Senior housing is still in recovery mode from the COVID-19 pandemic, but the sector still offers investment opportunities, according to Robb Chapin, a partner at Bridge Investment Group.
“We believe there are opportunities to acquire high-quality, newer-vintage assets below replacement cost from distressed sellers. We believe vertically integrated operations are a major advantage to stabilizing staffing, improving quality and rapidly growing occupancy and NOI,” Chapin wrote in a blog for the National Investment Center for Seniors Housing & Care. “The sector is also attractive because of its ‘needs-based’ character.”
Robb said he believes an optimal strategy in the short-term is for investors to look for “newer-vintage low-occupied buildings below replacement cost” because of the low risk, and then take on new development as the market expands within the decade. Construction starts have decreased by 60% over recent peak levels due to the pandemic, he said.
According to Robb, the market is far less disrupted from the delta variant than it was from the coronavirus a year ago and even earlier this year.
“Achieving stabilized occupancy levels by historic standards will continue to be a primary focus,” he said.
Labor shortages continue to be an obstacle to the senior living industry.
“Although it could be somewhat transitory, recruiting and retaining great staffs is always a significant focus. You have to get that right if you expect to be successful,” Robb said.
