Lenders and Investors Need To See
With so much capital flooding the senior care space, lenders and investors need a better appreciation of what it is they are funding. People like to say that the seniors housing and care industry is driven by demographics, but for the past few years it has been driven by cheap and abundant capital. But to buy it or build it “because I can,” while maybe rational in the moment, does not make long-term sense and usually leads to future problems. So here is my recommendation. For every new lender or investor you have, ask them to do an 8-hour shift in one of your buildings, and I mean doing the dirty work, not just shadowing an employee. First of all, they will have a new appreciation for how... Read More »
Cash Is King For Skilled Nursing Targets
When buyers value a skilled nursing facility, or any senior living property, it is always the absolute level of cash flow (NOI) that matters, not the operating margin or expense ratio. Buyers are purchasing a stream of net cash flow, and that net cash flow is going to provide the returns to capital providers. As long as cap rates remain stable, which they certainly have in the skilled nursing sector, when cash flow increases, the prices paid increase. From 2008 to 2015, the average cash flow per bed of SNFs sold increased by 63% (peaking in 2015 at $9,600 per bed), and this was driving the five straight years of record average prices for skilled nursing facilities, according to the 23rd... Read More »
Innovation and Seniors Housing
Everyone talks about the disruption factor coming to seniors housing, but nobody knows what it is. Can we innovate before it comes? So, I have been attending the Senior Living Innovation Forum this week, a “smallish,” invite only conference with about 250 attendees. The point of it is to bring in industry insiders and some outsiders to get into the down and dirty about the future of seniors housing in this country. My session, with four top CEOs on the panel, will be taking a deep dive into the future, where they think the industry will be in 2030, what a potential disruptor could be and whether it will come from outside the industry or inside. Will the disruption be service oriented or... Read More »
The CCRC Market
CCRCs are thriving in today’s market when so many other providers are struggling for census. But why? How many times have you heard that the CCRC market is a thing of the past? About as many times as you have heard that skilled nursing is dead? Well, I’ve got some news for you, neither is dead and they aren’t going anywhere. While so many providers are struggling with today’s occupancy or reimbursement issues, CCRCs are actually outperforming the entire senior housing and care sector, at least when it comes to occupancy. In addition, values in the CCRC acquisition market have been on an upward trend for the past four years. But what has changed since the Great Recession when people... Read More »
Senior Living and Veterans
Are we really doing enough for our veterans in senior living? I hope you all had a relaxing and enjoyable Memorial Day weekend. I was able to get away for a bit, but senior living is never far from my mind. With Memorial Day just two days ago, I thought it would be appropriate to mention who I ran into at the Argentum conference two weeks ago. Taking time out from retirement and sailing the world, Rick Grimes (former CEO of ALFA/Argentum and a veteran) was helping man the exhibit booth for Patriot Angels, an organization that helps veterans get the benefits they deserve. One benefit, which was new to me, is called the Aid and Attendance benefit through the Department of Veterans Affairs.... Read More »Schedule a demo
Gain access to the best healthcare and long-term care investment intelligence, data, and analysis.
