active previously are no longer active, some opportunities for financing remain ready to senior housing providers, Kramer says. In particular, relationship-based small (- million) deals straight through local community-based lenders and some regional banks will continue to get made, and an additional one arresting spot is that Fannie Mae and Freddie Mac have been very active as sources of takeout financing. Reit buyers, who still have good way to capital, and Possibly even some inexpressive equity entities may come to be active later in the year if prices are low enough and values stabilize.
Because of new steep stock store dives, communal associates may find it harder to way capital even if their operations are not impacted, Monroe says. The turbulent store also makes it unlikely that any enterprise will go communal this year, but if conditions improve, Atria remains the enterprise to watch in that arena, he adds.
Smart growth and Caution
The reputation crunch and general caution by providers brought new building starts down 70 percent in the middle of the second and third quarters of 2008, and starts are expected to stay flat unabridged for the foreseeable future, Kramer says. Sunrise Senior Living, the biggest maker in new years, has icy 54 improvement projects nationwide, and Capital Senior Living Corporation has also suspended new development. Still, new building will raise capacity in 2009 and 2010 as new communities that are already underway open. For example, Legend Senior Living did not make this year's list (currently it ranks No. 73 with 585 assisted living resident capacity), but will likely enter the list next year due to new improvement already underway, which will duplicate its size.
One sector to watch for new building is affordable assisted living, which has way to financing sources not ready to customary providers such as tax credits, nontaxable bond issues, and Hud financing, says Blair Minton, chairman and founder of Bma Management. He adds that, in 2009, Bma has six communities slated to open and expects to start an additional one six to seven properties, retention pace with a year-over-year capacity growth goal of at least 25 percent. The company, which at the start of this year operated 27 properties in Illinois, also plans to strengthen into other Midwestern states.
"Market rate residents who have more money have more choices and may not be choosing to move into assisted living because they are afraid of what's happening to their assets," Minton says. "Our residents are primarily poor, so it's not affecting them. We've not seen a decrease in occupancy."
This year could also be a good time to buy up land sites at cheap prices, positioning associates with the resources to build well for the next few years when economic conditions should improve, Monroe says. "Unless we have 25 percent unemployment rates, I'd love to be able to open properties in 2010-13," he adds. "You're not going to have competition, the request will be growing, and the duplicate kicker is that there will be a greater request for assisted living from people who deferred a move. people who are now considering Ccrcs will be arresting to assisted living."
The new year may also bring some good pricing opportunities for assisted living providers who wish to grow their portfolios straight through acquisition and have way to capital, Monroe says. Indeed, January 2009 already saw a renowned big deal as Sunwest administration sold off 45 senior living communities to a large undisclosed inexpressive equity buyer, which has contracted with Senior reserved supply Group to administrate 41 of the properties under the name LaVida Communities. The enterprise maintained its long-term No. 4 spot in 2009 but had a troubled year with about 30 minuscule liability associates affiliated with it filing for episode 11 bankruptcy, and President Jon Harder also resigned in January.
Well-financed small companies, with five to 10 properties, in particular, have a great opportunity to duplicate in size due to their capability to find the small number of capital needed for one-off acquisitions, Monroe says. But one big player to watch for acquisition operation in 2009 is Emeritus. The enterprise met all its 2008 goals last year to buy up leased assets formerly operated by Summerville Senior Living, with which it finalized a merger in 2008, as well as picked up leases to 11 properties formerly operated by Sunrise and owned by Hcp Inc. In a rare December deal, agreeing to Justin Hutchens, previous Emeritus Coo and senior vice president. While the enterprise will eye its spending closely due to the shaky economy and has slowed new development, it is well-positioned to grow next year in markets where request exceeds supply, Hutchens says.
Providers tempted to press the panic button would do well to remember that demographic trends ultimately favor senior living and assisted living in the long term, says Karen Shayne, Ceo of Nashville-based Maristone Senior Living and a veteran of more than a decade of feel in long-term care. The new enterprise has two properties under building and slated to open this summer and fall, but while Shayne foresees the year as "bumpy," she is not worried about filling units. In the metro Nashville market, she says she is "getting calls like crazy" from interested residents and is definite that within 18 months, senior housing "will explode again. There's an ebb and flow to every industry, but I think by far now with the baby boomers incoming and seniors becoming more sophisticated, if you have the right programs to present, they will come."
While Shayne does not want to grow Maristone too quickly, she says she will be without fail retention her eye out for deals this year.
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