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Continuing care retirement communities

A good choice for residents and investors

Created date

June 19th, 2012

With the economy on the mend, Americans are trying to make sense out of where things stand as we move toward financial recovery in 2012. Though few sectors of the U.S. market system went unscathed in what economists have dubbed the Great Recession, some areas have managed to weather the storm better than others among them are the nation s continuing care retirement communities (CCRCs). Offering a blend of independent living and health care amenities, CCRCs provide their residents the benefits of an active, stress-free lifestyle combined with the availability of medical resources if necessary. Industry experts say this feature is largely responsible for the consistent performance of CCRCs during the late recession. Overall, continuing care retirement communities have for the longest time, and still do, run higher occupancy rates than other forms of senior housing, says Michael Hargrave, vice president of the National Investment Center for the Seniors Housing & Care Industry. In fact, the industry-wide average occupancy rate is currently at 88%; Erickson Living, a leader in senior housing, has an even higher occupancy rate of 94%. CCRCs can sustain higher long-term average occupancy rates as opposed to other forms of senior housing because there s a substantial group of people out there who prefer the CCRC model, says Hargrave. If they need medical or specialized care down the road, they can access those services on the same campus.

Expected demand, growth

Based on population projections, the demand for this model of living will grow exponentially in the coming years. Some estimates predict that upwards of 10,000 baby boomers will turn 65 each day in 2012 one of several factors that make CCRCs attractive to investors. From an investor perspective, senior living outperforms other residential markets, says Adam Kane, senior vice president of corporate affairs at Erickson Living. It s more stable than apartments in terms of occupancy and it generates positive returns for investors. We re dealing with premium customers he adds, people who have good credit, sources of income that include pensions and social security, and little to no debt. This is very desirable to investors. Industry studies suggest the same thing. According to the Irving Levin Associates, Inc., Senior Care Acquisition Report, for instance, the number of publicly announced transactions in the senior housing and care market increased by over 50% in 2011 alone a positive trend not only for investors but customers as well. When people are shopping, they re searching for facilities with strong financial underpinnings, including many in the Erickson Living portfolio, which have no debt and are operated by a management company that has no debt, says Kane. That gives the company the flexibility it needs to make prudent decisions and invest strategically in the development of the communities, which, in turn, benefits both current and future residents.