Vital Signs Fall 2021: Healthcare and Medical Office Report

Near-term (year one) underwriting remains more conservative, particularly for properties that require significant lease-up to achieve stabilization. We have also observed a heightened emphasis on replacement cost evaluation, particularly with respect to pre-stabilized assets. Senior housing buyers continue to be predominantly institutional private equity funds, although the public REITs have made large portfolio acquisitions and dispositions. With the lack of opportunities over the past year and the continued inflow of new institutional commitments to the senior housing space, there is a significant amount of dry powder on the sidelines that is increasingly eager to be deployed. As more value-add and distressed opportunities present themselves, we have seen a number of opportunity funds not previously in the space now aggressively pursuing value-add portfolios of older properties and/or those with lower occupancies. For high quality Class A or stabilized properties, the pre-pandemic buyers have remained consistent. In the current phase of the pandemic, most of the sellers that have come to market have been either publicly traded groups that are seeking to realign their portfolios and operator relationships or private sellers who are evaluating strategic exits where ownership has capitulated. We expect sales of full continuum product, particularly if fully stabilized, to remain brisk. And the active adult space appears to be emerging as a standalone asset class and is expected to perform well.

For high quality Class A or stabilized properties, the pre-pandemic buyers have remained consistent.

CUSHMANWAKEFIELD.COM | 13