It’s no secret that real estate investment trusts (REITs) have become heavily engaged in the healthcare industry, and they are especially active in senior living as of late. During a panel discussion Tuesday at the 2011 Assisted Living Federation of America Conference and Expo in Orlando, Justin Hutchens, president and CEO of National Health Investors, an REIT, dared to even call senior living “recession resistant.”
But that’s not entirely the reason why REITs have vested so much interest in long-term care operations. Turns out your commitment to quality resident care plays a significant role in why REITs are attracted to the market. “It’s a mission-driven industry, even for the suits up here,” said Mercedes Kerr, senior vice president – marketing at Health Care REIT, who was on the panel with Hutchens and Jeff Muchmore, managing director at GE Capital.
Muchmore concurred, saying that senior living portfolios have “fared so much better” than commercial real estate because of the drive of operators who are dedicated to their residents.
“This is an industry with strong fundamentals,” said Hutchens, who went on to describe the characteristics an REIT will review before making a deal in senior living. Typically, National Health Investors will look at an operator’s balance sheet, credit profile, location, and an assessment of past performance coupled with an outlook over the next few years if a deal were to occur.
However, as Hutchens said, the deal is still contingent on an operator’s commitment to care. “We want to do business with people if they’re in this for the right reason,” he said. “If care for seniors is evident in the management team, then we want to do business.”
I was personally taken aback by the panel’s consensus, as it seems the desire for quality care has permeated the mindsets of even those most far removed from the daily operations in your communities. If this is truly the proverbial Kool-Aid, maybe it’s a good thing everyone has stopped for a sip.