Being Large In Seniors Housing
Size isn’t all its cracked up to be, and it does matter whether you own or operate the real estate. We always hear that size matters, but it can also work against you. While no one has claimed to be able to define the optimal size of a seniors housing company, I have yet to hear anyway say that they would be comfortable running a company with more than 500 properties. Most would say that 250 would be tops, with many of them even much smaller. I am talking about owning and operating, with the emphasis on operating. For REITs, I don’t know if there is a real number where their efficiencies get maxed out. They are not hiring the staff and serving the food. And they are not trying to... Read More »Healthcare REIT Stocks Surge
After the Federal Reserve announced it would not raise interest rates, at least not this month, healthcare REIT stocks surged on the news much more than the market as a whole. While the major stock indices were up between 0.5% and 1.0% in the first hour after the news, the healthcare REIT stocks increased from about 1.5% all the way to 6.0% for newly spun-off Care Capital Properties. We know Ray Lewis must have breathed a sigh of relief. This was a bit of a reprieve for the badly battered healthcare REITs, which suffered exaggerated declines during the past month or two. But rates will be increased, at some point. Read More »Seniors Housing: Build or Buy?
In this strong seniors housing acquisition market, when does it make sense to build a brand new community or buy an “A” quality community? Based on seniors housing construction projects since 2013 (which includes independent, assisted living and memory care, or some combination of the three), the average cost to build a new project is approximately $209,000 per unit. New construction, of course, comes with certain benefits. You will have a brand-new community with all the bells and whistles that can help attract attention. But you then have to fill it up, staff it and deal with the increasingly potential risk of a competitor opening up down the street. And to buy a stabilized, “A” level... Read More »Seniors Housing And The Flu
This past flu season has been blamed for many of the current seniors housing occupancy problems, but it has been bad for three years. When looking at the decline in seniors housing occupancy over the first two quarters of this year, much was made of the unusually severe flu season. While we are sure some companies and individual communities were hit particularly hard by this past winter’s flu, Barclays came out with an industry report which included a very interesting graph. It depicted the percentage of visits for influenza-like illnesses reported by the U.S. Outpatient influenza-like illness Surveillance Network. Yeah, I had never heard of that one either. Anyway, it did show that there... Read More »Labor Costs and Senior Care
It seems that too many people are avoiding the discussion of what is going to happen to labor costs, and the future impact on cash flow. Unfortunately, most Labor Day weekends I am toiling away trying to finish the September issue of The SeniorCare Investor. Not this year. Labor Day was so late I was able to finish it up so you would have something to read for the weekend. Really. But then I got to thinking, about labor that is. I see all these acquisitions, and all these pro forma cash flows, and I wonder how labor is going to impact things in the next few years. It is the biggest line item, and the one that may see the most changes. I don’t profess to know how many employees in seniors... Read More »Schedule a demo
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