Next week is NIC’s Fall Conference in Washington, D.C., and we are curious to see just how inflation, rising interest rates and general economic uncertainty will affect the mood of the many dealmakers in attendance. We are on track to break a record for total transactions announced in a year, and only an especially slow fourth quarter would prevent that from happening. Given how much capital is out there for higher yielding assets (compared to multifamily that is), and the fact that rates are still historically low for now, we think we’ll break that record.
There will just be a little more conservatism in most buyer’s bids and from their lending partners, which is not a bad thing. The realities of the slow census recovery, and more importantly the margin and cash flow recovery, should lead to more realistic assumptions about future performance when they are valuing current opportunities. It is hard to believe the 10% to 12% resident rate increases that some operators were able to achieve this year can continue into 2023 and 2024, so we’re not sure how revenues can rise at a faster pace than labor and food costs likely will. And raising rents only limits the potential resident pool. But, we aren’t operators, and certain communities in good markets will do just fine. So, if you disagree, call us, or better yet, find us at the networking lounge in D.C. See you there.
