Continuing Care Retirement Communities

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 3,800 continuing care retirement communities (CCRCs) in the US provide assisted living with on-site skilled nursing facilities, independent living, assisted living, and skilled nursing services either on campus or at nearby facilities. These facilities involve a contract each resident signs, entitling them to a continuum of care in exchange for payment of an entrance fee and ongoing monthly fees.

Sensitivity to Capital Markets

Difficulty in obtaining financing or in re-financing existing debt can force CCRCs to delay needed renovations, postpone planned expansions, or prevent them from breaking ground.

Demographic Trends Grow Demand

Since January 2011, baby boomers have been turning age 65 at a rate of 10,000 per day - and this will continue for 20 years.

Industry size & Structure

The average CCRC has about 123 employees and generates $10.8 million in annual revenue.

    • There are about 3,800 CCRC firms in the US operating 5,400 facilities with $41 billion in annual revenue and 468,000 employees.
    • About half of facilities are "true" CCRCs offering care from independent living through skilled nursing under a contract that guarantees a continuum of care in exchange for an entrance fee and ongoing monthly fees.
    • About half of "true" CCRCs are affiliated with faith-based organizations, such as Presbyterian, Lutheran, Methodist, or Catholic churches.
    • Companies that own and operate multiple communities include Life Care Services and Erickson Living.
    • CCRCs are located in a range of geographical areas from urban to suburban to rural.
                              Industry Forecast
                              Continuing Care Retirement Communities Industry Growth
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              May 18, 2024 - Moderate Sales Growth Expected
                              • Continuing care retirement community industry sales are forecast to grow at a 4.74% compounded annual rate from 2024 to 2028, faster than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc. Continuing care retirement community industry employment increased slightly during the first quarter of 2024 while average wages for nonsupervisory employees increased slightly during February before decreasing to January levels in March, according to the US Bureau of Labor Statistics.
                              • The minimum staffing rule that most nursing homes will be required to meet within the next three years will not affect credit ratings of continuing care retirement communities (CCRCs) according to Fitch Ratings. The rule will add to staffing pressures at continuing care retirement / life plan communities, but ratings will not be affected because although most CCRCs contain a skilled nursing component, they also include other service lines, such as independent living and assisted living, and can adjust the number of skilled nursing beds in service, according to Fitch. “Private-pay [independent living] units, which are a key driver of financial performance and generally comprise the largest number of units at Fitch-rated [life plan communities], are not subject to the proposed staffing requirements,” noted Gary Sokolow, Fitch director of US Public Finance, and Sarah Repucci, Fitch senior director of credit policy – research.
                              • Occupancy rates at private-pay senior-housing communities are nearing pre-pandemic levels, according to the National Investment Center for Seniors Housing & Care (NIC). The average occupancy rate was 85.1% in the 31 largest US markets in the fourth quarter of 2023, just 2 percentage points below the first quarter of 2020 but up significantly from the pandemic low point of 77.8% in the first half of 2021. Rent increases have outpaced inflation, according to the NIC, with independent living costing an average initial rate of $4,126 a month in December and the more intensive assisted-living units costing $6,422.
                              • There has been a 4% drop in the number of retirement communities in the US over the past five years, according to the Best States to Retire 2023 report from financial research firm Scholaroo. Texas, California, and Ohio — which have the highest number of retirement communities — showed an average drop of 2.6% in the number of retirement communities. Florida was the only one of the 10 states with the highest number of retirement communities to show growth, with an increase of 0.72%.
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