Led by quite a few high profile mergers and acquisitions, senior housing real estate transactions in 2014 passed the $25 billion mark. There are no signs of slowing down in the coming year. Scott Brinker, Executive Vice President and Chief Investment Officer at Health Care REIT, Inc. remarked “there’ll be lots of acquisition activity in 2015…Plus the financing markets are liquid.” He predicts strong property sales due to historically low cap rates. Buyers are seeing strong operating fundamentals and attractive risk-adjusted returns. Cambridge Senior Vice President Brent Holman-Gomez agrees with this view – “Industry executives largely believe that mergers and acquisitions will continue to rise at a brisk pace in 2015, since many of the larder owners and operators view this approach as a preferred means of growth. For smaller operators, acquisitions may not be a viable financial option. For these businesses, renovation and expansion have emerged as viable alternatives to acquisitions as these operators seek to expand or simply stay competitive.”
One significant reason for the surge in senior housing transactions is that non-traded REITs have recently been pushing into the senior housing market. In a non-traded REIT, shares are sold to investors at return rates of 5 percent or higher, leaving these REITs with an excess of cash. Robert A. Stanger & Co. has predicted that non-traded REITs combined will raise somewhere in the neighborhood of $30 billion in 2015. Much of this capital will be used to purchase senior housing and other healthcare properties.
Senior Housing Properties of All Sizes Planning Improvements/Acquisitions
A recent survey conducted by Senior Housing News polled 250 mostly smaller senior living companies, and found that 62 percent were extremely likely to pursue new construction, and 55 percent were extremely likely to plan a renovation project. With the demand for memory care on the rise, many of these senior housing operators are preparing. Many are hoping to add specialty wings for memory care and expand their assisted living offerings. Holman-Gomez says that every single senior living property in the portfolio of Cambridge Investment and Finance is currently working on or thinking about a new improvement or construction project. Demand for senior housing is steadily increasing, and capital is readily available to invest in projects to meet this demand.
Contact Cambridge Realty Capital
Cambridge Realty Capital specializes in providing financing and capital for large-scale improvements and construction projects for senior living facilities. We also have expertise in mergers, acquisitions, and joint ventures. For any questions regarding finance and capital for your senior living initiative, contact Cambridge Realty Capital. Whether you are planning to get ahead of the increase in demand for memory care, remodel, or invest in an acquisition, our experts are standing by to assist.
