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DevelopmentFrom The Magazine

Savvy Developers Seize Window of Opportunity

by Jeff Shaw

While ground-up construction has slowed dramatically due to a confluence of factors, contrarians are timing the delivery of new product to serve an aging population. By Jane Adler Post-pandemic, senior living owners and operators are rightfully focused on regaining occupancy and stabilizing their assets. Expansion opportunities have mostly been limited to acquisitions of troubled properties purchased at a discount. Inflation, relatively high interest rates, a tight labor market and even tighter capital markets have largely sidelined ground-up development.   But contrarian players believe now is the right time to build. …

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From The MagazineSkilled Nursing

Where We Stand With PDPM Five Years In

by Jeff Shaw

Despite years of build-up, the new skilled nursing payment model has flown under the radar since its implementation. Operators assess the impact. By Jeff Shaw In the years leading up to the implementation of the Patient-Driven Payment Model (PDPM), there was plenty of discussion and handwringing over the impact it would have on the skilled nursing industry. Officially launched on Oct. 1, 2019, by the Centers for Medicare & Medicaid Services (CMS), the model was supposed to be a sea change for healthcare billing and services. The impetus, at the …

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FinanceFrom The Magazine

HUD Lending Activity Set to Reach Crescendo in Second Half of FY 2024

by Jeff Shaw

By Matt Valley Loan production in the HUD Section 232 mortgage insurance program is running slightly behind last year’s pace through the first half of fiscal year (FY) 2024 due to two main factors: elevated interest rates and margin compression experienced by operators of skilled nursing and seniors housing facilities. But a growing deal pipeline will likely result in loan closings in FY 2024 surpassing last year’s total of $2.87 billion, says one seasoned lender. Michael Gehl, chief investment officer on the FHA lending team at NewPoint Real Estate Capital, …

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From The MagazineInvestment

Can Private Equity Time the Market?

by Jeff Shaw

With operating fundamentals on the rise and demographics on their side, this growing group of investors in seniors housing believes the stars are aligned to achieve healthy returns. By Jane Adler While some longstanding private equity groups in seniors housing remain on the sidelines as they work through the operational challenges created by the COVID-19 pandemic, others are making investments in the sector. Fund managers are raising capital and seeking investment opportunities. New private equity players are emerging. And more private equity groups are entering into joint ventures and forging …

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FinanceFrom The Magazine

NIC Capital Markets Panel Assesses Level of Distress Looming in Seniors Housing Sector

by Jeff Shaw

By Matt Valley What percentage of existing seniors housing loans are destined for trouble? An audience member posed that question during the closing session of the 2024 NIC Spring Conference in Dallas. The answer appears to be elusive. Titled “Capital Markets and Economic Update: Where We Have Been and Where We Are Going,” the March 7 session featured Joel Mendes, managing director at JLL, as panel moderator. Fellow participants included Jamie Cobb, chief financial officer at Columbia Pacific Advisors LLC; Doug Duncan, chief economist with Fannie Mae; and John Olympitis, …

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AcquisitionsFrom The Magazine

M&A Activity Poised to Rebound

by Jeff Shaw

Although 2023 was a down year for property sales, the seniors housing industry fared better than other real estate sectors, and many investors are already switching to ‘buy’ mode. By Jeff Shaw At first blush, 2023 looks like a bad year for seniors housing property sales. Total transaction volume fell 23 percent to $10.6 billion, the sector’s lowest mark in over a decade, according to data from MSCI Real Assets. “I’m not surprised to see transaction volume down from 2022,” says Kelly Sheehy, senior managing director of Artemis Real Estate …

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From The Magazine

How to Handle Bad Press

by Jeff Shaw

After a series of national news articles portraying the worst aspects of seniors housing, owners and operators are developing best practices for handling negative media coverage. By Jeff Shaw The headlines are sensational, and they make the seniors housing industry look bad. Negative news about this burgeoning sector seems to be a go-to for national and local journalists. The most recent attack came via the Washington Post, which released a pair of articles on Dec. 17 that cast seniors housing in a negative light: • “Understaffed and Neglected: How Real …

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From The Magazine

Key Industry Metric Is Stuck in Neutral

by Jeff Shaw

The penetration rate remains stagnant, even as seniors housing becomes a more accepted asset class and more prospective residents understand its value. What’s the solution? By Jeff Shaw The seniors housing industry is currently experiencing something of a metrics renaissance. After surviving the brutal blow that was the COVID-19 pandemic, most of the base numbers have trended positive: • There have been 11 consecutive quarters of occupancy growth. • Rental rates saw dramatic increases over the past few years, with reportedly little pushback from residents. • New construction has remained …

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FinanceFrom The Magazine

Lenders on Pins and Needles, Awaiting Turnaround

by Jeff Shaw

By Matt Valley Until there is a greater sense of stability in the marketplace and clarity from the Federal Reserve on the timing and extent of interest rate cuts, underwriting deals will remain a challenge for lenders, believes Jason Clouet, vice president of Bayview Asset Management.  “I think if we polled everybody in this room, half of you would say that we’re going to see a 200 basis points drop, and half of the room would say 50 basis points. There’s not real clarity right now as far as where …

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AcquisitionsFinanceFrom The Magazine

Capital Markets Cause Looming Wave of Distress

by Jeff Shaw

As variable-rate loans reach their maturity, higher interest rates are making refinancing difficult — or impossible — and leading to distressed properties hitting the market. By Jeff Shaw The challenge is well known by now. Interest rates saw an unprecedented rise in the last two years. To combat inflation, the Federal Reserve aggressively raised the federal funds rate 11 times from near zero percent in March 2022 to a target range of 5.25 to 5.5 percent as of mid-January, leading to higher borrowing costs across the board in the seniors …

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