Seniors' Housing Legal Alert - January 2011


The bad news is that the health of the U.S. economy can still be summed up in a single word: fragile. The recovery is definitely underway, but it’s still touch and go. It still faces serious challenges, including a limping housing market, potential spillover from Europe’s financial woes and stubbornly high unemployment, which sits at 9.8%. A number of factors – including the ongoing credit crunch and changes that owners made during the recession to stay afloat – are all contributing to business owners’ restrained approach to hiring. But for many investors, the dual components of real estate and need-driven services give seniors’ housing properties a unique resiliency, combining the benefits of real estate investment with the strength of the healthcare industry. This resiliency was evident during the real estate downturn of 2008-2009, when seniors’ housing and care properties outperformed other commercial real estate property types in terms of investment returns, rent growth and loan performance.

The good news for existing owners/operators is that new construction activity in the seniors’ housing sector has slowed to a crawl over the past year and is even slower when compared to two years ago. The drop was due to tepid demand and the skittish capital markets. Of the new construction projects under way, about 31% are classified as senior apartments; 30% are independent living communities; 20% are assisted living facilities; and 19% are nursing homes.

Please see full alert below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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