Skilled Nursing Facilities Rank Near Bottom of Investors’ Wish Lists

When asked which types of properties they were most interested in pursuing in 2018, a diverse group of investors ranked skilled nursing facilities near the bottom.

Just 14% of respondents in the CBRE (NYSE: CBRE) U.S. Healthcare Capital Markets Group’s annual Investor & Developer Survey said skilled nursing facilities met their acquisition requirements for 2018. In comparison, 98% said medical office buildings fit their criteria for the coming year, followed by ambulatory surgery centers at 72%

There was a steep drop-off from there — in third place came inpatient rehabilitation facilities (IRFs) and wellness centers at 29% apiece — but SNFs were only able to beat out long-term acute care hospitals (LTACs) and “other.”

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The one bright spot is that SNFs’ meager performance didn’t represent the largest opinion decline: That dubious honor belonged to assisted living facilities, which saw an 11% drop in interest among those surveyed. IRFs, meanwhile, had the greatest reputation boost, with 6% more interest than in 2017.

Real estate giant CBRE posed a set of 24 questions to a group of executives at more than 100 health care-focused real estate investment trusts (REITs), developers, and investment firms.

When asked about their supply-and-demand predictions for skilled nursing facilities in 2018, more than half said they expected supply to remain the same, while the majority of respondents said demand would be either the same or lower.

CBRE’s findings mirror those of real estate investment management company JLL (NYSE: JLL), which last month determined that more than half of operators and investors thought SNFs were “not at all desirable” in its Year-End 2017 Seniors Housing Investor Survey.

Similarly, advisory firm Lancaster Pollard found that just 19% of senior housing operators believed the outlook for standalone SNFs was “good” over the coming three years — with 34% deeming the future “poor.”

Written by Alex Spanko

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