In Central Florida, Bradford L. Johnson, managing director/principal, Integra Tampa Bay, Tampa, FL, tells GlobeSt.com he isn't seeing the same enthusiasm for investments in senior housing that are evident in Texas, California, Illinois and other seniors shelter markets.

Buyer/investor demand is "less than it was a few years ago," Johnson tells GlobeSt.com. "Demand has slowed down."

Still, he says, investors can realize a cash-on-cash return on equity of between 10% to 15%, "probably right around 12%," Johnson estimates because "this type of property is considered a little higher risk than most properties." On an equity-yield basis, he figures a return of 20% to 30% is achievable.

Florida lenders are still funding construction of new seniors housing product "but require a little higher due diligence" than office, industrial or retail loans, Johnson says. "For instance, they might ask for a supply and demand analysis and a report on the competition in the immediate area."

Construction costs will vary by facility type and quality level. "Soft costs could be from the low $65s per sf to $100 per sf," the broker tells GlobeSt.com. "Some developers have found construction costs of some of these facilities can actually outstrip the value of the property itself."

The best returns are generally found in facilities with 100 to 150 units, that are a combination of congregate (independent apartments) and assisted-living quarters, Johnson says. "That's the general favorite among developers because this type of property costs less; offers a little more diversity and versatility; and allows residents to remain in their homes longer."

Expense ratios for congregate-assisted living properties might be 40% to 45% of the operating revenue compared to 60% to 70% in facilities where the residents require more care, maintenance and more meals, the broker tells GlobeSt.com. A facility that requires on-duty nursing care would probably have an expense ratio of 80% to 90%, he says.

Robert G. Kramer, executive director, National Investment Center for the seniors' housing and care industries, Washington, DC, told GlobeSt.com national online editor John Salustri in a July 16 interview.

Go to:UpClose: Robert Kramer of NIC

"Lenders are eager to put money into independent housing and apartments while the care side is hurting in terms of access to public-equity markets and debt financing."

Kramer sums up the investment opportunities question in the seniors housing market by telling Salustri, "the key issue is that seniors housing is an inefficient market" for most investors to consider.

For example, Kramer says the assisted-living sector "has no national supply-and-demand information base that goes down to the local market level, and that is behind other real estate classes in having proven, empirical market-demand models."

But the seniors housing industry is "closing that gap quickly," the NIC executive director says.

(See related stories on the Dallas and National pages.)