ASHA 2020 Annual Conference Recap

The American Senior Housing Association (ASHA) held its annual conference on January 22-24, 2020 in Palm Desert CA.  As one would expect this time of year the warm temperatures were enjoyed by all, especially those who live in the parts of the country that actually have winter weather.

Attendees included operators, lenders, private equity firms and REIT’s as well as others interested in the space.  JCH had the opportunity to meet with new and existing clients.  Available products on the market, labor shortages and census issues continue to be hot topics of discussion.

ASHA’s primary focus in the senior housing sector includes independent living, assisted living and memory care facilities.  Most folks that we spoke with are still bullish on the sector, with the ideal asset type being a multi-level, such as Assisted and Memory Care.  The least favored product type currently seems to be stand-alone memory care buildings.

Attracting High-Quality Labor

Most savvy operators are beginning to realize that attracting qualified labor is, in reality, a two-step process.  First, senior housing must change the perception of caring for the elderly from a negative to a positive; highlighting the personal rewards of caring for the elderly as an honorable career, not just a job. Secondly, operators are going to have to offer entry-level employees higher wages than if they worked for Wal Mart or McDonald’s.

When will Census Stabilize?

Census, or should I dare say lack thereof, continues to be a major cause of concern for operators large and small.  The consensus seems to be that this development cycle happened too soon.  The average age of residents entering senior housing continues to increase and so their length of stay is reduced and acuity levels are increasing.   While the average age of a baby boomer today is 75, most won’t be entering senior housing facilities for another five years.  The penetration rate of potential residents to actual residents moving in continues to be low, leaving operators wondering how to attract them to their facilities.  Some are adding more technology and dining options, while others are creating opportunities for potential residents to “test the waters” by offering activities for them to participate in… perhaps an exercise program or allowing them to use the facility beauty salon before signing a lease.

Make Your Next Senior Housing Investment with The JCH Specialists

As a loyal attendee of the ASHA conferences, our network delivers top resources, connections, and information. We are a team of exceptional brokers and investment specialists, providing keen insight and advice to every client and customer. Our combined experience allows you to make your senior housing investment flourish within the senior housing industry.

We offer a variety of services, whether you choose to buy/sell assisted living facilities or buy/sell skilled nursing facilities. Our team manages investment portfolios of all types and sizes to increase your wealth and profitability.

The JCH Group investment specialists are available with real-time information and extensive experience to make intelligent decisions that deliver unmatched results. To make your next senior housing investment the right one, work with the JCH Group, the leading brokerage of the senior housing industry.

The National Senior Housing Market: 2019 review and 2020 outlook

2019 was a fascinating year for the Senior Housing sector. The construction cycle slowed, the popularity of multi-level facilities increased, and skilled nursing is still as hot as ever, even with the new PDPM payment model coming into effect.  As investors are realizing the immense need for these facilities and services, the outlook for senior housing transactions in 2020 will remain bullish.

The senior housing industry is a need-driven business. Divided into three major market segments: unlicensed facilities such as Independent Living (IL) sometimes referred to as Active Adult, and licensed facilities which would be Skilled Nursing Facilities (SNF) and Assisted Living Facilities (AL), nearly every family, regardless of their financial resources, will require the specialized care from one of these segments.  This fundamentally acts as a driving force for the senior housing industry no matter the overall climate of the economy.

Independent Living/Active Adult communities continue to gain popularity as baby boomers consider retirement living options.  This model typically isn’t licensed and offers a living environment chock full of exciting amenities designed for a “healthy” senior looking for peers to live near. This type of community is typically significantly less costly than Assisted Living, yet offers a sense of comfort in knowing that people your age are nearby. Some even offer the added option of “home health” should the need arise.

Skilled Nursing assets continue to be in high demand with capitalization rates for stable-performing assets remaining at 10%-13%.  The new Patient-Driven-Payment- Model (PDPM) payment system that took effect in October 2019 may increase the exit of “mom & pop” operators that weren’t prepared for the change.  If a significant number of them come on the market as distressed assets, it may well affect the average per bed price being offered.

