H2 2020 CBRE investor survey

Fully one-third of senior housing and care investors view assisted living as the biggest opportunity for investments. That’s according to CBRE’s H2 2020 Seniors Housing & Care Investor Survey, released last week.

That’s the second consecutive time investors have identified assisted living as the top investment sector; in the H1 2020 (first half of 2020) survey, which closed at the end of February, 30% gave assisted living the top spot.

Although in recent years, active adult communities have led this segment, investor interest has declined in the most recent periods. Active adult fell to third place in the H2 2020 survey, however, following independent living (22%). Investor interest in memory care also re-emerged in the latest survey and tripled in interest since the prior survey, to 12%.

The survey, which is based on market sentiment collected from senior housing investors, developers, lenders and brokers throughout the United States, also found that senior housing capitalization rates increased from H1 2020 levels. Overall, capitalization rates for H2 2020 resulted in an increase of 31 basis points from H1 2020 levels. Excluding active adult — a product that is still finding its place in the market — the remaining senior housing and care rates had an average increase of 22 basis points from the prior survey, or over pre-pandemic levels. Previous surveys reflected cap rate compression from H1 2019 to H1 2020.

An increased spread in Class A versus Class B cap rates, also indicated by a reduced delta between Class B and Class C rates, also illustrates an investor flight to quality throughout the pandemic, according to survey results. More than two-thirds (70%) of respondents said they are optimistic about a recovery within the sector in 2021, however. They expect occupancy to increase over the next year, compared with 53% in the previous survey (H1 2020).