What the ‘Buying Boom’ Means for Senior Living Valuations
Senior housing occupancy rates hit a record low in the second quarter of 2021, according to the National Investment Center for Seniors Housing and Care (NIC). Combined with other challenges such as labor shortages and outdated senior housing models, it’s no wonder investors were wary.
However, over the last year, occupancy rates have steadily climbed and operators have shifted tactics to embrace, rather than resist, future trends. This has brought new life to the industry, setting the stage for investors to get back into the game at a record pace. As more facilities become available, the industry is primed for a competitive market, which also drives valuations up.
Who’s Buying Up Senior Housing Properties?
As the pandemic fog lifted and we were left asking ‘what now?’, private buyers wasted no time. Numbers from 2021 show that out of the $3.7 billion spent on SNF transactions that year, $3.3 billion were private entities. That’s almost 90% of all senior living transactions in 2021. This was far from a new trend, with NIC data showing private buyers increased from 2015 to 2016, accounting for 36% of transactions. In 2020, this number once again rose - jumping to 82%. The above shows how we got to where we are today, and also sheds light on what’s driving senior housing valuations. This brings us back to occupancy rates. Today’s real estate market is off the charts across the board, creating both a buying boom and a selling frenzy. Because of this, relying on traditional market valuation methods will no longer cut it. Let’s take a look at some of the other factors impacting senior housing valuations:- Occupancy rates
- Various buyer resources and programs
- Overall need and market inventory