Senior living investors have a “growing pool of opportunities” this year, and they span the risk spectrum, Shashank Goel, assistant vice president in the transactions group at Harrison Street, wrote in a blog post published by the National Investment Centers for Seniors Housing & Care.
Opportunities exist to buy newer vintage properties still struggling from pandemic-related challenges, older vintage properties that have lost market positioning and others that exist in saturated markets where supply has outstripped demand, according to Goel.
“Addressing the underperformance can involve resetting loan-to-values, requiring additional capital infusion, sales by tired equity capital, or sales by lenders who have lost confidence, in some cases accepting discounted payoffs,” he said.
The year started off with tightened capital markets, Goel said, adding that sellers waiting for a reversal of fortune might be ready to act as 2024 progresses. Other factors are expected to come into play as well, presenting opportunities for investors.
Among those opportunities, NIC data show that there are $18 billion of senior living-related loans maturing in 2024 and 2025, Goel noted. In addition, elevated interest rates are hampering free cash flows. Also, Goel, citing a JLL Research, observed that senior living continues to generate interest among investors.
“The dynamics in play are set to create an active transaction environment in 2024 for investors spanning the cost of capital spectrum amidst increasingly favorable fundamentals with tailwinds for the foreseeable future,” he concluded.
Read the whole blog here.
