Better senior living industry operating results have given investors more confidence to transact in 2025 as buyers and sellers shift away from deals driven more by market distress.
That’s according to a new report from Walker & Dunlop, released Oct. 7. The authors of the report compiled it using data from sources including NIC MAP, Greenstreet and the U.S. Census Bureau.
According to the report, the baby boomers are pushing up demand with every passing year. The Walker & Dunlop report’s authors cited U.S. Census projections showing “rapid growth” of the number of people aged 80 or older through 2030.
Sellers of senior living communities have shifted their behavior in 2025 from distress-driven deals to deals that reflect new opportunities. Compression of cap rates, the need to rebalance and prune portfolios, management of debt maturities, a lack of new development, shifts to Medicaid and the new HUD lending “express lane” are all helping to motivate sellers looking ahead to 2026.
Meanwhile, buyers of communities are seeking properties with stabilized cash flows and good rent growth in markets supported by demographics and low new supply. As they do so, they are breaking apart and combining communities into new or existing portfolios to enhance efficiency and looking at communities to invest CapEx in or reposition below replacement costs.
“Sellers are predominantly exercising choice – maximizing proceeds, re-aligning strategies, and leveraging improved debt options – rather than exiting under pressure,” the report’s authors wrote. “Buyers are paying for quality, operator strength, and location, with disciplined underwriting and a premium on speed and certainty of close.”
In particular, the return of government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac and the launch of HUD’s Lean Express Lane is expanding financing flexibility for senior living companies.
The HUD “express lane” program, which is meant to help refinance licensed skilled nursing facilities and assisted living communities, is a “game-changer” for senior living transactions, according to Walker & Dunlop EVP and Group Head of FHA Finance Ken Buchanan.
“Historically, one of the biggest challenges with HUD financing is the long timeframes to get a deal closed. With the express lane these loans are processed and approved by HUD within 3 to 5 days compared to a historical average of 122 days,” he told Senior Housing News.
The Walker & Dunlop report also noted the company’s transaction team are “seeing strong alignment between buyer demand and seller expectations, particularly for well-operated assets with proven market appeal.”
At the same time, a low rate of new senior living community openings in 2025 is expected to buoy industry demand into 2026, pushing up revenue and aiding unit absorption in the next year. Higher construction costs, tighter bank underwriting and some hurdles with zoning are stymying new development projects even while pre-leasing and waiting lists grow stronger in many markets across the country, according to the report’s authors.
In other words, some of the same conditions boosting senior living occupancy and revenue also are hamstringing operators’ ability to grow in the years ahead via new development.
Current senior living industry headwinds include reimbursement uncertainty in some states and lack of affordability, elevated employee wages and lingering staffing issues, higher capital needs and competition from other operators with new communities, according to the report.
Tailwinds ahead include less of a reliance on agency staffers than in the past and scheduling improvements, moderating insurance costs, cap rate compression and needs-based demand that is less sensitive to economic shocks.
High demand and occupancy growth and a low rate of new community openings since mid-2021 are helping senior living operators maintain pricing power.
“Together, these dynamics support continued revenue gains for well-operated communities while rewarding assets in markets with limited competitive supply,” the report’s authors wrote.
Higher occupancy rates also support higher revenue among operators. Operators have indicated improving interest coverage and debt service this year. Additionally “there is a clear upward trajectory in revenue/NOI trends since 2022 and an anticipated acceleration through 2025, with the sharpest gains in supply-constrained submarkets,” the report’s authors wrote.
The senior living industry’s current occupancy average above 88% “is an impressive mark,” said Alex Vice, senior director at Walker & Dunlop. Operators should take this moment to determine where they stand on occupancy and plan ahead based on that.
“If I am ahead, I would be thinking about rate increases and pushing revenue to further enhance the bottom line, but also free up cashflow to keep up with increasing wages or re-invest in the community,” Vice told Senior Housing News. “If I am behind this nationwide occupancy figure, I am studying my rent roll and determining which units or acuity levels are struggling to lease.”
The report’s authors see the senior living industry in a “position of strength” in the next one to two years and projected continued revenue growth, cap rate compression and stabilized asset pricing, greater liquidity and lagging development timelines ahead. They also expect that operators will need to navigate Medicaid changes and lack of affordability in their markets and watch for shifts in reimbursements or market rents.
Still, longer-term, the industry will have to return to a growth footing before too long if it hopes to close the widening “supply gap.”
“While [continued lack of new supply] can be seen as a short-term net positive for current operators and their capital partners, the need for new supply is pressing,” Vice said.
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