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Equity, Tenant Groups Compete for Seniors Properties

As the number of people age 60-69 surges, the seniors housing industry is changing to accommodate their needs, according to a new report by Marcus & Millichap. Private equity groups and tenants in common are competing for market share of smaller, single-facility transactions in a sector once dominated by owner-operators, while foreign buyers are investing in larger developments, resulting in rapid price appreciation. Cap rates reflect the sector’s health, and are in the 7% range for assisted living properties and about 12% for skilled nursing facilities. Many investors prefer newly built or remodeled facilities and those with memory care programs, including memory care and assisted living programs.

Other highlights of the report:

• More than 10,000 independent living units are under construction. With rents rising, revenue growth is estimated at 5.6%, to $2,206 per unit.

• Occupancy levels at assisted living facilities are relatively stable at 95.7% over the past year, but still represent a 10 basis point decline.

• Some 3,200 beds are under construction at skilled nursing care facilities, 200 beds fewer than one year ago.

• Construction of dementia care units has risen over the past 12 months. Occupancy rose 90 basis points last year to 96.7%, and monthly revenues posted a 3.4% increase to $4,733 per occupied unit.

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