If census has indeed bottomed in the senior care industry, investors may still want to wait for several months of sustained growth before buying again.
Although “consensus” on anything is dangerous to rely on, it does seem that either we have hit that bottom of the occupancy plunge, and if not, we are very close to it.
After a year of turmoil and uncertainty, a rising national occupancy level for seniors housing will be quite a relief. What we are hearing is that some lenders want to see at least three months of consistent, increasing census for their new loans, and we suspect some buyers will want to see that as well.
I guess you could say they want to see it before they will believe it. Makes sense. But that has played a part in slowing down the M&A market, even after a big surge in December, with a record number of transactions.
But on the other side, sellers may also want to be able to show a three-month trend of rising census in order to get that price in their mind. While these early occupancy improvements will show that the bleeding has stopped, it will not predict how quickly census will rise, and how much of the increase was influenced by price discounting.
The result is a bit of a stalemate in the market for some deals, but not all. Meeting face to face will begin to ease the logjam as well.
