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As Housing Rebound Helps More Retirees Sell Homes, Investors Prep for Increased Demand for Senior Housing
Mark Heschmeyer / CoStar / September 11, 2013
Relatively Affordable Senior Unit Prices Attracting Buyers, REITs Allocating More Funds for Property Acquisitions
Senior housing investment sales, which have been slowly creeping up this year, could see a big boost in activity in the near future. Investors in the sector see senior living assets continuing to benefit from the ongoing recovery in housing, which is making it easier for older owners to sell their homes in anticipation of moving to a senior housing facility.
Seeing this trend, several major public REITs are beginning to sell some of the their commercial assets, which are getting premium pricing in the current market, to raise money to redirect towards senior housing and care facilities, in expectation that the prices will rebound.
Sales volume of senior multifamily housing properties, including assisted living and congregate care facilities, in the first half of this year is ahead of volume in the first half of last year – $1.59 billion vs. $1.18 billion, according to CoStar COMPs records.
However, per unit sales prices have been trending down since peaking in the third quarter of 2011 from about $88,000/unit to $58,000, according to CoStar COMPs.
HCN Leading the Charge
One of the biggest players in the market, Health Care REIT Inc. (NYSE:HCN), completed the $745.2 million final phase of the Sunrise Senior Living property portfolio acquisition this past summer. The REIT’s aggregate $4.3 billion investment in Sunrise Senior Living includes 120 wholly-owned properties and five properties owned in joint ventures with third parties.