Financing Senior Housing Facilities
Senior housing, which was once thought of as a niche property type, has recently become a mainstream commercial real estate asset class. This is due in large part to the post-WWII baby boomer population, some 76.4 million Americans born between the years 1946 to 1964, which will create unprecedented demand for the senior housing options over the next several decades. In addition to demographic trends, the most recent recession showed that senior housing tends to be a resilient asset class not as susceptible to occupancy fluctuations as seen in other asset classes. As commercial real estate investors have taken notice of this industry, the National Investment Center for the Seniors Housing and Care Industry estimate this market is valued at over $250 billion. Large-scale operators of senior living communities throughout the United States have rapidly acquired smaller, less sophisticated operators and the industry has seen mass consolidation as evidenced by the $2.8 billion Brookdale and Emeritus merger. However, there are still opportunities for operators to partner with non-bank funding sources to acquire and develop properties, redevelop, or conduct value-add projects when they are unable to secure conventional financing. Bloomfield Capital is a strategic capital partner that finances senior living facility acquisitions, recapitalizations, redevelopment, and other uses through bridge loans and equity participations with a focus on opportunistic and value-add opportunities nationwide.
Why Senior Living and Bloomfield Capital?
Today’s seniors often prefer life in senior housing communities as opposed to living at home alone. Not only do senior living communities offer high-end, resort style amenities such as restaurant-style dining, entertainment rooms, fitness and therapy rooms, and salons, but they also take away the burdensome homemaker tasks like cooking and cleaning. As senior living operators look to acquire communities they often have trouble securing debt and equity, especially for ground-up developments. Bloomfield Capital acts as a partner in these scenarios by providing bridge loans or equity participations until the asset is stabilized and conventional financing can be secured. Bloomfield Capital serves as not just a strategic capital partner, but as a resource, leveraging its existing senior living relationships to provide additional market research, demand studies, and other underwriting materials to help mitigate acquisition and development risk.
What Qualities Make a Senior Housing Investment Attractive?
- Location. It is the age-old adage in real estate but there is nothing more important in analyzing a senior living investment. Not only should the demographics of the area demonstrate relative affluence, a growing senior population, and density in the market area, but there should also be hospitals and other nearby referral sources. Are there any competitors in the area and what is their occupancy? Are there any new developments coming to the market?
- Operator quality and strategy. The operator should know the specific nuances of the care type of which they are operating, whether it is independent living, assisted living, or memory care and have a successful track record at running those communities.
- Community appeal. If this is a ground-up development will it have a modern look and feel as well as high-end amenities? If it is a value-add or redevelopment play then what will the final product look like?