Stronger Employment Report : October Jobs Up By 531,000

The Labor Department reported that nonfarm payrolls rose by 531,000 in October 2021. The consensus had been for an increase of 312,000. This was an acceleration from September when jobs grew by an upwardly revised 312,000 (originally reported as 194,000) and from August when jobs increased by 483,000, up from 366,000 as originally reported.

The Labor Department reported that nonfarm payrolls rose by 531,000 in October 2021. The consensus had been for an increase of 312,000. This was an acceleration from September when jobs grew by an upwardly revised 312,000 (originally reported as 194,000) and from August when jobs increased by 483,000, up from 366,000 as originally reported. Through October, the year-to-date monthly average job gain has been 582,000. Nonfarm payrolls have now increased by 18.2 million since its pandemic trough in April 2020 but are still down by 4.2 million or 2.8% from their pre-pandemic level in February 2020.  

Separately and from a different survey, the Labor Department reported that the supply of labor as measured by the labor force rose by a muted 104,000 in October, well short of population growth. With the household measure of employment rising by 359,000, the jobless rate fell to 4.6% from 4.8% in September. The labor force is 3.0 million below the February 2020 level. Many had speculated that the labor force would increase since enhanced unemployment benefits had largely expired, and schools largely reopened. The jobless rate is now 1.1 percentage points above the pre-pandemic level of 3.5% seen in February 2020, but well below the 14.7% peak seen in April 2020.

The underemployment rate or the U-6 jobless rate was 8.3% down from 8.5% in September 2021. This figure includes those who have quit looking for a job because they are discouraged about their prospects and people working part-time but desiring a full work week.  

The data show that the U.S. recovery from the pandemic continues. The COVID-19 Delta variant likely weighed on the economy in August and September as lower job numbers suggested. Employment in the leisure and hospitality industry increased by 164,000 in October and has risen by 2.5 million thus far in 2021, but it is still down by 1.4 million or 8.2% from February 2020.

Health care added 37,000 jobs in October with most of the gain occurring in home health care services (up 16,000) and nursing care facilities (up 12,000). Employment in the broad health care sector is down by 460,000 since February 2020.  

Today’s report is important as the Federal Reserve wants to see “substantial progress” in the economy as it shifts monetary policy and notably today’s report is important because it gives the Fed a gauge on the path of wage growth and inflation.  

Indeed, average hourly earnings for all employees on private nonfarm payrolls rose by $0.11 in October to $30.96, a gain of 4.9% from a year earlier, the strongest year-over-year gain February 2021. With the mix of job gains in October skewed towards low-wage workers, the 4.9% gain may be understating wage growth. The data suggests that rising demand for labor associated with the recovery from the pandemic is putting upward pressure on wages.  

Soon after their Federal Open Market Committee meeting (FOMC) in Washington D.C. this week, the Fed announced that they are ready to shift gears and are relaxing their aggressive bond buying program, a necessary precursor to allow the Fed to increase interest rates more freely when and if they view inflation as too serious a threat to stable economic growth. Moving too fast on an interest rate increase could crush the path of economic growth and moving too slowly could cause inflation to become embedded in the economy. Such a discussion has not been the focus of policy makers and pundits for more than 30 years.  

SBA Offers Financing Options:  A Conversation with Alex Cohen of Liberty SBF

NIC Chief Economist Beth Mace discussed the SBA program and financing options with Alex Cohen, CEO, Liberty SBF. Here is a recap of their conversation.

Senior living providers and investors are familiar with the financing options from Fannie Mae, Freddie Mac, and HUD. Less well known are the government-subsidized loan programs for healthcare facilities through the U.S. Small Business Administration (SBA). Liberty SBF is a specialty finance company that offers SBA, conventional and bridge loans.  

NIC Chief Economist Beth Mace recently discussed the SBA program and other financing options with Alex Cohen, CEO at Liberty SBF.  Here is a recap of their conversation.  