The Assisted Living sector continues to face several issues, including labor shortages, lower occupancy levels, higher acuity coupled with shorter stays, the desirability of multi-level facilities and how to best serve the middle market.  Several factors are contributing to the labor shortages. First, the booming economy has resulted in a smaller pool of available workers.  Second, and probably the most important is raising minimum wages.  It’s a given that caring for seniors is much more demanding than working in retail, yet the pay is often the same.  As development slows and the glut of new developments are absorbed, occupancy levels will continue to improve.  Savvy operators are discovering that improving culture at the facility level not only increases staff retention, it escalates census as well.  An emerging trend for buyers in the sector is the desire to have multi-level facilities; this could be independent living combined with assisted living or assisted living combined with memory care.  We anticipate potential buyers continuing to look for multi-level assets or for ways of potentially adding an additional component to an assisted living facility acquisition in 2020. As more and more baby boomers come of age in 2020, astute operators will continue to develop creative ways to serve middle-market seniors who can’t afford to live in today’s senior living model.

Cindy Hazzard

Principle, JCH Senior Housing Investment Brokerage

Office: 714-463-1672

Email: [email protected]

The National Senior Housing Market: 2019 review and 2020 outlook

2019 was a fascinating year for the Senior Housing sector. The construction cycle slowed, the popularity of multi-level facilities increased, and skilled nursing is still as hot as ever, even with the new PDPM payment model coming into effect.  As investors are realizing the immense need for these facilities and services, the outlook for senior housing transactions in 2020 will remain bullish.

The senior housing industry is a need-driven business. Divided into three major market segments: unlicensed facilities such as Independent Living (IL) sometimes referred to as Active Adult, and licensed facilities which would be Skilled Nursing Facilities (SNF) and Assisted Living Facilities (AL), nearly every family, regardless of their financial resources, will require the specialized care from one of these segments.  This fundamentally acts as a driving force for the senior housing industry no matter the overall climate of the economy.

Independent Living/Active Adult communities continue to gain popularity as baby boomers consider retirement living options.  This model typically isn’t licensed and offers a living environment chock full of exciting amenities designed for a “healthy” senior looking for peers to live near. This type of community is typically significantly less costly than Assisted Living, yet offers a sense of comfort in knowing that people your age are nearby. Some even offer the added option of “home health” should the need arise.

Skilled Nursing assets continue to be in high demand with capitalization rates for stable-performing assets remaining at 10%-13%.  The new Patient-Driven-Payment- Model (PDPM) payment system that took effect in October 2019 may increase the exit of “mom & pop” operators that weren’t prepared for the change.  If a significant number of them come on the market as distressed assets, it may well affect the average per bed price being offered.

The Assisted Living sector continues to face several issues, including labor shortages, lower occupancy levels, higher acuity coupled with shorter stays, the desirability of multi-level facilities and how to best serve the middle market.  Several factors are contributing to the labor shortages. First, the booming economy has resulted in a smaller pool of available workers.  Second, and probably the most important is raising minimum wages.  It’s a given that caring for seniors is much more demanding than working in retail, yet the pay is often the same.  As development slows and the glut of new developments are absorbed, occupancy levels will continue to improve.  Savvy operators are discovering that improving culture at the facility level not only increases staff retention, it escalates census as well.  An emerging trend for buyers in the sector is the desire to have multi-level facilities; this could be independent living combined with assisted living or assisted living combined with memory care.  We anticipate potential buyers continuing to look for multi-level assets or for ways of potentially adding an additional component to an assisted living facility acquisition in 2020. As more and more baby boomers come of age in 2020, astute operators will continue to develop creative ways to serve middle-market seniors who can’t afford to live in today’s senior living model.

Cindy Hazzard

Principle, JCH Senior Housing Investment Brokerage

Office: 714-463-1672

Email: [email protected]

The Times They Are A-Changing!

