PHOENIX—A lot of deciding between asset types in senior is driven by yield in each asset class. That was according to Stefan Oh, EVP of acquisitions at Griffin-American Healthcare REIT III, who recently served as a panelist at RealShare National Healthcare Real Estate 2015.
Oh explained that "There has been a shift for us in the space towards moving where we can price and meet those expectations a bit better. Skilled nursing is probably the area we are seeing the most yield advantage," he said.
Despite the fact that lease rates have come down, they are still much higher than you would get from an assisted living facility, Oh added.
But with the higher yield comes higher risk…an operational risk, said panel moderator Steven Kaye, partner at Arnall Golden Gregory LLP.
Oh explained that some assets are seen as pure long-term care and some are more focused on short-term, but Griffin-American likes ones that have a little bit of both. "It doesn't put all your eggs in one basket. If you have too much of one, you have further to fall if there was a change in reimbursement down the line."
Darryl Freling, co-founder and managing principal of MedProperties Holdings LLC, said that his company has also invested in a number of ground-up skilled nursing facilities, but that it has been on a deal by deal basis. "It is a case by case analysis where we might do one specific project in one market, but not touch a similar one in another market."
About five years ago, Caddis entered into the senior housing sector. The firm's CEO and partner, Jason Signor, said that the reasons is because the spreads are much wider. "We can find and identify a market."
But Signor, too, said that the risks that go with it are substantial. "You don't just have real estate risk…You have operator risk," he said.
To read more senior housing articles and more from the RealShare National Healthcare Real Estate 2015 conference, check out the links below.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
