Senior living and care investments are poised for even or increased growth this year, according to the results of a survey by Dallas-based BBG real estate services.
In January, BBG solicited responses from US investors, developers, lenders and brokers to identify trends expected to affect the long-term care market this year. Seniors housing and care property types analyzed in the survey included active adult, independent living, assisted living, memory care, skilled nursing and continuing care retirement / life plan communities.
“Many of the findings this year show more market optimism than was discovered in our 2023 report,” RJ DeBee III, managing director and national seniors housing practice leader, said in a statement Tuesday. “The aging population makes this asset class a highly attractive investment option.”
According to the survey results, capitalization rates across all sectors of long-term care are expected to remain flat or decrease in 2024 compared with the findings of BBG’s 2023 survey, which anticipated that cap rates would remain flat or expand in 2023.
Unrelated results from a midyear 2023 survey by CBRE found that capitalization rates had increased in all segments of long-term care except skilled nursing. A later CBRE survey, published in January, showed that the average senior housing and care capitalization rate across all segments increased by 74 basis points between April and October.
In the new BBG survey, most participants said they anticipated an increase in rental rates growth.
“Over 90% of respondents are expecting rental growth in 2024 for property types excluding care. For assisted living and memory care, the most frequent projection was for growth between 5% and 10%, with more than half (52%) of respondents anticipating increases exceeding 5% in 2024,” BBG said.
According to the data, active adult communities will have the highest gains in stabilized occupancy among the property types studied. Skilled nursing facilities, on the other hand, are expected to have the lowest growth.
“The survey also showed that [CCRCs are] expected to have the largest spread in stabilized occupancy compared to other care levels,” BBG said.
Eighty-one percent of the respondents indicated expectations that operating expenses will increase 3% to 5% this year. In 2023, 77.5% had the same expectation.
