Brookdale Senior Living (NYSE: BKD) on Wednesday reported weighted average occupancy of 73.5% for November 2021, marking nine consecutive months of growth.
November also was the first month of positive year-over-year growth for Brookdale’s weighted average occupancy since the Covid-19 pandemic began. Brentwood, Tennessee-based Brookdale is the nation’s largest senior living provider, with a portfolio of more than 680 communities across 41 states as of Sept. 30, 2021.
The company’s month-end occupancy did decline from 74.5% in October 2021 to 74.3% in November 2021. And, average occupancy growth has been slowing through the fall, with 50 basis points of monthly growth in September, 30 basis points in October and 20 basis points in November.
This deceleration is likely the result of typical seasonality, Stifel analysts wrote in a note issued Wednesday.
The analysts anticipate that fourth-quarter average occupancy will be 90 basis points higher than third-quarter average occupancy if December holds at its current level.
“This above-historical growth shows that senior housing recovery is still intact, and a respectable performance given all the noises around Covid and labor challenges,” they wrote.
The labor challenges have been intense across the industry, with worker shortages in some cases suppressing occupancy growth. In an effort to offset the financial fallout from these challenges, some providers are aggressively driving rate; and, several owners and operators have said that consumers are willing to pay at these higher price points.
Brookdale likely will implement mid to high single-digit rate growth, which will boost revenue per occupied room at the start of next year, the Stifel analysts wrote. The foresee 2022 being a positive inflection year for the company’s earnings.
Brookdale CEO Cindy Baier also has a bullish outlook on 2022.
“I think in the industry you’ll see occupancy growth, but I also think rate is going to grow,” she said on the company’s Q3 2021 earnings call last month. “I do expect strong RevPAR [revenue per available room] growth in 2022 — and I think it will be one of the best years in the industry’s history.”
As for “noises around Covid,” the analysts attribute recent declines in Brookdale’s stock price to fears over the omicron variant.
“While there is still much to be known about the new variant, we think the price action is market structure and sentiment driven and consider the selloff excessive compared to where fundamentals are moving,” they wrote.
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