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Revaluing Seniors

Dallas-Fort Worth
Revaluing Seniors
Hearthstone at Braeswood
Grandparents are worth way more than  $2 bills, so look for changes in seniors housing over the next decade. Marcus & Millichap reports that the healthcare legislation's Community Living Assistance Services & Supports (CLASS) Act will revalue skilled nursing communities. The high cost of care will lead eligible seniors to opt out, leading to reduced payouts. The value of skilled nursing facilities (SNC) is their profitability, not physical sites, so this could mean a decrease in building value. Assisted living units like Hearthstone at Braeswood, above, may benefit from higher projected reimbursement, so more seniors will choose that project type. Over the next 10 years, changes will encourage developers to build continuing care retirement communities with larger assisted components. A shortage in SNCs means the government will need to spur development and supplement the high cost of care, according to the firm.
Marcus & Millichap Texas head of seniors housing and healthcare Doug O'Toole
Our Houston reporter chatted with Marcus & Millichap Texas head of seniors housing and healthcare Doug O'Toole, who tells us the need for seniors housing will grow and Texas will continue to be a leading retirement state. He says Texas' housing market is better than many popular retirement areas (Florida, Nevada, California), so it's easier for seniors to  sell their homes for equity to fund rent in a seniors living community. He predicts most demand will be for assisted living properties with dementia facilities, which are already in short supply in Texas. Doug tells us seniors housing has some of the best LTV in CRE—he's seeing 80% or higher. Where's most of the interest now? Did you guess REITs  and portfolio owners? Bingo.