You might ask, what factors attribute to the continued growth and prosperity of the seniors housing market? The answer is simple. Successful owner/operators of assisted living, independent living/active adult, memory care and skilled nursing facilities continue to adapt to an ever-changing market. Today’s senior housing residents are not only tech savvy they expect to live the same lifestyle they are accustomed to in their home. If you are to succeed, you must anticipate what will attract them to your facilities.  

There is no question that Senior Housing is a need driven business. At this point in time, only ten percent of potential residents are utilizing senior housing facilities.  With the potential resident base growing as baby boomers age and need care, the need for active adult/independent living, assisted living, memory care and skilled nursing facilities should continue to thrive.  

Changes in The Marketplace

As boomers begin to contemplate their futures, they are considering several factors; the type of care needed, price, and the ability to spend the rest of their lives in the place they choose are top priorities. What does this mean to operators?  As new active adult/independent living, assisted living, and memory care facilities come online, it appears that most are targeting the high-end consumer, once again leaving most seniors few options to choose from. Smart operators are beginning to roll out, or at least contemplate, what type of product will attract this middle market consumer.  Ideas proposed are “pod style” living where residents typically have their own bedrooms but share living rooms and restrooms. Another suggestion is perhaps providing less expensive furnishings and fewer or mixed-use common areas. The idea of active adult or independent living units are making a comeback. Also, the rise of multi-level campuses with a combination of assisted living/memory care or independent/active adult coupled with assisted living are a hot commodity in today’s senior housing marketplace for both buyers and potential residents alike.  

Skilled Nursing facilities are adjusting to the new PDPM payment model which was rolled out in October.  Small mom and pop operators may find it difficult to adjust to the new reimbursement model and still make a profit. The appetite of skilled nursing buyers is still strong despite the changes.  

REITS and Private Equity firms continue to be active players in both skilled nursing and assisted living sectors choosing regional operators rather than national operators to run them.  

Why Choose JCH

For the past twenty years the senior housing industry has experienced immense change and growth. The JCH Group has brokered hundreds of transactions and witnessed present changes influencing the future. Senior Housing investments don’t necessarily look like what they used to, and the senior housing industry has matured in unprecedented ways. 

The JCH Consulting Group is the top brokerage for your senior housing investments in the senior housing industry. With over 110 years of combined experience, our specialists are unmatched in acuity and experience, and we have the track record to prove it.

Make the most of your senior housing investment. Call the experts in the senior housing industry by contacting The JCH Group. We can help you navigate the process as you choose to divest or invest in the senior housing sector. 

Fall NIC Conference 2019 Recap

Once again, the National Investment Center held its annual conference in Chicago from Sept 11^th to 13^th. It was a bit earlier in the year, but I for one enjoyed the warmer weather. As always, this conference attracts a very large crowd. Over 3,000 operators, investors, lenders, as well as brokers were in attendance. It was an excellent time to meet new people and catch up with old friends, share new information, discuss hot topics, and rising concerns in the senior housing industry.

Development, Middle Market, PDPM, and Equity Were Hot Topics at NIC Conference

Several topics that kept coming up were, current development cycle, the forgotten middle market, new PDPM reimbursement, and the large amount of equity available in the space.

The consensus seems to be that development is slowing down; several factors are contributing to that, most notability high construction costs. Another factor is that as developers chase the high-end resident, certain areas are being overbuilt.  Despite high construction costs and slow fill-up rates, JCH spoke with many investors still looking to build.

The “middle market” resident seems to be garnering more attention as the senior housing industry struggles with ways to cut operating cost without impacting care.  Some operators are adding “Active Adult” communities to their portfolio to serve this population.  This may be a part of the eventual solution especially considering their lower monthly rents.

The skilled nursing facilities new payment model PDPM, which went into effect on October 1, 2019 was also on attendees’ minds. Most operators don’t seem to be bothered about it and are still out looking for new facilities to add to their portfolios.

