The Biggest Opportunities, Threats for Nonprofit CCRCs

From a resurgence of the independent living product to expansion opportunities and a positive economic outlook, not-for-profit continuing care retirement communities (CCRCs) face an optimistic future.

In fact, optimism has increased significantly from years past, according to the latest annual benchmark survey produced by specialty investment bank Ziegler and Irving, Texas-based Greystone Communities.

The survey’s findings show that 75% of respondents — which comprised 20 nonprofit CCRC providers representing more than 75 communities nationwide — have a more optimistic outlook on the economy compared to last year, while the remaining respondents’ outlook was unchanged.


“The overall sense of optimism about the economy, the senior consumer and about the market for senior living is up substantially over prior years,” Greystone CEO John Spooner tells SHN. “It grew dramatically in the past 12 months. A lot of that has to do with the housing market, uncertainty being removed from the economy at large, and the senior living business booming on all fronts.”

And booming, it is. Merger and acquisition activity for the industry overall shattered records in 2014, reaching up to $387.4 billion in transactions. 

‘Critical Factors for Success’


For nonprofit CCRCs, one word can summarize the growth potential in the coming year and beyond: capital. 

“Capital and access to capital are the prime, critical factors for success of the not-for-profit senior living business,” Spooner says. “Interest rates are very low, the investor community that buys the bonds of senior living communities have ready cash and appetite, and their levels of confidence about the industry are good.”

For those interested in investing in a CCRC, the majority are drawn to moderately sized projects with project budgets under $100 million, targeted at the upper-middle market, according to the survey. 

When it comes to physical growth, nonprofit CCRCs are looking to expand their presence in many ways, as 85% are considering multiple growth initiatives, including expanding or redeveloping their existing campus, developing a new campus, or acquiring, partnering or merging with another entity.

‘Big Opportunity Exists’

However, the biggest opportunity for the segment lies in independent living, Spooner says. 

“Independent living is where the big enthusiasm and the big opportunity exists for not-for-profit providers, as the for-profits aren’t concentrating on the independent living side as much as they are the health care side,” he says.

For-profit providers are investing more in assisted living and memory support services, he says, leaving a window of opportunity available for the nonprofit CCRCs. 

Additionally, demand for independent living apartments is increasing as the housing market picks back up to pre-recession levels in many regions, and seniors begin to feel more confident about selling their homes and making plans for their future, Spooner says. 

According to the survey, 65% of respondents see real estate values in their markets experiencing moderate improvements over pre-recession levels, while 25% see values returning to those levels. 

“That’s what’s driving the re-engagement of independent living. The independent living consumer is now back,” he says. 

Threats Remain

Despite the optimistic outlook for nonprofit CCRCs, threats remain. The regulatory environment and reimbursement changes as well as competition from for-profits top survey respondents’ list of concerns.

“[For-profit providers are] coming. They move fast and they have a purpose, which is to fill quickly and openly sell as a real estate asset play,” Spooner says, noting that for-profits often compete on price when entering markets dominated by nonprofit providers. 

Additionally, single-site providers of all product types are finding it harder to compete with multi-site organizations that have scale — and resources — on their side, Spooner says. 

“It’s harder and harder every year for a stand-alone community to exist and compete. There are a number of, and will be more, single-site providers looking to affiliate with — loosely or through acquisition — other larger providers,” he says.

Written by Emily Study

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