Seniors Housing Business

AUG-SEP 2018

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

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Annual Absorption (R) 24 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2018 visit us @ www.midcapfinancial.com Eastern Region Lawrence Brin (301) 841-6484 Central Region David Sharp (312) 488-4524 Western Region Jason McMeen (312) 288-8603 FHA Group Head Brett Patrick (303) 757-2148 Dottie, you need to call MidCap. I hear they now offer Fannie and Freddie loans through a correspondent relationship with Bellwether Enterprise. And you know they already had the niftiest balance sheet and HUD programs. When it comes to tailoring a loan structure to your business plan, MidCap is the cat's pajamas. Psssst… development. Kaplan describes himself as "geographically agnostic," evi- denced by the fact that his four communities are located in Colo- rado, Maryland, Florida and Penn- sylvania. Solera prefers markets with high barriers to entry, where there is little opportunity to buy land and the zoning and entitle- ment process is complicated. These barriers help prevent overbuilding. "At this point in the cycle I try to remain hyper-disciplined," says Kaplan. "We look for areas where it's going to be more difficult for another competitor to come in." Waiting for the boomers While development may have outpaced the incoming seniors population, it is true that the Sil- ver Tsunami will eventually arrive. The current spike in development is simply a little early. "If you have to wait five to 10 years to have a home run, you're going to be broke before that ever happens," says McElwee. "You can't build for the future. You have to build for the moment." However, as the baby boomers age, properties positioned earlier on the continuum of care such as active-adult communities or inde- pendent living may be well posi- tioned to capitalize. The oldest boomers are now 72 years old, a prime target age for active adult operators. Some developers have bet heav- ily on targeting that group. The Wolff Company has announced plans to build $300 million to $400 million worth of active adult and independent living commu- nities annually. Holiday Retire- ment, which focuses exclusively on independent living, currently ranks as the third largest operator Although absorption has been strong, holding over 3 percent of inventory for several years, assisted living development has continued to outpace demand. As a result, assisted living occupancy hit an all-time low of 85.7 percent in first-quarter 2018, lower than even during the Great Recession. Source: National Investment Center for Seniors Housing & Care (NIC) Assisted Living Occupancy Hits Record Low 0% 1% 2% 3% 4% 5% 6% 84% 85% 86% 87% 88% 89% 90% 91% 92% 93% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Forecast Majority Assisted Living Supply-Demand Forecast Primary Markets | 4Q06 - 1Q19ÕF Occupancy Annual Inventory Growth (R) Annual Absorption (R) Many developers cite the demographic wave of incoming baby boomers as a reason to build now. However, the first baby boomers are just now hitting retirement age and the Silver Tsunami of those hitting their prime seniors housing age of 80 and over is still about a decade away. Source: U.S. Census Bureau projections Silver Tsunami Not Cresting For Years Forecasted Growth in 75-Plus Population by Select Cohorts 2017Ð2040 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 75 - 82 83 - 87 88-Plus

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