Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.
Issue link: https://seniorshousingbusiness.epubxp.com/i/566450
ASHA 50 18 2015 ASHA 50 2015 We're a large company with solid fnancial resources, training pro- grams and technology. The evolu- tion of the seniors housing industry will facilitate more consolidation. Q: There's a lot of competition for quality properties. Is it diff- cult to fnd acquisition targets? Cohen: We've been very fortu- nate. We've announced $164 mil- lion of acquisitions this year, and since 2010 we've acquired proper- ties worth more than $750 million. Our pipeline is robust. What's interesting about our strategy is that most of the properties we have acquired are off-market, not brokered transac- tions. Sellers like the fact that we are owner-operators. While we still have good rela- tionships with many of the REITs and have partnered over the years with other fnancial frms, we have gone from owning 32 percent of our operated properties in 2010 to owning 58 percent of the properties today. We own every acquisition we have made since 2011. Q: Are property prices still rising? Cohen: Prices are going up. Of course, property pricing refects the impact of low interest rates in the capital markets. But I also think an important component of today's pricing is improved fundamentals and cash fows. We are still obtain- ing a strong cash-on-cash return on investment that is in the mid-teens. Are prices up? Yes. Are cap rates down? Yes. Are prices per unit going up? Yes. But the funda- mentals are getting better. Seniors housing is also becom- ing a core asset. It survived the recession well and proved to be resilient, so the access to capital is broadening. Today, buyers include private equity and foreign entities, not just REITs. On the lender's side, we are borrowing from sources other than Fannie Mae and Freddie Mac, such as life insurance companies. The perception of risk for the owner and investor is more manageable because the industry is maturing and becoming more professional. Q: How is your company meet- ing the challenge of rising resi- dent acuity? Cohen: We are converting independent living units to assisted living and memory care units. Through the second quarter of 2015, we have converted 400 units. We plan to convert another 100 units in the second half of this year, and 200 more units in 2016. As residents age in place, we are seeing a need in communities to offer more care. By converting units, we can extend their stay. There is demand from residents, and families don't want to move a relative who needs more care. The conversions have a dramatic impact on occupancy levels. On a combined basis, occupancy at those converted communities has grown from 80.5 percent prior to conversion to nearly 93 percent as of June 30. Q: By converting independent living units to assisted living, what else is affected? Cohen: What's interesting is that we used to have separate din- ing areas for assisted and indepen- dent living. Now we are taking Q&A; with Larry Cohen THAT GOAL IS TO CREATE VIBRANT SENIOR LIVING COMMUNITIES THAT MEET THE NEEDS OF WORKFORCE RETIREES. OVER 40 YEARS OF EXPERIENCE IN "NECESSITY OF LIFE" WORKFORCE HOUSING AN EXTENSIVE NETWORK OF INDUSTRY SPECIALISTS HUNDREDS OF MILLIONS IN CAPITAL DEPLOYED