February 28, 2025 • 47 mins
Packed with valuable insights, this deep dive into the seniors housing market offers a detailed exploration of the industry's current trends and future opportunities. We discuss the latest data from JLL's Seniors Housing and Care Survey and discover how demographic shifts are affecting the landscape of senior living investments.
• Strong market activity with rising confidence and transaction volume
• Insights on cap rate compression and what it means for investors
• Rebounding occupancy rates and robust rent growth trends
• Limited new construction creating favorable supply-demand dynamics
• Increasing interest from a variety of investor types, including private equity
• Risks to be mindful of, particularly economic uncertainties
Explore how technology and innovation are shaping the investment strategies within this sector, ensuring quality care for residents along with profitable returns.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:07):
As you consider potential investments in seniors
housing and care.
Here are a few key takeaways.
First, the market is strong andit's expected to remain strong,
driven by those powerfuldemographic tailwinds.
Second, those cap rates arepotentially poised for
compression, which could lead tohigher property value.
And if those cap rates arepotentially poised for
compression, which could lead tohigher property value, and if
those cap rates do compress, itcould create some opportunities
(00:29):
for those who get in early.
Third, occupancy rates arerebounding nicely.
Rent growth is robust.
Fourth, new construction islimited, which creates that
favorable supply-demand dynamic.
Fifth, investors are eager toincrease their exposure to the
sector.
They're seeing the potentialand they're acting on it.
Sixth, there are some risks toconsider, like interest rate
volatility and those potentialeconomic headwinds, but the
(00:51):
overall outlook it remainspositive.
The long-term demand driversare strong and the fundamentals
of this market are sound.
Speaker 2 (01:04):
Welcome to the Senior Housing Investors Podcast.
If you are an owner operator,investor, developer or buyer of
senior housing, you've come tothe right place.
The best way to stay connectedwith us is to sign up for our
weekly newsletter athavenseniorinvestmentscom.
This podcast doesn't existwithout you, our community.
(01:26):
Thank you for listening andreach out to us anytime.
Speaker 1 (01:36):
Welcome back to another Deep Dive.
This one I'm pretty excitedabout because we're going to be
looking at something that's notjust a hot topic in real estate
but it also connects to thishuge demographic shift we're
seeing.
We're talking about seniorshousing and care investments.
Speaker 3 (01:48):
You know, what's so interesting about this is that
everyone seems to be talkingabout the aging population, but
very few are connecting the dotsto the investment implications.
Speaker 1 (01:56):
Yeah, exactly, it seems like there's a big
opportunity there, right, andluckily for us, jll just came
out with their Seniors Housingand Care and Founders Survey and
Trends Outlook for spring 2025.
So if you're even thinkingabout opportunities in this
sector, this is a great place tostart right.
Speaker 3 (02:10):
Oh, absolutely.
This report is kind of like acheat sheet to where the smart
money is going.
Speaker 1 (02:14):
Okay.
So let's jump right in First up.
Let's talk about what'sactually happening in the market
.
So the transaction trends.
You might be surprised to hearthat the seniors housing market
is really active right now.
I mean, we're seeing activitylevels that are rivaling
pre-pandemic times.
Speaker 3 (02:28):
Yeah, it is pretty remarkable.
Speaker 1 (02:29):
It is yeah.
Speaker 3 (02:30):
Transaction volume in 2024, it hit $15.6 billion,
which is actually consistentwith the previous year's
activity.
Speaker 1 (02:38):
So that's a good sign , right.
It seems like investors arereally starting to pay attention
to this sector, but there'salso an interesting little twist
here.
Oh, the report points out thatwe're seeing a lot more
individual asset sales comparedto those mega portfolio
transactions that we used to see.
Speaker 3 (02:52):
That's right, and you know what?
The reason for that seems to bea rise in cost of debt.
Those big portfolio deals aregetting a lot harder to pull off
.
Speaker 1 (03:00):
So smaller bites are a little more digestible in this
current environment.
Definitely.
Okay, so smaller bites are alittle more digestible in this
current environment, DefinitelyOkay.
So let's move on to I know thething you've been waiting for
cap rates.
Oh yeah.
This is where it gets juicy fora potential investor.
Absolutely.
Right.
So the good news is 57% of theinvestors that JLL surveyed are
predicting cap rate compression.
But sometimes people throwaround terms like cap rate
(03:21):
compression and they kind ofassume everyone knows what it
means.
Could you break it down for ourlistener In plain English?
Why should they care?
Speaker 3 (03:29):
Well, think about it this way when we talk about cap
rate compression, it usuallymeans that property values are
about to go up.
It's like the market is saying,hey, this is getting even more
valuable, so get in while youcan.
Speaker 1 (03:42):
So it's all about potential profit for both.
To get in at the right time.
Okay, and to put things inperspective, the current seniors
housing cap rates are hoveringaround 6.5%, which is a good bit
higher than what you'd see in,say, the multifamily sector.
That's right, right.
So that yield premium isdefinitely something investors
are paying attention to,especially, you know, as
(04:03):
interest rates are going up.
Everybody wants to know whereto park their money Right, for
the best bang for their buck.
Okay.
So let's switch gears a littlebit and talk about occupancy
rates, because, at the end ofthe day, a senior's housing
investment is only as good asits occupancy levels.
Speaker 3 (04:20):
Oh, absolutely.
You could have the bestlocation, the nicest building,
but if you don't have residents,you don't have a business.
Speaker 1 (04:26):
That's a good point and this is where the JLL report
has some really good news.
Occupancy rates they'veactually bounced back in most
markets, except for those bigWest Coast cities.
Speaker 3 (04:34):
Yeah, and what's interesting is that occupancy in
those secondary markets isactually nearing all-time highs.
Speaker 1 (04:40):
Okay.
So that begs the questionwhat's driving this?
Is it just kind of like pent updemand from the pandemic years,
or is something morefundamental going on here?
Speaker 3 (04:48):
Well, I think it's a pretty straightforward supply
and demand situation.
We're seeing strong absorptionrates, so units are filling up
quickly, but at the same time,new construction it's relatively
limited, so you've got this.
You know this favorableenvironment for the landlords.
Speaker 1 (05:02):
Yeah, that makes sense.
So it's a win-win right foroperators and investors.
Yeah, definitely.
Okay, Speaking of wins, let'stalk about rent growth.
I mean seniors housing is kindof killing it in this department
.
Oh, absolutely.
Right Outperforming most othercommercial real estate sectors.
Speaker 3 (05:16):
It's pretty amazing Rents are now 22.5% higher than
they were before the pandemic.
Speaker 1 (05:27):
The average is $5,207 per month across both those
primary and secondary markets.
Okay, so this is something ourlistener can really sink their
teeth into.
Speaker 3 (05:32):
Yeah, it's real.
Speaker 1 (05:32):
This strong rent growth.
It translates directly intopotential income for investors.
Speaker 3 (05:37):
Absolutely.
I mean, it's a clear sign thatdemand for seniors housing is
strong and operators are able tocommand those higher rents.
Speaker 1 (05:44):
Now here's the thing.
Remember how we talked aboutlimited new construction.
Well, that actually creates aneven bigger opportunity for
investors, right?
Speaker 3 (05:50):
Exactly, I mean new development of seniors housing.
It's at its lowest point inover 16 years.
That's wild, it is.
Speaker 1 (05:57):
Especially considering the rising demand
we're seeing.
Yeah.
So I mean, what does this meanfor someone who's thinking about
getting into this space?
Speaker 3 (06:04):
Well, you know, it paints a pretty compelling
picture.
Right Limited supply, surgingdemand, it creates a very
lucrative environment.
Strong investment returns arevery likely.
Speaker 1 (06:13):
Makes sense and this positive outlook it's definitely
reflected in investor sentiment.
According to this JLL survey,the majority of investors are
actively looking to increasetheir exposure to seniors
housing in 2025.
Speaker 3 (06:26):
Yeah, it's a strong wood of confidence from people
who are closest to the market.
Speaker 1 (06:30):
Now, within seniors housing, there are different
types of facilities right, sowhich subsectors are they most
interested in?
Speaker 3 (06:36):
Well, independent and assisted living facilities.
Those seem to be the hottesttickets right now.
Speaker 1 (06:41):
Yeah, ok, that makes sense.
Those are probably the twolargest segments catering to a
wide range of seniors.
Speaker 3 (06:45):
Yeah, definitely, and they also tend to offer a good
balance of risk and reward.
Speaker 1 (06:49):
Okay, and then, of course, let's not forget the
massive demographic tailwindthat's kind of pushing this
entire sector forward.
Speaker 3 (06:57):
Right.
This is something everyinvestor needs to understand.
I mean, the 80 plus age cohortin the US is going to explode by
like 36 percent over the nextdecade.
Speaker 1 (07:05):
Wow, those are huge numbers.
Speaker 3 (07:07):
Yeah.
Speaker 1 (07:07):
So this isn't just like a short term trend, right?
No.
It's a fundamental shift in oursociety that's going to be
creating these opportunities fordecades to come.
Speaker 3 (07:14):
Absolutely.
The demand for seniors housingand care is only going to go up,
so it makes it a potentiallyvery solid long term investment.
Speaker 1 (07:22):
So let me just kind of recap here for our listener.
We've got strong transactionvolume potential for cap rate
compression, occupancy rebound,robust rent growth, limited new
supply, eager investors and amassive demographic wave pushing
everything forward.
Speaker 3 (07:37):
You know it's a pretty compelling case for
taking seniors housing and careinvestments seriously.
Speaker 1 (07:42):
Yeah, okay, now let's dive a little deeper into what
this JLL Investors Surveyactually uncovered.
Speaker 3 (07:51):
They talked to over 75 professionals who really know
this market, so their insightsare valuable.
Yeah, they're the ones outthere on the front lines doing
deals.
They're seeing how thismarket's evolving.
Speaker 1 (07:56):
Exactly so.
The survey covered a lot ofground, from cap rate
expectations to preferredinvestment types, so let's start
by looking at how investors areactually valuing seniors'
housing assets, because it seemslike there's been a bit of a
shift in the methodology.
Speaker 3 (08:09):
You know it's interesting, the use of
discounted cashflow analysis andrequired yield rates has
actually decreased a little bitsince the last survey.
Speaker 1 (08:18):
Okay, what do you think that tells us?
Speaker 3 (08:20):
Well, it could suggest that investors are
placing more emphasis on otherfactors, factors like market
conditions, the operationalexpertise and the quality of the
real estate itself.
Speaker 1 (08:30):
So it's not just about crunching the numbers.
Speaker 3 (08:32):
Right.
Speaker 1 (08:32):
It's more about taking a holistic view.
Exactly OK, but it's importantto note, though, that discounted
cash flow analysis it's stillthe dominant approach.
Fifty three percent of therespondents said they still rely
on that.
Speaker 3 (08:43):
Still a valuable tool .
Speaker 1 (08:44):
Yeah, so it's still valuable, but investors are also
looking beyond just thespreadsheets.
Speaker 3 (08:55):
Definitely.
I think they're realizing thatseniors housing it's a complex
asset class, that requires kindof a nuanced approach to
valuation.
Speaker 1 (08:58):
OK, so what about those all important unlevered
internal rates of return?
What are investors targeting?
Speaker 3 (09:03):
Well, there is actually quite a range of
responses, which, to me,suggests that investors are
considering the specifics ofeach deal.
Speaker 1 (09:11):
OK, so there's no magic number right, no magic
number.
Speaker 3 (09:13):
It really depends on things like the location, the
type of facility, theoperational model, you know all
those things.
Speaker 1 (09:20):
Yeah, the risk profile.
But the survey did reveal anaverage spread between the cap
rate and the unlevered IRR on aseven years old.
Speaker 3 (09:29):
Yeah, and that spread was 279 basis points.
Speaker 1 (09:32):
Okay, so healthy spread.
Speaker 3 (09:34):
Yeah.
Speaker 1 (09:34):
Indicates, investors are still seeking those
attractive returns.
Speaker 3 (09:37):
Right.
They're looking foropportunities to grow their
capital while mitigating risk.
Speaker 1 (09:42):
Now, one thing that always comes up in real estate
is you know the distinctionbetween performing and
non-performing assets.
How are investors approachingthis in the seniors housing
market?
Speaker 3 (09:53):
Well, you know, the survey said that the most common
spread that's applied betweenthose cap rates for performing
and non-performing propertiesit's 200 basis points.
Speaker 1 (10:03):
So a higher risk premium for those non-performing
assets.
Speaker 3 (10:05):
Makes sense.
I mean, you've got to accountfor those potential costs and
you know those challenges ofturning around a property that's
not doing well.
Speaker 1 (10:12):
Yeah, absolutely so.
It's not just about finding abargain.
Speaker 3 (10:15):
No.
Speaker 1 (10:15):
It's about understanding those risks and
that potential upside.
Speaker 3 (10:19):
You got it.
Investors need to carefullyassess the operational
challenges and the capitalexpenditures required to make a
non-performing asset great.
Speaker 1 (10:29):
OK, let's talk about terminal cap rates.
This is something investorsalways need to think about,
especially when looking atlonger term holds.
Speaker 3 (10:35):
Oh for sure, and you know.
When they asked about thespread they're underwriting
between the going in cap rateand the terminal cap rate on a
10 yearyear hold, almost half ofthose people said a spread of
50 basis points.
Speaker 1 (10:46):
So a pretty modest spread.
Speaker 3 (10:47):
Yeah.
Speaker 1 (10:48):
Suggests, they're fairly confident in the
long-term stability.
Speaker 3 (10:51):
Right, they don't expect any crazy shifts over the
next 10 years.
Speaker 1 (10:54):
Now, of course, no investment outlook is complete
without talking about inflationright, oh, of course, inflation
yeah.
So what are investors using astheir baseline when it comes to
inflation assumptions?
Speaker 3 (11:04):
Well, it seems like they're taking a pretty
conservative approach.
You know, almost two thirds ofthe people surveyed said they're
typically underwriting a 3percent inflation rate and then,
like a little over a quarter,using a 4 percent rate.
Speaker 1 (11:16):
OK, so they're factoring it in, but they're not
going crazy.
Speaker 3 (11:19):
Right, just trying to find that balance between
realism and optimism.
Speaker 1 (11:22):
They're acknowledging that inflation is a factor, but
they're confident that seniorshousing operators can adjust
rents accordingly, Absolutely OKnow let's get into some of the
nuances of different investmenttypes within the sector.
Speaker 3 (11:37):
Yeah, there's a lot to cover here, because the
market offers quite a fewoptions, each with their own
risk and reward profile.
