The American Seniors Housing Association (ASHA) held its highly anticipated annual conference at the Arizona Biltmore in Phoenix, AZ, from January 27-29, 2025. This event is a cornerstone for the seniors housing industry, bringing together key players to discuss trends, challenges, and opportunities. Here are some of the key takeaways from this year's conference:
Optimism and Growth in the M&A Market
The conference saw participation from a diverse group of stakeholders, including owners, operators, debt/equity lenders, transaction brokers, investors, and developers. The atmosphere was charged with optimism as the M&A market came off a record-breaking year in 2024, with over 700 publicly announced transactions. This surpassed the previous high of 560 transactions in 2022. The availability of superior cost of capital allowed REITs to finance non-performing and unstabilized assets effectively.
Improving Occupancy Rates
According to NIC Map Vision, the sector’s occupancy improved for a fourteenth consecutive quarter to 87.2% including substantial increases in absorption as this is a strong indicator of demand in the sector. As construction activity remains slow in the sector, these figures will most likely continue to increase as expected occupancy and NOI growth continue to be favorable from an investment perspective.
Enhanced Liquidity in the M&A Market
Liquidity in the M&A market has been on an upward trend, with expectations that equity and debt providers will increase their capital allocations in 2025. This improved liquidity is a positive sign for the sector, indicating robust investment activity.
Labor Costs and Challenges
While labor costs have decreased since 2022 due to the easing of agency labor, they remain a challenge as overall occupancies increase. Managing labor costs will be crucial for maintaining profitability in the sector.
2025 Transactions
The overall fundamental outlook for transactions in 2025 is positive as there should be increased market stabilization across the industry as cap rates have flattened and margins are beginning to improve.Although seniors housing values have lagged when compared to other real estate sectors over the years, value increases in the space made some strides in 2024 and are positioned well in 2025.
A Positive Outlook for 2025
Overall, the tone of optimism for the industry is becoming more prevalent. Improving fundamentals are attracting more investors, and a strong M&A market is anticipated for 2025. Private equity could see a resurgence as financing costs potentially decrease, making yields in the seniors housing sector more attractive compared to other real estate sectors.
The 2025 ASHA Conference highlighted the resilience and growth potential of the seniors housing industry, setting a positive tone for the year ahead.
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Brian L. Chandler, MAI, CRE, FRICS, Partner Valuation Advisors
Brian L. Chandler, MAI, CRE, FRICS, is Senior Managing Director for Partner Valuation Advisors, where he leads the firm’s national Seniors Housing practice. With over 30 years of commercial real estate experience, Mr. Chandler offers deep expertise in the preparation and desk review of consulting and valuation reports, market studies, and cash flow analysis reports for owners and developers, insurance companies, pension fund advisors, governmental agencies, commercial lending institutions, and investment companies experience. In addition to his valuation experience, Mr. Chandler brings a rich perspective from his experience in real estate brokerage, tenant representation, and asset management.
