Financial and sale transactions in the seniors housing and care sector have slowed to a trickle, according to healthcare real estate advisory firm HealthTrust. The firm polled almost 50 C-suite level lenders, operators and owners about financial and transactional activity in the sector since the COVID-19 pandemic began, and about their views over the long-term.
More than two-thirds of the participants reported experiencing at least one canceled or delayed deal. Delays typically were initiated by buyers and access limitations for third parties. And although the reasons for deals coming undone varied, they generally fell into one of four categories: the lender backed out (40%); too much market uncertainty arising from COVID-19 (27%); the buyer backed out (20%); or the lender changed terms (13%).
“Activity should resume over the next three to six months, although ‘normal’ is likely to be further out,” the survey results noted. More than 90% of respondents also agreed that capitalization rates for seniors housing would increase over the next 12 to 36 months, and 72% felt the rate would increase for skilled nursing.
“Broadly speaking, there is a long-term impact on seniors housing communities that is likely less than 50 basis points,” according to the firm. “However, for skilled nursing, which has never seen the drop to single-digit capitalization rates that seniors housing did, the impact could be nothing. Or, if daily headlines continue to report facilities rife with COVID-19 related deaths, the impact could be over 100 basis points.”
