By Hayden Spiess
ATLANTA — The seniors housing sector has not always been the apple of commercial real estate (CRE) capital’s eye. Industry professionals say that this is no longer the case and that a confluence of factors is driving strong investment activity in the sector.
“Nationally, this asset class is the darling with respect to CRE,” asserts Michael Bowden, senior vice president of investments with LTC Properties. “It wasn’t, as we know, for a long time. So that’s a new shift, which is super cool for all of us.”
Courtney Nickels, chief operating officer of the healthcare business at Artemis Real Estate Partners, agrees. “Seniors housing, as an alternative to other asset classes, is really attractive,” she enthuses. “Green Street has increased its projected NOI growth for the next three years, so there are very positive headlines out there,” she adds.
The comments from Nickels and Bowden came during a panel session at the 12th annual InterFace Seniors Housing Southeast conference, which took place at the InterContinental Hotel in Atlanta on Wednesday, Aug. 27.
In addition to Bowden and Nickels, participants of the panel — titled “Investment Market Update: Transaction Activity & Deal Velocity” — included Kevin Pascoe, chief investment officer, National Health Investors (NHI); Doug Halperin, partner at Elevated Estates; Matt Pyzyk, managing director of acquisitions with Green Courte Partners; and moderator Kyle Hallion, managing director, senior housing & care at Blueprint Healthcare Real Estate Advisors.
Appetite for Acquisitions
The proof of seniors housing’s newfound status as a coveted asset type is in the investment activity pudding, argued panelists, who pointed to the pace of investments and acquisitions in this sector of commercial real estate.
“Relative to other asset classes, you’re seeing a lot more capital inflows for people wanting exposure to the space,” shared Pyzyk. He pointed out that this was a welcome shift from other, not-too-distant years, referencing the ‘stay alive till 2025’ mentality adopted by the industry as it struggled its way through COVID and other economic headwinds.
Halperin argued that the shift observed by Pyzyk is partially the result of greater stability with respect to the challenges faced by owners and operators. “In addition to all the positive activity and great things that are ahead for the future, I think a lot of the issues that there have been in the past four or five years are now more consistent,” he contended.
“The problems of payroll, of finding good labor, of food costs rising, all of those things, even on the debt side, have stabilized. Whenever there is more certainty in the market, there’s a lot more ability to deploy capital and find deals because you’re not figuring things out on a month-to-month basis.”
“All of the things that we were waiting for — the tailwinds — feel like they’re here,” added Pyzyk. “We’re seeing a lot more deal activity out in the market today.”
“Transactions that are occurring are just fueling the appetite for more transactions,” echoed Nickels.
Bowden went so far as to describe the current level of activity as a “frenzy in the acquisition market.” He attributed this frenzy to a number of favorable factors.
“You have a combination of availability of capital, an active investor population and the demographic tailwinds that we’re all seeing in terms of the silver tsunami, those kinds of things,” Bowden explained.
According to data from MSCI, seniors housing property and portfolio sales nationally increased by almost 32 percent year over year in 2024. The sector saw $14.4 billion in annual investment sales, compared to $10.9 billion in 2023.
Dearth of Development
In addition to the tailwinds coming from strong real estate fundamentals and increased capital availability, Bowden points out that the current paucity of development is also helping fuel investment activity and acquisitions, generating interest in properties that might have been previously overlooked by investors.
“The lack of development is spurring the absorption of properties that have sort of been slogging through the pandemic,” he observed. “You have capital out there that’s ready to invest that has been waiting for this period of time, and then you have the lack of new supply.”
The number of seniors housing construction starts has fallen dramatically since 2021, which saw a post-COVID rebound. In 2023 and 2024, new construction starts across the 31 NIC MAP primary markets totaled just 9,226 units and 7,794 units, respectively. In 2021, construction starts reached 21,743 units.
“There just hasn’t been development,” corroborated Halperin. “That leads everyone to sort of push on the acquisition side and renovate properties or look at currently stabilized assets. I think that there will be increased activity over the next 12 to 18 months.”
Panelists also indicated that they do not expect the dynamic created by a lack of development to shift in the near term.
“I don’t expect to see significant development in the space for the foreseeable future,” predicted Pyzyk. “Eventually there will be a breaking point where development is going to continue to make sense, but I see that beyond the 18-month window we’re talking about.”
Flight to Quality
Amid the growing investor interest in seniors housing, not all buildings and acquisitions are created equal. Despite the healthy demand, investors are still exhibiting discretion, panelists pointed out.
“Obviously there’s a lot of activity, but there is not dumb money out there,” clarified Hallion. “Buyers are very disciplined. They have their criteria, and they stick to those criteria.”
Stabilized newer properties are, unsurprisingly, generating the greatest number of offers. “Everyone is going for them,” exclaimed Bowden. “It’s like flies on you-know-what. That’s where we see the most competition in terms of number of bidders or number of groups going after an asset.”
Pyzyk confirmed that he has observed the same trend. “What we’re seeing is like a flight to quality,” said Pyzyk. “We’re seeing a much more competitive sales process for communities that are stabilized and have durable cash flow. We’re still seeing a kind of thinner buyer pool for deals that have a story to them or that have stalled in lease-up — anything that has a little more lift to it from an operating or capital perspective.”
As buyers vie for quality assets, it will be increasingly important for investors to distinguish themselves from the pack. Panelists agreed that cultivating relationships is a key component to gaining a competitive edge and achieving success.
“When we go through a process, we don’t think of it as transactional, even though that is what it is; we think of it as relational,” Bowden shared of LTC. “We listen, and we have conversations with sellers, learning what is important for a seller in a particular transaction. Every deal is different, so how do we meet the sellers in the middle with what’s important to them?”
Halperin pointed out that these relationships are especially paramount in the seniors housing sector relative to other asset classes. “The relationship doesn’t even stop at the sale,” he emphasized. “That’s different in a lot of other areas of real estate — you buy a multifamily property, you buy a retail building, you’ll never speak to the seller again.”
At the end of the day, seniors housing is a “people” business, and this informs every aspect of the sector, even the investment activity and execution of transactions.
“You’re taking care of people that need your help,” stressed Halperin. “There are so many things that need to be done in tandem. It’s crucial to have everyone on the same page and build a good relationship for the sale portion, but also for the next step.”
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