May 23, 2016 | Beth Burnham Mace | National Real Estate Investor
The seniors housing sector that we know today largely started in the 1980s and 1990s. It grew out of the need for housing and care for seniors whose adult daughters were joining the workforce at a rapid rate and could not be home to take care of their aging parents. In the years since then, the sector has more fully emerged and matured, and today it has become a more institutionally-accepted asset type in which to invest.
Market intelligence and data
There was very limited data available to investors on the seniors housing and care sector 20 years ago. Unlike with other commercial property types then (e.g., office, retail, industrial and multifamily), familiar concepts such as simple property identification and classification, terminology, inventory counts, occupancy rates and demand and supply measures, simply did not exist for the seniors housing and care sector. Comprehensive, reliable and consistent information on transaction activity was no better than hearsay and word of mouth. Experience, intuition and trust in your partner’s information sources (from the capital provider or capital seeker) was paramount. It was a bit of a “Wild West.” As a result of limited, inconsistent and unreliable data, the sector experienced a higher cost of capital than exists today, with cap rates averaging 10.5 percent or more for high quality product.
Blue Vault helps me to stay well informed on the financial status of both open and closed nontraded REITs and BDCs, so that I can help my clients better understand the product, before they make the decision to invest and after.