CREJ

April 2021 — Health Care & Senior Housing Quarterly — Page 19 www.crej.com SENIOR HOUSING — INSIGHTS Let us Guide Your Senior Living Community to Success Consulting and Managed Services Call today to learn more. 720-400-3616 • Operational expertise • Regulatory compliance • Resident wellness programs • Clinical expertise • Sales and marketing • Resident satisfaction • Human resources and talent recruitment • Financial oversight • Innovative technologies • Centralized procurement • Project feasibility and development Independent Living | Assisted Living | Memory Care | www.WellAge.com | 12136W. Bayaud Ave. Suite 200, Lakewood, CO 80228 Jackson Creek Senior Living (CO) The Lodge at Greeley Senior Living (CO) Sopris Lodge at Carbondale (CO) Arbor View Senior Living (CO) The Lodge at Grand Junction Senior Living (CO) Carriage House (CO) Sterling Ridge Senior Living (NV) Willowood at Mustang Senior Living (OK) Emerald Square Senior Living (OK) Our Communities L ike other sectors of commer- cial real estate, the senior living sector was impacted significantly by the arrival of COVID-19. We all now know that residents of seniors housing and skilled nursing communities were among our most vulnerable, and the owners and operators of these communities have contin- ued to respond and adjust in order to provide care and protection for their residents and staff. The over- all impacts have been increased expenses due to COVID-19 protocols and decreased occupancies due to fewer move-ins. When added to the already existing challenge of hiring and retaining qualified and committed staff, it has been a demanding time. In many cases this has resulted in decreased valu- ations for these buildings. However, there also is a lot of thought and creativity around both existing and future building design, the use of sophisticated technological tools and attracting new members to the senior living labor force. In addition, the availability and widespread use of effective vaccines is an incredibly significant positive development for the sector. Given the above, what does the landscape in Colorado look like? Here are my observations over this last year. n Development. There is continued interest and activity in the devel- opment of senior living communi- ties, including independent living, assisted living, memory care, skilled nursing and active adult. There are a num- ber of develop- ments underway in dynamic, urban settings in Denver as well as in sur- rounding metro Denver markets and beyond. Most cities in the metro area recognize the need for senior liv- ing for their popu- lation of residents and are interested in these develop- ments. In addition, with the under- standing that the time involved in land acquisition, development, construction and stabilization can take several years, those senior- living developers who still can per- form are moving forward. Inquiries about suitable land have continued, and I am currently working with an out-of-state developer/operator partnership to secure a site. It is as competitive a process now as it was before the pandemic. n Acquisitions. There is interest in acquisitions, particularly if there is a motivated seller and/or a dis- tressed situation. There also is con- tinued interest in core properties, whose financials are healthy and therefore present less risk than a building that is struggling. Operations has been and contin- ues to be the critical component in seniors housing – the most beauti- ful seniors housing building will not be successful without an excellent operator at the helm. This is more important than ever. As an example, last summer a private real estate investment trust needed to find a new operator for two underper- forming buildings. A local owner/ operator interested in expanding was identified and came in on a lease with a purchase option for both buildings. The operator fully intends to purchase the buildings when appropriate, and both parties are very happy with the arrange- ment. Very attractive financing options exist today, from U.S. Department of Housing and Urban Development loans to the newer Small Business Administration programs designed for smaller businesses. Interest rates continue to remain lower for now. A number of owners have taken advantage of this envi- ronment to refinance and positively impact their financial situation. A current client who is a senior housing operator is taking advan- tage of one of the SBA programs to purchase the community she has been leasing from the owner. On a related note, while not financ- ing per se, the Paycheck Protection Program also has been very helpful to senior living communities. One skilled nursing owner told me that the pandemic was “a blessing in disguise” because the PPP gave him breathing room to make internal adjustments and improvements to his operations. In summary, the fundamentals related to the senior living sector in Colorado remain strong and com- Senior housing observations after challenging year Hayden Behnke Senior associate broker, senior living real estate, Panorama Commercial Group The fundamentals related to the senior living sector in Colorado remain strong and compelling. Please see Behnke, Page 24