The Industry Today
The economic environment is deteriorating at a rapid and accelerating pace, and the seniors’ housing and care industry has not been immune but has been holding up fairly well. Acquisition prices have declined as financing has dried up. Values have dropped and cap rates are up. While other sectors of commercial real estate are under more pressure to reduce rates, the seniors’ housing industry is still able to raise rates. Nationwide, revenues have increased 4.5 percent year over year to $3,543 per occupied unit per month. Occupancies are either flat or have fallen a little, but nothing catastrophic, and there is anecdotal evidence of discounting, so rates could be lowered to help maintain occupancy. However, margins could be a possible bright spot, where lower commodity costs and interest rates could help with expenses, and with massive layoffs in many industries nationwide, labor cost increases will moderate.
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