Berkadia’s David Fasano Adds Industry Insight to NIC’s Q1 Data Release 

April 18, 2024

Managing Director David Fasano of Berkadia Seniors Housing & Healthcare joined the National Investment Center’s (NIC) quarterly data release webinar last week as a subject matter expert in Seniors Housing & Healthcare. Dave sat down with NIC’s Head of Research & Analytics, Lisa McCracken to discuss the current direction of the sector. 

NIC hosts this webinar for subscribers alongside their Quarterly Data Release of the NIC MAP Vision Market Fundamentals. In this quarterly release, the organization shares occupancy figures, absorption rates, and new construction data for their 31 primary markets in the seniors housing, independent living, and assisted living segments. In analyzing this information, we can support current trends as well as forecast future trends both at the national and local market level. 

During the webinar’s live poll, attendees were asked two questions: 

When do you see deal volume regaining momentum? 

  • H2 2024 – 6% 
  • H1 2025 – 42%  
  • H2 2025 – 48% 
  • 2026 – 5% 

What is your strategy for the remainder of 2024? 

  • Looking to buy / acquire assets – 41%  
  • Looking to sell – 8% 
  • On hold – 51% 

The survey results closely aligned with the key takeaways from Lisa and Dave’s conversation: 

Lisa McCracken (LM): What is selling? 

David Fasano (DF): Current sellers are doing so out of necessity for a variety of reasons including loan maturity, end of life of a fund, or divestiture from a certain asset type. Product in the market is being sold by owners dedicated to affecting a transaction. 

The most popular product type right now is older properties at a lower price per unit that can be purchased with all cash. These properties might need some additional capital improvements but offer buyers the opportunity to enter or expand in markets at a lower price point while potentially capturing market share from the middle market.  

LM: What is keeping deals from being done? 

DF: The good news is 41 percent of people on the webinar are looking to buy or acquire a property. Access to capital seems to be the main thing holding people back. The REITs are providing some capital, but we need banks to reenter the space and make funds available. Once we see a few banks get the ball rolling, we expect more to follow. The recent rent increases and flattening of wage growth along with rise in demand has created some strong underlying financials for stabilized properties being brought to market. As the debt market settles down, the industry will feature a very strong asset class. We have already noticed that the length of time it takes to get a deal done has started to shorten.  

LM: While fundamentals have improved, there is a certain degree of distress. Can you expand on that? 

DF: There is the typical distress that people think of, which is when a property is in financial distress for a variety of reasons, such as a floating interest rate or labor costs that have inflated. Some communities have not seen occupancy and NOI return to pre 2020 levels. This could be because of location, new supply entering the market, or even because of the operator in place. Renters utilizing senior housing now are more selective than ever, making it especially important to have an operator in place that really fits and understands that market.  

For more information on the Q1 NIC Data Release, please view our Seniors Housing Quarterly Report Card.