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Mace: Can you tell our readership about Liberty SBF? 

Cohen: We launched the firm in 2011 and have been lending through several business cycles. We work with a lot of businesses that are buying or refinancing real estate for their companies, or what we call owner-user commercial real estate finance. We have closed more than $2 billion in commercial real estate loans. One of the eligible asset classes is healthcare, including skilled nursing, assisted living and memory care. When we first launched the firm, we were co-lending with the SBA and financed a decent number of assisted living and skilled nursing facilities and that’s how we were introduced to the asset class. We now have a full range of loan products for healthcare facilities and medical practice owners. 

Mace: What distinguishes Liberty SBF from other lenders? You are a non-bank lender. What does that mean? 

Cohen: We are a specialty finance company, a non-depository lender. We do not finance our operations through deposits. We have private equity and institutional investors who invest in our assets, but we are not a bank. That gives us some flexibility in terms of the deals we can underwrite. It allows us to operate in an area of the credit space where banks might not feel comfortable during choppy times. Certainly, the last 18 months have been choppy considering COVID-19, but we have continued to lend in the healthcare space. Compared to other specialty finance companies, we tend to provide loans for assets in the $2 million-$20 million range. We are focused on lower middle market or small balance commercial loans.  

Mace:  Is your cost of borrowing higher or lower for a borrower than that of a conventional bank? 

Cohen:  We offer some very attractive rate products. The way we finance these products is very efficient. On the permanent financing side, we can offer very attractive high-leverage, low-cost products. Some of our larger permanent financing deals are being priced in the high 2%-3% with up to 80%-85% leverage. That’s very attractive financing for these healthcare facilities which are an eligible asset class for government subsidized or quasi-subsidized programs. We tend to work with the SBA. Some of its offerings beat comparable offerings from HUD, Fannie Mae, and Freddie Mac. The SBA programs aren’t as well known in the sector. We are trying to educate the healthcare facility owner community about other financing options available for ground-up construction, transitional type business plans for existing assets, or permanent financing for stabilized properties.  

Mace: What types of loans do you provide? 

Cohen:  We offer SBA, conventional, and bridge loans for healthcare facilities. One of the most attractive loan products we offer is the SBA 504 loan. Facility owners can get up to 85% loan-to-cost financing through the SBA with Liberty SBF as the co-lender. The loan can be used for ground-up construction, for example, and the borrower can secure up to the total cost of financing. It is a recourse loan. The way the program works, we partner with a Certified Development Company (CDC). A CDC is a nonprofit organization that promotes economic development within its community through 504 loans. CDCs are certified and regulated by the SBA, and work with the SBA and participating lenders, such as Liberty SBF, to provide financing to small businesses. The CDCs underwrite the loans with us and submit it to the SBA. When the loan is authorized, we fund the entire project. The SBA takes us out either at completion of construction, or shortly after the loan closes.  

Mace: Is the process similar to the way Fannie Mae and Freddie Mac partner with Delegated Underwriting and Servicing (DUS) lenders? 

Cohen:  Each government program works a little differently. There are many CDCs, and we work with the largest ones. CDCs also work with other state and local subsidy programs. The CDCs are typically well versed on healthcare facilities. We manage the process, not the borrower, so it’s pretty seamless. And because we’re specialists, we can get these deals done in 45-60 days, whereas a large bank lender may take 90-120 days to close.

Mace: When you say healthcare facilities, can you define the types of assets? 

Cohen: The types of assets we finance are assisted living, skilled nursing, memory care, and rehab facilities. The assets typically have a higher acuity of care. We also finance medical office buildings, which are eligible under the SBA program. Active adult and independent living properties would be considered investment real estate from our perspective. We do offer bridge lending on multi-family properties, including some age-restricted senior housing.  

Mace: Do you offer conventional and bridge financing?  

