SENIOR HOUSING ASSET CLASSES

Buyers

SENIOR HOUSING ASSET CLASSES

Senior housing properties usually provide both housing and ancillary services, such as assistance with ADLs (Activities of Daily Living). There are three primary asset classes, which include independent living, assisted living and skilled nursing. Memory care can be considered in its own separate category or as a subset of assisted living. The National Investment Center for Seniors Housing and Care (NIC) provides detailed descriptions of all senior housing property types, as well as comprehensive research and resources for owners, operators and investors of senior housing.

In recent years, tech giants Apple and Amazon have make strides to enter the senior care industry and are expected to be significant market disruptors in the coming decade.

Beginning a few years ago, there has been a red-hot interest in the active adult rentals market, seen as a potential threat to independent living. Many private equity investors and REITs have shifted their focus to active adult residential options, as acuity has increased in independent living facilities and today’s active adult resident is more similar to the independent living resident of a decade ago.

However, among all types of investments in senior housing, independent living and assisted living investments still outpace active adult rental investments.

Independent Living: These are typically designed for 55+ seniors who need little or no assistance. They primarily offer hospitality-type services, such as meal packages, housekeeping and laundry. There may be an emphasis or gourmet or custom dining, and a variety of meal plans may be available. The primarily offer apartment-style living facilities, from studios to larger two-bedroom units.

Assisted Living: These facilities are licensed by the state and provide both housing and personal support services, as well as health-care services. These residents are not fully independent and generally require some assistance with the activities of daily living (ADLs), such as meal preparation, personal care and grooming, medication management and transportation.

Memory Care: These are customarily long-term care facilities designed for those with memory impairment from Alzheimer’s and other dementias. Memory care facilities provide 24-hour supervision and assistance and may often be contained within a special floor or unit of an assisted living facility.

Skilled Nursing: These facilities are licensed to provide 24-hour skilled care for those residents who require care for chronic and short-term conditions that require more intensive or more specialized medical and nursing care. Memory Care Rehab centers provide a high level of care for seniors and non-seniors who need assistance on a short-term basis, perhaps for recovery from a major surgery or injury.

Campuses: Senior care properties can be designed as stand-alone or adjoining facilities, in addition to campus-like continuing care retirement communities, which may offer a continuum of care, from independent living to skilled nursing and memory care. CCRCs are ideal for many seniors, as they allow their residents to move from one type of care to a greater level of services as their need for care progresses. This type of campus may work well for spouses or siblings with different levels of needs, as it will allow these residents to live close to one another.

Affordability of Care: A recent study by the National Investment Center for Seniors Housing and Care revealed that by 2029, 54% of middle-income seniors will not have the ability to afford senior housing. Operators will need to take action to properly plan for this daunting middle-market challenge. Occupancy concerns have been easing up over the past few years, despite growing competition in this sector.

There has been a definite occupancy boost in independent living, assisted living and active adult rentals. Leading industry experts predict that there will be a major repositioning of market-rate communities to negotiate the expanding requirements of the middle market.

Of the many challenges faced by the senior housing industry, the primary issue is the affordability of assisted living. New models of customized design and construction, repositioning current market-rate communities and collaborations between developers, financiers and government partners will be vital to ensure that this gap in the continuum of care is effectively bridged.