Assisted Living In Toronto￼
“The reality that we’ll capable of pointing to this period, the worst economic downturn of our lives-and declare that our industry averted it fairly well, and has even has continued to grow is important,” says Granger Cobb who is co-CEO and president Emeritus Senior Living. Emeritus Senior Living.
The recessions of the past two years have caused a lot of hardship for assisted living and many care assisted living providers at the beginning of 2009 were worried the stagnant housing market, the depletion of stock earnings and rate of unemployment among adult children of residents’ potential could cause occupancy rates fall. However, after moderate declines in rates in 2008 and a decrease in rent growth to 2 percent, down from 2.9 percent during 2008 and from 4 percent when 2007 was the part of assisted living that is based on needs living appeared to outweigh the economics. The move-in process could be delayed but only for a limited time.
In the second quarter of 2009 indications of stabilization started to show up, which was followed by an upward but slow trend as per Robert G. Kramer, the president of the Annapolis Maryland-based National Investment Center for the Seniors Housing & Care Industry (NIC). Although unemployment in the country remained at an alarming 10 % in the month of January Kramer states that he is cautiously hopeful about the future, particularly considering that the industry experienced the highest rate of absorption for the quarter ending March 2009 since the beginning quarter of 2006. It was 1,400 assisted living in Toronto units within the top 30 markets in urban areas and slightly more for the 100 top markets.
These figures suggest that the general picture is more favorable for assisted living than other real estate segments which include hotels, multifamily and offices, Kramer notes. “Basically we’re seeing operators securing their position regarding prices,” he adds. “We definitely are seeing more concessions in the market, but in the same way these concessions tend to be specific to the market, property or even specific to a particular unit.”
Still, move-in delays due to economic factors have amplified a trend already developing pre-recession-residents tend to be older and frailer, says Jim Moore, president of Moore Diversified Services and author of “Strategic Forecast,” published in Assisted Living Toronto Executive’s January/February 2010 issue. This has led to increased opportunities for dementia services, which are more dependent on needs in comparison to assisted living says. In fact, several of the top 70 operators have transformed their independent units into assisted living senior’s, assisted living memory care.
For new construction, the buildings being built remained open, but very few firms have launched new developments. And at the beginning of January the number of building launches had dropped to the lowest level since NIC began to track trends in the senior housing market. The number of companies that went public was not high in 2009.
The forecast for 2010
Access to capital will be the biggest challenge to the development of 2010 but new buildings that were built prior to the recession will be open until in the final quarter of 2010. The lack of new homes isn’t necessarily negative for assisted living toronto
“We’re going through an era of minimal new products that is coming on the market however, if this is accompanied by a surge in demand and an improvement of the economic situation, it will be well for occupancy and growth in rents for assisted living facilities,” Kramer says. “Outside of economic external factors which we have no influence over, our biggest danger for assisted living is the overbuilding.”
Fannie Mae along with Freddie Mac will continue to remain reliable sources of 10-year loans, but in the case of the construction loan, project developers are left with limited choices. A limited amount of HUD 232 financing options will be available and, most likely, the projects that do go on the market will be able to do so due to the relationships that local lending institutions have.
In fact, The Arbor Company, situated in Atlanta has no money to construct property on its own however, thanks to a partnership that it has formed with Formation Capital, Arbor will manage two new developments that are scheduled to go into construction this fall, according to the CEO Judd Harper. “We are much more positive and more positive about assisted living opportunities in the current slow-growing economy, but believe that independent living will recovery in the coming years,” he adds. “As people gain jobs, they no more have the ability to provide care for their parents in their home.”
A good thing in the arena of acquisitions, private equity companies are beginning to look at assisted living Toronto as an lucrative sector , and the major REITs involved in senior housing are in a good position to make a return investment, Kramer notes. Emeritus is a company to keep an eye on thanks for the Blackstone deal. Although it is only planning one new facility in the year 2010, the company is looking for additional acquisition opportunities that are priced at a reasonable price.
“If the company is cash-flow positive, has liquidity and a fairly sound balance sheet, it’s in a good position since there are many opportunities available right now,” Cobb says. This isn’t only for large companies such as Emeritus as well as smaller, regional players that have targeted expansion plans Cobb adds, noting that “interest rates haven’t changed that much in the past couple of years, however, that amount of equity as well as the coverage ratios you need to maintain is becoming more stringent along with an underwriting.”
Fanwood is a company based in New Jersey. Chelsea Senior Living leveraged a good relationship with a local bank to acquire a former Sunwest location located in New Jersey last fall and is looking to find more deals, according to Roger Bernier, president and COO. “Some individuals are likely to have their debts mature and will be unable to refinance it,” the CEO predicts. “Ultimately our goal is to expand by two communities each year, but it must be the right time for us to look at.”
The majority of the buying activity in 2010 will be confined to distressed properties, however, no one thinks that a lot of luxury properties to be put on the market in 2010 as per Steve Monroe of Senior Care Investor. “High-performing properties are likely to be sold if the owners are able to obtain a decent cost, though that might be changing in the course of 2010.”
However, prudent owners should not be enticed by the attractive price tags enough that they forget to think about how the purchase fits in with their current portfolio and the changing requirements of families and seniors, Moore cautions. “Senior psychographics are evolving,” he adds. “It’s not as very much as the World War II homemaker widow as the 80-year-olds that have been employed in the workplace.”
Another area for growth in 2010 is the possibility of new management agreements for lenders and owners who are dissatisfied with the current management of their company, Moore suggests. In the case of many businesses the best option in 2010 could be to enhance internal processes Moore suggests.
However, while Greensboro, North Carolina- located Bell Senior Living is open to any deal within the mid-Atlantic states the states where it is already operating and operates, this strategy is its top focus this year, according to the president, Steve Morton. “I’d suggest that it’s moment to focus on operations, enhance the efficiency of operations, such as revenue streams and management and develop the necessary tools to increase and manage communities efficiently feasible,” he says. “This is something that we can accomplish since we do not have five acquisitions or development agreements.”
Additionally, volatile market conditions make it highly unlikely that any company will ever go to the public market in 2010. However, in the event that conditions improve Moore saysthat two companies worth watching will remain Atria Senior Living Group (No. 4.) along with HCR ManorCare (No. 10).
The Assisted Living Federation of America (ALFA) is the biggest national organization exclusively focused on professionally-run assisted living facilities for senior citizens. ALFA’s member-driven initiatives promote efficiency and business excellence through national conferences research, publications, as well as executive networking. ALFA strives to influence public policy through advocacy for a well-informed choice, quality health care, and accessibility to everyone Americans.