The seniors housing and care acquisition market is bifurcating in more ways than one.
We have all long talked about how the various seniors housing and care acquisition markets have bifurcated over the years. There is the vast difference between “A” quality and “B” quality assisted living communities. There are the old independent living communities vs. the new ones built with AL and MC included. There are the 40-year old SNFs compared with the sparkling new transitional care facilities.
But as a result of this coronavirus pandemic and the economic shutdown, there appears to be another bifurcation that has developed. This one is based on outlook.
There appears to be two camps. The first camp believes that because most of seniors housing is need driven, the bounce-back after the curve flattens will be fairly quick and significant. All of those move-ins that were waiting on the sidelines will, when given the “all clear” signal, resume their tours and move-ins, units will fill up, cap rates will continue to trend down, investors will jump back in and some degree of normalcy will return to the acquisition market by the summer months.
The other camp sees a much longer timeline for “normalcy” to return. They have already written off the summer months, and are hoping things will be better sometime in 2021, but fear it may be late in 2021 or even 2022. The shock to the economy, to our health system, to state and federal deficits, and to the consumer psyche will just be too much to get over any time soon. They see some capital leaving our space, a long road to replace lost census, costs remaining high, the labor problem not going away despite the current unemployment levels, and values declining from the peaks of 2019.
We all want things to get back to normal soon, especially those whose livelihood depends on it, which is most of us. But this just feels much different from 10 years ago, for everyone.