Cohen: Yes, we offer conventional and bridge financing. Our leverage is not as high with those products. But our borrowers can obtain permanent financing through our conventional offerings.  

Mace: Do you finance the operations/cash flow part of the senior housing business or just the real estate? 

Cohen: We only finance the real estate.  

Mace: Were you active lenders during the pandemic?   

Cohen: We were very lucky. We were designated as a Paycheck Protection Program (PPP) lender. We made PPP loans to a lot of companies in our servicing portfolios as well as to new businesses. We financed close to $200 million in healthcare-related businesses and financed about $1 billion in total for all types of companies. We were able to help healthcare borrowers, including our own existing borrowers, to weather the storm. Our bridge loan business has been active, helping owners refinance their facilities at a lower leverage point. The PPP program was successful and popular with borrowers. Now, we are working through the PPP forgiveness process with our borrowers and new customers. They must demonstrate the funds were used for legitimate operating expenses. And at that point, the loan becomes a grant that is tax free income for the business. Facility owners, particularly smaller, closely held healthcare facility owners, should keep in mind that the SBA was chosen as the vehicle through which the government provided stimulus to the entire business community, not just small businesses. The SBA has provided loan and fee deferments, and some rules have been changed. For example, borrowers can refinance SBA and HUD debt into an SBA 504 loan, an option that was not available before. It can be an opportunity for borrowers to pull cash out and lower the interest rate. Also, the government continues to provide other subsidies to healthcare facility providers, through programs such as the Provider Relief Fund. We have a great originations team, and we can be helpful if anyone has questions on the programs.   

Mace: How large is Liberty SBF’s book of business for senior housing?   

Cohen: Our servicing portfolio is several billion dollars. Our goal, as we transition from PPP to core lending, is to deploy about $100 million-$150 million between now and the end of the year. We have a number of healthcare transactions in the pipeline. There is a lot of interest from borrowers who believe we are at or near the bottom of the rate cycle and want to take advantage of the low-cost financing.  

Mace: Has your bridge lending program been especially active during the pandemic? Why is that? 

Cohen:  Yes, our bridge lending program has been active. Borrowers with loans at maturity on their existing conventional debt or with an underperforming asset are taking advantage of bridge financing to reposition the facility. Or perhaps a buyer making an acquisition needs a bridge loan to execute a business plan to improve the census or put CapEx into the building to stabilize the property to get permanent financing or sell the asset.  

Mace: Do you offer non-recourse bridge loans? 

Cohen:  We do offer non-recourse bridge loans. They are typically larger in size than recourse loans. Non-recourse bridge loans range from about $5 million to $15 million, with about 65% loan-to-value.   

Mace: Broadly, what do you look for in a borrower?  

Cohen: Operating experience is key. What is their operating experience for these types of facilities and sizes? Do they understand the market? Are they in town? We look at the borrower’s net worth and liquidity relative to the loan amount we are making. We focus on the recourse guarantors—ultimately the owners of the business—and the non-recourse carve out guarantors.   

Mace:  Do you often turn anyone down? 

Cohen:  We look at deals all day long. We are focused on originating deals that fit our credit box. We offer a large swath of products to the industry and can cater to different borrower profiles. Certain situations are not financeable for us and those are deals we cannot move forward with.  

Mace:  Where do you get your lending ability from? Institutional groups? High net-worth individuals?  

Cohen: Our limited partners are primarily family offices. We have a well-capitalized operating company. The decision makers at our company are principals and managers. We were successful with the PPP program, and we are deploying that capital back into the market through our core programs with our limited partners and other institutional investors. They are very aggressively seeking investment opportunities at this point. We feel good about our capital position and our ability to lend.  

Mace: What else would you like to share with our readership? 

Cohen: I’m looking forward to the NIC Fall Conference in Houston. If anyone would like to set up a meeting during the Conference, please contact us. 

