Investment transactions among seniors housing properties rose 340% in 2011 to $27.8 billion across senior housing and care properties, according to Real Capital Analytics data, reports National Real Estate Investor, vaulting the industry to “near record” sales numbers.
A research study conducted by NREI and Seniors Housing Investment Advisors found most respondents feeling positive about the sector’s outlook in the coming year, with 64% expecting an increase in acquisition/transaction activity, and 63% anticipating an increase in available financing in the next six months.
“Our mergers and acquisitions activity in 2011 almost approached the boom years of 2006 and 2007, in large part because of the voracious appetite of the REITs for large portfolios,” says Mel Gamzon, president of Fort Lauderdale-based Seniors Housing Investment Advisors. That strong investment sales activity points to growing confidence in the improving fundamentals throughout the sector, as well as greater access to capital, adds Gamzon.
Seniors housing performed well relative to other real estate sectors. Respondents reported that the average occupancy rate within their portfolios is at 89 percent. Those results mirror industry data. The seniors housing occupancy rate continued its slow recovery, rising 70 basis points to reach 88.2 percent in fourth quarter, according to data from the National Investment Center for the Seniors Housing & Care Industry (NIC). Occupancy rates are now 110 basis points above the cyclical low point of 87.1 percent that occurred in first quarter 2010.
Up until 2008, the overall industry occupancy rate for purpose-built senior housing was hovering between 90 percent and 91 percent. Those who do expect a further increase in the coming six months foresee occupancies to rise by an average of 69 basis points.
Industry fundamentals are looking good, with one healthcare REIT expecting to make similar dollar-volume investments in 2012 as it did in 2011.
“If you look at the number of people who are turning 65 and older, that supports a lot of growth in senior housing for many years out,” says Sharon Yester, head of asset management for CNL Financial Group, in the NREI article. “I think what we have is a wide open field for the types of assets that we like.”
Written by Alyssa Gerace