Who are the most active buyers in the Senior Housing Market – by Jason Punzel
Many sellers want to know who are the most active buyers in the Senior Housing Market. While it is great to get a high-price offer, if the buyer doesn’t have the ability to close, it doesn’t matter how good the offer is.
There are four main types of buyers:
- Real Estate Investment Trusts (REITs) – REITs are publicly or privately traded real estate companies that typically have ample cash available to acquire properties. Most of the time REITs buy a community and at closing, sign a long term NNN lease with a local or regional operator to operate the community. REITs typically buy with cash. In the past 24 months, most REITs have been net sellers due to lower stock prices.
- Private Equity Companies – PE companies range in size from multi-billion dollar companies to much smaller companies. Private Equity companies typically buy properties and use a management company to operate them. Private Equity companies typically buy with cash or with a large line of credit and don’t require financing. In the past 24 months Private Equity companies have been some of the most active buyers in the marketplace.
- Local and Regional Operators – Local and Regional operators may own/lease 5-50+ communities. They may use a REIT or Private Equity company as a partner or may buy a community on their own. If they are buying a community on their own, they typically use bank debt and raise equity internally with high net worth individuals, and through friends and family.
- “Mom and Pop” Operators – Typically they own from 0-5 properties. Most REITs and Private Equity companies will not partner with Mom and Pop operators because they have too few assets and the communities they operate are often not large enough. They typically buy with personal equity or friends and family’s equity, and bank debt.
As a seller, it is important to understand what type of buyer is making an offer to buy your community and how they plan to finance the purchase. Far too many buyers try to put communities under contract to buy, and THEN try to find the equity and debt. This often leads to delays in closing, cancelling the offer to purchase, or re-trading at a lower price.
Conclusion:
At Senior Living Investment Brokerage, Inc. we have relationships with over 1,000 different types of buyers. We can help you understand what type of buyer is making an offer, their track record in closing deals and how they plan to finance it.
For more information on selling your community, contact Jason Punzel at 630-858-2501 x 233 or punzel@slibinc.com.
