Last we predicted that 2015 would be another very solid year for all areas of Senior Living. Expecting another solid year, we were not disappointed. All facets of Seniors Housing continue to show positive indicators. In fact, over the past decade we have seen investing in these property types go from the fringes to much more mainstream. It has not gone unnoticed that the senior living business has shown considerable resilience in good times and in bad. And fundamentals continue to show strength in all facets. Best in class properties in primary markets have done exceedingly well producing solid returns as well as good appreciation. Despite a recent uptick in new development, especially in Memory Care units and properties, overall new development has been generally limited since the Great Recession. Continued strong demand is being driven by an aging population of Boomers, a much healthier residential housing market, and the attractive spread between borrowing rates and Capitalization rates…all of which leads us to being very confident of continued strong demand going into 2016 and beyond.
Chart courtesy of HEALTHTRUST Seniors Housing & Healthcare Real Estate Advisory Services
EBITDAR-What is it?
This is earnings before interest, taxes, depreciation, amortization and rent associated with your business. It is often used for the valuation of properties through a market Cap rate (EBITDAR divided by price).
OTHER TRENDS
- We expect to continue to see industry consolidations going forward for a variety of reasons including economies of scale.
- Continued uptick in development particularly in underserved markets AND in markets with older inventories.
- Independent living apartments will continue to become “assisted living light” much as ALF’s have experienced acuity creep over the past two decades.
- Nursing Home Cap rates continue to be very steady locally and nationally but have trended slightly lower (several hundred basis points) recently than the historical 13%.
- The reimbursement landscape has not shown significant uncertainty of late helping to foster the slightly lower Cap rates on Nursing Facilities.
- Generally all Seniors Housing Cap rates remain firm at historical lows and we expect that to persist at least until interest rates begin to climb in earnest.
YOUR ASSESSMENT – Is it fair?
Remember that assessors are not permitted to assign value to personal property-that is assessed separately. They also must refrain from assessing intangible assets such as your business operations. Profits may be subject to income taxes but not property tax. They must tax only the fee simple interest of the real property, i.e. the “sticks and the bricks.” You have the right to appeal your assessment. We can direct you to an appropriate professional if you feel that your assessment may be unfair. Or you can go to: www.revenue.wi.gov/pubs/slf/pb055.pdf online if you prefer.
Solicited by a Broker from Illinois or another state?
New Wisconsin statutes enacted early in 2015 prohibit Out of State Real Estate Licensees from practicing in Wisconsin in most circumstances including LISTING your property, conducting TOURS, and even INSPECTING your Wisconsin property. Always ask to see their Wisconsin credentials before hiring someone based out of state as this is the LAW.
- We create demonstrative value for you by maximizing price
- We create competitive environments for our clients communities
- We serve as a buffer for difficult discussions with Buyers during negotiations and through the sale process.
- Our experience and expertise allows you to focus on operations while we focus on the numerous sale details.
- We are experienced at ensuring the highest levels of Confidentiality.
PLEASE CONTACT LeCLAIRE COMMERCIAL FOR ALL YOUR SENIOR HOUSING/LIVING BROKERAGE & CONSULTING NEEDS: 262.312.4642
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