Higher interest rates have not necessarily hampered senior living investments, according to Cambridge Realty Capital Senior Vice President Brent Holman-Gomez.
“While interest rates are declining, they are still higher than recent memory, causing deal makers to forge new paths,” Holman-Gomez wrote in a blog post also shared Friday with the media as a press release. “While high interest rates tend to cool the market and frighten off many traditional property buyers, other types of transactions become more favorable in a market such as we are experiencing right now.”
Many investors in senior living, he said, have been taking advantage of opportunities to buy under-performing properties. Holman-Gomez added that those types of acquisitions currently are trading closer to fair market value, “offering promising investment opportunities as cap rates have risen across all senior housing asset classes.”
Also, he said, third-party operators and managers are acquiring properties they already operate.
“Such opportunities often arise when the M&A market is less active and competitive, making the present an opportune moment for them to capitalize,” Holman-Gomez said.
Last but not least, he noted, it is advantageous in today’s market for existing communities to expand, “fostering a more hands-on approach to enhancing community economics.”
Finding the right capital partner is key to investing, Holman-Gomez said, which might involve “unconventional and creative financing methods.”
“In spite of the current market challenges, transactions are indeed being completed, with increasing interest and operators re-entering the market to capitalize on our favorable industry outlook,” he said.
Although unique opportunities exist in the higher interest rate environment, Holman-Gomez suggested that operators contact senior living or skilled nursing finance experts to explore options.
