Members of the mortgage banking and investment sales teams of Berkadia Seniors Housing & Healthcare recently attended the annual National Investment Centers (NIC) Fall Conference in Washington, D.C. The tone of the conference mirrored the revived enthusiasm currently felt throughout the sector, compared to recent years.
Seniors housing is the leading asset for rent growth in 2024. At 3.8%, seniors housing has the largest increase in average rent among major CRE assets, outpacing multifamily (1.1%), retail (2.2%), office (0.9%), and industrial (2.9%).
Our team is seeing the most liquidity in the market since 2019 with lots of groups having an excess of $100 million in equity available and many of the largest REITs in the industry looking to begin raising capital for new funds ranging from $500 million to $1.5 billion.
Construction for seniors housing remains a hot topic for investors and developers alike. While it is still cheaper to buy than build, the number of construction financing requests is on the uptick. However, it is unlikely that we will see meaningful increases in construction for another three to five years. See our latest Seniors Housing Quarterly Report Card for the most recent insights on construction metrics.
For those looking to acquire or sell, the most appealing properties are:
- Class A properties that are cash flowing with operators who have been able to optimize the building in terms of profit margins.
- Class B properties that have value-add potential and could be marketed to the growing middle market of seniors.
From both a sales and development perspective, the top 30 MSA’s are currently getting the most attention, depending on relationships with operators in those markets. The operations side has seen a lot of consolidation recently as fewer younger operators are coming into the seniors housing space. Larger operational groups see benefits in insurance premiums and operational scalability.
NIC’s conference sessions, speakers, and data confirm our team’s belief that seniors housing will be one of the best performing asset types in the coming years. Berkadia Seniors Housing & Healthcare is built to help our clients take advantage of that growth. For more information on market insights and conference takeaways, please contact your local Berkadia Seniors Housing expert and check out our Q3 Seniors Housing Report Card.
– Ezekiel Duprey, Senior Research Analyst