Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.
Issue link: https://seniorshousingbusiness.epubxp.com/i/799407
www.seniorshousingbusiness.com 41 February/March 2017 n Seniors Housing Business CONNECTED ADVANTAGE. The CBRE National Senior Housing Team is the industry leader in both investment sales and debt originations. In 2016, CBRE National Senior Housing completed $3.0 billion in combined Senior Housing transactions following record setting years in 2014 and 2015. The result – combined three year Senior Housing investment sales and debt transaction volume totaling over $8.5 billion representing over 35,000 units nationwide. Whether you own a single community or a large portfolio, or are contemplating a sale or financing – we can transform your real estate into real advantage. Aron Will Vice Chairman +1 713 787 1965 aron.will@cbre.com Matthew Whitlock Vice Chairman +1 978 282 0024 matthew.whitlock@cbre.com cbre.com/nationalseniorhousing Lisa Widmier Executive VP +1 858 729 9890 lisa.widmier@cbre.com Ross Sanders First Vice President +1 314 221 8543 ross.sanders@cbre.com Industry observers expect more REITs to shift their strategy away from RIDEA structures in favor of triple-net leases (see sidebar). New development still plays a role at Sentio Healthcare Prop- erties, a non-traded REIT based in Orlando, Fla. The company, backed by a $158 million invest- ment by private equity firm KKR, seeks acquisitions and redevelop- ment opportunities, according to John Mark Ramsey, president and CEO at Sentio. Ramsey expects the REITs will face ever-increasing challenges around the appropriate level of capital expenditures to improve older buildings as new properties open nearby. "We will hear more and more about owners making larger rein- vestments in portfolios to keep them competitive," he says. "It's something we are focusing on, as are other large owners." A sample of new Sentio develop- ment projects includes the Delaney at Georgetown Village, a 207-unit project just north of Austin, Texas, and Accel at Golden Ridge, a 120- unit rehab care facility located in Golden, Colo. Ramsey prefers primary mar- kets with high barriers to entry in order to limit competition. He also sees an opportunity to offer senior apartments with access to services in order to reach seniors who cannot afford an expen- sive product. "The industry owes a response to a need that is already here and increasing," says Ramsey. MB Financial's Robinson agrees that the industry hasn't figured out how to create an affordable housing product that generates decent returns for middle-class seniors. "The upper end of the market is well covered," says Robinson. LTC Properties, Inc. (NYSE: LTC), the Westlake Village, Calif.- based REIT, has committed $54 million toward three new develop- ment projects, and $20 million for major expansions of two Michi- gan properties, all currently under construction. Two of new projects are stand- alone, private-pay memory care communities located in Glenview and Oak Lawn, Ill., suburbs of Chicago. Anthem Memory Care will operate these communities. LTC has two other recently opened memory care projects in suburban Chicago in Tinley Park and Burr Ridge, also operated by Anthem. The third new project is a $24 million skilled nursing center that will be built in the Cincin- nati metro area. It will be located in Union, Ky., and feature 143 beds. The facility is scheduled to open in 2018 and will be operated by Cincinnati-based Carespring, which operates other facilities in the metro area, according to Clint Malin, chief investment officer at LTC. "We look for operators with a strong presence in the market- place," he says. That strategy builds relationships for LTC with operators that have leverage to better assist in negotiations with local hospital systems and man- aged care providers, he adds. What's next? The REITs are exploring creative, new opportunities. For exam- ple, LTC is providing mezzanine financing and preferred equity to operators. The REIT deployed $3 million of mezzanine financing to a regional operator for construc- tion of a private-pay community in Ocala, Fla. The goal is to grow these relationships to expand the REIT's network of regional operat- ing companies. Like all real estate investors, the REITs face a lot of uncertainty. Will interest rates continue to rise? If so, capital could become more expensive for them. On the other hand, higher interest rates might also push cap rates higher, making it easier and less expensive for the REITs to invest. How will the broader economy fare? And questions about the Affordable Care Act and health- care regulations under the new administration will continue to play out. Vanacore, the analyst with Stifel, sums up the situation suc- cinctly. "The uncertainty makes it challenging to build a long-term investment outlook." n A new dining room is part of an $8 million renovation at Calusa Harbor in Fort Myers, Fla., a project owned by Senior Housing Properties Trust. About the writer Jane Adler is a freelance reporter who has covered seniors housing for more than 10 years. She reports on the industry as well as consumer trends.