Although COVID-19 continues to hit the seniors housing industry hard in terms of increased operational expenses, most investors and capital providers still believe the sector is likely to withstand the current recession pretty well, according to speakers at a National Investment Center for Seniors Housing & Care “Leadership Huddle” webinar Thursday.
That’s particularly true when the outlook for seniors housing is compared with the retail and office sectors, said Ben Firestone, executive managing director and co-founder of Blueprint Healthcare Real Estate Advisors.
“If I was an institutional investor that was multi-asset class focused, I’d be thinking more about seniors,” Firestone said. “Compared to those other alternative asset classes, I like the story and I like the 80 million baby boomers coming down the pipeline. I truly believe this industry will come back with a vengeance.”
In addition, many of the increased costs related to COVID-19 are being viewed by capital providers as one-time operating expenses, which is a boon for borrowers, said Charles Bissell, managing director of JLL’s Seniors Housing Capital Markets Group. He added that if operators currently aren’t tracking their increased COVID-19 operating expenses as a separate line item, they should be.
Bissell also pointed out that some of COVID-19’s side effects ultimately may offer unexpected financial benefits to the seniors housing industry overall, especially as the country becomes more adept at dealing with the pandemic. He noted that construction delays may help improve occupancy levels.
“We’ve also seen a decrease in construction costs, which will allow projects that do get built to price themselves a little lower and open them up to a wider market,” Bissell added. Long term, he also believes that the labor market will be more favorable for seniors housing, with decreased competition from the hospitality and retail sectors.
“Long term, we’re very bullish on this sector,” he concluded.