 

 

5 Key Takeaways from NIC  MAP 3rd Quarter 2021 Seniors Housing Webinar

NIC MAP Vision clients, with access to NIC MAP® Data, attended a webinar in mid-October on key seniors housing data trends during the 3rd quarter of 2021.

Seniors Housing Market Fundamentals Show Improvement in Demand.

NIC MAP Vision clients, with access to NIC MAP® data, attended a webinar in mid-October on key seniors housing data trends during the third quarter of 2021. Findings were presented by the NIC Analytics research team. Key takeaways included the following: 

Takeaway #1: Record High Demand in 3Q 2021  

  • Demand, as measured by the change in occupied inventory or net absorption, rebounded in the third quarter of 2021, increasing by 12,318 units in the Primary Markets, the strongest unit increase since NIC MAP Vision began reporting the data in 2005. Prior to the third quarter, the strongest quarterly increase occurred in the third quarter of 2019 (5,242 units). Combined with the second quarter (3,364 units), net absorption has increased by 15,682 units.  
  • Notably, this is a clear reversal from the loss of 42,344 units during the pandemic in the second, third, and fourth quarters of 2020 and the first quarter of 2021.   
  • As a result of greater net absorption, the total number of occupied units were close to its year-earlier level in the third quarter of 2020. 

Takeaway #2: Occupancy Increased for Both Independent Living and Assisted Living in 3Q 2021 

  • Assisted living occupancy increased to 76.9% in the third quarter, up from its pandemic low of 75.4% in the first quarter of 2021, but still below its pre-pandemic level of 85.0% in the first quarter of 2020. Independent living occupancy increased to 83.2%, up from its pandemic low of 81.8%in the first quarter of 2021 but still below its pre-pandemic level of 89.7%. 

Takeaway #3: Not-for-Profits Continued to Have Higher Occupancy Rates 

  • Not-for-profit properties consistently have higher occupancy rates than for-profits and this remained the case during the pandemic. Part of the explanation for this is that the not-for-profits often include Continuing Care Retirement Communities (CCRCs) or Life Planning Communities (LPCs) and CCRCs tend to attract residents that are younger and less frail and who typically reside in independent living often creating a longer length of stay. CCRCs also may have had more ability to segregate vulnerable populations than smaller properties. 
  • From pre-pandemic occupancy to the low point in 1Q 2021, the occupancy rate for the for-profits fell 9.7 percentage points, a full 3.2 percentage points more than the not-for-profits. And at 86.4%, the occupancy rate for the not-for-profits was 9.1 percentage points higher than for the for-profit cohort of properties (77.4%). 

Takeaway #4: All Primary Markets Occupancy Rates Up from Record Lows  

  • The chart below provides perspective on recovery patterns from the pandemic low by metropolitan market. The yellow dot shows the seniors housing occupancy rate in 3Q 2021, and the top of the green bar shows the 1Q 2021 occupancy rate and the bottom of the green bar shows the 1Q 2021 low point.   
  • All markets are above their low occupancy levels. The market with the highest 3rd quarter occupancy rate was San Jose at 85.9%, followed by San Francisco, Portland, New York, and Boston. And the lowest occupied markets were Houston at 74.8%, Cleveland, Atlanta, and Miami.  There is an 11.1 percentage point wide gap between the best and worst performing markets.   
  • Regarding improvements from their respective low points, Riverside and Denver both saw a better than 3 percentage point increase in occupancy, followed by Minneapolis, Dallas, and San Jose. The smallest improvement occurred in Chicago, Seattle, and Philadelphia. 
  • For perspective, the Primary Market occupancy rate was 80.1% and it saw a 1.4 percentage point improvement. 

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Key Takeaway #5:  Where Has Inventory Growth Occurred Since 3Q 2020? 

