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Occupancy rates are recovering and rents are growing. But developers of senior housing are still looking for new ways to attract older consumers to their communities, according to a recent analysis in Long-Term Living magazine. Executive Editor Sandra Hoban sees a future market with smaller portfolios and fewer large continuing care retirement communities (CCRC). She and the experts she interviewed also anticipate a greater focus on developing:
Several trends are spurring these new approaches, according to the analysis. For one thing, older consumers are postponing their senior living decisions because they can’t sell their homes or find affordable housing alternatives. That’s pushing developers to focus on needs-based specialty care, rather than choice-driven CCRCs, says Robert Kramer, president of the National Investment Center for the Seniors Housing and Care Industry (NIC). In addition, investors are biding their time. They’re still smarting from the lower occupancy and rental rates that came along with the recent recession.It’s not that deals have come to a standstill, says NIC MAP Vice President Michael Hargrave. But, says Hargrave, everyone is shopping around. Lenders are selecting their projects carefully and focusing on seasoned developers. Developers and operators are searching high and low for the best rates.“If you are a good operator with a proven track record and history of meeting your numbers and adjusting to market conditions, lenders will continue to do business with you because they know you will deliver,” says Kramer.But what if you’re new to the seniors housing field? “You practically have to come up with 100% debt equity, especially for new construction,” warns Hargrave.
With the election just weeks away, experts aren’t sure how political uncertainties will play out in the senior housing market. Some suggest that politics may speed things up by creating pressure to get deals done before 2013 dawns.
Others believe the national vote could slow things down because developers and lenders are waiting to see how election results will affect the future of health reform and Medicaid. At least one expert suggests that the election won’t impact the market one way or the other. Regardless of who wins, Americans will continue to turn 65 every day for the next 10 years.“There will be markets at the high and low ends of the project spectrum as affordability will be a prime factor in the decision to move to senior living,” says Imran Javaid, managing director of commercial and specialty finance at Capital One Bank.