Skilled Nursing Facility Irma Fall-Out
Eight horrible deaths in one skilled nursing facility should not result in new regulations. By now we have all heard about the disaster at the skilled nursing facility in Hollywood, Florida where eight residents died from the heat during Hurricane Irma. It never should have happened, and we all have to wonder what the staff was thinking when inside temperatures soared and vital signs hit the danger zone. What we should have expected is politicians, regulators and other groups demanding more staffing so something like this does not happen again. While I agree that this should never happen again, I don’t agree that staffing levels should be re-evaluated as a result of one horrible event. And... Read More »
REIT Financing: RIDEA or Sale/Leaseback
As healthcare REITs get ready to invest in 2018, it will be important for owners to know whether to go the traditional sale/leaseback route, or the newer RIDEA structure. Many of you have noticed that the volume of healthcare REIT financing has been lower the past couple of years, especially for those REITs that have been restructuring their portfolios. That is going to change. I suspect we will be seeing a turnaround in activity next year, and when that happens, it is best to be prepared. But prepared for what? Will customers want to continue with the traditional sale/leaseback structure that has been around for more than four decades? Or maybe a different twist on the old product? What... Read More »
Change Will Be Coming To Seniors Housing
What if there is more to the decline in seniors housing occupancy than just new development? Sometimes it seems I just think too much about this industry. For instance, it has been bothering me that occupancy continues to decline, even in quarters when it should be rising. New development has been having an impact, of course. But what if there is something else going on, or maybe multiple things? A lot is going to happen, and change, between now and when the first boomer turns 80 in 2026, and we may have to wait until they are 85 or even older for the “big impact.” Everyone has been focused on this demographic, and there is the often discussed thought of, what if we increase penetration... Read More »
Financial Modeling for Seniors Housing Acquisitions Has Changed
Financial modeling for seniors housing and care is not as easy as it used to be, when revenues could be assumed to rise faster than expenses. Have you noticed that financial modeling for seniors housing and care is not as easy as it used to be? In the past, forecasters (and buyers) would model 2% increases in annual costs and 3% increases in revenues. This would build in a growing profit amount, which always looked good to lenders and investors. One of the problems with this was that annual capital expenditures were always, and I mean always, low-balled. Often it was a plug number at $300 per unit or bed, when it should have been three, four or five times that amount. The problem today is... Read More »
Seniors Housing And Affordability
New development is widely blamed for occupancy declines, but affordability may be just as culpable. Declining occupancy in seniors housing has been a major issue for the past 18 months or so, and while it took some providers way too long to admit that new development was taking its toll on census, there may be other things at work. One big one is affordability. While analysts celebrate that rents have gone up 3% despite census declines, remember that the numbers are based on asking rents. Just possibly, however, those rising asking rents are scaring some people away. I have not seen any statistical analysis on this, but I think the seniors housing sector really has to take a hard look at... Read More »Schedule a demo
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