  • This map shows inventory growth by market for 99 markets which include the NIC MAP Primary 31 and Secondary 68 markets. The size of the circle shows the level of activity, while the color of the circle shows inventory growth relative to the size of inventory one year ago.   
  • The largest increase in inventory from year-earlier levels as of the third quarter of 2021 occurred in New York, followed by Washington, D.C., Atlanta, Phoenix, Minneapolis, and Philadelphia, all with more than 1,000 units coming online. 

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Interested in learning more? 

  • While the full key takeaways presentation is only available to NIC MAP clients with access to NIC MAP data, you can access the abridged version of the 3Q21 Data Release Webinar & Discussion featuring my exclusive commentary below. 

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  • To learn more about NIC MAP data, powered by NIC MAP Vision, an affiliate of NIC, and accessing the data featured in this article, schedule a meeting with a product expert today. 

COVID-19 Discussions with Senior Housing and Care Operators

Topics include workflow changes, testing strategies, PPE access, dementia care challenges, addressing loneliness and social isolation, and vaccines. 

In March and April of 2021, researchers from the National Investment Center for Seniors Housing and Care (NIC) and the nonpartisan and objective research organization, NORC at the University of Chicago (NORC). spoke with a dozen senior housing and care operators about their experiences, challenges, and successes throughout the COVID-19 public health emergency during 2020. Discussion topics included workflow changes implemented in response to various state and federal requirements, testing strategies employed, PPE access, challenges with dementia care residents, interventions to address loneliness and social isolation, and efforts to vaccinate residents and staff.

“The collaboration and creativity between departments and team members was probably the silver lining of all of this. It knocked down a lot of silos.”

These qualitative interviews come from senior housing and care operators located in Colorado, Connecticut, Florida, Georgia, and Pennsylvania. Operators ranged in size from just a few properties to several hundred and included both for-profit and not-for profit status, freestanding and mixed-use properties, and Continuing Care Retirement Communities (CCRCs), aka Life Plan Communities. These interviews supported the quantitative analysis on COVID-19 mortality rates by care setting and allowed the research teams to better understand the context of the COVID-19 death data as well as the challenges they faced throughout the various stages of the COVID-19 pandemic and associated public health emergency.

 

The predominant theme from the interviews is that senior housing and care operators were incredibly agile and dedicated through the pandemic and worked 24/7 to keep residents safe while continuing to compassionately care for residents. NIC has published a selection of stories and quotes from our series of interviews to highlight the efforts that operators have successfully made to protect, safeguard, and maintain engagement with their residents and staff. Read the full white paper.

Last Chance to Register for the 2021 NIC Fall Conference

A week from today, thousands of leaders in senior housing and care will convene in person for three days of networking, deal-making, and strategic insight.

A week from today, thousands of leaders in senior housing and care will convene, in person, for three days of networking, deal-making, and strategic insight. For many, the 2021 NIC Fall Conference is the most important event of the year, particularly during a time of disruption which is presenting significant challenges – and major opportunities. Most are likely looking forward to meeting friends, old and new, in person, and to being able to return to a sense of normalcy.

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Veterans of previous NIC conferences will notice some changes from past events, but will nonetheless enjoy all of the business benefits, and perks, that they have come to expect from this highly anticipated event. NIC, working closely with event health and safety leader, SafeExpo, as well as in close coordination with the management and staff of the Marriott Marquis Houston, has designed the event both to be as safe as possible, and as rewarding as ever. 

No Onsite Registration 

Due to safety requirements, NIC is closing registration this Thursday, October 28th, and will not offer onsite registration. It’s not too late to sign up and upload proof of vaccination – but procrastinators (you know who you are) must register now. See here for details. 

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Safety 

Safety has dictated many decisions, including the requirement that every attendee and all NIC staff provide proof of vaccination. Numerous innovations, such as the all-day self-service NIC Café, advance mailing of credentials and PPE kits, spreading out the educational program, indoor and outdoor remote live-streaming areas, and onsite health resources, will help improve safety. NIC is even providing social distancing comfort-level buttons, so attendees can convey whether they prefer elbow bumps, hugs, or no physical contact. Masks will be strongly encouraged when attendees are not drinking or dining. 