Speaker 1 (11:41):
Yeah, it's not one size fits all.
Speaker 3 (11:43):
Definitely not.
Risk and reward profile yeah,it's not one size fits all.
Definitely not.
Investors need to carefullyconsider their goals, their risk
tolerance and their level ofexpertise before they decide
which type is right for them.
Speaker 1 (11:52):
Okay Now.
One type of investment that Inoticed in the survey was
absolute net leased properties.
Oh yeah.
So these are properties wherethe tenant takes on most of
those operating expenses, right?
Speaker 3 (12:04):
Right.
So this is a way for investorsbut kind of have those passive
income streams.
Speaker 1 (12:08):
Okay, so they're collecting rent without having
to deal with the day-to-dayhassles of property management.
Speaker 3 (12:13):
Exactly, but it's important to note that absolute
net leases, you know they comewith their own sets of risks.
Such as Well, you're relying onthe tenant to maintain the
property right and pay thoseoperating expenses.
Speaker 1 (12:23):
So you need to do your due diligence.
Speaker 3 (12:25):
Oh, absolutely Make sure they're financially stable.
They have a good track record.
Speaker 1 (12:28):
And the lease terms are favorable to you as the
landlord.
Okay, now, the JLL survey foundthat there's a lot of variation
in how investors areapproaching these deals.
For private pay senior livingsubsectors so think independent
living, assisted living, memorycare the most common spread
between going concern cap ratesand absolute net lease cap rates
was 100 basis points.
Okay, but for skilled nursingfacilities that spread was
(12:50):
higher.
Half the respondents indicateda range of 250 to 300 basis
points.
Speaker 3 (12:56):
Okay.
So they're demanding a higherpremium for those absolute net
lease deals in the skillednursing sector.
Speaker 1 (13:01):
Which makes sense.
I mean, that's a morespecialized area.
Speaker 3 (13:03):
Definitely.
Speaker 1 (13:04):
Right and potential for more regulatory complexities
.
Speaker 3 (13:06):
Absolutely.
It's a higher risk, higherreward proposition.
Speaker 1 (13:10):
Okay, so investors need to carefully weigh those
potential returns against therisks.
Absolutely.
Before jumping into somethinglike that.
Okay, so let's shift ourattention now to who's actually
doing the buying in the seniorshousing market.
The JLL survey gives us somegreat insights into the buyer
composition, which I think isreally important for
(13:31):
understanding the competitivelandscape.
Speaker 3 (13:32):
Oh yeah, absolutely Helps you identify potential
partners or competitors.
Speaker 1 (13:34):
Exactly so in 2024, private buyers they were the
dominant force, accounting for57 percent of purchases, which
was actually down a little fromthe previous year, but still
above the average of 52 percentsince 2016.
Speaker 3 (13:47):
So it seems like private capital is still finding
those opportunities in thesector.
Speaker 1 (13:51):
Yeah, and it makes sense because they're often more
nimble, right, right.
They can move quickly when theysee a good deal.
Speaker 3 (13:56):
Exactly.
They're not bound by the sameprocesses that larger
institutions might be.
Speaker 1 (14:01):
So they could be more opportunistic and responsive to
market conditions.
Absolutely.
Now, while those private buyersare leading the charge, we're
also seeing institutionalinvestors kind of dipping their
toes back into the water.
Their share of purchasesincreased a bit, from 5% in 2023
to 12% in 2024.
Speaker 3 (14:19):
So I guess that suggests that institutions are
starting to recognize thepotential here, especially given
those long-term demographictrends we were talking about.
Speaker 1 (14:26):
They're seeing the writing on the wall.
Speaker 3 (14:28):
Absolutely.
Speaker 1 (14:28):
They're realizing they can't ignore this market.
Speaker 3 (14:31):
And this could be a sign of things to come.
We might see a wave ofinvestment from pension funds,
insurance companies, other biginstitutions.
Speaker 1 (14:40):
Which would further drive up those prices and
increase competition foracquisitions.
Yeah.
Now it's important to rememberthat the sector isn't just
attracting attention from, youknow, those traditional real
estate investors.
Speaker 3 (14:51):
This is key for our listener.
Speaker 1 (14:52):
Right.
We're seeing growing interestfrom those seeking exposure to
alternative investment sectors.
Speaker 3 (14:58):
Right.
So you know, investors arelooking beyond the usual office,
retail and industrialproperties.
They want diversification andthey're finding opportunities in
sectors that have those uniquedemand drivers.
Speaker 1 (15:10):
And seniors housing fits that bill.
Speaker 3 (15:11):
Oh for sure.
It's a non-correlated assetclass, which means it's not
directly tied to the ups anddowns of the stock market.
Speaker 1 (15:18):
Right and it's not tied to the broader economy.
Speaker 3 (15:20):
Right.
Speaker 1 (15:21):
So it's driven by the demographics and that growing
need Exactly For this type ofhousing and care, which makes it
very appealing for someone whowants to diversify.
Absolutely.
Now, along with student housingand medical office, seniors
housing is one of the threelargest alternative sectors in
terms of investment volume.
Speaker 3 (15:38):
Wow, so it's attracting serious capital from
a wide range of investors.
Speaker 1 (15:42):
And the reason is clear, right.
These sectors often offergreater growth prospects.
Speaker 3 (15:46):
Absolutely.
Especially in a market likethis, where interest rates are
rising and investors aresearching for yield, these
alternative sectors are veryappealing.
Speaker 1 (15:55):
They offer that potential for higher returns
without taking on that excessiverisk.
Speaker 3 (15:59):
Right, that's a very attractive combination.
Speaker 1 (16:01):
Okay.
So before we wrap up this firstpart of our deep dive, let's
talk about what investors aremost concerned about.
Speaker 3 (16:07):
Yeah, let's be real.
Every investment has some risks.
Speaker 1 (16:10):
Exactly right, and it's important to understand
those risks.
So the JLL survey asked thesemarket participants to identify
their top concerns aboutpotential negative impacts on
the market in 2025.
Okay.
And the number one concerncited by 45% of respondents was
capital markets and interestrate related issues.
Speaker 3 (16:28):
Well, that makes sense given the current
environment.
We've seen rates risesignificantly.
Speaker 1 (16:32):
Yeah, and there's always that risk of further
increases or volatility.
Speaker 3 (16:35):
Right, which can impact everything.
Borrowing costs, propertyvaluations.
Absolutely.
Makes underwriting morechallenging and can create a lot
of uncertainty.
Speaker 1 (16:43):
Yeah.
Now, another 10% of respondentssaid the availability of
financing was a major concern.
Speaker 3 (16:48):
OK, so lenders might be tightening up a little bit,
making it harder to get thoseloans.
Speaker 1 (16:52):
Which could slow down transaction volume or make it
harder for new players to comein.
Speaker 3 (16:56):
Right Creates a barrier to entry for those who
don't have access to capital.
Speaker 1 (17:00):
OK.
And then we had concernsrelated to the broader economic
environment, you know theavailability of workforce, the
regulatory landscape,development costs and then
competition for capitalplacement.
Speaker 3 (17:11):
Right.
I mean these are all validconcerns.
It's not all sunshine and rosesin any market.
No, never is Right.
Speaker 1 (17:17):
So that's why we do these deep dives we want to
equip you with what you need,that's right To navigate those
complexities, help you makethose informed decisions, yeah,
okay.
So let's step back for a moment.
Think about what all thisinformation means for you.
We've covered transactiontrends to investor sentiment,
potential risks.
Speaker 3 (17:33):
It's a lot to digest, but it's all really valuable
stuff.
Speaker 1 (17:36):
Yeah.
So, as you consider potentialinvestments in seniors housing
and care, here are a few keytakeaways.
First, the market is strong andit's expected to remain strong,
you know, driven by thosepowerful demographic tailwinds.
Speaker 3 (17:50):
And that's a fundamental driver.
It's not going away.
Speaker 1 (17:53):
The aging of the baby boomer generation.
That's a mega trend.
Absolutely.
It's going to create asustained demand for decades to
come.
Definitely.
Second, those cap rates arepotentially poised for
compression, which could lead tohigher property values.
Speaker 3 (18:07):
Yeah, if you're looking for appreciation
potential, this could be a goodbet.
Speaker 1 (18:10):
Yeah, and if those cap rates do compress, it could
create some opportunities forthose who get in early For sure.
Third, occupancy rates arerebounding nicely.
Rent growth is robust.
Speaker 3 (18:19):
Yeah, so it's a healthy market.
Speaker 1 (18:21):
It's a sweet spot.
Fourth, new construction islimited, which creates that
favorable supply-demand dynamic.
Speaker 3 (18:27):
Right.
This is supporting occupancyrates and rent growth.
Speaker 1 (18:30):
Yeah, exactly Fifth.
Investors are eager to increasetheir exposure to the sector.
Speaker 3 (18:35):
Right.
They're attracted to the growthpotential and the long-term
stability.
Speaker 1 (18:39):
Yeah, this is a vote of confidence from those who are
putting their money where theirmouth is.
Absolutely.
They're seeing the potentialand they're Six.
There are some risks toconsider, like interest rate
volatility and those potentialeconomic headwinds.
Speaker 3 (18:53):
Right.
It's important to be aware ofthat and factor those into your
decision.
Speaker 1 (18:56):
Yeah, but the overall outlook it remains positive,
right.
It does.
The long-term demand driversare strong and the fundamentals
of this market are sound.
Speaker 3 (19:04):
Absolutely.
It's a sector that's wellpositioned for growth.
Speaker 1 (19:08):
Okay, now, before we move on to the next part of our
deep dive, let's take a quicklook at what the typical
marketing time is for seniorshousing assets.
Okay, so this is the time ittakes to sell a property, from
listing to closing.
Speaker 3 (19:20):
Right.
So for a seller who wants aquick and efficient transaction,
this is a key factor Exactly.
They don't want their capitaltied up in a property that takes
forever to sell Right and,according to the JLL survey,
that typical marketing time it'sbeen decreasing lately.
Speaker 1 (19:35):
That's a good sign, right.
Speaker 3 (19:36):
Yeah, I think so.
It means the market's moreliquid Buyers and sellers can
transact more quickly.
Speaker 1 (19:40):
So that's, positive.
Speaker 3 (19:41):
Yeah, it indicates strong demand and a lot of
buyers out there.
Speaker 1 (19:44):
Okay, Now, I know we've covered a lot already, but
there's one more crucial aspectof this market we need to
explore.
Oh, okay, what's that?
We've talked about?
Demographics demand investmentopportunities.
But what about the actualproduct?
Oh yeah, the senior housingfacilities themselves.
Speaker 3 (19:58):
This is where it gets really interesting.
Speaker 1 (20:00):
Right.
Speaker 3 (20:00):
Because we're not just talking about bricks and
mortar anymore.
Speaker 1 (20:02):
OK.
Speaker 3 (20:03):
We're talking about creating these living
environments that cater to theunique needs of a new generation
of seniors.
Speaker 1 (20:10):
A generation that's more active, more tech savvy.
Speaker 3 (20:12):
Yeah, more demanding.
Speaker 1 (20:13):
Yeah.
Speaker 3 (20:13):
They want more than just a place to live.
Speaker 1 (20:15):
They want experiences .
Speaker 3 (20:16):
Exactly.
Speaker 1 (20:17):
They want community, they want to stay connected, and
that's driving so muchinnovation in the design and the
development and the operationof these facilities.
Speaker 3 (20:24):
Absolutely.
We're seeing a shift away fromthat traditional institutional
model towards something thatfeels more like hospitality.
Speaker 1 (20:31):
Okay, so think boutique hotels.
Speaker 3 (20:33):
Yeah.
Speaker 1 (20:34):
Resort-style amenities, personalized care
plans.
Speaker 3 (20:37):
Exactly.
It's all about creating a senseof well-being.
Speaker 1 (20:40):
Yeah, and this is where technology comes in.
Speaker 3 (20:42):
Oh, big time Right.
Speaker 1 (20:47):
Telehealth, smart home features, social engagement
apps.
Yeah, it's about using tech toenhance the resident experience,
improve care delivery, makethings more efficient for those
operators.
Right, and this is going to bea key differentiator for
investors.
Speaker 3 (20:57):
Absolutely.
It's not just about locationand property anymore.
Speaker 1 (21:00):
It's about understanding how technology and
innovation are shaping thefuture of this.
Speaker 3 (21:04):
And how those factors are going to impact the
long-term value of yourinvestment.
Speaker 1 (21:10):
Okay.
So as you evaluate potentialopportunities, ask yourself how
is this facility incorporatingtech to enhance the resident
experience?
How are they using data andanalytics to improve care and
operations?
How are they adapting to theseevolving needs and preferences
of this new generation ofseniors?
Speaker 3 (21:27):
Those are the questions that are going to
separate the winners from thelosers in this really exciting
and evolving market.
Speaker 1 (21:33):
Now I know we're diving deep, but it's important
to understand the layers here.
It's not just about thefinancial returns, right?
No, it's about investing issomething that's making a real
difference.
Speaker 3 (21:42):
Absolutely, and that's something we can all feel
good about.
Speaker 1 (21:45):
Okay, so before we get to those investor survey
results, let's take a littledetour and talk about a specific
investor type that's beenmaking waves in the seniors
housing market.
Okay.
This is a trend that's worthpaying attention to, because it
kind of reflects the appeal ofthe sector to a wider range of
investors.
Okay, so who are we talkingabout here?
Speaker 3 (22:02):
Private equity firms.
Speaker 1 (22:04):
Ah, the big players.
Speaker 3 (22:05):
Exactly, and they've been increasingly active in this
space, attracted by thefundamentals and the potential
for big returns.
Speaker 1 (22:11):
OK, but what's driving their interest
specifically?
Speaker 3 (22:19):
Well, there's a few things.
First, they love fragmentedmarkets, and seniors housing is
definitely fragmented.
There are a lot of smalleroperators, so it creates
opportunities for consolidation.
Speaker 1 (22:24):
So they can come in, buy up a bunch of companies,
create a larger platform.
Speaker 3 (22:27):
Exactly which leads to cost savings and, hopefully,
higher profits.
Speaker 1 (22:31):
So it's classic private equity.
Speaker 3 (22:33):
Right, which leads to cost savings and, hopefully,
higher profits.
Speaker 1 (22:35):
So it's classic private equity Right Buy, build
and sell.
Exactly.
Now the second thing drivingtheir interest is that aging
population.
They see the trends, oh yeah,they understand the demand and
they're betting on that longterm growth.
Speaker 3 (22:46):
Absolutely.
And that long term perspective,that's something that aligns
well with their typicalinvestment horizon.
