Ripe With Opportunity: What’s in Store for Senior Housing Investment
Continuum Advisors' Jay Jordan and David Kliewer share their views.
The senior housing sector is in for growth in 2025, as the aging population continues to drive rising demand. This is expected to generate an uptick in investment, with a particular appeal for high-quality properties in regions with robust demographic increases. In addition, the improving financing conditions are contributing to a more favorable environment for both acquisitions and new developments.
Focusing exclusively on senior housing investment sales, Continuum Advisors has the finger on the pulse of the sector. Since its inception, the Florida-based brokerage and advisory firm has arranged more than 175 transactions across 35 states.
In this interview, Co-Founders Jay Jordan and David Kliewer shed light on the forces that will drive deal activity this year. From the growing appeal of continuing care retirement communities to the increased role of non-bank lenders, they share their perspectives on market trends, financing shifts and investment opportunities.
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What are the top trends impacting deal activity in the senior housing sector?
Kliewer: There is strong optimism around the 2025 outlook for both the operational environment and capital markets environment. In the broader lens of commercial real estate, senior housing continues to garner broader attention that has transitioned this asset to the mainstream as compared to being viewed as an alternative asset class. The current environment is ripe with opportunity as occupancy rates climb and resident demand outpaces new development.
Coming off a financing slowdown, we’ve seen an uptick in lenders now eager to provide liquidity to the marketplace, especially in the senior housing sector where market fundamentals are on the upswing. While construction costs remain high, many developers are finding more profitable opportunities buying existing properties with value-add potential rather than starting new projects.
What’s your current sales pipeline? Which types of properties and/or markets are drawing strong investor interest?
Jordan: Our current pipeline is diverse, both geographically and from a property profile standpoint. We’re highly active across the Midwest, Southeast and Northeast regions, with deal profiles spanning court-directed sale processes to facilitate bringing a community out of bankruptcy, to lighter value-add and fully stabilized, cash flowing deals.
Right now, we’re focused on getting some large transactions over the finish line in the first quarter of 2025. These engagements average more than $75 million each.
Where we saw more value-add and distressed transactions make up a significant part of activity 12-24 months ago, we’ve seen that complexion change over the past year and into 2025. Our average transaction size is in the $40 million realm—consistent with where we’ve been for the past 10 years.
Our sales pipeline reflects one of our specialty asset types: Continuing care retirement communities that offer residents the convenience to age in place as their care needs evolve. These campuses are luxurious in nature and offer independent living, assisted living and memory care all on the same site, as well as skilled nursing care for short-term rehabilitation stays or long-term, higher acuity needs.
It’s difficult to replace these one-of-a-kind, large-scale communities at a time where construction costs are painfully high, so we’re seeing serious buyer interest in these unique assets we’re bringing to the market.
Kliewer: We are still in the midst of a dynamic market cycle. So, while operational challenges are improving, we continue to work through deals which are distressed in nature. After more than 20 years exclusively selling senior housing, we understand the unique regulatory, operational and financial challenges of senior housing assets. We’ve successfully led more than $1.25 billion in distressed sales to close, each deal handled with precision and care.
As a result, we’ve become a trusted partner for bankruptcy attorneys and trustees across the U.S. these last few years. Some recent deals include negotiating the $81 million bankruptcy sale of The Arlington at Naples in Florida, arranging the sale of the largest senior living campus in Illinois—Friendship Village of Schaumburg—and the $45 million bankruptcy sale of Merrill Gardens at ChampionsGate, just south of Orlando, Fla.
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Given your national footprint and reach, how do you ensure you understand local touches and smaller markets? Are there specific practices or technologies you use to stay connected to regional nuances?
Jordan: Senior living is operationally intensive and deeply rooted in a community, which is why we spend adequate time onsite and in the local markets for every deal we’re involved in—as brokers or advisors. In addition to in-depth analysis, we take pride in tailoring our offerings to each listing—there is never a presentation that is a copy or the same from a previous offering.
In recent years, have you noticed any changes in the way senior housing deals are financed or structured? Are lenders more or less receptive post-2020?
Jordan: Similar to other commercial real estate asset types, we saw lending contract quite significantly for senior housing starting in summer 2022, citing concern with general market economics and the need for liquidity in their balance sheets. We’ve seen this begin to reverse in more meaningful way over the past several months, with the past quarter really starting to see more change and buyers having multiple lender term sheets in hand.
We’ve also seen non-bank lenders be quite aggressive in offering terms that are attractive for their ease of execution and additional loan proceeds.
Are there specific markets and/or property types that you expect to dominate senior housing investment sales in the near future?
Jordan: Operating fundamentals for health-care real estate, while slower to rebound postpandemic, have made steady and consistent growth, with strong tailwinds set against the broader backdrop in 2025.
A recent report out of the Mortgage Bankers Association noted that mortgage originations for health-care properties are now up 510 percent from last year, reiterating that senior housing as an asset class will remain a hot investment opportunity.
Investors are absolutely taking note. This is especially true in areas like the Southeast, where demographic growth of seniors shows no signs of slowing down, and our transactions in the current pipeline reflect this trend.
Baby Boomers will begin to turn 80 in 2025. How do you expect that to impact the sector?
Kliewer: The surge in senior housing demand, especially high-quality, amenity-rich options, will continue. The Wall Street Journal’s recent reporting has it right: Wealthier Americans are paying millions to age in luxury campuses, which places pressure on existing communities to compete. Some may be rendered obsolete or require significant repurposes, while others will transition to serve as more middle-market living options. Both are welcome as this creates a wider array of options that best meet the demand of today and tomorrow’s senior population.
Do you leverage proprietary data or analysis to forecast where senior housing demand will grow? If so, what trends do you anticipate in 2025 and beyond?
Kliewer: We have been able to collect an enormous amount of internal data which helps us identify and evaluate market trends in real time. We’re also involved in NIC and ASHA, two stellar industry resources that track demographics and inventory.
From a property demand standpoint, we’ve seen a move to larger communities—i.e. 100+ units—and more care options within a single campus. This allows for greater efficiency in operations, staffing and responsiveness to the care needs of residents. We’re also seeing lower-acuity living options added to campuses, like patio homes or cottages integrated into a campus that have been very well received and desired by residents.
Jordan: For example, we recently sold a newly developed, three-property portfolio in Indiana with one community rebounding from COVID-19, another recently stabilized and the third to be delivered at certificate of occupancy. We saw extraordinary interest for these independent living/assisted living/memory care campuses with two of the three also offering cottage homes. The sale ultimately closed with a partnership between a public REIT and a regional operating group that had a long-held relationship with the REIT.
Demand within markets where adult children are will continue to rise. Today and tomorrow’s seniors are far more likely than those generations of the past to relocate to where their adult children reside, so counterintuitively, some of the best senior’s growth markets happen to be markets that have led the way in growth of younger adults and families.
