“For senior housing, I would characterize the market as the tail wagging the dog,” Aron Will, vice chairman of CBRE, said Tuesday during a National Investment Center for Seniors Housing & Care leadership huddle.
The discussion was moderated by NIC Chief Economist and Director of Outreach Beth Burnham Mace.
At the same time, Steve Blazejewski, managing director at PGIM, said that the difficulty the market is experiencing is most likely temporary, and he said he has positive expectations for the medium and longer term.
“We need to collectively acknowledge that senior housing is a sort of role player, a bit player, within the broader real estate sector,” Blazejewski said. “We are feeling, I think, spillover impact from really every other sector, and the banks, of course.”
In his opinion, he said, the distressed office sector is “eating up a lot of liquidity” in commercial real estate.
“There is also, at the same time, this dynamic that everybody thinks things are going to be better in a year, and so, therefore, nobody wants to do anything,” he continued. “Therefore, we’re seeing continued freezing of the market.”
From the operators’ perspective, according to Kris Woolley, founder and CEO of Avista Senior Living, “It feels a lot better than it did a year ago, and most certainly, two years ago.”
Occupancies are up, net operating income is up, and reliance on staffing agencies is down, he noted.
“There’s a lot of good things going on, notwithstanding the difficult, very real capital markets issues we’re seeing,” Woolley said.
“I think the reset and valuation is going to provide operators that want to be part of ownership and want to be in some form of real estate ownership and the upside to the real estate, that this is going to create a good opportunity for us going forward with the right capital partners that are willing and able to figure out and capitalize deals right now,” he said.
