Just over two weeks ago, we were writing an article about our company’s experience at the Spring NIC Conference and our outlook for the upcoming year.  All indications for 2020 looked strong; our 1st quarter BOV numbers were high, investors were excited to do business, and the lending market was on par.  Less than a week after NIC, the realization of COVID-19’s presence within our nation became a reality and its impact quickly grew as the days progressed.

We are now facing an unprecedented time of uncertainty, with projections for normalization ranging anywhere from 6 weeks to 6 months.  Some believe that when things settle there will be a V-shaped economic rebound, and others suggest that this could be the beginning of a recession. On a national level, our government has taken some serious steps to slow the spread of the virus, flatten the bell curve, and not overwhelm our healthcare system. The effects of these actions are expected to be long felt. 

There is a major concern, specifically within our industry, about the impact this virus may have on residents.  Over the past week, operational challenges have been voiced by many facility owners regarding staffing, supply chain, and new admissions. Some groups have transitioned to virtual meeting rooms for conducting new resident interviews, which seemed to work well for them.

As brokers and consultants, our goal during this time is to stay informed and to pass that information along to our clients and colleagues. We are in regular contact with operators, lenders, and investors, and will continue to do so at an even greater level over these next few weeks and months. Our firm holds weekly, national, and local conference calls to discuss market conditions, and we are staying in regular contact with our National Seniors Housing Group to discuss what is happening within the industry.  As opposed to speculating and giving opinions about the unknown, we will be providing weekly updates on the changes within our industry, the state of our economy, and the direction of our country.

In relation to the investment world, most buying groups are still interested in looking at new opportunities and are engaged in the transactions they have been underwriting. Some have identified that they are taking a more conservative approach in qualifying the properties they are considering, but still desire to see new inventory. There have been select groups that feel there will be great opportunities on the acquisitions side once things normalize and are waiting to invest their equity at that point of the cycle.

Lenders appear engaged and optimistic in getting transactions done. There have been a few lending options that have dried up during this time, but for the most part, it is business as usual. Many groups feel this pandemic has an end in sight that will not extend beyond a standard deal cycle, but we anticipate and have seen extended due diligence periods for both borrows and lenders.

A popular topic of discussion has been what type of economic rebound we should expect.  Many conversations and projections to date have not taken into account the stimulus packages that has been initiated. We will discuss this in greater detail in one of our future updates.  

We wish you well,

The Knapp Group Team