Investors and Operators Shun Standalone Skilled Nursing Facilities
The hits keep coming for the skilled nursing sector.
A new survey from professional services firm JLL (NYSE: JLL) finds that more than half of operators and investors consider standalone skilled nursing facilities “not at all desirable” as an an investment.
The findings from JLL bear out the findings of a different survey from Lancaster Pollard, which concluded that most senior housing operators have a pessimistic outlook for the sector.
Unsurprisingly, the outlook for annual growth in skilled nursing revenue in the JLL survey was poor, with respondents predicting an average growth of 1.4%. Expenses were projected, on average, to increase by 2.8%.
In comparison, the average prediction of revenue growth for independent living was 3.7%, while expense growth for that sector was projected at 3.4% on average.
The survey drew from more than 250 potential respondents, 28% of which were operators, 23% of which were developers, and 19% of which were lenders. Of that group, 56% rated standalone nursing care facilities as “not at all desirable,” while an additional 14% rated such properties as “not so desirable.”
Exactly 50% of respondents predicted that skilled nursing values would decrease over the next 12 months, with 41.7% predicting a “modest decrease” and 8.3% percent envisioning a “significant decrease.” About a third of respondents predicted no change, while a modest or significant increase was seen by 8.3% of respondents each.
Skilled nursing facilities also fared the worst of senior housing types in terms of time spent on the market. When asked how many months typically passed between the date a property is placed on the market and the closing date, respondents gave an average of 7.1.
This was the highest average time on the market out of the seniors-only apartments, independent living, assisted living, and skilled nursing categories.
This, in part, could be due to the senior care sector moving toward facilities that provide a range of care levels. Almost 69% of the survey respondents said the shift from single-level-of-care facilities to continuum-of-care facilities is “definitely here to stay.”
Written by Maggie Flynn
- JLL Seniors Housing Investor Survey and Trends2: JLL Seniors Housing Investor Survey and Trends