Transaction volume is still running ahead of last year’s record, fueled by liquidity and low interest rates.
As of yesterday, seniors housing and care acquisition volume was still running ahead of last year’s record-setting pace. We are well over 300 transactions so far in 2019, and September is already looking to beat last year’s September, with several days to go.
The question still remains, how long can this go on? The simple answer is as long as liquidity in the market remains at current levels. And that liquidity will remain as long as returns stay higher than alternative investments. They have, and low interest rates have not hurt.
The other question is, when will the slow fill-up buildings hit the sales market, who will buy them and at what discount? Okay, several questions. There have been some of these sales, but not the quantity that we were expecting. Our guess is that investors and operators are holding on to them in the expectation that industry-wide improving occupancy rates will bail them out. This theory has been helped by the small slowdown in new developments, according to NIC MAP.
The proverbial “other shoe,” however, may never drop. In my 33 years in senior care, I have not seen any market stay so strong, for so long, and the boomers have yet to have their impact. But that is an impact that remains unknown, for now.