Ok, now the perspective that'ssomething that aligns well with
their typical investment horizon.
Speaker 1 (22:52):
Okay now the third thing that's attractive is the
potential for operationalimprovements.
A lot of these facilities arerun by smaller operators that
might not have the same level ofsophistication as those larger
companies.
Speaker 3 (23:04):
Right, so they see an opportunity to bring in their
own management teams, implementbest practices.
Speaker 1 (23:08):
So they're not just buying real estate Right,
they're investing in thatoperational side of the business
.
Absolutely.
Now it's important to point outthat private equity's
involvement in this it's notwithout its critics.
Oh yeah, some argue that youknow their focus on profits can
sometimes come at the expense ofresident care.
Speaker 3 (23:24):
Yeah, there have been some cases where they face
scrutiny for cutting costs orstaffing levels.
Speaker 1 (23:29):
Right, but it's important to remember that not
all private equity firms arecreated equal.
Oh, absolutely.
Some have great track recordsin the healthcare space, while
others might be focused on thoseshort-term gains.
So it's important to do yourdue diligence.
Yeah.
Make sure their values alignwith yours.
Absolutely.
Now this influx of privateequity capital.
It's definitely had an impacton the market.
(23:50):
It's increased competition,it's driven up prices and it's
made it harder for smallerplayers to compete.
So that's something that bothbuyers and sellers need to be
aware of.
Speaker 3 (23:59):
Right, it's a much more competitive landscape.
Speaker 1 (24:05):
Okay.
So, speaking of buyers, let'stake a closer look at these.
Jll survey results and seewho's most active in the market.
So, as we mentioned earlier,private buyers were the dominant
force in 2024, 57% of thosepurchases.
But within that category, thereare different types of private
investors.
Right, they have differentstrategies, different risk
tolerances and the survey givesus some good insights into who's
driving this wave.
So the one-disc group,according to the survey, are
(24:27):
high net worth individuals, andfamily offices are high net
worth individuals and familyoffices.
Speaker 3 (24:32):
So these are individuals or families with a
lot of wealth who are looking todiversify and invest in
tangible assets.
Speaker 1 (24:37):
And senior housing is appealing to them for a lot of
reasons.
Right, it's a stable incomeproducing asset.
Right.
It's backed by strongdemographic trends.
Speaker 3 (24:46):
It's something they can feel good about investing in
too.
Speaker 1 (24:48):
Yeah, they're helping to provide housing and care.
Absolutely.
Okay Now, the second largestgroup of those private buyers
are private real estate funds.
Okay, so these are funds thatpool capital from multiple
investors and invest in variousreal estate assets, including
seniors housing.
Okay, so they're attracted toseniors housing for similar
reasons as those high outworthindividuals that stable income,
(25:10):
the demographic trends, thelong-term appreciation potential
, and they often have theexpertise to acquire and manage
larger portfolios of theseproperties Right, it's their
specialty.
Now the third group of privatebuyers is a little more
specialized, healthcare-focusedprivate equity firms.
Speaker 3 (25:27):
Oh, okay.
Speaker 1 (25:28):
So these are firms that specifically target
investments in the healthcaresector, including seniors
housing.
So they bring firms thatspecifically target investments
in the health care sector,including seniors housing.
Speaker 3 (25:33):
So they bring a deep understanding of the industry.
Speaker 1 (25:36):
Absolutely the regulatory landscape,
operational complexities ofthese businesses, which can be
very valuable in the seniorshousing space.
Speaker 3 (25:43):
Yeah, that expertise is key.
Speaker 1 (25:45):
Now, in addition to these private buyers, we're also
seeing some activity frompublicly traded REITs.
So REITs, or real estateinvestment trusts, are companies
that own and operateincome-producing real estate,
and they're required todistribute a large portion of
their profits to shareholders inthe form of dividends.
So it makes them appealing toinvestors looking for income and
(26:09):
potential appreciation.
Now REITs have been kind ofquiet in the seniors housing
market lately, but we'restarting to see some signs of
renewed interest.
Oh, okay, this is partly due tothe improving fundamentals of
the sector, as well as thatpotential for consolidation and
scale.
Speaker 3 (26:24):
So REITs have the capital to acquire those large
portfolios.
Speaker 1 (26:28):
They've got the expertise to manage them.
Speaker 3 (26:31):
And they can benefit from those economies of scale
which can lead to betterprofitability.
Speaker 1 (26:37):
Now the final group of buyers we'll mention are
those institutional investorslike pension funds and insurance
companies.
Ok so these are big long terminvestors looking for stable
income producing assets.
Speaker 3 (26:47):
Yeah, they're looking for something that matches
their liabilities.
Speaker 1 (26:50):
Exactly, and seniors housing fits that.
Speaker 3 (26:52):
Yeah, it does.
Long-term asset class,predictable cash flow and a
growing demand base.
Speaker 1 (26:57):
And those institutional investors are
becoming more comfortable withthe operational complexities of
seniors housing.
Speaker 3 (27:02):
They're realizing the potential.
Speaker 1 (27:04):
Now, with all these different types of buyers active
in the market, it's no surprisethat the competition for
acquisitions is heating up.
Speaker 3 (27:11):
Oh, yeah, definitely.
Speaker 1 (27:16):
Now we're moving beyond those financials.
We're going to dive into theheart of what makes seniors
housing really tick theoperations.
Speaker 3 (27:19):
Yeah, you know, bricks and mortar.
That's just the beginning.
The real secret to success inthis industry it lies in
understanding how thesefacilities actually work.
Speaker 1 (27:28):
Okay, so let's break this down for our listener.
You know, if you're thinkingabout putting your money into a
senior's housing facility, whatare the key operational aspects
that you should really be laserfocused on?
Speaker 3 (27:37):
Well, first and foremost, I mean it all boils
down to resident care.
Right, this is like thefoundation of everything.
It's what drives residentsatisfaction, it drives
occupancy rates and ultimately,you know, it drives the
financial performance of theentire operation.
Speaker 1 (27:50):
Yeah, happy residents , happy business, exactly Okay.
So, but how can you as aninvestor, how can you, actually
assess a quality of care in apotential investment?
What are you really looking forthere?
Speaker 3 (28:02):
staffing ratios.
You want to look at thequalifications of the caregivers
, their experience, the level of, you know, personalization in
the care plans and then theavailability of any specialized
services.
Speaker 1 (28:20):
So it's not just about warm bodies, it's about
having the right people with theright skills and experience.
Speaker 3 (28:24):
Exactly and you know you want to see evidence of
those training programs.
Are they developing their staff, you know, are they keeping
them up to speed on the latestbest practices?
That's important.
Speaker 1 (28:33):
Now we've talked a lot about technology in the
seniors housing space.
So, beyond staffing, how istechnology really impacting the
operational side of things?
Speaker 3 (28:42):
Well, technology is really transforming the way we
approach senior care, both inenhancing care delivery and then
also improving that operationalefficiency.
One area we're seeing a ton ofinnovation is in telehealth.
Speaker 1 (28:53):
Oh, telehealth.
Speaker 3 (28:54):
Yeah, and this allows residents to connect with their
health care providers remotely,which is so valuable,
especially for folks who havethose mobility challenges or
maybe some chronic conditions.
Speaker 1 (29:04):
So you're bringing the health care to the resident.
That's right.
Ok, that's huge.
Speaker 3 (29:08):
Yeah, and you know what?
It can also help reduce thosecostly hospital readmissions,
which is a win win for everyone.
Okay, that's huge.
Speaker 1 (29:12):
Yeah, and you know what it can also help reduce
those costly hospitalreadmissions, which is a win-win
for everyone, absolutely Okay.
So what other tech driveninnovations are you seeing out
there?
Speaker 3 (29:17):
Well, smart home technology it's gaining traction
.
Things like voice activatedassistance, you know, lights and
temperature controls that areautomated, and even sensors that
can detect if somebody falls.
Speaker 1 (29:28):
Wow, that's incredible.
Speaker 3 (29:29):
Yeah, it just creates a safer, more convenient
environment.
You know families, they havethat peace of mind.
That's huge yeah.
And speaking of peace of mind,let's not forget about social
engagement.
Speaker 1 (29:38):
Oh yeah.
Speaker 3 (29:39):
I mean this is so crucial for residents'
well-being, and technology isplaying a big role in connecting
people and fostering that senseof community.
Speaker 1 (29:46):
So I'm curious what are some examples of how
technology is actually beingused to combat social isolation,
you know, to promote that senseof belonging among residents?
Speaker 3 (29:56):
Well, we're seeing these social engagement apps and
platforms that are designedspecifically for seniors.
So these platforms allow themto, you know, connect with each
other, maybe participate in somevirtual activities and stay in
touch with their family andfriends.
Speaker 1 (30:09):
OK, so it's bridging that digital divide.
Speaker 3 (30:11):
Right, exactly, and you know those connections.
Those are vital for mental andemotional health.
Speaker 1 (30:16):
They are Absolutely Now beyond these resident-facing
technologies.
How is tech being used kind ofbehind the scenes to improve
operational efficiency?
Speaker 3 (30:24):
Well, property management software.
It's getting much moresophisticated.
These systems can actuallyautomate tasks like rent
collection, maintenance requests, communication with residents.
More sophisticated, thesesystems can actually automate
tasks like rent collection,maintenance requests,
communication with residents.
Speaker 1 (30:34):
So it's streamlining the whole process, freeing up
staff to focus on those highervalue tasks.
Speaker 3 (30:38):
Yeah, things like interacting with residents, and
they provide a ton of data thatcan be used to make those
smarter decisions about staffingand programming.
Speaker 1 (30:46):
Speaking of data, one area where it's making a huge
impact is in personalized careplanning.
So can you explain howtechnology is actually being
used to tailor those care plansto the needs of each resident?
Speaker 3 (30:58):
Well, you know, now there are software platforms
that can actually collect andanalyze data from lots of
different sources, likeelectronic health records, you
know, wearable devices, evenresident surveys, and all this
information is then used tocreate those customized care
plans.
Speaker 1 (31:12):
So it's moving away from that one-size-fits-all
approach.
Speaker 3 (31:14):
Right, embracing that uniqueness of each resident.
Speaker 1 (31:17):
And that leads to better outcomes.
Speaker 3 (31:19):
Absolutely.
You get better outcomes, higherresident satisfaction and lower
costs.
Speaker 1 (31:23):
Now, with all this talk about technology, it's
important to remember, you know,it is just a tool.
It can enhance and support care, but it can't replace that
human touch.
Speaker 3 (31:32):
Oh, absolutely.
You can't replace compassion,empathy and that genuine human
connection that's at the heartof quality care.
Speaker 1 (31:40):
Absolutely OK.
So stepping away fromtechnology for a moment, what
other operational considerationsshould investors be thinking
about?
Speaker 3 (31:47):
Well, I mean the physical condition of the
property.
That's paramount.
You want to make sure that thefacility is well-maintained,
safe and accessible for all theresidents.
Speaker 1 (31:55):
Yeah, so invest in regular maintenance upgrades.
Make sure it's designed withthe residents' needs in mind.
Speaker 3 (32:00):
Exactly.
You want spaces that areinviting, that encourage people
to socialize, provideopportunities for recreation and
relaxation.
Speaker 1 (32:08):
It should feel like home, not an institution.
Speaker 3 (32:10):
Right, that sense of home is incredibly important.
Speaker 1 (32:13):
Yeah, OK, so let's talk about the financial health
of the facility.
I mean, obviously you want tomake sure that it's generating
enough revenue to cover expensesand provide a return.
Speaker 3 (32:22):
Of course, you want to see that they're managing
their finance as well, that theyhave accurate budgets, they're
paying their bills on time andthey have effective cost control
measures in place.
Speaker 1 (32:32):
So it's not just about the top line.
Speaker 3 (32:33):
No.
Speaker 1 (32:34):
It's about managing those expenses.
Absolutely.
And making sure it's profitable.
Speaker 3 (32:38):
Right and that gives you the confidence that you know
your investment is secure.
Speaker 1 (32:42):
Now there's growing interest in those
environmentally friendly youknow, energy efficient senior
housing facilities.
So what are some of thosesustainable practices that
investors should be on thelookout for?
Speaker 3 (32:53):
Well, things like solar panels, energy efficient
appliances, water conservationmeasures using sustainable
building materials.
All those practices not onlybenefit the environment, but
they can help reduce thoseoperating costs, which is a
win-win.
Speaker 1 (33:07):
Absolutely.
Speaker 3 (33:07):
And it's a great selling point for those
residents who are, you know,more environmentally conscious.
Speaker 1 (33:12):
OK, so let's touch on the regulatory environment
because, as we mentioned earlier, seniors housing is highly
regulated and it's reallyimportant for investors and
operators to understand andcomply with those regulations.
Absolutely.
So what are some of the keyregulatory bodies that oversee
seniors housing?
Speaker 3 (33:30):
Well, you know, at the federal level you've got the
Centers for Medicare andMedicaid Services, so CMS.
They set the standards fornursing homes that participate
in those programs.
And then at the state level youtypically have licensing and
inspection agencies that youknow oversee assisted living and
other types of senior housing.
And then there are those localregulations that might apply.
(33:50):
You know things like zoning andbuilding codes.
Speaker 1 (33:52):
So it's a pretty multilayered system.
Speaker 3 (33:54):
Yeah, it can be a lot to navigate but you know it's
there to protect those residentsand ensure that the care is
high quality.
Speaker 1 (33:59):
Now, in addition to comply with regulations, you
know, operators also have to bevigilant about protecting those
resident rights.
Speaker 3 (34:07):
Oh, absolutely.
I mean residents.
They have the right to betreated with dignity and respect
, to receive quality care and tohave their privacy protected.
Speaker 1 (34:15):
And any violation of those rights can have serious
consequences.
Speaker 3 (34:19):
Yeah, absolutely.
It's important to create aculture of respect where
residents feel safe and valued.
Speaker 1 (34:24):
Now you know, with all this talk about regulations
and rights, it's easy to getlost in the details, but let's
not forget the big picture,right?
It's easy to get lost in thedetails, but let's not forget
the big picture, right?
Speaker 3 (34:38):
I mean the ultimate goal of seniors housing is to
provide a supportive andenriching environment where
seniors can actually thrive.
That's right.
It's about creating communitieswhere seniors feel connected,
where they're engaged and theyfeel valued.
Speaker 1 (34:44):
OK, so let's talk about marketing and outreach,
because you know, even the bestrun facility, it won't be
successful if it can't attractand retain residents.
Speaker 3 (34:52):
That's right.
Marketing is key.