The crazy amount of equity available was also a hot topic.  In some ways this is good news for the senior housing industry and in other cases not so much.  With the pent-up need to place this equity, coupled with inexperience, inevitability new investors to the senior housing space purchase expensive or overvalued assets.  Too often JCH sees people overpromise returns which can cause negative reactions even tarnishing the asset class or product type.  The good news is, that equity is also available to the seasoned senior housing investors who continue purchasing using tried and true valuation methods.

Work with The JCH Group for Your Senior Housing Investments

The JCH Consulting Group works with hundreds of operators, investors and specialists to successfully navigate the senior housing industry. With well-researched and informed decisions, our team routinely builds strong and solid portfolios.

No matter the size or type of real estate asset, we are your top resource in making the most of your senior housing investments in the senior housing industry. By sticking to longstanding industry principles, our guidance in the sector has always weathered storms in the senior housing industry.

For expert guidance, work with the investment specialists at the JCH Group. Learn more about the senior housing industry and receive a free business valuation at your convenience.

Selling your Assisted Living or Skilled Nursing Facility

When the time has come for you to sell your assisted living or skilled nursing facility, there are several things you should consider doing to prepare for the sale.  

Take a hard look at the physical condition of your Assisted Living or Skilled Nursing Facility

The adage “the first 90 feet/first 90 seconds” should come to mind as you decide what improvements make the most sense.  Chances are that a potential buyer has already visited several skilled nursing or assisted living facilities that are for sale and your facility can make a great first impression with a few low-cost upgrades.  Improving the buyer’s first impression by giving the facility a good deep cleaning inside and out goes a long way and is relatively inexpensive. Painting cleans up scuffmarks and small imperfections inside and out.

Resealing and striping the parking spaces on the asphalt of the parking lot making it look new and smooth should be a serious contender. Look at your curbs. Is the red paint bright red or has it turned orange over the years? Making sure to keep landscape alive and attractive also adds to that first impression. Fertilize the lawns and make sure that everything is well watered and trimmed. 

Don’t forget to make sure that all capital systems are in working order, plumbing, electrical as well as heating and air conditioning. The buyer will be checking on these systems during due diligence so having records on hand will help speed the process. 

Preparing financial documents in an industry standard format is an important part of the process

As you begin the process preparing your assisted living or skilled nursing facility for sale, organizing the facility financials in an industry standard format becomes critical. We will help you with that. As buyers consider which assisted living or skilled nursing facility they want to purchase, being able to easily analyze your financials will put your assisted living or skilled nursing facility in the running. During the due diligence period buyers will ask for income and expense statements and balance sheets to be exported to standard programs like excel.  Making sure that numbers are accurate and consistently in the same categories will help the buyer analyze the asset. 

What documentation do you need to gather for a buyer of your assisted living or skilled nursing facility?

An important aspect of any sales transaction involving assisted living or skilled nursing facilities is the due diligence material.  When formulating a plan to list your facility for sale you should also begin to assemble documents that a buyer will ask for. These items more than likely will include 3- 5 years of financials, utility bills, copies of permits and drawings, copies of all service contracts, such as elevator, gardening, pest control and your referral services. They will also need to review leases for things like dishwashers, copy machines etc. Buyers will also want to see Employment Packages and staff Policy and Procedure Manuals. Typically, they need to review the resident admission packages. Beginning to gather this information prior to the actual sale will make the sales process much easier.

Make your sale with the JCH team

For the past 20 years, the JCH Group has proudly served the senior housing community with unwavering dedication. Our expertise has created opportunities, navigated storms and solidified transactions for both small and large-scale senior housing investments including CCRCs, skilled nursing facilities, assisted living facilities and memory care facilities as well as other healthcare properties. 

Get every dollar your property is worth.  Discover what the JCH experts can do for you.  Contact one of our investment specialists for a no cost consultation. Jim Hazzard , [email protected] 714-463-1677 or Cindy Hazzard, [email protected] 714-463-1672.