Berkadia Seniors Housing: First Impressions of 2024’s First Quarter

January 30, 2024

After enduring four challenging years marked by the impact of COVID-19, the Great Resignation, and debt market turbulence, seniors housing owners find themselves at a critical juncture. These events have held investors on the sidelines for long enough and the time has arrived to act, whether it be deploying capital, refinancing, selling, or embarking on new construction projects.

Investors are facing a number of considerations in 2024 including fund life timelines, debt maturities, the need to recycle capital, or the desire to free up cash. Encouragingly, there are indicators that point towards increased transaction activity as investors and debt providers gradually emerge from one of the more challenging years in recent memory.

Over the past year, many transactions have involved smaller dollar transactions that have required varying degrees of value-add efforts. These deals typically involved sellers who had a pressing need to sell, rather than a desire to do so.

As we enter 2024, we are witnessing promising signs of transaction activity as both sellers and buyers come to terms with the fact that the debt markets have shifted the valuation landscape. Conversely, acquirers are beginning to recognize the rare opportunity to purchase both value and stable assets at values significantly below replacement cost.

Operations within the industry are displaying continued improvement, with strong rental rate growth, a more stable employment base, and wage rates reaching a point of stabilization. With limited new construction, markets could absorb much of the existing supply and operators would be well positioned to continue to increase market rental rates. Overall, the market is slowly thawing, and we hold an optimistic outlook for increased transaction activity in the months ahead.

Berkadia Seniors Housing & Healthcare has experienced significant growth over the past year, with a total of 46 dedicated seniors housing professionals now on the team. We are grateful to our valued clients and partners for their support and look forward to continued success in 2024.

Connect with one of our trusted seniors housing advisors today.

– Ross Sanders, Managing Director, Berkadia Seniors Housing & Healthcare