Better Times Ahead for Struggling CCRCs?

There have been several stories in the news about continuing care retirement communities (CCRCs) landing in bankruptcy court to file for Chapter 11 protection and citing the economy as a reason for low censuses, but it’s possible the segment now has nowhere to go but up, the National Real Estate Investor reports.

Bankruptcies in the news include The Clare at Water Tower, in Chicago’s Gold Coast, which filed for bankruptcy last November. Then, St. Mary of the Woods, a CCRC in Ohio, followed suit, and just a couple weeks later, in December, the Clare Oaks community in Bartlett, Ill. also ended up in bankruptcy court.

“There are still real challenges for communities that were not filled prior to the recession, or that opened during the financial crisis,” said Dan Hermann, senior managing director and head of investment banking at Ziegler, a Chicago-based specialty investment bank for continuing care communities, in the NREI article.


The depth of the housing downturn caught developers and building operators by surprise. Seniors decided to stay put instead of selling their single-family homes and using the proceeds to move to a CCRC. Projects that had been years in the planning were shelved. Others struggled to sell units and meet debt obligations.

CCRC occupancies slipped during the downturn from about 94 percent to about 89 percent, Ziegler’s Hermann says. The firm’s research shows that only five continuing care communities opened in 2011, compared to an average of about 12 a year prior to the downturn.

Hermann figures that about a third of the CCRCs are performing well, another third are doing fair and the others are struggling. New campuses, single-site projects, and older communities without solid financial reserves are the ones most likely to be under stress.


However, there could be better times ahead, as seniors housing occupancies have been gradually but steadily improving, according to data from the National Investment Center for the Seniors Housing & Care Industry (NIC), while property managers continue to work on limiting expenses, according to NREI.

Projects are moving forward, with Ziegler helping to finance nine CCRCs since the downturn, says the article, and as real estate market conditions improve, competition for sites could heat up between non-profit and for-profit developers.

Read the full article here.

Written by Alyssa Gerace

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