According to a survey by the National Real Estate Investor (NREI)/National investment for Seniors Housing & Care (NIC) Seniors Housing Market, the remainder of 2017 is expected to be busy for senior housing brokers. The survey indicated that nearly half of the investors polled plan to invest in senior housing properties within the next 12 months. This is an increase of 9% from respondents who were polled on the same question this time last year. In addition, 11% of senior housing property owners plan to sell in the next year, while 42% say they will be holding on to their facilities.
One of the driving factors behind the responses from pollsters is the fact that many believe senior housing prices will drop. Throughout the last year, senior housing investments have remained steady and even dropped 1.5% in the second quarter of the year. However, it is important to note that is still a 6% increase from where prices were at this time in 2016. Nonetheless, senior housing dealmakers are preparing for an influx of investors as more properties become available.
One of the main questions senior housing developers are asking regarding this change is, “why now?” For one, approximately 95% of all senior housing deals that closed in the second quarter of 2017 were for $50 million or less, which is a substantial number. In fact, there hasn’t been that margin of deals closed in that price range since 2010. This means that senior housing prices remain competitive as we continue to see more and more properties hit the market. This is presenting a unique opportunity for investors – one that we are going to keep our eye on. While prices remain steady and we are seeing interest among dealmakers and investors alike, it is important to pay attention to the trends. We are seeing bids from different sources than we have in the past – namely private equity and smaller private buyers.
So while public real estate investment trusts (REITs) may not be in the spotlight when it comes to senior housing investment, there is plenty of interest. If demand remains strong (as we predict it will) and investors have the capital, you can expect to see more senior housing facilities trade hands. To learn more about the current state of the senior living industry or if you are interested in investing in a senior housing property, please contact Shep Roylance of The JCH Group.