Got to keep those beds filled.
Speaker 1 (34:54):
So what are some effective marketing strategies
for seniors housing?
What should operators be doingto reach those potential
residents and their families?
Speaker 3 (35:03):
Well, in today's digital age, a strong online
presence.
I mean that's everything.
You know most seniors and theirfamilies they start their
search online.
So a user friendly, informativewebsite that's essential.
Yeah, know most seniors andtheir families they start their
search online.
So a user-friendly, informativewebsite that's essential.
Speaker 1 (35:14):
Yeah, you got to make that good first impression
digitally.
Speaker 3 (35:17):
Exactly, and social media is just as important.
You know platforms likeFacebook, instagram.
It allows you to connect withpotential residents.
You can share information aboutyour facility, build those
relationships.
Speaker 1 (35:27):
Okay, so beyond the online world, what other
outreach strategies are actuallyeffective?
Speaker 3 (35:32):
Well, building those relationships with referral
sources, that's key.
So think hospitals, doctor'soffices, senior centers.
You know these are folks thatare in contact with seniors who
are thinking about their housingoptions.
Speaker 1 (35:44):
They're those trusted sources of information.
Speaker 3 (35:46):
Exactly so they can be really valuable partners Now.
Another effective strategy iscommunity involvement.
Speaker 1 (35:51):
Okay, what does that look like?
Speaker 3 (35:53):
Well, it could be sponsoring local events, you
know, offering educationalprograms, maybe partnering with
organizations that serve seniors.
It's all about getting yourname out there, building that
trust and showing yourcommitment to the community.
Speaker 1 (36:06):
Okay, now one final marketing tip.
What would you say?
Speaker 3 (36:08):
Focus on what makes your facility unique, what are
your strengths, what sets youapart, you know, do you offer
specialized care services?
Do you have an amazingactivities program?
Is your location awesome?
Highlight those things.
Speaker 1 (36:19):
Now, with all that talk about marketing and
outreach, let's not forget aboutthe power of just word of mouth
.
You know happy residents andfamilies.
They are your bestadvertisement.
Speaker 3 (36:28):
Absolutely.
There's no better marketingthan a positive reputation.
Speaker 1 (36:31):
Yeah, so the key is to provide that exceptional care
, build those strongrelationships and create that
community where residents feelvalued.
Speaker 3 (36:38):
And those referrals.
They will come naturally.
Speaker 1 (36:40):
Okay, so let's shift gears a little bit and talk
about the future of seniorshousing.
You know this is an industrythat's constantly evolving,
driven by demographic shifts,technology changing consumer
preferences.
Speaker 3 (36:52):
It's a dynamic industry and those who adapt and
innovate they will be the oneswho succeed.
Speaker 1 (36:56):
So, looking ahead, what trends do you see really
shaping the future of seniorshousing?
Speaker 3 (37:01):
Well, one trend that's already happening is the
demand for that personalizedcare.
Speaker 1 (37:05):
OK.
Speaker 3 (37:05):
Seniors are living longer, they're healthier and
they want those care plans thatare customized.
Speaker 1 (37:10):
Right, it's about empowering them to take control.
Speaker 3 (37:12):
Exactly, and technology is playing a big role
there Wearable devices,telehealth platforms, data
analytics.
It's amazing.
Speaker 1 (37:20):
OK now.
Another trend that's gettingbigger and bigger is the
emphasis on wellness andprevention.
Speaker 3 (37:25):
Yeah, it's not just about treating illness anymore.
It's about helping seniors stayhealthy.
Speaker 1 (37:29):
So what are you seeing in terms of those
wellness initiatives?
Speaker 3 (37:32):
Well, a lot more emphasis on healthy food,
fitness programs, socialactivities and even those
complementary therapies likeyoga, meditation and massage.
Speaker 1 (37:41):
Okay, so it's taking that holistic approach.
Speaker 3 (37:43):
Absolutely Addressing physical, mental and emotional
health.
Speaker 1 (37:47):
Now another trend worth watching is the blurring
of lines between different typesof seniors housing.
Speaker 3 (37:52):
Oh yeah.
Speaker 1 (37:53):
What do you mean by that?
Speaker 3 (37:54):
Well, we're seeing more communities that offer that
continuum of care.
So, from independent living toassisted living, to skilled
nursing, all on the same campus.
Speaker 1 (38:03):
OK, so residents can age in place, moving through
those levels as their needschange.
Speaker 3 (38:07):
Exactly, it provides so much flexibility.
Speaker 1 (38:10):
Now, the final trend we'll mention is that growing
importance of technology.
Speaker 3 (38:13):
Of course.
Speaker 1 (38:14):
And I think we've talked about some of the ways
it's being used, but I feel likewe're just scratching the
surface.
Speaker 3 (38:18):
Oh, we are.
Technology is impactingeverything from care delivery to
resident engagement, to howefficient the operation is.
Speaker 1 (38:26):
It's about creating that better experience,
improving outcomes and makingthings more efficient.
Speaker 3 (38:31):
Yeah, and you know, looking ahead, it's clear that
technology is going to play aneven bigger role in the future.
Speaker 1 (38:36):
So for investors, they really need to understand
how technology is shaping theindustry and look for operators
who are embracing thoseinnovations.
Speaker 3 (38:44):
Absolutely those who are tech savvy and forward
thinking.
They're going to thrive.
Speaker 1 (38:49):
Okay, so we've covered a lot of ground here.
You know it's a complexindustry, but it's also an
industry that's full ofopportunities.
Yeah, I agree, Especially forthose who understand the nuances
and are really committed toproviding that quality care.
Speaker 3 (39:00):
And, as we head into the next part of our deep dive,
we're going to explore somespecific examples of seniors
housing facilities that arereally getting it right.
Speaker 1 (39:07):
Yeah, we'll take a closer look at their models,
their marketing and how they'reusing technology.
Speaker 3 (39:16):
We've covered the market trends, the operational
nuts and bolts, but now it'stime to see how these concepts
actually play out in the realworld.
Right Theory's important, butnothing really brings an
investment thesis to life likereal world examples of success.
Speaker 1 (39:24):
Exactly so.
Let's jump into some casestudies of senior housing
communities that are trulyraising the bar.
I know you've got someinspiring examples lined up.
Hit me with your first shiningexample.
Speaker 3 (39:34):
Well, let's start with a community called the
Village at Willow Creek.
They're located in a reallyvibrant suburb just outside of a
major city, and they've reallynailed the concept of aging in
place.
Speaker 1 (39:45):
Okay, I like the sound of that already.
What makes their approach toaging in place so special?
Speaker 3 (39:49):
Well, they offer a full continuum of care options,
all on the same campus.
So from independent living toassisted living, to memory care,
okay, this means that residentscan seamlessly transition
between those levels of care astheir needs change, without
having to uproot their lives andmove to a whole new environment
.
Speaker 1 (40:07):
That's huge for both residents and their families.
I mean it eliminates so muchstress and disruption.
What about their approach toresident care?
Is there anything unique abouttheir model?
Speaker 3 (40:17):
Yeah, they've implemented a really innovative
system that focuses onpersonalized care plans, but the
key here is these plans aredriven by data and resident
feedback.
Speaker 1 (40:26):
So it's not a one size fits all approach.
Speaker 3 (40:28):
No, not at all.
Speaker 1 (40:29):
They're tailoring the care.
Speaker 3 (40:30):
They're really tailoring it to each
individual's needs andpreferences.
They use technology to track,you know, residents' health
metrics, their activity levels,their social engagement, and
then all that data is used tocreate these custom care plans
that evolve as the needs change.
Speaker 1 (40:45):
That's impressive.
It sounds like they're reallyleveraging tech to enhance that
human touch.
Speaker 3 (40:49):
Yeah, and it's definitely working.
They have incredibly highresident satisfaction rates and
a pretty long waiting list.
Speaker 1 (40:56):
Wow, that's a testament to the quality of
their care and the overallexperience.
Now, beyond the care itself,how do they foster that sense of
community and engagement amongresidents?
Speaker 3 (41:05):
Well, they've created this really vibrant and active
community and they have a packedcalendar full of events.
Okay, social events,educational programs, fitness
classes, outings, you name it.
Speaker 1 (41:15):
So there's something for everyone.
Speaker 3 (41:16):
Oh, absolutely.
They cater to all sorts ofinterests.
So it's not just aboutproviding care, it's about
creating this rich andfulfilling lifestyle.
Speaker 1 (41:24):
I love that.
Now, does the physicalenvironment reflect this?
Speaker 3 (41:27):
Oh yeah, absolutely.
The facility itself is designedto be bright, welcoming,
accessible, with lots ofcommunal spaces, you know, both
indoors and outdoors.
They have beautifullylandscaped garden, walking paths
, a fitness center, a pool.
They even have a pudding green.
Speaker 1 (41:43):
Wow, it sounds like they've thought of everything to
create that welcoming andstimulating environment.
Speaker 3 (41:47):
Yeah, they really have, and you know their
financial performance.
It reflects their success.
They consistently have highoccupancy rates, strong revenue
growth and they have a stellarreputation as a top tier
provider.
Speaker 1 (41:58):
It sounds like it.
So that's a great example of awell-run community that can
achieve both residentsatisfaction and that financial
success.
Okay, I'm ready for your nextinspiring case study.
What do you got?
Speaker 3 (42:09):
All right, so let's shift gears and head into the
heart of a bustling city, wherewe'll find Urban Oasis, a
seniors housing community that'sreally redefining urban living
for older adults.
Speaker 1 (42:19):
Ooh, urban living for seniors.
That's a growing trend and I'mreally eager to hear how Urban
Oasis is approaching this.
Speaker 3 (42:24):
Well, you know, they're really leading the way
by creating a community that'stotally integrated into the
fabric of the city.
They're actually located withinwalking distance of shops,
restaurants, culturalattractions, public
transportation, so residents caneasily access all the best the
city has to offer.
Speaker 1 (42:41):
So they're not isolated out in the suburbs,
they're right in the thick of it.
Speaker 3 (42:44):
Right in the middle of the action and you know what
They've partnered with localbusinesses and organizations to
offer residents.
You know discounts andexclusive access to all sorts of
events and services.
Speaker 1 (42:54):
So they're really tapping into that urban
ecosystem.
Absolutely, that's smart.
Now, affordability is a majorconcern for a lot of seniors
living in cities.
How does Urban Oasis addressthat challenge?
Speaker 3 (43:05):
Well, they offer a range of unit sizes and price
points to try and make itaccessible to a wider group.
Speaker 1 (43:11):
OK.
Speaker 3 (43:11):
And they've actually got some clever design features
to maximize space and efficiency.
So think like convertiblefurniture that can transform a
living room into a guest room.
Speaker 1 (43:21):
Ooh, I like that.
Speaker 3 (43:22):
Or a dining area into a workspace.
Speaker 1 (43:24):
That's innovative.
So they're making the most ofevery square foot.
Speaker 3 (43:27):
They are, and they also have those shared amenities
like a rooftop garden and acommunity kitchen, which really
encourage socialization andreduce the need for each unit to
have every single thing.
Speaker 1 (43:37):
Right, it's about creating a sense of community
and shared resources.
Now, how does their approach toresident care kind of fit into
that urban model?
Speaker 3 (43:44):
Well.
They've partnered with aleading health care system to
provide on-site medical care andwellness programs, so residents
have access to high qualitycare without having to navigate
the complexities of the city.
Speaker 1 (43:56):
Okay, that makes sense.
Speaker 3 (43:57):
And they have a dedicated team of social workers
and activity coordinators whohelp residents, you know,
connect with community resourcesand stay engaged in city life.
Speaker 1 (44:06):
So they're providing that holistic approach to
well-being that's tailored tothe urban environment.
Speaker 3 (44:10):
Exactly, and it's attracting, you know, a new
generation of seniors who wantthat active, engaged lifestyle
without having to compromise oncare or community.
Speaker 1 (44:19):
Wow, these examples are fantastic.
I mean they really highlightthe diversity of models within
senior housing and all thoseinnovative approaches that are
emerging.
Speaker 3 (44:27):
They do and they really underscore some of those
key trends that we've beentalking about.
Such as Well, that growingemphasis on personalization, you
know, both in terms of careplans and just living
environment.
And then technology, you knowbeing used not just for
efficiency but to enhance careand engagement, and that shift
towards a more holistic approachto wellbeing that encompasses
(44:48):
physical, mental and socialhealth.
Speaker 1 (44:50):
Yeah, those are all themes that we've woven
throughout our deep dive.
Speaker 3 (44:53):
And these examples really bring those themes to
life.
They show how they can betranslated into real world
success.
Speaker 1 (44:59):
Okay Now I know some listeners might be thinking well
, these are probably high-endluxury facilities that are out
of reach for most people.
What would you say to that?
Speaker 3 (45:07):
Well, it's a fair point, but the principles behind
these communities, they can beapplied across the entire
spectrum of senior housing.
Speaker 1 (45:15):
Okay.
Speaker 3 (45:15):
It doesn't matter what the budget is or the target
market is.
Speaker 1 (45:18):
So it's not about those fancy amenities or the
high price tag.
Speaker 3 (45:21):
No, it's really about the philosophy, the philosophy
of care, community andwell-being.
Speaker 1 (45:26):
And as investors, operators and developers, you
know we have a responsibility tostrive for those standards of
excellence, no matter what thebudget is, Because ultimately,
this is about creatingcommunities where these seniors
can thrive.
Speaker 3 (45:38):
Right.
It's about recognizing thevalue of our aging population
and creating environments thatsupport them.
Speaker 1 (45:43):
Well said.
So, as we wrap up this deepdive, let's reflect on what
we've learned.
We've explored the marketdynamics of senior housing, the
operational considerations, andseen some pretty amazing
communities that are setting anew standard.
Speaker 3 (45:55):
We've covered the challenges, the opportunities,
the risks and the rewards andreally highlighted the
importance of taking thatlong-term perspective, you know,
focusing on resident well-beingand embracing innovation.
Speaker 1 (46:07):
So, for our listener who's considering an investment
in senior housing, what's thekey takeaway?
Speaker 3 (46:12):
Well, you know, this is a dynamic, growing market
with huge potential.
But it's not a passiveinvestment.
It requires careful duediligence.
You know a real understandingof how these operations work and
a genuine passion for servingthose needs.
Speaker 1 (46:27):
It's about more than just financial returns.
Speaker 3 (46:29):
Way more.
Speaker 1 (46:29):
It's about making a difference.
Absolutely so, as you embark onyour investment journey, keep
these insights in mind.
Ask the tough questions, lookfor those best practices and
don't be afraid to think outsidethe box.
