Sunrise Deal Sparks Interest in Senior Care Properties; Residential Real Estate Remains a Challenge

The recent takeover of Sunrise Senior Living, Inc has highlighted the relative value of senior living real estate, as described in “Housing for the Elderly Targeted after Record Premium” at Bloomberg.com.  Indeed the stock prices of other senior living companies, such as Brookdale Senior Living, Emeritus and Capital Senior have all since seen healthy gains of 40-70%. According to the National Investment Center for the Seniors Housing & Care Industry, the average occupancy of senior living properties increased for the 9th consecutive month to 88.6%. This strengthening trend has encouraged some value oriented REIT investors to bid prices up.

The residential housing market, on the other hand, has experienced modest improvement, even as mortgage rates hit new all-time lows. The housing market is burdened by a still dysfunctional mortgage market and a big “shadow” inventory of “underwater” homes and foreclosures. As a result, senior living providers are continuing to be creative in their approach to filling open units. An interesting article in Senior Housing News, “Senior Living Providers: Discounting Can Boost Occupancy, But Is It Worth It?” discusses the pros and cons of one successful tactic.

About Jim Jeffery, CFA

Jim Jeffery, the founder and principal of Jeffery Asset Management has joined Solaris Advisors LLC as Managing Director where he will lead the non profit senior living effort. Jim is a Chartered Financial Analyst (CFA) with more than 20 years experience in the financial services industry. Have a question about your financial plan? ASK JIM
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