Acquisitions will continue to be the most common way that seniors housing and long-term care operators expand their businesses in 2019, predict industry executives responding to a recent survey.
When Capital One queried 147 senior executives in September, 37% cited acquisitions of existing properties as their top growth strategy for the coming year, repeating 2017 results regarding 2018. Alternatively, 25% of poll participants said they would focus on repositioning older properties, down from 30% last year, and 24% said they expected new development to be their chief strategy, up from 19% in 2017.
Overall, 92% of executives said they foresee merger and acquisition activity maintaining or exceeding the current pace over the next 12 months, with 37% of all respondents predicting an increase in activity.
“The outlook for seniors housing is strong, with M&A activity expected to continue into 2018,” Capital One Healthcare Managing Director Chris Taylor said in a statement. “While many trends are dependent on the specific region or sub-market, there’s an overall optimism that continues to attract new investors to the industry.”
Additional findings:
- 48% of respondents said labor costs are their top financial challenge, whereas 39% cited supply and demand imbalances.
- Executives continued to express their interest in the Southeast and West Coast markets, with 28% and 19%, respectively, predicting that these areas will offer the most opportunity in 2019.
- 34% of respondents said real estate loans will be the main driver of financing, whereas 28% said construction loans would be their primary need.
- 32% predicted an decreased interest in skilled nursing in the next 12 months, whereas 29% predicted an increased interest.
