| Earlier this week at our senior housing event, Baltimore's Capital Funding Group EVP Tim Sanders said the recession made HUD ?one of the only games in town? for financing, besides Fannie and Freddie. Though long wait times can be frustrating (application to closing takes 12 to 14 months), he says it's still the best place to get long-term, fixed-rate, non-recourse assumable debt. Most HUD borrowers tend to be small operators with three to five buildings, he says, and the agency does deals at up to 80% LTV. Independent-living facilities will struggle because they're most impacted by the economy, and 24-hour-care buildings will lead the pack. Tim also says the average resident age at properties is increasing because operators want to retain residents—folks staying in assisted living, for instance, when they might need to move on to a nursing home. |
| CSH managing partner Scott Stewart says senior housing is CRE's most compelling investment class, thanks to a ?perfect storm" of an aging population, increasing acceptance of the asset class (moving grandma to an assisted living facility no longer carries a stigma) and limited new development over the past several years. No wonder his firm just got a new JV partner with Harvard Management Co (which runs the university?s $30B endowment). Scott says it saw opportunity in the ?silver tsunami? of aging Baby Boomers sweeping America (Carlyle Group has been CSH's main equity partner since 2003). Many investors see senior housing as recession-proof, he says, making it a sensible defensive play for conservative equity players like REITs. After investing in a property, Scott recommends partnering with a regional operator (CSH's $600M, 20-asset portfolio uses six) because ?the smaller guys tend to know what's going on in their backyards.? |
| Health Care REIT's Steve Blazejewski (with moderator Kimberly Wachen of Arent Fox) says ownership is consolidating (his company has closed five large acquisitions so far this year). A fruitful capital-raising environment for REITs combined with pentup demand from the recession has convinced many small owners it's time to sell, leading to a bump in sales volume. And he's not talking about the dreary nursing homes of Sophia Petrillo's Shady Pines yore. ?These are places you'd like to live,? Steve says, ?and the social aspect of the real estate can't be ignored. It gives seniors a chance to connect in person rather than sitting alone at home.? |
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Related Topics:
Carlyle Group, Health Care REIT, Kimberly Wachen, Scott Stewart, Shady Pines, Steve Blazejewski
