Bloomberg: 36 Senior Living Muni Debt Issues Fell Into Default Last Year

Three-dozen municipal debt issues for senior living communities fell into default in 2020, and five more borrowers have failed to make payments this year.

That’s according to an analysis published last week by Bloomberg. A previous analysis, done by Municipal Market Analytics in Aug. 2020, showed 23 retirement communities had reported first-time defaults on municipal bonds as of that date. The previous high was 22 defaults in a single year, recorded in 2016.

Much of the distress is due to the Covid-19 pandemic, which has driven up expenses for labor, protective equipment and other needs, while eroding occupancy and revenue.


The senior living communities that have missed payments this year are located in Georgia, New York, New Hampshire and Illinois, Bloomberg reported.

Despite these pandemic-driven defaults, nonprofit life plan communities or continuing care retirement communities (CCRCs) — which are active in the muni market — have held up better than other segments of the senior living industry.

In Q42020, life plan community occupancy dipped to 85.7%, which was a historical low for the product type, according to data from the National Investment Center for Seniors Housing & Care (NIC). However, that occupancy rate beat the overall Q4 senior living occupancy rate, which sat at 80.7%.


And, not-for-profit life plan communities had a higher average occupancy (87.3%) than for-profits (81.2%).

This relative stability in occupancy, combined with factors such as the strong housing market, contributed to Fitch Rating’s stable outlook for life plan communities in 2021.

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