Commercial real estate has been very hard hit by the recession, but one area of the industry has proven to be quite resilient: senior housing. As funding expert Jeffrey A. Davis observed, “It was a breakthrough year for senior housing and healthcare properties as the extent to which senior housing demand is sustainable during different economic environments began to more fully sink in with lenders and investors.”
Davis, head of Chicago-based Cambridge Realty Capital, notes that the drop in the residential market, along with the decline in consumer confidence as a result of the recession, forced many seniors to delay moving to independent living properties.
However, the recession’s impact on other types of senior housing, such as skilled nursing homes, where the majority of residents are supported by Medicaid, Medicare or private insurance, has been less apparent.
“The federal government’s stimulus program, coupled with the willingness and ability of states to meet their responsibilities to the Medicaid population, has enabled nursing home operators to perform at a high level while providing excellent care for residents.
Skilled nursing facilities still could face additional challenges as a result of decreasing state revenues and Medicaid cuts, but the industry’s greatest cyclical challenges appear to be behind us at this time,” said Davis.