More investors are seeking to increase their exposure to the senior housing industry as M&A deals present themselves in 2024, according to the latest results of an annual survey from JLL Capital Markets.
The survey, released Feb. 13, contains responses from more than 100 professionals working in the senior housing and care space.
Slightly less than two-thirds of the respondents in JLL’s spring investor sentiment survey, 63%, said their companies plan to increase their exposure to senior housing in 2024. Another 29% said they did not plan to change their exposure to senior housing this year, while just 8% said they plan to decrease their senior housing exposure in 2024.
Less than half (44%) of respondents in a similar survey from JLL one year ago said they planned to increase senior housing exposure in 2023, while 13% said they planned to decrease senior housing exposure.
Assisted living was the biggest investment target for 41% of the survey respondents, while independent living represented the biggest opportunity for investment to 20% of the respondents. Less than a quarter of those who responded, 20%, identified active adult as the top opportunity for investment in 2024.
“Opportunities exist for investors to acquire high-quality real estate at below replacement cost, and the investment community will continue to target alternative sectors that stand to benefit from long-term demographic tailwinds,” wrote the survey’s authors.
Last year, private buyers made up 85% of the buyers of senior housing assets, representing an 11 percentage point gain from 2022 and marking “the highest share in recent cycles,” according to JLL.
Almost half of the respondents (48%) said they expect no change to capitalization rates in the coming 12 months, while 33% said they expect cap rates to increase in 2024. Another 17% said they think cap rates will decrease this year.
According to the respondents, top concerns for the year ahead included the availability of financing (44%), capital markets and interest rates (35%) and workforce availability (12%).
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