Seniors Housing Business

AUG-SEP 2015

Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.

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6 Seniors Housing Business n August-September 2015 Editor's Letter Operational risk is at core of the matter H O U S I N G B U S I N E S S ® SENIORS Seniors Housing Business® (ISSN 2168-9199) is published six times per year by France Publica- tions, Inc., d/b/a France Media, Inc. Editorial and advertising ofces are located at Two Securi- ties Centre, 3500 Piedmont Rd., Suite 415, Atlanta, GA 30305. Telephone 404-832-8262. E-mail Postage paid at Atlanta, GA, and additional mailing ofces. POSTMASTER: Please send address changes to Seniors Housing Business, P.O. Box 47065, Plymouth, MN 55447-0065. ©2015 France Publications, Inc. Seniors Housing Business® is a registered trademark of France Publications, Inc. Subscription rates: USA 1-year $78; 2-years $112. Single copies are $15. The opinions and statements made by authors, contributors and advertisers to Seniors Housing Business are not necessarily those of the editors and publishers. To photocopy items from Seniors Housing Business or to get PDFs and reprints of articles or news items, please visit for our automated permissions system. For reprints, please contact Barbara Sherer, manager of special advertising at 630-553-9037. For subscriber services, please call 1-800-869-6882 or write to: SENIORS HOUSING BUSINESS Customer Service Department P.O. Box 47065 Plymouth, MN 55447-0065; e-mail: Or visit President and CEO Jerrold France Executive Vice President Scott France Chief Financial Ofcer Michael F. Jacobs Publisher Richard Kelley (914) 468-0818 Associate Publisher Mark Aden (404) 832-8262 Media Advisor Eric Goldberg (404) 832-8262 Layout Editor Robin Sherman Editor Matt Valley (404) 832-8262 Managing Editor Jef Shaw Contributing Editors John Nelson Contributing Writers Jane Adler Bendix Anderson Brian A. Lee Eric Taub Haisten Willis Vice President, Circulation Director Tammy Orr Senior Vice President, Editorial & Operations Randall Shearin Published by France Media, Inc. August / September 2015 Matt Valley CONTACT US FOR YOUR FREE PILOT MODEL 508.405.0355 x1 START TO EXPERIENCE: Turnkey Design Solutions Immediate ROI Increase in Move-In Sales NOW THAT'S SOMETHING TO CELEBRATE! As an asset class, seniors housing is closer than ever to becoming a "core real estate" product based on strong investor appetite and prop- erty performance. NCREIF reports that total returns for a small sample size of seniors housing properties owned by institutional investors averaged 14.2 percent over a 10-year period, easily out- performing the offce, industrial, retail and apartment sectors. That's a far cry from 20 years year ago when seniors housing wasn't even considered a property sector. Still, the operationally intensive nature of the business means that investors face more risks in this sector than in other property types. Core properties are fully stabilized assets occupied by credit-quality tenants in primary or secondary markets. Most of the returns in a core property are derived from income growth as opposed to gains made on the sale of the asset. Core-plus assets possess many of the same charac- teristics, but the risks are higher because there is no guaranteed stable income. Many of the fully stabilized seniors housing facili- ties in primary and secondary markets today fall into that core-plus category. Their occupancy rates range from about 88 to 92 percent. Beth Mace, chief economist for the National Investment Center for Seniors Housing & Care, says that as investors develop a greater understanding of the operating business and the importance of partnering with smart operators, the risks become more manageable. A robust property sales market also is giving the industry a boost. Deal volume in the sector was up 32 percent year-to-date through August. "If I'm a buyer, that makes me feel better because I can prob- ably sell my property if I want to sell it," says Mace. "There is liquid- ity in the market." All of which helps drive up returns.

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