Increasingly, senior housing investors are seeking a financial interest in the independent service providers that can make the difference between a portfolio’s success and failure.
In early 2019, Bridge Seniors Housing Fund Manager LLC acquired Somerby Senior Living Services, a senior housing operator in the Southeast. Later in the year, TPG made an unsuccessful play for senior living community developer and operator Capital Senior Living Corp., according to Bloomberg. And in 2018, Ventas Inc. tapped the then-new Eclipse Senior Living to manage 76 senior housing communities and took a 34 percent stake in the operator as well.
“Many of our investor clients are struggling to find solid operating partners and most are doing away with third-party only, looking for those who have even a small ownership in the property, so they have their own skin in the game,” said Traci Bild, CEO of senior housing consulting firm Bild & Co.
Such partnerships are desirable for operators because they can benefit from investors’ support in such areas as sales and marketing, while they focus on patient-care hiring in a tight labor market. Eighty-eight percent of respondents to health-care industry financial services firm Lancaster Pollard’s 2020 Seniors Housing and Care Survey listed a shortage of workers as one of their primary areas of concerns.
Perhaps a new trend on the horizon is senior housing investors taking a more organic approach to operations. “For the first time in my 20 years of advising operators and investors, I’ve seen ownership seeking to create their own operating platform in-house,” Bild revealed. “Many find third-party operators complacent and unwilling to align with the priorities of the owners.”
Sector Insights rotates among market rate/luxury housing, workforce housing, low-income housing, student housing, senior housing and mixed-use.