In a recent survey conducted by Cushman & Wakefield, 68% of respondents anticipate a sustained increase in capitalization rates over the next year, expressing concern over debt market liquidity, which is the primary worry for 51% of participants. The majority of respondents, 49%, are pursuing core-plus investment strategies, while 34% focus on opportunistic or distressed investments, expecting around $18 billion in sector-specific loan maturities within the next 24 months. Notably, 33% of participants are targeting need-driven segments, particularly assisted living.
There’s a notable compression in basis point spreads between the going-in capitalization rate and terminal capitalization rate, with nearly 20% of respondents underwriting a 25 to 50 basis point spread. Environmental, social and governance (ESG) considerations are gaining prominence in the senior living and care sector, with 59% of respondents viewing ESG initiatives positively. However, only 9% are willing to pay a premium for pricing where ESG is prevalent.
