From The Magazine

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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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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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 10 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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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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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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Prices are just beginning to stabilize after a 2022 wracked with catastrophes led to unprecedented rate increases. By Jeff Shaw As if things weren’t challenging enough for senior living owners… Expense increases have been a major contributor to shrinking profit margins in the seniors housing space since the COVID-19 pandemic struck in 2020. Whether it’s due to increased labor costs or rising construction costs, it seems like the “L” portion of the P&L keeps growing. We’ll add property insurance premiums to that list — 2022 was a devastating year for …

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By Matt Valley The seniors housing industry is still reeling from the “triple whammy” that began with a deadly pandemic in early 2020, making 2024 a pivotal year for borrowers and lenders, says Ari Adlerstein, senior managing director with Meridian Capital Group. “We had COVID, then we had labor shortages, and now we have high interest rates. Folks that I’ve been doing business with for 13 years in my career who are really good operators and who run a great shop with tons of assets and lots of cash flow …

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Architects and interior designers see their work shift toward updating older properties as ground-up development activity continues to wane. By Jeff Shaw The slowdown in new construction starts in the seniors housing industry has far-reaching consequences.  The number of seniors housing units under construction relative to the total existing seniors housing inventory was 4.7 percent in the third quarter, the lowest percentage since 2014, according to NIC MAP Vision data. While this obviously means less work for seniors housing builders, it also means less work for the architects and interior …

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Nonprofit providers consolidate, grow cautiously and seek efficiencies to continue serving seniors. By Jane Adler Nonprofit senior living providers face the same market forces as their for-profit counterparts, but nonprofits are putting their own spin on how to address operational challenges while fulfilling their mission.  Operating margins have been squeezed and consolidation among nonprofits is an ongoing theme. The organizations hope to realize the benefits of scale to reduce costs and boost productivity. Mease Life, for example, completed its affiliation with Acts Retirement-Life Communities in October 2023. Based in Dunedin, …

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With a $500 million pipeline, the developer is one of the few currently working on ground-up construction projects. By Jeff Shaw With borrowing rates at a 20-year high, the cost of construction extremely high in its own right, and suitable development sites becoming harder and harder to find, very few seniors housing builders are breaking ground right now. In the private-pay seniors housing segment, year-over-year inventory growth nationally was 1.3 percent in the third quarter of this year, according to NIC MAP Vision. That figure is near the smallest year-over-year …

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