The number of senior housing acquisitions and transactions are expected to increase according to 70% of respondents in a survey conducted by National Real Estate Investor and Senior Housing Investment Advisors Inc.
The survey, which attracted 240 industry participants, found that almost half (45% of respondents) expect independent living and assisted living to see the greatest growth in investor demand, with 23% seeing the growth coming from memory care.
Over the last year, health care real estate investment trusts (REITs) accounted for more than 90% of the sector’s buyer composition according to industry experts, helping to bid up the prices of Class-A facilities. The REITs have helped raise the profile of the seniors housing industry by engaging in a number of mega deals, but they aren’t the only aggressive buyers.
“Much of the industry’s historic growth has come from buyers of single assets and portfolios in the $10 million to $200 million range, below the radar screen of the major health care REITs,” said Mel Gamzon, President of Ft. Lauderdale based, Senior Housing Investment Advisors, Inc.
Gamzon said he expects the velocity of these investment sales transactions to further increase as the U.S. economy slowly improves.
As far as financing is concerned, almost two thirds of respondents said they’re considering local/regional banks for debt financing. As for other resources, Fannie Mae/Freddie Mac and the Department of Housing and Urban Development are being considered by 31% said the survey results.
Nearly one in three respondents (32%) said they expect cap rates to increase over the next six months compared with 33% who expect them to decrease. About one in three respondents believe that cap rates will stay the same.
View a copy of the report.
Written by John Yedinak