Seniors Housing & Care Investor Survey and Trends Outlook

Now over twelve months since the onset of COVID-19, market expectations begin to reset as the pandemic continues to manifest change.

May 26, 2021

Although the seniors housing and care sector still faces meaningful challenges, we are beginning to see a transition back to offensive operations as operators once again look to attract new residents, while employing learned best practices that ensure the health and wellbeing of their residents and staff.

Here are some of the key takeaways from our latest annual Seniors Housing & Investor Survey Trends Outlook:

Capital Markets

  • The COVID-19 pandemic interrupted a nearly twelve-year growth cycle for seniors housing
  • Seniors housing valuations dropped to an eight-year low, with indications that the bottom has been reached as distressed transaction activity proves to be much more limited than expected
  • On the other hand, nursing home per-bed pricing increased by nearly 22%, with the asset type propped up by government stimulus
  • Dry powder for commercial real estate investment remains at all-time highs; seniors housing and care sector continues to be in demand

Market Fundamentals

  • Market fundamentals suffered during 2020 as stabilized occupancy rates fell to unprecedented lows, with indications that the sector is turning the corner
  • Recovery expected withing two to four years depending on market location, which will be expedited by reduced construction starts and rising home values
  • COVID-19 operating expenses averaging from $1,420 per unit for independent living to $3,320 for nursing care, are beginning to subside

Investor Sentiment

  • Capitalization rates have started to compress from 2020 highs indicating improvement in market confidence, with transactions volume expected to grow
  • Gravitation back to traditional and need-driven segments of the industry
  • Medium and long-term investment bullish as investors prepare for the influx in demand with leading-edge baby boomers within ten years of occupancy

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