The skilled nursing industry has faced pandemic-fueled challenges over the past year, resulting in lots more empty beds. Despite this reality, real estate owners selling some of those underperforming properties are finding plenty of buyers, according to an analysis posted last week by real estate and investment management firm JLL.
In addition, an increasing number of buyers are converting those distressed assets into facilities that are in high demand, such as affordable housing, behavioral health facilities and student accommodations.
In December, two-thirds of nursing homes revealed that their facilities or companies wouldn’t make it another year at their current operating pace due to increased costs, according to a survey by the American Health Care Association.
“Many of the properties identified for potential repositioning were not significant performers prior to COVID-19,” said Zach Rigby, director, JLL Capital Markets. “It makes sense to close the doors and focus on the more probable winners within a portfolio. Right now, there are many opportunities.”
Analysis authors noted that many of these distressed properties are being snapped up by other skilled nursing operators.
“Often, a large national owner looking to streamline its portfolio sells to either a regional group with an existing footprint or a group looking to enter a new market,” Rigby said. “We are currently marketing multiple properties within these parameters, all of which are receiving interest from a wide variety of conversion types as well.”