Leaders Least Optimistic About Standalone Skilled Nursing Assets in 2019

A survey of industry leaders from around the country revealed the least optimism for standalone skilled nursing assets in 2019.

When asked about the perceived economic viability of solo SNF properties over the coming year, a plurality of respondents to Lancaster Pollard’s 2019 Seniors Housing & Care Survey — or 36% — said the outlook was “poor.” For comparison, 33% thought the buildings’ financial footing would be “fair” in the year ahead, with just 28% responding “good.”

Lancaster Pollard, a Columbus, Ohio-based lender that focuses on the aging services sector, found one bright spot in the analysis: That 28% “good” rating represents a nine-percentage-point increase from 2018.

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For comparison, 57% respondents to the survey said the outlook was good for standalone assisted living properties, while 56% saw sunny skies ahead for the continuing care retirement community (CCRC) marketplace.

SNFs also finished dead last when Lancaster Pollard asked which care segment would see the most growth in 2019, attracting just 8% of the respondents; affordable housing and Alzheimer’s/memory care both tied for the top spot at 48%, followed closely by independent living, home health, and assisted living services.

The sector fared a tad better in the rankings of planned construction projects, finishing with 13%, though that still lags far behind assisted living (34%) and independent living (30%). Still, the most popular result was no construction, with 36% saying they were not planning any projects over the coming year.

Skilled nursing routinely ranks near the bottom of such industry-wide financial health surveys. A September 2018 report from real estate services firm CBRE found that 17% of senior housing and care investors thought SNFs had the most potential upside, as compared to 34% for independent living, 23% for assisted living, and 19% for active adult developments.

CBRE earlier that year determined that only 17% of investors said that SNFs met their acquisition standards — as compared to 98% for medical office buildings — while JLL found that more than half of operators and investors found SNFs “not at all desirable” as investments at the close of 2017.

Lancaster Pollard’s most recent group of survey subjects consisted of 249 respondents, 73% of which identified themselves as C-suite employees. A plurality, or 39%, had fewer than 250 skilled nursing beds at their organizations, with a combined 25% reporting anywhere from 250 to more than 3,000 beds; 36% had no SNF assets at all.

The respondents expressed some familiar concerns across the care spectrum, with a full 88% reporting sufficient staffing as a serious concern — up from 82% last year.

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