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Networking 

Whether meeting in hallways, educational sessions, scheduled events and meetings, or in the elevator, attendees will be ready to explore new relationships and opportunities, and to share their experiences and insights with one another. NIC has spread meeting points throughout the entire Marriott Marquis Houston, scheduled organized networking events, and provided two spacious designated networking lounges, to enable the kind of face-to-face interactions that all of us have missed so much. The NIC App provides tools for messaging, scheduling meetings, finding resources, and much more. 

First-Time Attendees 

First-time attendees have access to activities and resources specifically geared to help them successfully navigate the conference, including an orientation webinar, a First-time Attendee Gathering, and morning meet-ups. The special gathering, scheduled from 1-2PM Monday in the Level 6 Outdoor Event Pavilion, is both a chance to meet NIC leadership for tips and tools – and a great networking event. The morning meet-ups offer another chance to meet fellow first-timers, Tuesday and Wednesday, 8-8:30AM, in the Level 4 Texas Ballroom Foyer. 

Insights 

Over 50 thought leaders and experts will share their insights and their (sometimes-differing) perspectives in a ten-session educational program designed for timeliness, relevance, and impact. These include Nobel prize-winning economist Paul Krugman and former Secretary of the U.S. Treasury Lawrence H. Summers, who will be discussing macroeconomic and capital market trends. Every session is designed to help attendees understand the latest trends, digest the latest data, and hear from the nation’s most highly regarded experts and leaders on the issues facing senior housing and care today—and the solutions of the near future.  

Because sessions are non-concurrent this year, attendees will have the opportunity to attend every session, without having to choose between two or three. They may also opt to view sessions from comfortable and spacious remote live-streaming areas. 

Focus Areas 

Whether attendees are focused on financing or operations, the conference program offers relevant and expert insights into current market trends and innovations, as well as the disruptions facing the sector. Sessions are organized into two tracks; Managing Margins (MM), providing insights into operational strategies, property operations and management, and Realizing Returns (RR), for insights into capital markets, property investments and capital flow. 

Pampering 

NIC attendees love to take advantage of the many attendee resources NIC provides for their comfort, safety, and a bit of pampering. Attendees this year can swing by the LinkedIn corner to get professional help updating their online profiles, for example. They may also enjoy a casual chat over gourmet coffee, get a new headshot, or take their networking out on the town with evening car service – and find dessert waiting upon their return. If they need to take a call or get some work done, NIC has provided individual private workspaces. And if attendees have a question, need a mask, or even forgot their toothbrush, there’s a concierge desk on every level.  

Know-Before-You-Go 

NIC is providing attendees with resources to get the most out of the event, even before they board a flight to Houston. The NIC app is an essential tool, both for preparation and for optimizing conference resources on site. Registrants can access the attendee list ahead of time, download the program, plan their schedules, message each other, post on the social wall, and much more. The app is easy to find and download; just search for “NIC Conference” on the iTunes App Store or Google Play.  

NIC provides first-time registrants with the ‘First-time Attendee Webinar,’ offering tips and insights on preparing for the conference. This year, NIC is sending registrants a special package containing their conference credential, along with a PPE kit, and even a NIC lapel pin, designed to help attendees identify and connect with each other as they travel to and from Houston. Later registrants can pick up their credential onsite. 

Don’t Miss the Most Important In-Person Event of the Year 

Since its founding 30 years ago, NIC has been convening industry leaders to share thought-leadership, connect with capital, improve transparency, and bring transformative innovation into the marketplace. Over time, these efforts have proven an effective means to advance NIC’s mission of enabling access and choice for America’s elders, while simultaneously helping industry leaders find pathways to success. For both of these reasons, NIC is pleased to be able to convene so many, even during this time of disruption, and to be able to present so much opportunity, as we all look forward to a bright future.