Yeah, be creative.
Because the future of seniorshousing is very bright and those
who are willing to lead withinnovation and compassion will
shape that future.
Speaker 3 (46:49):
Thank you so much for joining us on this deep dive.
We hope you found it insightful.
Speaker 1 (46:57):
And we encourage you to continue exploring this
sector.
Until next time, happyinvesting.
As you consider potential investments in seniors
housing and care.
Here are a few key takeaways.
First, the market is strong andit's expected to remain strong,
driven by those powerfuldemographic tailwinds.
Second, those cap rates arepotentially poised for
compression, which could lead tohigher property value.
And if those cap rates arepotentially poised for
compression, which could lead tohigher property value, and if
those cap rates do compress, itcould create some opportunities
(00:29):
for those who get in early.
Third, occupancy rates arerebounding nicely.
Rent growth is robust.
Fourth, new construction islimited, which creates that
favorable supply-demand dynamic.
Fifth, investors are eager toincrease their exposure to the
sector.
They're seeing the potentialand they're acting on it.
Sixth, there are some risks toconsider, like interest rate
volatility and those potentialeconomic headwinds, but the
(00:51):
overall outlook it remainspositive.
The long-term demand driversare strong and the fundamentals
of this market are sound.
Speaker 2 (01:04):
Welcome to the Senior Housing Investors Podcast.
If you are an owner operator,investor, developer or buyer of
senior housing, you've come tothe right place.
The best way to stay connectedwith us is to sign up for our
weekly newsletter athavenseniorinvestmentscom.
This podcast doesn't existwithout you, our community.
(01:26):
Thank you for listening andreach out to us anytime.
Speaker 1 (01:36):
Welcome back to another Deep Dive.
This one I'm pretty excitedabout because we're going to be
looking at something that's notjust a hot topic in real estate
but it also connects to thishuge demographic shift we're
seeing.
We're talking about seniorshousing and care investments.
Speaker 3 (01:48):
You know, what's so interesting about this is that
everyone seems to be talkingabout the aging population, but
very few are connecting the dotsto the investment implications.
Speaker 1 (01:56):
Yeah, exactly, it seems like there's a big
opportunity there, right, andluckily for us, jll just came
out with their Seniors Housingand Care and Founders Survey and
Trends Outlook for spring 2025.
So if you're even thinkingabout opportunities in this
sector, this is a great place tostart right.
Speaker 3 (02:10):
Oh, absolutely.
This report is kind of like acheat sheet to where the smart
money is going.
Speaker 1 (02:14):
Okay.
So let's jump right in First up.
Let's talk about what'sactually happening in the market
.
So the transaction trends.
You might be surprised to hearthat the seniors housing market
is really active right now.
I mean, we're seeing activitylevels that are rivaling
pre-pandemic times.
Speaker 3 (02:28):
Yeah, it is pretty remarkable.
Speaker 1 (02:29):
It is yeah.
Speaker 3 (02:30):
Transaction volume in 2024, it hit $15.6 billion,
which is actually consistentwith the previous year's
activity.
Speaker 1 (02:38):
So that's a good sign , right.
It seems like investors arereally starting to pay attention
to this sector, but there'salso an interesting little twist
here.
Oh, the report points out thatwe're seeing a lot more
individual asset sales comparedto those mega portfolio
transactions that we used to see.
Speaker 3 (02:52):
That's right, and you know what?
The reason for that seems to bea rise in cost of debt.
Those big portfolio deals aregetting a lot harder to pull off
.
Speaker 1 (03:00):
So smaller bites are a little more digestible in this
current environment.
Definitely.
Okay, so smaller bites are alittle more digestible in this
current environment, DefinitelyOkay.
So let's move on to I know thething you've been waiting for
cap rates.
Oh yeah.
This is where it gets juicy fora potential investor.
Absolutely.
Right.
So the good news is 57% of theinvestors that JLL surveyed are
predicting cap rate compression.
But sometimes people throwaround terms like cap rate
(03:21):
compression and they kind ofassume everyone knows what it
means.
Could you break it down for ourlistener In plain English?
Why should they care?
Speaker 3 (03:29):
Well, think about it this way when we talk about cap
rate compression, it usuallymeans that property values are
about to go up.
It's like the market is saying,hey, this is getting even more
valuable, so get in while youcan.
Speaker 1 (03:42):
So it's all about potential profit for both.
To get in at the right time.
Okay, and to put things inperspective, the current seniors
housing cap rates are hoveringaround 6.5%, which is a good bit
higher than what you'd see in,say, the multifamily sector.
That's right, right.
So that yield premium isdefinitely something investors
are paying attention to,especially, you know, as
(04:03):
interest rates are going up.
Everybody wants to know whereto park their money Right, for
the best bang for their buck.
Okay.
So let's switch gears a littlebit and talk about occupancy
rates, because, at the end ofthe day, a senior's housing
investment is only as good asits occupancy levels.
Speaker 3 (04:20):
Oh, absolutely.
You could have the bestlocation, the nicest building,
but if you don't have residents,you don't have a business.
Speaker 1 (04:26):
That's a good point and this is where the JLL report
has some really good news.
Occupancy rates they'veactually bounced back in most
markets, except for those bigWest Coast cities.
Speaker 3 (04:34):
Yeah, and what's interesting is that occupancy in
those secondary markets isactually nearing all-time highs.
Speaker 1 (04:40):
Okay.
So that begs the questionwhat's driving this?
Is it just kind of like pent updemand from the pandemic years,
or is something morefundamental going on here?
Speaker 3 (04:48):
Well, I think it's a pretty straightforward supply
and demand situation.
We're seeing strong absorptionrates, so units are filling up
quickly, but at the same time,new construction it's relatively
limited, so you've got this.
You know this favorableenvironment for the landlords.
Speaker 1 (05:02):
Yeah, that makes sense.
So it's a win-win right foroperators and investors.
Yeah, definitely.
Okay, Speaking of wins, let'stalk about rent growth.
I mean seniors housing is kindof killing it in this department
.
Oh, absolutely.
Right Outperforming most othercommercial real estate sectors.
Speaker 3 (05:16):
It's pretty amazing Rents are now 22.5% higher than
they were before the pandemic.
Speaker 1 (05:27):
The average is $5,207 per month across both those
primary and secondary markets.
Okay, so this is something ourlistener can really sink their
teeth into.
Speaker 3 (05:32):
Yeah, it's real.
Speaker 1 (05:32):
This strong rent growth.
It translates directly intopotential income for investors.
Speaker 3 (05:37):
Absolutely.
I mean, it's a clear sign thatdemand for seniors housing is
strong and operators are able tocommand those higher rents.
Speaker 1 (05:44):
Now here's the thing.
Remember how we talked aboutlimited new construction.
Well, that actually creates aneven bigger opportunity for
investors, right?
Speaker 3 (05:50):
Exactly, I mean new development of seniors housing.
It's at its lowest point inover 16 years.
That's wild, it is.
Speaker 1 (05:57):
Especially considering the rising demand
we're seeing.
Yeah.
So I mean, what does this meanfor someone who's thinking about
getting into this space?
Speaker 3 (06:04):
Well, you know, it paints a pretty compelling
picture.
Right Limited supply, surgingdemand, it creates a very
lucrative environment.
Strong investment returns arevery likely.
Speaker 1 (06:13):
Makes sense and this positive outlook it's definitely
reflected in investor sentiment.
According to this JLL survey,the majority of investors are
actively looking to increasetheir exposure to seniors
housing in 2025.
Speaker 3 (06:26):
Yeah, it's a strong wood of confidence from people
who are closest to the market.
Speaker 1 (06:30):
Now, within seniors housing, there are different
types of facilities right, sowhich subsectors are they most
interested in?
Speaker 3 (06:36):
Well, independent and assisted living facilities.
Those seem to be the hottesttickets right now.
Speaker 1 (06:41):
Yeah, ok, that makes sense.
Those are probably the twolargest segments catering to a
wide range of seniors.
Speaker 3 (06:45):
Yeah, definitely, and they also tend to offer a good
balance of risk and reward.
Speaker 1 (06:49):
Okay, and then, of course, let's not forget the
massive demographic tailwindthat's kind of pushing this
entire sector forward.
Speaker 3 (06:57):
Right.
This is something everyinvestor needs to understand.
I mean, the 80 plus age cohortin the US is going to explode by
like 36 percent over the nextdecade.
Speaker 1 (07:05):
Wow, those are huge numbers.
Speaker 3 (07:07):
Yeah.
Speaker 1 (07:07):
So this isn't just like a short term trend, right?
No.
It's a fundamental shift in oursociety that's going to be
creating these opportunities fordecades to come.
Speaker 3 (07:14):
Absolutely.
The demand for seniors housingand care is only going to go up,
so it makes it a potentiallyvery solid long term investment.
Speaker 1 (07:22):
So let me just kind of recap here for our listener.
We've got strong transactionvolume potential for cap rate
compression, occupancy rebound,robust rent growth, limited new
supply, eager investors and amassive demographic wave pushing
everything forward.
Speaker 3 (07:37):
You know it's a pretty compelling case for
taking seniors housing and careinvestments seriously.
Speaker 1 (07:42):
Yeah, okay, now let's dive a little deeper into what
this JLL Investors Surveyactually uncovered.
Speaker 3 (07:51):
They talked to over 75 professionals who really know
this market, so their insightsare valuable.
Yeah, they're the ones outthere on the front lines doing
deals.
They're seeing how thismarket's evolving.
Speaker 1 (07:56):
Exactly so.
The survey covered a lot ofground, from cap rate
expectations to preferredinvestment types, so let's start
by looking at how investors areactually valuing seniors'
housing assets, because it seemslike there's been a bit of a
shift in the methodology.
Speaker 3 (08:09):
You know it's interesting, the use of
discounted cashflow analysis andrequired yield rates has
actually decreased a little bitsince the last survey.
Speaker 1 (08:18):
Okay, what do you think that tells us?
Speaker 3 (08:20):
Well, it could suggest that investors are
placing more emphasis on otherfactors, factors like market
conditions, the operationalexpertise and the quality of the
real estate itself.
Speaker 1 (08:30):
So it's not just about crunching the numbers.
Speaker 3 (08:32):
Right.
Speaker 1 (08:32):
It's more about taking a holistic view.
Exactly OK, but it's importantto note, though, that discounted
cash flow analysis it's stillthe dominant approach.
Fifty three percent of therespondents said they still rely
on that.
Speaker 3 (08:43):
Still a valuable tool .
Speaker 1 (08:44):
Yeah, so it's still valuable, but investors are also
looking beyond just thespreadsheets.
Speaker 3 (08:55):
Definitely.
I think they're realizing thatseniors housing it's a complex
asset class, that requires kindof a nuanced approach to
valuation.
Speaker 1 (08:58):
OK, so what about those all important unlevered
internal rates of return?
What are investors targeting?
Speaker 3 (09:03):
Well, there is actually quite a range of
responses, which, to me,suggests that investors are
considering the specifics ofeach deal.
Speaker 1 (09:11):
OK, so there's no magic number right, no magic
number.
Speaker 3 (09:13):
It really depends on things like the location, the
type of facility, theoperational model, you know all
those things.
Speaker 1 (09:20):
Yeah, the risk profile.
But the survey did reveal anaverage spread between the cap
rate and the unlevered IRR on aseven years old.
Speaker 3 (09:29):
Yeah, and that spread was 279 basis points.
Speaker 1 (09:32):
Okay, so healthy spread.
Speaker 3 (09:34):
Yeah.
Speaker 1 (09:34):
Indicates, investors are still seeking those
attractive returns.
Speaker 3 (09:37):
Right.
They're looking foropportunities to grow their
capital while mitigating risk.
Speaker 1 (09:42):
Now, one thing that always comes up in real estate
is you know the distinctionbetween performing and
non-performing assets.
How are investors approachingthis in the seniors housing
market?
Speaker 3 (09:53):
Well, you know, the survey said that the most common
spread that's applied betweenthose cap rates for performing
and non-performing propertiesit's 200 basis points.
Speaker 1 (10:03):
So a higher risk premium for those non-performing
assets.
Speaker 3 (10:05):
Makes sense.
I mean, you've got to accountfor those potential costs and
you know those challenges ofturning around a property that's
not doing well.
Speaker 1 (10:12):
Yeah, absolutely so.
It's not just about finding abargain.
Speaker 3 (10:15):
No.
Speaker 1 (10:15):
It's about understanding those risks and
that potential upside.
Speaker 3 (10:19):
You got it.
Investors need to carefullyassess the operational
challenges and the capitalexpenditures required to make a
non-performing asset great.
Speaker 1 (10:29):
OK, let's talk about terminal cap rates.
This is something investorsalways need to think about,
especially when looking atlonger term holds.
Speaker 3 (10:35):
Oh for sure, and you know.
When they asked about thespread they're underwriting
between the going in cap rateand the terminal cap rate on a
10 yearyear hold, almost half ofthose people said a spread of
50 basis points.
Speaker 1 (10:46):
So a pretty modest spread.
Speaker 3 (10:47):
Yeah.
Speaker 1 (10:48):
Suggests, they're fairly confident in the
long-term stability.
Speaker 3 (10:51):
Right, they don't expect any crazy shifts over the
next 10 years.
Speaker 1 (10:54):
Now, of course, no investment outlook is complete
without talking about inflationright, oh, of course, inflation
yeah.
So what are investors using astheir baseline when it comes to
inflation assumptions?
Speaker 3 (11:04):
Well, it seems like they're taking a pretty
conservative approach.
You know, almost two thirds ofthe people surveyed said they're
typically underwriting a 3percent inflation rate and then,
like a little over a quarter,using a 4 percent rate.
Speaker 1 (11:16):
OK, so they're factoring it in, but they're not
going crazy.
Speaker 3 (11:19):
Right, just trying to find that balance between
realism and optimism.
Speaker 1 (11:22):
They're acknowledging that inflation is a factor, but
they're confident that seniorshousing operators can adjust
rents accordingly, Absolutely OKnow let's get into some of the
nuances of different investmenttypes within the sector.
Speaker 3 (11:37):
Yeah, there's a lot to cover here, because the
market offers quite a fewoptions, each with their own
risk and reward profile.
Speaker 1 (11:41):
Yeah, it's not one size fits all.
Speaker 3 (11:43):
Definitely not.
Risk and reward profile yeah,it's not one size fits all.
Definitely not.
Investors need to carefullyconsider their goals, their risk
tolerance and their level ofexpertise before they decide
which type is right for them.
Speaker 1 (11:52):
Okay Now.
