Originally appearing in ABL Advisor, December 10, 2020
As part of a continuing conversation on the topic, key thought leaders at Monticello discuss how they expect the continuing issues brought on by the coronavirus will impact the skilled nursing sector.
The business of skilled nursing is highly complex due to the varied government payor sources, regulations, and most importantly, the patients’ individual medical needs. While demand for the product may be there on a macro scale, picking the right borrowers and operators requires a deep understanding of how these assets operate, which becomes even more apparent during a pandemic.
“When times are good, people come out to the periphery where Monticello is because they think they can make a quick profit, but now they’re getting lost in the complexities of skilled nursing,” said Thomas Lally, co-founder of Monticello.
Alan Litt, co-founder of Monticello, shared that based on his recent experience, “Monticello’s thesis is that we’re going to see a large number of investors and lenders leaving the skilled nursing space. It’s too scary for people who don’t have the discipline.”
Matthew Downs went on to explain Monticello’s bullish stance on skilled nursing from his alternate perspective as the Managing Director for commercial real estate at Monticello. “Skilled nursing has barriers to entry. There are finite owner-operators that know what they are doing in upturns and downturns. In CRE, everyone thinks they’re a developer, but that’s just not the case.”
Mr. Litt and Mr. Lally shared that in talking to operators, they have found that COVID-19 has presented unique problems in getting adequate staffing and finding the right occupancy levels in a building to prevent further outbreaks. On the expense side, they are seeing increased nursing and maintenance expenses from operators quarantining patients and increasing cleaning and disinfecting initiatives to prevent future outbreaks. They’re also seeing added payroll expenses for increased sick pay for staff that has contracted COVID-19 or increased rates paid to nurses to compete with hospitals that are vying for the same limited number of nurses in an area. On the revenue side, facilities that were once at near full capacity are trying to keep occupancy low in order to provide space for quarantine wings and to allow for more private rooms.
Read the full article at ABLadvisor.com ››
About MONTICELLOAM
Monticello offers floating rate bridge loans, 5, 7 and 10-year fixed rate loans, as well as working capital lines of credit. Monticello provides financing for healthcare facilities and commercial real estate throughout the U.S. The firm was founded in October 2014 by Alan Litt, Thomas Lally and Jonathan Litt, who each have over 35 years of industry experience as lenders, investors, developers and owner operators.
