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New 4th Quarter Report from NREI: Senior Living Investors Optimistic

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A recently released fourth quarter survey of senior housing investors, conducted by National Real Estate Investor (NREI) and Senior Housing Investment Advisors (SHIA), shows optimism regarding improving fundamentals and activity across the entire senior living industry. This optimism extended to financing, construction, and acquisitions of senior living real estate.

Construction optimism was strongest, with 76 percent of respondents expecting new projects to increase over the next 6 months. Optimism regarding investment activity was also strong, with 65 percent of those surveyed expecting investment activity to grow. Respondents also expect financing to improve, with 58 percent saying that financing should be more readily available in the coming 6 months.

“The fundamentals and performance in this sector are compelling. Capital continues to aggressively seek out opportunities, and that will continue in 2013,” says Mel Gamzon, president of SHIA, a national real estate advisory firm that specializes in seniors housing transactions.

The overall outlook of those surveyed is that seniors housing is in a slow recovery phase. This outlook is consistent with responses from surveys conducted in the 2nd and 3rd quarters of 2012.

As the sector continues to recover, occupancy levels are continuing to rise. Survey respondents reported occupancy levels averaging 91 percent. Among respondents who own or operate senior housing facilities, roughly half (54 percent) own less than 600 units. Survey respondents are also optimistic that occupancy levels will continue to rise over the next 6 months, with 53 percent expecting increased occupancy.

While sales volumes in 2012 are nowhere close to the near record activity from 2011, this is not indicative of waning investor interest.

Real estate transaction volume of seniors housing and nursing care facilities was a near record $27.4 billion in 2011, much of this has been attributed to REIT purchases. Through the first three quarters of 2012 it has been a more tame but consistent $5.2 billion. This survey was consistent with the NREI first quarter survey with respondents predicting that senior living facilities will experience the largest investor demand in the coming six months. Independent living and assisted living property optimism was tops, with 42 percent of those surveyed seeing growth in investor demand for these properties. 38 percent believe that the greatest growth will be in memory care facilities. Optimism regarding growth was less heated in other sectors though, with just 12 percent seeing the greatest growth in continuing care retirement communities, 5 percent in age restricted communities and 0 percent in skilled nursing facilities.

Source: www.offmarket.org

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