From The Magazine

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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Deal volume in the Section 232 program fell 3 percent to nearly $2.87 billion in FY 2023, but signs of a rebound emerge. By Matt Valley Considering the body blows the seniors housing industry absorbed coming out of the COVID-19 pandemic — including a spike in interest rates, inflation and labor issues that negatively impacted net operating income — deal volume in HUD’s Section 232 healthcare mortgage insurance program for fiscal year (FY) 2023 was solid, say lenders. Annual lending volume decreased 3 percent to nearly $2.87 billion, while the …

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By Bendix Anderson The problem can seem too big to solve. Many seniors can’t afford private-pay seniors housing, such as independent living, assisted living or memory care. But millions of those potential residents also have too many financial resources to move into housing reserved for low-income seniors. By 2029, there will be 14.4 million of these “missing middle” seniors.  A few developers have new ideas about where these seniors might live. The prototypes of their new middle-market seniors communities are now under construction. From licensed assisted living in Florida to …

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While rising occupancies and improving cash flows buoy owners and operators, questions remain whether net operating income will ever completely recover. By Jane Adler After several years of punishing declines, net operating income (NOI) — defined as operating income minus expenses — is slowly climbing back. As a vital metric used to assess the profitability and value of a property, any improvement in NOI is a good sign for the health of the sector. Seniors housing occupancy has been on the upswing for eight consecutive quarters, boosting revenues.  The occupancy …

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By Jeff Shaw By many metrics, it has been a slow couple of years for REITs immersed in the seniors housing segment.  The volume of acquisitions and dispositions by REITs in 2022 was the lowest in at least a decade, according to MSCI Real Assets. The expectation is that 2023 is going to be another down year for transaction volume.  Publicly traded investors made approximately $2.5 million in acquisitions and dispositions in 2022, dropping from $12.7 billion in 2021. As recently as 2015 that number was over $15 billion. But …

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By Matt Valley Heading into 2023, Lument’s Aaron Becker anticipated a challenging year for lenders and borrowers due to the sharp rise in interest rates, but he underestimated the level of difficulty. Capital providers tightened underwriting standards more than expected, which negatively impacted deal volume. U.S. property and portfolio sales in the seniors housing sector, excluding skilled nursing, totaled $3.27 billion during the first half of 2023 compared with $4.57 billion during the same period in 2022, according to MSCI Real Assets.  That’s a 28 percent decline in deal volume …

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With baby boomers now aging into seniors housing in staggering numbers, how does the industry best serve this new generation of prospective residents? By Jeff Shaw For decades now, developers have been building up for a massive demographic wave of baby boomers aging into seniors housing. We’ve all heard the numbers: 10,000 Americans will turn 80 every day starting in 2025. By 2030, all 73 million boomers will be of retirement age. The wave was nicknamed the silver tsunami. With the first baby boomers turning 78 next year, the generation …

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While some owners see opportunities in converting obsolete seniors housing into behavioral health facilities, others look for ways to improve those services within their communities. By Jeff Shaw Seniors housing and behavioral health real estate have a lot in common. Both house people with a largely needs-based offering. There are a wide range of products to serve a variety of needs, and residents are sometimes not there by choice. Both sectors also have favorable demographics and strong real estate fundamentals on their side with demand outpacing supply. Behavioral health real …

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By Matt Valley More than 75 percent of investors surveyed by CBRE expect rental rate increases of at least 3 percent over the next 12 months across all seniors housing asset classes except skilled nursing. The most bullish outlook is in the assisted living sector where 28.1 percent of survey respondents expect to underwrite rent growth above 7 percent, up from 15 percent in the 2022 survey. No decreases in rental rates are expected for any asset class. Meanwhile, difficulty in maintaining adequate staffing levels ranks as the greatest headwind …

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