| The Seniors Housing market continues to attract strong investor interest here in Wisconsin and across the country. According to the National Multifamily Housing Council (NMHC), the number of seniors over the age of 75 will increase by 3.2 percent per year, from around 19 million to 26 million by 2025. More importantly, the number of individuals living in seniors housing is projected to increase from 1.7 million to 2.2 million residents in that same time frame. Demand for seniors housing remains strong, with national occupancies in the high 80’s and approaching 90%, despite significant new development according to the National Investment Center for Seniors Housing & Care (NIC). And as the need for seniors housing continues its ascent, rents will follow. Genworth Financial reports that the national median costs in a private pay community is now $3,750 per month. Median costs for semi-private SNF rooms hit $7,148 per month while private rooms reached $8,121 per month nationally. |  |
 | Property sales transaction volume was strong the last several years and is expected to continue into 2018. As long as we continue to project desirable demographic trends and solid investment returns not seen in other commercial real estate asset types, this can be expected to continue. Of the three major seniors housing property types, assisted living and independent living will generally have lower Cap Rates due not only to an increased amount of revenue related to the real estate as opposed to services and due to having less budgetary issues associated with more private pay revenue. Many Mom-and-pop owners see opportunity to exit the business while prices are still solid and interest rates remain mostly stable. |
2018 should be another banner year for all property types including skilled nursing homes, despite some gloom and doom predictions. We have heard that because SNF’s are the most labor and operationally intensive; that it relies too much on governmental funding; that it is saddled with the highest level of governmental oversight and regulations; and that it is the type with the oldest average age of its real estate. Despite everything, operators have seen increased cash flows of late as they learn to adapt to new Medicare payment models. Buyer demand remains strong for skilled nursing facilities.
While labor costs continue to rise, there is even more pressure for senior living operators to seek out additional revenue streams, with ancillary services playing an ever expanding role. These additional amenities and clinical services include everything from massage therapy and salons to dermatology and X-rays, administered on site in an effort to serve residents as completely as possible while keeping revenues in-house.
Lenders are readily available and are competing for senior living business. There is no shortage of lenders ready to talk. They have some concerns such as the potential of rising interest rates, pointing out that Cap Rates will follow. Lenders love certainty and have become more and more comfortable with Seniors Housing’s ability to generate solid profitability when managed well.
While labor costs continue to rise, there is even more pressure for senior living operators to seek out additional revenue streams, with ancillary services playing an ever expanding role. These additional amenities and clinical services include everything from massage therapy and salons to dermatology and X-rays, administered on site in an effort to serve residents as completely as possible while keeping revenues in-house.
Lenders are readily available and are competing for senior living business. There is no shortage of lenders ready to talk. They have some concerns such as the potential of rising interest rates, pointing out that Cap Rates will follow. Lenders love certainty and have become more and more comfortable with Seniors Housing’s ability to generate solid profitability when managed well.
DID YOU KNOW?
- Since the end of 2015, Milwaukee, Ozaukee, Waukesha and Washington Counties have seen 900 new senior living units enter the market…
- Seniors Housing properties are the only commercial RE asset class that experienced positive rent growth during the Great Recession…
- Seniors Housing rent growth has exceeded that of other commercial RE property types over the past several years…
- Falls involving alcohol killed more than 400 Wisconsin senior citizens in 2016…
- DHS reports a worsening trend from 2010-2016 with 2,266 Wisconsin seniors reported dying from alcohol-attributed falls...
- The National Taxpayers Union reports that as much as 60% of taxable property in the US in overtaxed…
Specializing in Seniors Housing since 1992
Award winning track record second to none
Confidentiality ensured for 25 years
PLEASE CALL US FOR ALL YOUR SENIOR HOUSING BROKERAGE & CONSULTING NEEDS:
262.312.4642
Award winning track record second to none
Confidentiality ensured for 25 years
PLEASE CALL US FOR ALL YOUR SENIOR HOUSING BROKERAGE & CONSULTING NEEDS:
262.312.4642
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