With occupancy at historic lows, and expenses in flux, it has been difficult to value nursing homes in today’s market. But it is happening every day despite the uncertainty.
With occupancy still in turmoil and many nursing homes reliant on federal aid to pay the bills, it must be quite difficult to underwrite and value individual nursing facilities, let alone a portfolio of them. But it is happening every day.
What assumptions do you make for occupancy, and census mix? What is a normalized level of PPE expenses, and will this be indefinite? And then you have labor costs and supply. With a Biden/Harris administration, is a $15 national minimum wage around the corner, and will that ratchet up over time?
These are tough questions, but they are being answered every day in the market, because they have to. Buyers and sellers are coming to terms, leases are being renegotiated, and acquisition loans are beings closed. It may be messy out there, but there is also a lot of opportunity.
Join me next week on our annual SNF webcast, where Laca Wong Hammond of Lument, Dan Booth of Omega Healthcare Investors, and David Reis of Senior Care Development will give their candid opinions, based on decades of experience, of what is happening in the nursing home market today, and what you can expect in the next years to come. See you then.