Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.
Issue link: https://seniorshousingbusiness.epubxp.com/i/484276
By Nellie Day Los Angeles — The seniors hous- ing industry needs to focus more on the health and happiness of residents and less on the real estate aspect of the business if profts are going to be sustained for the long term, said Maragret Wylde, presi- dent and CEO of research and advi- sory frm ProMatura Group and keynote speaker at the InterFace Seniors Housing West conference. More than 250 industry profession- als attended the event held Feb. 26 at the Omni Hotel in Los Angeles. "We really don't need to be selling the real estate," said Wylde, whose Oxford, Miss.- based research frm specializes in con- sumers age 50 and above. "We don't need to put any more into our communities. We don't need any more amenities." From Wylde's point of view, the importance of a quality operator can't be overstated. Bidding frenzy continues Many of the day's panelists agreed that real estate aspect of senior care has gotten a bit out of control recently, creating prime conditions for a seller's market ripe with hungry institutional investors. Some also wondered if this furry of activity might soon lead to overbuilding in many of the nation's hottest seniors mar- kets, such as Sarasota, Fla., Hous- ton and parts of Colorado. "Interest rates are absolutely driving the market," said Darrin Smith, a speaker on "The Out- look for Seniors Housing in 2015" panel and senior vice president of seniors housing for HCP, a giant publicly traded healthcare REIT based in Irvine, Calif. "They're pushing prices of acquisitions to historic levels. It's pushing the development cycle as well. If you're a developer and you see a stabilized property at a 6 or sub-6 percent cap rate and you can build at a 9 or 10 percent cap and stabilize your costs, you're going to continue building. That won't change until interest rates go up," added Smith. Debt and equity have been readily available for seniors hous- ing acquisitions and developments over the past few years, thanks to REITS, pension funds, life insurance companies and mezzanine lenders. However, many participants on the panel focusing on the outlook for 2015 expressed their concern that this wave of capital may place facilities and, therefore, the seniors who occupy them, in the hands of inexperienced operators. "More important than under- writing is operations," said pan- elist Margaret Scott, executive vice president and chief invest- ment offcer with Houston-based Belmont Village Senior Living, a seniors housing owner and operator whose portfolio includes several properties in California. "We see lots of people building. Some might be merchant builders that are turning over to an opera- tor that might not have dealt with seniors before. We can't lose sight that seniors is a labor-intensive business." Peter Martin, fellow panelist and managing director of equity research for San Francisco-based JMP Securities, said the asking prices for these projects has become so infated that many smaller inves- tors have had no choice but to jump into the development game if they want a piece of the action. Some of the recent portfolio transactions have been in excess of $1 billion, said Martin. "These guys shouldn't get too enamored with the dollar value, but with the underlying metrics. We see people wanting to get into the platform, but the operator platform is what deserves a premium because we all know how diffcult it is." Though operators face chal- lenges due to ongoing labor, litigation and regulation concerns, Wylde said the biggest issue facing the industry is that it's failed to develop for, and cater to, seniors and their families. In short, the Seniors housing is much more than real estate, Margaret Wylde reminds conference attendees ————INTERFACE SENIORS HOUSING W ES T———— Maragret Wylde, president, CEO, ProMatura. Seniors housing industry experts speak during a "Technology and Operations" panel at InterFace Seniors Housing West at the Omni Hotel in Los Angeles on Feb. 26. Panelists included, from left to right, Karissa Price-Rico of Care Innovations, Kevin Merrill of Inviacom, Dana Wollschlager of Plante Moran Living Forward, Dan Dixon of Guardian Angels Senior Services and Bryan Fuhr of Healthsense. Speakers from "The Outlook for Seniors Housing in 2015" panel were, left to right, Margaret Scott of Belmont Village, Darrin Smith of HCP, Adam Bandel of Pacifca Senior Living, John Cochrane of The be.group, Peter Martin of JMP Securities, and Alan Plush of HealthTrust. Some of the more than 250 leading seniors housing industry professionals mingle and network at the InterFace Seniors Hosing West conference in Los Angeles. 26 www.seniorshousingbusiness.com Seniors Housing Business n February-March 2015