Renewed investor interest in senior housing sector: SHHA

Improvements in operational performance have led to an increase in investor interest in the sector, delegates heard at the ¨Global Horizons: unlocking the future of senior housing worldwide¨ webinar, organised by the Senior Housing and Healthcare Association (SHHA).

¨After Covid operator margins had come under pressure as labour, energy and other costs had increased in most European countries, while fees did not keep up with rising prices¨, said Raoul Thomassen, Chief Operating Officer, Aedifica. ¨But in the last couple of years we have seen a clear recovery. Occupancy levels are high, operational performance has improved reaching unprecedented levels, and more than two times rent cover is becoming the norm.¨

These improvements have sparked a renewed interest from investors, as shown by the intense M&A activity in the UK market, with US capital in particular getting very involved.

¨Continental Europe is less attractive to investors, but it is just a matter of time¨, said Thomassen. ¨Waiting lists are building up and we can achieve UK occupancy levels, while rent covers are improving. Crucially, we also see more transparency on operator performance, which really helps attract investor interest and make the case for the sector.¨

The issue with Europe, in the senior housing sector as in other asset classes, remains the differences in regulations between countries, which make a pan-European strategy more complex to implement.

¨Whether it is the standard of qualifications for carers or rules about the use of technology, it would be good if there was some consistency across the board¨, he said. ¨Some things are difficult to comprehend: in Germany, for example, there are long waiting lists and there are beds available, but regulations slow things down.¨

The available offer is not matched with the existing demand, creating a problem that should not exist. Or to give another example, Thomassen said, a country like France is open to using technology to help reduce the number of workers in the care sector, but a company operating there cannot use the same product or tech in Ireland because regulations will not allow it.

Yet Ireland is an example to follow in other respects. ¨Care homes play an important role in the chain¨, he said. ¨A floor or sometimes more of a home is devoted to transitional care, which frees up hospital beds and reduces the long waiting lists, but also provides a better environment for people to be in. It shows how flexible and resilient the sector can be.¨