Penny Pritzker, founder and chair of Classic Residence by Hyatt, and a member of President Obama's Economic Recovery Advisory Board (as well as being his campaign's former finance chair), gave Thursday's opening keynote address at the 19th Annual NIC Conference in Chicago. More than 1,600 economically weary but still hopeful attendees listened attentively to a straight-forward assessment of the state of seniors housing.
"We've definitely been hurt, but on a whole our industry has held up better than many other asset classes," Pritzker said. This was after reciting a conclusive rundown of the body blows experienced by seniors housing. One such example was that the industry is trending to receive just $600 million in loans from Fannie Mae this year. Compare that to 2007 when $5.9 billion was handed out. Talk about 'hurt.'
But there was some good news to be discussed, such as the roughly $2 billion to $2.5 billion in equity raised in 2009 thanks to a few successful long-term care providers. Also, Pritzker said she is convinced senior living will remain a relevant, demanded business in the United States for two reasons: An aging population--estimated to reach around 71 million prospective customers in the near future--favors the industry. Also, the country has become a nation of two-income families, and as parents age, it will be "difficult if not impossible for their children to care for them," Pritzker said.
Three steps for future success
Not satisfied with merely explaining what has gone wrong during the financial crisis, Pritzker ended her keynote with what she says are three necessary improvements the industry must make to achieve long-term triumphs:
First: Senior living companies need to de-lever and raise equity in order to become attractive to investors.
Second: Like thriving retailers that focus on bang-for-buck instead of luxury, providers must understand that to consumers, "value is the new must-have." Third: To reinvent the country's view of long-term care, the entire industry has to embrace and enhance quality of care, for it is first "a people business."