One type of investment that Inoticed in the survey was
absolute net leased properties.
Oh yeah.
So these are properties wherethe tenant takes on most of
those operating expenses, right?
Speaker 3 (12:04):
Right.
So this is a way for investorsbut kind of have those passive
income streams.
Speaker 1 (12:08):
Okay, so they're collecting rent without having
to deal with the day-to-dayhassles of property management.
Speaker 3 (12:13):
Exactly, but it's important to note that absolute
net leases, you know they comewith their own sets of risks.
Such as Well, you're relying onthe tenant to maintain the
property right and pay thoseoperating expenses.
Speaker 1 (12:23):
So you need to do your due diligence.
Speaker 3 (12:25):
Oh, absolutely Make sure they're financially stable.
They have a good track record.
Speaker 1 (12:28):
And the lease terms are favorable to you as the
landlord.
Okay, now, the JLL survey foundthat there's a lot of variation
in how investors areapproaching these deals.
For private pay senior livingsubsectors so think independent
living, assisted living, memorycare the most common spread
between going concern cap ratesand absolute net lease cap rates
was 100 basis points.
Okay, but for skilled nursingfacilities that spread was
(12:50):
higher.
Half the respondents indicateda range of 250 to 300 basis
points.
Speaker 3 (12:56):
Okay.
So they're demanding a higherpremium for those absolute net
lease deals in the skillednursing sector.
Speaker 1 (13:01):
Which makes sense.
I mean, that's a morespecialized area.
Speaker 3 (13:03):
Definitely.
Speaker 1 (13:04):
Right and potential for more regulatory complexities
.
Speaker 3 (13:06):
Absolutely.
It's a higher risk, higherreward proposition.
Speaker 1 (13:10):
Okay, so investors need to carefully weigh those
potential returns against therisks.
Absolutely.
Before jumping into somethinglike that.
Okay, so let's shift ourattention now to who's actually
doing the buying in the seniorshousing market.
The JLL survey gives us somegreat insights into the buyer
composition, which I think isreally important for
(13:31):
understanding the competitivelandscape.
Speaker 3 (13:32):
Oh yeah, absolutely Helps you identify potential
partners or competitors.
Speaker 1 (13:34):
Exactly so in 2024, private buyers they were the
dominant force, accounting for57 percent of purchases, which
was actually down a little fromthe previous year, but still
above the average of 52 percentsince 2016.
Speaker 3 (13:47):
So it seems like private capital is still finding
those opportunities in thesector.
Speaker 1 (13:51):
Yeah, and it makes sense because they're often more
nimble, right, right.
They can move quickly when theysee a good deal.
Speaker 3 (13:56):
Exactly.
They're not bound by the sameprocesses that larger
institutions might be.
Speaker 1 (14:01):
So they could be more opportunistic and responsive to
market conditions.
Absolutely.
Now, while those private buyersare leading the charge, we're
also seeing institutionalinvestors kind of dipping their
toes back into the water.
Their share of purchasesincreased a bit, from 5% in 2023
to 12% in 2024.
Speaker 3 (14:19):
So I guess that suggests that institutions are
starting to recognize thepotential here, especially given
those long-term demographictrends we were talking about.
Speaker 1 (14:26):
They're seeing the writing on the wall.
Speaker 3 (14:28):
Absolutely.
Speaker 1 (14:28):
They're realizing they can't ignore this market.
Speaker 3 (14:31):
And this could be a sign of things to come.
We might see a wave ofinvestment from pension funds,
insurance companies, other biginstitutions.
Speaker 1 (14:40):
Which would further drive up those prices and
increase competition foracquisitions.
Yeah.
Now it's important to rememberthat the sector isn't just
attracting attention from, youknow, those traditional real
estate investors.
Speaker 3 (14:51):
This is key for our listener.
Speaker 1 (14:52):
Right.
We're seeing growing interestfrom those seeking exposure to
alternative investment sectors.
Speaker 3 (14:58):
Right.
So you know, investors arelooking beyond the usual office,
retail and industrialproperties.
They want diversification andthey're finding opportunities in
sectors that have those uniquedemand drivers.
Speaker 1 (15:10):
And seniors housing fits that bill.
Speaker 3 (15:11):
Oh for sure.
It's a non-correlated assetclass, which means it's not
directly tied to the ups anddowns of the stock market.
Speaker 1 (15:18):
Right and it's not tied to the broader economy.
Speaker 3 (15:20):
Right.
Speaker 1 (15:21):
So it's driven by the demographics and that growing
need Exactly For this type ofhousing and care, which makes it
very appealing for someone whowants to diversify.
Absolutely.
Now, along with student housingand medical office, seniors
housing is one of the threelargest alternative sectors in
terms of investment volume.
Speaker 3 (15:38):
Wow, so it's attracting serious capital from
a wide range of investors.
Speaker 1 (15:42):
And the reason is clear, right.
These sectors often offergreater growth prospects.
Speaker 3 (15:46):
Absolutely.
Especially in a market likethis, where interest rates are
rising and investors aresearching for yield, these
alternative sectors are veryappealing.
Speaker 1 (15:55):
They offer that potential for higher returns
without taking on that excessiverisk.
Speaker 3 (15:59):
Right, that's a very attractive combination.
Speaker 1 (16:01):
Okay.
So before we wrap up this firstpart of our deep dive, let's
talk about what investors aremost concerned about.
Speaker 3 (16:07):
Yeah, let's be real.
Every investment has some risks.
Speaker 1 (16:10):
Exactly right, and it's important to understand
those risks.
So the JLL survey asked thesemarket participants to identify
their top concerns aboutpotential negative impacts on
the market in 2025.
Okay.
And the number one concerncited by 45% of respondents was
capital markets and interestrate related issues.
Speaker 3 (16:28):
Well, that makes sense given the current
environment.
We've seen rates risesignificantly.
Speaker 1 (16:32):
Yeah, and there's always that risk of further
increases or volatility.
Speaker 3 (16:35):
Right, which can impact everything.
Borrowing costs, propertyvaluations.
Absolutely.
Makes underwriting morechallenging and can create a lot
of uncertainty.
Speaker 1 (16:43):
Yeah.
Now, another 10% of respondentssaid the availability of
financing was a major concern.
Speaker 3 (16:48):
OK, so lenders might be tightening up a little bit,
making it harder to get thoseloans.
Speaker 1 (16:52):
Which could slow down transaction volume or make it
harder for new players to comein.
Speaker 3 (16:56):
Right Creates a barrier to entry for those who
don't have access to capital.
Speaker 1 (17:00):
OK.
And then we had concernsrelated to the broader economic
environment, you know theavailability of workforce, the
regulatory landscape,development costs and then
competition for capitalplacement.
Speaker 3 (17:11):
Right.
I mean these are all validconcerns.
It's not all sunshine and rosesin any market.
No, never is Right.
Speaker 1 (17:17):
So that's why we do these deep dives we want to
equip you with what you need,that's right To navigate those
complexities, help you makethose informed decisions, yeah,
okay.
So let's step back for a moment.
Think about what all thisinformation means for you.
We've covered transactiontrends to investor sentiment,
potential risks.
Speaker 3 (17:33):
It's a lot to digest, but it's all really valuable
stuff.
Speaker 1 (17:36):
Yeah.
So, as you consider potentialinvestments in seniors housing
and care, here are a few keytakeaways.
First, the market is strong andit's expected to remain strong,
you know, driven by thosepowerful demographic tailwinds.
Speaker 3 (17:50):
And that's a fundamental driver.
It's not going away.
Speaker 1 (17:53):
The aging of the baby boomer generation.
That's a mega trend.
Absolutely.
It's going to create asustained demand for decades to
come.
Definitely.
Second, those cap rates arepotentially poised for
compression, which could lead tohigher property values.
Speaker 3 (18:07):
Yeah, if you're looking for appreciation
potential, this could be a goodbet.
Speaker 1 (18:10):
Yeah, and if those cap rates do compress, it could
create some opportunities forthose who get in early For sure.
Third, occupancy rates arerebounding nicely.
Rent growth is robust.
Speaker 3 (18:19):
Yeah, so it's a healthy market.
Speaker 1 (18:21):
It's a sweet spot.
Fourth, new construction islimited, which creates that
favorable supply-demand dynamic.
Speaker 3 (18:27):
Right.
This is supporting occupancyrates and rent growth.
Speaker 1 (18:30):
Yeah, exactly Fifth.
Investors are eager to increasetheir exposure to the sector.
Speaker 3 (18:35):
Right.
They're attracted to the growthpotential and the long-term
stability.
Speaker 1 (18:39):
Yeah, this is a vote of confidence from those who are
putting their money where theirmouth is.
Absolutely.
They're seeing the potentialand they're Six.
There are some risks toconsider, like interest rate
volatility and those potentialeconomic headwinds.
Speaker 3 (18:53):
Right.
It's important to be aware ofthat and factor those into your
decision.
Speaker 1 (18:56):
Yeah, but the overall outlook it remains positive,
right.
It does.
The long-term demand driversare strong and the fundamentals
of this market are sound.
Speaker 3 (19:04):
Absolutely.
It's a sector that's wellpositioned for growth.
Speaker 1 (19:08):
Okay, now, before we move on to the next part of our
deep dive, let's take a quicklook at what the typical
marketing time is for seniorshousing assets.
Okay, so this is the time ittakes to sell a property, from
listing to closing.
Speaker 3 (19:20):
Right.
So for a seller who wants aquick and efficient transaction,
this is a key factor Exactly.
They don't want their capitaltied up in a property that takes
forever to sell Right and,according to the JLL survey,
that typical marketing time it'sbeen decreasing lately.
Speaker 1 (19:35):
That's a good sign, right.
Speaker 3 (19:36):
Yeah, I think so.
It means the market's moreliquid Buyers and sellers can
transact more quickly.
Speaker 1 (19:40):
So that's, positive.
Speaker 3 (19:41):
Yeah, it indicates strong demand and a lot of
buyers out there.
Speaker 1 (19:44):
Okay, Now, I know we've covered a lot already, but
there's one more crucial aspectof this market we need to
explore.
Oh, okay, what's that?
We've talked about?
Demographics demand investmentopportunities.
But what about the actualproduct?
Oh yeah, the senior housingfacilities themselves.
Speaker 3 (19:58):
This is where it gets really interesting.
Speaker 1 (20:00):
Right.
Speaker 3 (20:00):
Because we're not just talking about bricks and
mortar anymore.
Speaker 1 (20:02):
OK.
Speaker 3 (20:03):
We're talking about creating these living
environments that cater to theunique needs of a new generation
of seniors.
Speaker 1 (20:10):
A generation that's more active, more tech savvy.
Speaker 3 (20:12):
Yeah, more demanding.
Speaker 1 (20:13):
Yeah.
Speaker 3 (20:13):
They want more than just a place to live.
Speaker 1 (20:15):
They want experiences .
Speaker 3 (20:16):
Exactly.
Speaker 1 (20:17):
They want community, they want to stay connected, and
that's driving so muchinnovation in the design and the
development and the operationof these facilities.
Speaker 3 (20:24):
Absolutely.
We're seeing a shift away fromthat traditional institutional
model towards something thatfeels more like hospitality.
Speaker 1 (20:31):
Okay, so think boutique hotels.
Speaker 3 (20:33):
Yeah.
Speaker 1 (20:34):
Resort-style amenities, personalized care
plans.
Speaker 3 (20:37):
Exactly.
It's all about creating a senseof well-being.
Speaker 1 (20:40):
Yeah, and this is where technology comes in.
Speaker 3 (20:42):
Oh, big time Right.
Speaker 1 (20:47):
Telehealth, smart home features, social engagement
apps.
Yeah, it's about using tech toenhance the resident experience,
improve care delivery, makethings more efficient for those
operators.
Right, and this is going to bea key differentiator for
investors.
Speaker 3 (20:57):
Absolutely.
It's not just about locationand property anymore.
Speaker 1 (21:00):
It's about understanding how technology and
innovation are shaping thefuture of this.
Speaker 3 (21:04):
And how those factors are going to impact the
long-term value of yourinvestment.
Speaker 1 (21:10):
Okay.
So as you evaluate potentialopportunities, ask yourself how
is this facility incorporatingtech to enhance the resident
experience?
How are they using data andanalytics to improve care and
operations?
How are they adapting to theseevolving needs and preferences
of this new generation ofseniors?
Speaker 3 (21:27):
Those are the questions that are going to
separate the winners from thelosers in this really exciting
and evolving market.
Speaker 1 (21:33):
Now I know we're diving deep, but it's important
to understand the layers here.
It's not just about thefinancial returns, right?
No, it's about investing issomething that's making a real
difference.
Speaker 3 (21:42):
Absolutely, and that's something we can all feel
good about.
Speaker 1 (21:45):
Okay, so before we get to those investor survey
results, let's take a littledetour and talk about a specific
investor type that's beenmaking waves in the seniors
housing market.
Okay.
This is a trend that's worthpaying attention to, because it
kind of reflects the appeal ofthe sector to a wider range of
investors.
Okay, so who are we talkingabout here?
Speaker 3 (22:02):
Private equity firms.
Speaker 1 (22:04):
Ah, the big players.
Speaker 3 (22:05):
Exactly, and they've been increasingly active in this
space, attracted by thefundamentals and the potential
for big returns.
Speaker 1 (22:11):
OK, but what's driving their interest
specifically?
Speaker 3 (22:19):
Well, there's a few things.
First, they love fragmentedmarkets, and seniors housing is
definitely fragmented.
There are a lot of smalleroperators, so it creates
opportunities for consolidation.
Speaker 1 (22:24):
So they can come in, buy up a bunch of companies,
create a larger platform.
Speaker 3 (22:27):
Exactly which leads to cost savings and, hopefully,
higher profits.
Speaker 1 (22:31):
So it's classic private equity.
Speaker 3 (22:33):
Right, which leads to cost savings and, hopefully,
higher profits.
Speaker 1 (22:35):
So it's classic private equity Right Buy, build
and sell.
Exactly.
Now the second thing drivingtheir interest is that aging
population.
They see the trends, oh yeah,they understand the demand and
they're betting on that longterm growth.
Speaker 3 (22:46):
Absolutely.
And that long term perspective,that's something that aligns
well with their typicalinvestment horizon.
Ok, now the perspective that'ssomething that aligns well with
their typical investment horizon.
Speaker 1 (22:52):
Okay now the third thing that's attractive is the
potential for operationalimprovements.
A lot of these facilities arerun by smaller operators that
might not have the same level ofsophistication as those larger
companies.
Speaker 3 (23:04):
Right, so they see an opportunity to bring in their
own management teams, implementbest practices.
