Capital costs are being driven by two factors. One is pandemic-related occupancy losses. The other is property characteristics. That’s according to Andrew Van Zee, an investment broker with the Knapp Group of Marcus & Millichap. Van Zee spoke about current trends in seniors housing Monday on the Health Care Real Estate Advisor podcast.
“Even though we had these bottom-of-the-market interest rates, lenders in seniors housing were putting floors on those to try to cover some of the risks — with the biggest fear being whether COVID-19 is going to get into your building and wipe everything out between time for closing and/or shortly after you close on it,” Van Zee said.
He added that as more time passes, it’s likely the data will show that seniors housing is still a safe investment. Van Zee also noted that one of the silver linings of the pandemic is that it forced operators to quickly adapt to existing and potential resident needs.
“In the last six months, seniors housing has done an amazing job of taking care of the residents and adapting through virtual tours, virtual meetings, technology of tracking the flow of visitors, and delivering meals,” he said. “All of these changes are going to set up this industry for a very strong run in the future.”
Van Zee also discussed the long-term future of the sector, noting that despite the success of the Green House model in keeping COVID-19 under control in skilled nursing, larger communities are more attractive for investors.
