Senior housing and care providers are optimistic about the economy and anticipate stronger business performance in the next 12 months, according to a survey of industry executives by GE Capital, Healthcare Financial Services.
Survey respondents also ranked several challenges facing senior housing and care providers over the next year, with 26 percent citing rising interest rates as the industry’s top challenge and 22 percent selecting regulatory oversight. The U.S. economy was rated No. 3 (19 percent), followed by reimbursement pressures at 17 percent.
These rankings are notably different from last year’s, when respondents to the GE Capital, Healthcare Finance Services’ survey said the senior housing and care industry’s top two challenges were the U.S. economy (35 percent) and reimbursement pressures (29 percent).
[See also: Senior care adapts to health reform.]
“The environment, especially in the short-term, is the least threatening that it’s been in many years,” said James Seymour, senior managing director of GE Capital, Healthcare Financial Services’ real estate financing team. “At the state level, most states are looking at fairly stable fiscal situations and are talking about annual increases in the zero to 2 percent range, and certainly Medicare is in the same boat.” This short-term optimism is fueling a desire to expand among senior housing and care providers. Two-thirds (67 percent) of survey respondents said their chief strategy for growth over the next 12 months is to buy or merge with existing properties or operators. More than one-quarter (26 percent) of respondents said they plan to revitalize and upgrade existing properties.
Slightly more than half of the survey respondents (51 percent) said acquisition funding will be the most important type of financing they seek, while 31 percent said they expected to pursue construction financing.
GE Capital, Healthcare Finance Services surveyed 150 executives within the senior housing and care industry via email in September. “What our customers are telling us is they feel better about their businesses and growth prospects than they did a year ago, that their primary growth vehicle is going to be M&A and that secondarily they also plan to invest in [capital expenditures] to upgrade their facilities,” Seymour said. “By and large, the themes were that they feel strong about the space, they expect revenues to increase, they expect to make acquisitions.”
[See also: Senior housing and care industry M&A driven by smaller operators.]
Nearly one-third of respondents (31 percent) said property and business valuations in the senior housing and care industry are sustainable based on “a better market understanding of the space,” while 25 percent said better industry fundamentals will support valuations. But nearly one-quarter of respondents (23 percent) said current valuations weren’t sustainable.
“The longer-term systemic issues about the sustainability of the payment streams are still there, but in the shorter term things look pretty good for an operator, a capital provider or a lender,” says Seymour. “There are no big clouds on the horizon.”
Senior housing and care providers are optimistic about the economy and anticipate stronger business performance in the next 12 months, according to a survey of industry executives by GE Capital, Healthcare Financial Services.
Survey respondents also ranked several challenges facing senior housing and care providers over the next year, with 26 percent citing rising interest rates as the industry’s top challenge and 22 percent selecting regulatory oversight. The U.S. economy was rated No. 3 (19 percent), followed by reimbursement pressures at 17 percent.
These rankings are notably different from last year’s, when respondents to the GE Capital, Healthcare Finance Services’ survey said the senior housing and care industry’s top two challenges were the U.S. economy (35 percent) and reimbursement pressures (29 percent).
[See also: Senior care adapts to health reform.]
“The environment, especially in the short-term, is the least threatening that it’s been in many years,” said James Seymour, senior managing director of GE Capital, Healthcare Financial Services’ real estate financing team. “At the state level, most states are looking at fairly stable fiscal situations and are talking about annual increases in the zero to 2 percent range, and certainly Medicare is in the same boat.” This short-term optimism is fueling a desire to expand among senior housing and care providers. Two-thirds (67 percent) of survey respondents said their chief strategy for growth over the next 12 months is to buy or merge with existing properties or operators. More than one-quarter (26 percent) of respondents said they plan to revitalize and upgrade existing properties.
Slightly more than half of the survey respondents (51 percent) said acquisition funding will be the most important type of financing they seek, while 31 percent said they expected to pursue construction financing.
GE Capital, Healthcare Finance Services surveyed 150 executives within the senior housing and care industry via email in September. “What our customers are telling us is they feel better about their businesses and growth prospects than they did a year ago, that their primary growth vehicle is going to be M&A and that secondarily they also plan to invest in [capital expenditures] to upgrade their facilities,” Seymour said. “By and large, the themes were that they feel strong about the space, they expect revenues to increase, they expect to make acquisitions.”
[See also: Senior housing and care industry M&A driven by smaller operators.]
Nearly one-third of respondents (31 percent) said property and business valuations in the senior housing and care industry are sustainable based on “a better market understanding of the space,” while 25 percent said better industry fundamentals will support valuations. But nearly one-quarter of respondents (23 percent) said current valuations weren’t sustainable.
“The longer-term systemic issues about the sustainability of the payment streams are still there, but in the shorter term things look pretty good for an operator, a capital provider or a lender,” says Seymour. “There are no big clouds on the horizon.”