September 18, 2019, Steve Monroe, SeniorCare Investor - The record crowd of 3,300 attendees were mostly positive about the market despite the headwinds. After spending four days last week in Chicago with my 3,300 best friends, my one big takeaway is the continued positivity that brought a record crowd to NIC. Not everyone was positive, but more capital keeps coming into the sector for a reason, even though returns have softened.
One topic that kept on coming up was that new development is beginning to slow. But what many people forget is that a national statistic has little meaning for a particular market. Some areas are slowing down because they got way overbuilt, but others keep on chugging along, like Sarasota, Florida, despite the current occupancy and fill-up woes. In other words, senior living is local, but it always has been.
While NIC has been pushing “affordability” in the sector, especially with its “Forgotten Middle” market study, we did not hear many people talking about expanding into it, other than moving into the Active Adult market, which in some ways, especially with their lower monthly rates, can serve some of the forgotten middle. But there were definitely differing opinions on where the Active Adult market was heading.
On the SNF side, everyone was talking about the new PDPM reimbursement for Medicare, and how it would be a net positive. But not many capital providers really understand it beyond what their customers tell them. The bottom line is that the providers will figure it out, as they always do.
One common comment was that there had to be a record number of lenders at NIC this year. While probably true, it still is a relationship business. Few people are expecting values to decline, but even with them high, many people remain nervous about developing as an alternative to buying as construction costs continue to be high. That said, everyone seems to know what they want to do and how they are going to do it. And there is no shortage of capital to let them do it.