Speaker 1 (23:08):
So they're not just buying real estate Right,
they're investing in thatoperational side of the business
.
Absolutely.
Now it's important to point outthat private equity's
involvement in this it's notwithout its critics.
Oh yeah, some argue that youknow their focus on profits can
sometimes come at the expense ofresident care.
Speaker 3 (23:24):
Yeah, there have been some cases where they face
scrutiny for cutting costs orstaffing levels.
Speaker 1 (23:29):
Right, but it's important to remember that not
all private equity firms arecreated equal.
Oh, absolutely.
Some have great track recordsin the healthcare space, while
others might be focused on thoseshort-term gains.
So it's important to do yourdue diligence.
Yeah.
Make sure their values alignwith yours.
Absolutely.
Now this influx of privateequity capital.
It's definitely had an impacton the market.
(23:50):
It's increased competition,it's driven up prices and it's
made it harder for smallerplayers to compete.
So that's something that bothbuyers and sellers need to be
aware of.
Speaker 3 (23:59):
Right, it's a much more competitive landscape.
Speaker 1 (24:05):
Okay.
So, speaking of buyers, let'stake a closer look at these.
Jll survey results and seewho's most active in the market.
So, as we mentioned earlier,private buyers were the dominant
force in 2024, 57% of thosepurchases.
But within that category, thereare different types of private
investors.
Right, they have differentstrategies, different risk
tolerances and the survey givesus some good insights into who's
driving this wave.
So the one-disc group,according to the survey, are
(24:27):
high net worth individuals, andfamily offices are high net
worth individuals and familyoffices.
Speaker 3 (24:32):
So these are individuals or families with a
lot of wealth who are looking todiversify and invest in
tangible assets.
Speaker 1 (24:37):
And senior housing is appealing to them for a lot of
reasons.
Right, it's a stable incomeproducing asset.
Right.
It's backed by strongdemographic trends.
Speaker 3 (24:46):
It's something they can feel good about investing in
too.
Speaker 1 (24:48):
Yeah, they're helping to provide housing and care.
Absolutely.
Okay Now, the second largestgroup of those private buyers
are private real estate funds.
Okay, so these are funds thatpool capital from multiple
investors and invest in variousreal estate assets, including
seniors housing.
Okay, so they're attracted toseniors housing for similar
reasons as those high outworthindividuals that stable income,
(25:10):
the demographic trends, thelong-term appreciation potential
, and they often have theexpertise to acquire and manage
larger portfolios of theseproperties Right, it's their
specialty.
Now the third group of privatebuyers is a little more
specialized, healthcare-focusedprivate equity firms.
Speaker 3 (25:27):
Oh, okay.
Speaker 1 (25:28):
So these are firms that specifically target
investments in the healthcaresector, including seniors
housing.
So they bring firms thatspecifically target investments
in the health care sector,including seniors housing.
Speaker 3 (25:33):
So they bring a deep understanding of the industry.
Speaker 1 (25:36):
Absolutely the regulatory landscape,
operational complexities ofthese businesses, which can be
very valuable in the seniorshousing space.
Speaker 3 (25:43):
Yeah, that expertise is key.
Speaker 1 (25:45):
Now, in addition to these private buyers, we're also
seeing some activity frompublicly traded REITs.
So REITs, or real estateinvestment trusts, are companies
that own and operateincome-producing real estate,
and they're required todistribute a large portion of
their profits to shareholders inthe form of dividends.
So it makes them appealing toinvestors looking for income and
(26:09):
potential appreciation.
Now REITs have been kind ofquiet in the seniors housing
market lately, but we'restarting to see some signs of
renewed interest.
Oh, okay, this is partly due tothe improving fundamentals of
the sector, as well as thatpotential for consolidation and
scale.
Speaker 3 (26:24):
So REITs have the capital to acquire those large
portfolios.
Speaker 1 (26:28):
They've got the expertise to manage them.
Speaker 3 (26:31):
And they can benefit from those economies of scale
which can lead to betterprofitability.
Speaker 1 (26:37):
Now the final group of buyers we'll mention are
those institutional investorslike pension funds and insurance
companies.
Ok so these are big long terminvestors looking for stable
income producing assets.
Speaker 3 (26:47):
Yeah, they're looking for something that matches
their liabilities.
Speaker 1 (26:50):
Exactly, and seniors housing fits that.
Speaker 3 (26:52):
Yeah, it does.
Long-term asset class,predictable cash flow and a
growing demand base.
Speaker 1 (26:57):
And those institutional investors are
becoming more comfortable withthe operational complexities of
seniors housing.
Speaker 3 (27:02):
They're realizing the potential.
Speaker 1 (27:04):
Now, with all these different types of buyers active
in the market, it's no surprisethat the competition for
acquisitions is heating up.
Speaker 3 (27:11):
Oh, yeah, definitely.
Speaker 1 (27:16):
Now we're moving beyond those financials.
We're going to dive into theheart of what makes seniors
housing really tick theoperations.
Speaker 3 (27:19):
Yeah, you know, bricks and mortar.
That's just the beginning.
The real secret to success inthis industry it lies in
understanding how thesefacilities actually work.
Speaker 1 (27:28):
Okay, so let's break this down for our listener.
You know, if you're thinkingabout putting your money into a
senior's housing facility, whatare the key operational aspects
that you should really be laserfocused on?
Speaker 3 (27:37):
Well, first and foremost, I mean it all boils
down to resident care.
Right, this is like thefoundation of everything.
It's what drives residentsatisfaction, it drives
occupancy rates and ultimately,you know, it drives the
financial performance of theentire operation.
Speaker 1 (27:50):
Yeah, happy residents , happy business, exactly Okay.
So, but how can you as aninvestor, how can you, actually
assess a quality of care in apotential investment?
What are you really looking forthere?
Speaker 3 (28:02):
staffing ratios.
You want to look at thequalifications of the caregivers
, their experience, the level of, you know, personalization in
the care plans and then theavailability of any specialized
services.
Speaker 1 (28:20):
So it's not just about warm bodies, it's about
having the right people with theright skills and experience.
Speaker 3 (28:24):
Exactly and you know you want to see evidence of
those training programs.
Are they developing their staff, you know, are they keeping
them up to speed on the latestbest practices?
That's important.
Speaker 1 (28:33):
Now we've talked a lot about technology in the
seniors housing space.
So, beyond staffing, how istechnology really impacting the
operational side of things?
Speaker 3 (28:42):
Well, technology is really transforming the way we
approach senior care, both inenhancing care delivery and then
also improving that operationalefficiency.
One area we're seeing a ton ofinnovation is in telehealth.
Speaker 1 (28:53):
Oh, telehealth.
Speaker 3 (28:54):
Yeah, and this allows residents to connect with their
health care providers remotely,which is so valuable,
especially for folks who havethose mobility challenges or
maybe some chronic conditions.
Speaker 1 (29:04):
So you're bringing the health care to the resident.
That's right.
Ok, that's huge.
Speaker 3 (29:08):
Yeah, and you know what?
It can also help reduce thosecostly hospital readmissions,
which is a win win for everyone.
Okay, that's huge.
Speaker 1 (29:12):
Yeah, and you know what it can also help reduce
those costly hospitalreadmissions, which is a win-win
for everyone, absolutely Okay.
So what other tech driveninnovations are you seeing out
there?
Speaker 3 (29:17):
Well, smart home technology it's gaining traction
.
Things like voice activatedassistance, you know, lights and
temperature controls that areautomated, and even sensors that
can detect if somebody falls.
Speaker 1 (29:28):
Wow, that's incredible.
Speaker 3 (29:29):
Yeah, it just creates a safer, more convenient
environment.
You know families, they havethat peace of mind.
That's huge yeah.
And speaking of peace of mind,let's not forget about social
engagement.
Speaker 1 (29:38):
Oh yeah.
Speaker 3 (29:39):
I mean this is so crucial for residents'
well-being, and technology isplaying a big role in connecting
people and fostering that senseof community.
Speaker 1 (29:46):
So I'm curious what are some examples of how
technology is actually beingused to combat social isolation,
you know, to promote that senseof belonging among residents?
Speaker 3 (29:56):
Well, we're seeing these social engagement apps and
platforms that are designedspecifically for seniors.
So these platforms allow themto, you know, connect with each
other, maybe participate in somevirtual activities and stay in
touch with their family andfriends.
Speaker 1 (30:09):
OK, so it's bridging that digital divide.
Speaker 3 (30:11):
Right, exactly, and you know those connections.
Those are vital for mental andemotional health.
Speaker 1 (30:16):
They are Absolutely Now beyond these resident-facing
technologies.
How is tech being used kind ofbehind the scenes to improve
operational efficiency?
Speaker 3 (30:24):
Well, property management software.
It's getting much moresophisticated.
These systems can actuallyautomate tasks like rent
collection, maintenance requests, communication with residents.
More sophisticated, thesesystems can actually automate
tasks like rent collection,maintenance requests,
communication with residents.
Speaker 1 (30:34):
So it's streamlining the whole process, freeing up
staff to focus on those highervalue tasks.
Speaker 3 (30:38):
Yeah, things like interacting with residents, and
they provide a ton of data thatcan be used to make those
smarter decisions about staffingand programming.
Speaker 1 (30:46):
Speaking of data, one area where it's making a huge
impact is in personalized careplanning.
So can you explain howtechnology is actually being
used to tailor those care plansto the needs of each resident?
Speaker 3 (30:58):
Well, you know, now there are software platforms
that can actually collect andanalyze data from lots of
different sources, likeelectronic health records, you
know, wearable devices, evenresident surveys, and all this
information is then used tocreate those customized care
plans.
Speaker 1 (31:12):
So it's moving away from that one-size-fits-all
approach.
Speaker 3 (31:14):
Right, embracing that uniqueness of each resident.
Speaker 1 (31:17):
And that leads to better outcomes.
Speaker 3 (31:19):
Absolutely.
You get better outcomes, higherresident satisfaction and lower
costs.
Speaker 1 (31:23):
Now, with all this talk about technology, it's
important to remember, you know,it is just a tool.
It can enhance and support care, but it can't replace that
human touch.
Speaker 3 (31:32):
Oh, absolutely.
You can't replace compassion,empathy and that genuine human
connection that's at the heartof quality care.
Speaker 1 (31:40):
Absolutely OK.
So stepping away fromtechnology for a moment, what
other operational considerationsshould investors be thinking
about?
Speaker 3 (31:47):
Well, I mean the physical condition of the
property.
That's paramount.
You want to make sure that thefacility is well-maintained,
safe and accessible for all theresidents.
Speaker 1 (31:55):
Yeah, so invest in regular maintenance upgrades.
Make sure it's designed withthe residents' needs in mind.
Speaker 3 (32:00):
Exactly.
You want spaces that areinviting, that encourage people
to socialize, provideopportunities for recreation and
relaxation.
Speaker 1 (32:08):
It should feel like home, not an institution.
Speaker 3 (32:10):
Right, that sense of home is incredibly important.
Speaker 1 (32:13):
Yeah, OK, so let's talk about the financial health
of the facility.
I mean, obviously you want tomake sure that it's generating
enough revenue to cover expensesand provide a return.
Speaker 3 (32:22):
Of course, you want to see that they're managing
their finance as well, that theyhave accurate budgets, they're
paying their bills on time andthey have effective cost control
measures in place.
Speaker 1 (32:32):
So it's not just about the top line.
Speaker 3 (32:33):
No.
Speaker 1 (32:34):
It's about managing those expenses.
Absolutely.
And making sure it's profitable.
Speaker 3 (32:38):
Right and that gives you the confidence that you know
your investment is secure.
Speaker 1 (32:42):
Now there's growing interest in those
environmentally friendly youknow, energy efficient senior
housing facilities.
So what are some of thosesustainable practices that
investors should be on thelookout for?
Speaker 3 (32:53):
Well, things like solar panels, energy efficient
appliances, water conservationmeasures using sustainable
building materials.
All those practices not onlybenefit the environment, but
they can help reduce thoseoperating costs, which is a
win-win.
Speaker 1 (33:07):
Absolutely.
Speaker 3 (33:07):
And it's a great selling point for those
residents who are, you know,more environmentally conscious.
Speaker 1 (33:12):
OK, so let's touch on the regulatory environment
because, as we mentioned earlier, seniors housing is highly
regulated and it's reallyimportant for investors and
operators to understand andcomply with those regulations.
Absolutely.
So what are some of the keyregulatory bodies that oversee
seniors housing?
Speaker 3 (33:30):
Well, you know, at the federal level you've got the
Centers for Medicare andMedicaid Services, so CMS.
They set the standards fornursing homes that participate
in those programs.
And then at the state level youtypically have licensing and
inspection agencies that youknow oversee assisted living and
other types of senior housing.
And then there are those localregulations that might apply.
(33:50):
You know things like zoning andbuilding codes.
Speaker 1 (33:52):
So it's a pretty multilayered system.
Speaker 3 (33:54):
Yeah, it can be a lot to navigate but you know it's
there to protect those residentsand ensure that the care is
high quality.
Speaker 1 (33:59):
Now, in addition to comply with regulations, you
know, operators also have to bevigilant about protecting those
resident rights.
Speaker 3 (34:07):
Oh, absolutely.
I mean residents.
They have the right to betreated with dignity and respect
, to receive quality care and tohave their privacy protected.
Speaker 1 (34:15):
And any violation of those rights can have serious
consequences.
Speaker 3 (34:19):
Yeah, absolutely.
It's important to create aculture of respect where
residents feel safe and valued.
Speaker 1 (34:24):
Now you know, with all this talk about regulations
and rights, it's easy to getlost in the details, but let's
not forget the big picture,right?
It's easy to get lost in thedetails, but let's not forget
the big picture, right?
Speaker 3 (34:38):
I mean the ultimate goal of seniors housing is to
provide a supportive andenriching environment where
seniors can actually thrive.
That's right.
It's about creating communitieswhere seniors feel connected,
where they're engaged and theyfeel valued.
Speaker 1 (34:44):
OK, so let's talk about marketing and outreach,
because you know, even the bestrun facility, it won't be
successful if it can't attractand retain residents.
Speaker 3 (34:52):
That's right.
Marketing is key.
Got to keep those beds filled.
Speaker 1 (34:54):
So what are some effective marketing strategies
for seniors housing?
What should operators be doingto reach those potential
residents and their families?
Speaker 3 (35:03):
Well, in today's digital age, a strong online
presence.
I mean that's everything.
You know most seniors and theirfamilies they start their
search online.
So a user friendly, informativewebsite that's essential.
