Pricing for Seniors Housing and long term care assets remains nearly as strong as ever. There is little doubt that the senior living and skilled nursing sectors have been hit hard by the pandemic. Nevertheless, the long term trends and industry out- look remain solid as senior demographics are fundamentally strong. According to data from the National Council of Real Estate Investment Fiduciaries, senior housing returns have consistently outperformed other types of real estate over the past ten years. Developers like the solid yields and perceived lower risk (compared to other RE classes). Newer, well designed properties with stabilized occupancy and a stable operating history continue to increase in value. That’s not to say that we don’t have issues. We are dealing with significant labor issues including scarcity as well as rising costs. Wages are growing much faster than reimbursement and rental rates. And the universe of potential employees has gotten smaller for a variety of reasons. Occupancy levels plummeted across the senior care spectrum due in large part to the pandemic. Affordability continues to challenge us as well. And virtually all levels of the senior care spectrum are dealing with older, higher acuity residents.
The good news is that compared to other real estate classes, seniors housing and care is seen as more need based. Baby boomers continue to age and people are living longer. While we will always deal with short term question marks, there remains a real need for assisted living communities and skilled nursing facilities in the post-pandemic world ahead. With hikes in lumber and other construction costs, as well as longer project completion rates, buying looks more attractive to potential purchasers. It is our rm belief that the rebounding merger and acquisition activity we have begun to see will continue to grow through 2022 and beyond and for many decades to come.
The good news is that compared to other real estate classes, seniors housing and care is seen as more need based. Baby boomers continue to age and people are living longer. While we will always deal with short term question marks, there remains a real need for assisted living communities and skilled nursing facilities in the post-pandemic world ahead. With hikes in lumber and other construction costs, as well as longer project completion rates, buying looks more attractive to potential purchasers. It is our rm belief that the rebounding merger and acquisition activity we have begun to see will continue to grow through 2022 and beyond and for many decades to come.
Data is representative of senior living communities with 25+ residents across assisted living, memory care, and independent living facilities. COVID-19 nancial impact data is based on a representative national sample. Estimates are based on a per resident impact by state for 2020 and Q1/Q2 estimates for 2021. Provider Relief Fund estimate is based on percentage of COVID-19 cases per state against “GAO Summary of PRF Allocations” as of 12/31/20.
Consulting firm Willis Towers Watson found that 94% of employers believe that voluntary benefits – which typically aren’t subsidized but are offered to workers at a group rate discount – are important to their staff. Among the fastest growing voluntary benefits are those that protect workers from identity theft. Other popular offerings include pet insurance, legal benefits and critical illness coverage.
TODAY’S TOP 5 TECH TRENDS
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DID YOU KNOW?
- State laws generally require tax assessors to value only real estate and not include the intangible value.
- Long term care costs have increased faster than the rate of inflation since 2004 and are expected to further increase by more than 5% in the next six months.
- New Development trends include high-end resort style amenities with multiple restaurants, dedicated tech rooms and even wine cellars.
- An American Journal of Geriatric Psychiatry study indicates that the use of video chat technologies by seniors may lower risk for developing depression even years later.
- Smaller senior communities of less than 50 units sold at the highest average cap rates while the largest communities (90+ units) sold at the lowest cap rates/highest prices.
NOTABLE / QUOTABLE
Warren Buffett once offered two non-negotiable business rules. Rule #1 is to make money. Rule #2 is to remember Rule #1. As someone once said: “there is no mission without a margin.”
Specializing in Seniors Housing since 1992
Confidentiality assured approach
Commercial Association of Realtors award winning broker
PLEASE CALL US FOR ALL YOUR SENIORS HOUSING BROKERAGE & CONSULTING NEEDS
414.416.3001
Confidentiality assured approach
Commercial Association of Realtors award winning broker
PLEASE CALL US FOR ALL YOUR SENIORS HOUSING BROKERAGE & CONSULTING NEEDS
414.416.3001
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