The senior housing real estate market is poised for a good recovery after the challenges of operating during a pandemic, according to Michael Acton, managing director and head of research at AEW.
His comment came as part of Wednesday’s Leadership Huddle by the National Investment Center for Seniors Housing & Care. NIC Chief Economist Beth Burnham Mace moderated the session on market trends and the economic outlook.
Occupancy is recovering more quickly than operating margins, which will take some time to recover, “but I think we’re on our way,” Acton said. “This should be a pretty good year for a recovery story.”
Real estate is better positioned than stocks and bonds for investments in this inflationary economy, according to Mary Ludgin, senior managing director of global investment research at Heitman.
“We know that real estate isn’t the perfect inflation hedge, but it’s a pretty good inflation hedge,” she said.
Market trends tend to be cyclical, according to Acton. “There’s commonality in cycles that do re-present themselves. …We sort of know what to do as the playbook unfolds,” he said.
What’s changed, since the recession of the 1990s, Ludgin said, is that she tells investors to invest across the cycle.
“There’s no need to sit on the sidelines. Their job is to get their capital to work in a smart way,” she said.
In a recession, Ludgin said, it is possible to invest debt rather than taking equity risks “if you’re really scared about changes in economic climate for real estate.”