Yeah, know most seniors andtheir families they start their
search online.
So a user-friendly, informativewebsite that's essential.
Speaker 1 (35:14):
Yeah, you got to make that good first impression
digitally.
Speaker 3 (35:17):
Exactly, and social media is just as important.
You know platforms likeFacebook, instagram.
It allows you to connect withpotential residents.
You can share information aboutyour facility, build those
relationships.
Speaker 1 (35:27):
Okay, so beyond the online world, what other
outreach strategies are actuallyeffective?
Speaker 3 (35:32):
Well, building those relationships with referral
sources, that's key.
So think hospitals, doctor'soffices, senior centers.
You know these are folks thatare in contact with seniors who
are thinking about their housingoptions.
Speaker 1 (35:44):
They're those trusted sources of information.
Speaker 3 (35:46):
Exactly so they can be really valuable partners Now.
Another effective strategy iscommunity involvement.
Speaker 1 (35:51):
Okay, what does that look like?
Speaker 3 (35:53):
Well, it could be sponsoring local events, you
know, offering educationalprograms, maybe partnering with
organizations that serve seniors.
It's all about getting yourname out there, building that
trust and showing yourcommitment to the community.
Speaker 1 (36:06):
Okay, now one final marketing tip.
What would you say?
Speaker 3 (36:08):
Focus on what makes your facility unique, what are
your strengths, what sets youapart, you know, do you offer
specialized care services?
Do you have an amazingactivities program?
Is your location awesome?
Highlight those things.
Speaker 1 (36:19):
Now, with all that talk about marketing and
outreach, let's not forget aboutthe power of just word of mouth
.
You know happy residents andfamilies.
They are your bestadvertisement.
Speaker 3 (36:28):
Absolutely.
There's no better marketingthan a positive reputation.
Speaker 1 (36:31):
Yeah, so the key is to provide that exceptional care
, build those strongrelationships and create that
community where residents feelvalued.
Speaker 3 (36:38):
And those referrals.
They will come naturally.
Speaker 1 (36:40):
Okay, so let's shift gears a little bit and talk
about the future of seniorshousing.
You know this is an industrythat's constantly evolving,
driven by demographic shifts,technology changing consumer
preferences.
Speaker 3 (36:52):
It's a dynamic industry and those who adapt and
innovate they will be the oneswho succeed.
Speaker 1 (36:56):
So, looking ahead, what trends do you see really
shaping the future of seniorshousing?
Speaker 3 (37:01):
Well, one trend that's already happening is the
demand for that personalizedcare.
Speaker 1 (37:05):
OK.
Speaker 3 (37:05):
Seniors are living longer, they're healthier and
they want those care plans thatare customized.
Speaker 1 (37:10):
Right, it's about empowering them to take control.
Speaker 3 (37:12):
Exactly, and technology is playing a big role
there Wearable devices,telehealth platforms, data
analytics.
It's amazing.
Speaker 1 (37:20):
OK now.
Another trend that's gettingbigger and bigger is the
emphasis on wellness andprevention.
Speaker 3 (37:25):
Yeah, it's not just about treating illness anymore.
It's about helping seniors stayhealthy.
Speaker 1 (37:29):
So what are you seeing in terms of those
wellness initiatives?
Speaker 3 (37:32):
Well, a lot more emphasis on healthy food,
fitness programs, socialactivities and even those
complementary therapies likeyoga, meditation and massage.
Speaker 1 (37:41):
Okay, so it's taking that holistic approach.
Speaker 3 (37:43):
Absolutely Addressing physical, mental and emotional
health.
Speaker 1 (37:47):
Now another trend worth watching is the blurring
of lines between different typesof seniors housing.
Speaker 3 (37:52):
Oh yeah.
Speaker 1 (37:53):
What do you mean by that?
Speaker 3 (37:54):
Well, we're seeing more communities that offer that
continuum of care.
So, from independent living toassisted living, to skilled
nursing, all on the same campus.
Speaker 1 (38:03):
OK, so residents can age in place, moving through
those levels as their needschange.
Speaker 3 (38:07):
Exactly, it provides so much flexibility.
Speaker 1 (38:10):
Now, the final trend we'll mention is that growing
importance of technology.
Speaker 3 (38:13):
Of course.
Speaker 1 (38:14):
And I think we've talked about some of the ways
it's being used, but I feel likewe're just scratching the
surface.
Speaker 3 (38:18):
Oh, we are.
Technology is impactingeverything from care delivery to
resident engagement, to howefficient the operation is.
Speaker 1 (38:26):
It's about creating that better experience,
improving outcomes and makingthings more efficient.
Speaker 3 (38:31):
Yeah, and you know, looking ahead, it's clear that
technology is going to play aneven bigger role in the future.
Speaker 1 (38:36):
So for investors, they really need to understand
how technology is shaping theindustry and look for operators
who are embracing thoseinnovations.
Speaker 3 (38:44):
Absolutely those who are tech savvy and forward
thinking.
They're going to thrive.
Speaker 1 (38:49):
Okay, so we've covered a lot of ground here.
You know it's a complexindustry, but it's also an
industry that's full ofopportunities.
Yeah, I agree, Especially forthose who understand the nuances
and are really committed toproviding that quality care.
Speaker 3 (39:00):
And, as we head into the next part of our deep dive,
we're going to explore somespecific examples of seniors
housing facilities that arereally getting it right.
Speaker 1 (39:07):
Yeah, we'll take a closer look at their models,
their marketing and how they'reusing technology.
Speaker 3 (39:16):
We've covered the market trends, the operational
nuts and bolts, but now it'stime to see how these concepts
actually play out in the realworld.
Right Theory's important, butnothing really brings an
investment thesis to life likereal world examples of success.
Speaker 1 (39:24):
Exactly so.
Let's jump into some casestudies of senior housing
communities that are trulyraising the bar.
I know you've got someinspiring examples lined up.
Hit me with your first shiningexample.
Speaker 3 (39:34):
Well, let's start with a community called the
Village at Willow Creek.
They're located in a reallyvibrant suburb just outside of a
major city, and they've reallynailed the concept of aging in
place.
Speaker 1 (39:45):
Okay, I like the sound of that already.
What makes their approach toaging in place so special?
Speaker 3 (39:49):
Well, they offer a full continuum of care options,
all on the same campus.
So from independent living toassisted living, to memory care,
okay, this means that residentscan seamlessly transition
between those levels of care astheir needs change, without
having to uproot their lives andmove to a whole new environment
.
Speaker 1 (40:07):
That's huge for both residents and their families.
I mean it eliminates so muchstress and disruption.
What about their approach toresident care?
Is there anything unique abouttheir model?
Speaker 3 (40:17):
Yeah, they've implemented a really innovative
system that focuses onpersonalized care plans, but the
key here is these plans aredriven by data and resident
feedback.
Speaker 1 (40:26):
So it's not a one size fits all approach.
Speaker 3 (40:28):
No, not at all.
Speaker 1 (40:29):
They're tailoring the care.
Speaker 3 (40:30):
They're really tailoring it to each
individual's needs andpreferences.
They use technology to track,you know, residents' health
metrics, their activity levels,their social engagement, and
then all that data is used tocreate these custom care plans
that evolve as the needs change.
Speaker 1 (40:45):
That's impressive.
It sounds like they're reallyleveraging tech to enhance that
human touch.
Speaker 3 (40:49):
Yeah, and it's definitely working.
They have incredibly highresident satisfaction rates and
a pretty long waiting list.
Speaker 1 (40:56):
Wow, that's a testament to the quality of
their care and the overallexperience.
Now, beyond the care itself,how do they foster that sense of
community and engagement amongresidents?
Speaker 3 (41:05):
Well, they've created this really vibrant and active
community and they have a packedcalendar full of events.
Okay, social events,educational programs, fitness
classes, outings, you name it.
Speaker 1 (41:15):
So there's something for everyone.
Speaker 3 (41:16):
Oh, absolutely.
They cater to all sorts ofinterests.
So it's not just aboutproviding care, it's about
creating this rich andfulfilling lifestyle.
Speaker 1 (41:24):
I love that.
Now, does the physicalenvironment reflect this?
Speaker 3 (41:27):
Oh yeah, absolutely.
The facility itself is designedto be bright, welcoming,
accessible, with lots ofcommunal spaces, you know, both
indoors and outdoors.
They have beautifullylandscaped garden, walking paths
, a fitness center, a pool.
They even have a pudding green.
Speaker 1 (41:43):
Wow, it sounds like they've thought of everything to
create that welcoming andstimulating environment.
Speaker 3 (41:47):
Yeah, they really have, and you know their
financial performance.
It reflects their success.
They consistently have highoccupancy rates, strong revenue
growth and they have a stellarreputation as a top tier
provider.
Speaker 1 (41:58):
It sounds like it.
So that's a great example of awell-run community that can
achieve both residentsatisfaction and that financial
success.
Okay, I'm ready for your nextinspiring case study.
What do you got?
Speaker 3 (42:09):
All right, so let's shift gears and head into the
heart of a bustling city, wherewe'll find Urban Oasis, a
seniors housing community that'sreally redefining urban living
for older adults.
Speaker 1 (42:19):
Ooh, urban living for seniors.
That's a growing trend and I'mreally eager to hear how Urban
Oasis is approaching this.
Speaker 3 (42:24):
Well, you know, they're really leading the way
by creating a community that'stotally integrated into the
fabric of the city.
They're actually located withinwalking distance of shops,
restaurants, culturalattractions, public
transportation, so residents caneasily access all the best the
city has to offer.
Speaker 1 (42:41):
So they're not isolated out in the suburbs,
they're right in the thick of it.
Speaker 3 (42:44):
Right in the middle of the action and you know what
They've partnered with localbusinesses and organizations to
offer residents.
You know discounts andexclusive access to all sorts of
events and services.
Speaker 1 (42:54):
So they're really tapping into that urban
ecosystem.
Absolutely, that's smart.
Now, affordability is a majorconcern for a lot of seniors
living in cities.
How does Urban Oasis addressthat challenge?
Speaker 3 (43:05):
Well, they offer a range of unit sizes and price
points to try and make itaccessible to a wider group.
Speaker 1 (43:11):
OK.
Speaker 3 (43:11):
And they've actually got some clever design features
to maximize space and efficiency.
So think like convertiblefurniture that can transform a
living room into a guest room.
Speaker 1 (43:21):
Ooh, I like that.
Speaker 3 (43:22):
Or a dining area into a workspace.
Speaker 1 (43:24):
That's innovative.
So they're making the most ofevery square foot.
Speaker 3 (43:27):
They are, and they also have those shared amenities
like a rooftop garden and acommunity kitchen, which really
encourage socialization andreduce the need for each unit to
have every single thing.
Speaker 1 (43:37):
Right, it's about creating a sense of community
and shared resources.
Now, how does their approach toresident care kind of fit into
that urban model?
Speaker 3 (43:44):
Well.
They've partnered with aleading health care system to
provide on-site medical care andwellness programs, so residents
have access to high qualitycare without having to navigate
the complexities of the city.
Speaker 1 (43:56):
Okay, that makes sense.
Speaker 3 (43:57):
And they have a dedicated team of social workers
and activity coordinators whohelp residents, you know,
connect with community resourcesand stay engaged in city life.
Speaker 1 (44:06):
So they're providing that holistic approach to
well-being that's tailored tothe urban environment.
Speaker 3 (44:10):
Exactly, and it's attracting, you know, a new
generation of seniors who wantthat active, engaged lifestyle
without having to compromise oncare or community.
Speaker 1 (44:19):
Wow, these examples are fantastic.
I mean they really highlightthe diversity of models within
senior housing and all thoseinnovative approaches that are
emerging.
Speaker 3 (44:27):
They do and they really underscore some of those
key trends that we've beentalking about.
Such as Well, that growingemphasis on personalization, you
know, both in terms of careplans and just living
environment.
And then technology, you knowbeing used not just for
efficiency but to enhance careand engagement, and that shift
towards a more holistic approachto wellbeing that encompasses
(44:48):
physical, mental and socialhealth.
Speaker 1 (44:50):
Yeah, those are all themes that we've woven
throughout our deep dive.
Speaker 3 (44:53):
And these examples really bring those themes to
life.
They show how they can betranslated into real world
success.
Speaker 1 (44:59):
Okay Now I know some listeners might be thinking well
, these are probably high-endluxury facilities that are out
of reach for most people.
What would you say to that?
Speaker 3 (45:07):
Well, it's a fair point, but the principles behind
these communities, they can beapplied across the entire
spectrum of senior housing.
Speaker 1 (45:15):
Okay.
Speaker 3 (45:15):
It doesn't matter what the budget is or the target
market is.
Speaker 1 (45:18):
So it's not about those fancy amenities or the
high price tag.
Speaker 3 (45:21):
No, it's really about the philosophy, the philosophy
of care, community andwell-being.
Speaker 1 (45:26):
And as investors, operators and developers, you
know we have a responsibility tostrive for those standards of
excellence, no matter what thebudget is, Because ultimately,
this is about creatingcommunities where these seniors
can thrive.
Speaker 3 (45:38):
Right.
It's about recognizing thevalue of our aging population
and creating environments thatsupport them.
Speaker 1 (45:43):
Well said.
So, as we wrap up this deepdive, let's reflect on what
we've learned.
We've explored the marketdynamics of senior housing, the
operational considerations, andseen some pretty amazing
communities that are setting anew standard.
Speaker 3 (45:55):
We've covered the challenges, the opportunities,
the risks and the rewards andreally highlighted the
importance of taking thatlong-term perspective, you know,
focusing on resident well-beingand embracing innovation.
Speaker 1 (46:07):
So, for our listener who's considering an investment
in senior housing, what's thekey takeaway?
Speaker 3 (46:12):
Well, you know, this is a dynamic, growing market
with huge potential.
But it's not a passiveinvestment.
It requires careful duediligence.
You know a real understandingof how these operations work and
a genuine passion for servingthose needs.
Speaker 1 (46:27):
It's about more than just financial returns.
Speaker 3 (46:29):
Way more.
Speaker 1 (46:29):
It's about making a difference.
Absolutely so, as you embark onyour investment journey, keep
these insights in mind.
Ask the tough questions, lookfor those best practices and
don't be afraid to think outsidethe box.
Yeah, be creative.
Because the future of seniorshousing is very bright and those
who are willing to lead withinnovation and compassion will
shape that future.
Speaker 3 (46:49):
Thank you so much for joining us on this deep dive.
We hope you found it insightful.
Speaker 1 (46:57):
And we encourage you to continue exploring this
sector.
Until next time, happyinvesting.
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