We look forward to visiting with you at the upcoming LeadingAge Annual Conference in Boston. There is no doubt we are facing a period of significant change and a vast number of issues, questions and opportunities come to mind. We look forward to hearing and discussing what’s on your mind (and possibly keeping you awake at night).
So, to get the ball rolling, here are some issues that we think should be “front of the mind” as we confront this new and exciting future for senior housing.
- What will my market look like over the next decade? Are there new competitors going to be coming into your primary market? Is there enough demand to cover the increase in competition? What do we have to do in order to compete with the new providers and how do I finance the changes? How will a change in your financing impact your pricing model? Who do you ask to find out?
- What new services will we have to provide our market in order to remain competitive? Memory care, rehabilitation, and homecare all come to mind, but we are sure there are more. What will it cost to retrofit our property to be able to provide these new services and how should you finance these costs? Who do you ask to find out?
- When are interest rates going to rise? We think that this question is being asked over all business sectors in our economy. We know that this will happen, but when and by how much? You also need to know how this will impact my current debt structure. Is your debt structure flexible enough to respond to the next decade? Who do you ask to find out?
- Will there be changes in how entrance fee contracts are structured? The CCRC universe has seen a number of bankruptcies over the last couple of years. In all of the bankruptcies, a resolution to the matter was complicated as the result of a large percentage of high refund resident contracts. As a result, a couple of states have at least taken a look at the regulatory protections for this contract type. What is the risk related to your entrance fee refund type? Are there any reasonable protection measures you should take to reduce the risks? How will the capital markets respond to this new scrutiny of entrance fee contracts? Who do you ask to find out?
- Should you engage an independent financial advisor? It will come as no surprise that we think that the answer to this question is a resounding yes. If you are faced with any of the issues outline above, you will be better prepared to develop an appropriate plan if you are supported by an independent financial advisor. The ability to anticipate change and to act in a rapid as well as responsible manner will be important in reaching success. The capital markets available to senior housing providers has changed dramatically over the past decade and you need to have a skilled financial advisor who is only looking out for your interests. We would like to serve you in that capacity.
