Record NIC attendance hints at continued investor and lender interest in seniors housing and care.
It was yet another record crowd at the NIC Conference, which brings up a point I kept on making. If the headwinds are so strong, on many fronts, why are there still so many more people who want to invest, lend or operate in this business? The simple answer is good returns and an even better future, at some point.
What were my takeaways? First, that there is just too much equity capital available. Think about that. Ten, 15 and 20 years ago, that statement would have been laughed at.
Second, the skilled nursing sector appears to be primed to turn around before seniors housing. Why? There is minimal increase in supply, there is a 2.5% Medicare rate increase, and reimbursement will be more rationalized late next year with the new PDPM system. While seniors housing construction growth has declined a bit, it is still way above historical averages and we have had 10 straight quarters where new supply has exceeded absorption.
Third, labor will be the key issue next year and into 2020, but there still seem to be few solutions. The only result will be tighter margins when many operators will not be able to raise rates enough to cover higher labor costs.
Finally, there was no rumored “big” deal, or a looming financial collapse of a company, like we often hear at NIC, and that is good for many reasons.
And I would be remiss if I did not give a special shout-out to the sponsors of The Wallflowers at the House of Blues Thursday night: Blueprint Healthcare Real Estate Advisors, CapitalSource, HHC Finance, Sabra Health Care REIT and Valuation & Information Group. Great show, and thank you!
