After struggling in the first quarter, which historically has been the industry norm, Brookdale Senior Living posted an increase of 40 basis points in weighted average occupancy in May (compared with up by 70 basis points in May 2022), and 50 basis points for month-end occupancy (compared with up by 90 basis points in month-end 2022). That is the good news. The bad news is that weighted average occupancy in May was still just 76.6%, the same as in January.
So far, weighted average occupancy has increased by 50 basis points in the second quarter (two months). This compares with an increase of 100 basis points in the first two months of the second quarter of 2022, and 160 basis points for the full second quarter 2022. The company needs a strong June performance like it had in 2022 when census jumped by 60 basis points, followed by a total increase of 170 basis points in the third quarter. For the industry, the third quarter has historically been the strongest of the year. This year should follow the past.
There is little reason for Brookdale’s census not to continue on its upward run. Month-end occupancy in May was 190 basis points away from hitting the symbolic 80% level. They will need to move beyond that to start being profitable, and the record low level of new construction starts may just help them with that. As we have mentioned before, the company has many communities with 90% and 95% occupancy; it is the laggards below 70% that keep the average for the total company down, and we do not see a way out for these poor performers.
