International Investments in US Seniors Housing
In recent years, the seniors housing industry has grown exponentially. Investors from other industries have entered the seniors housing space and brought their capital, connections, and value to the industry along with them. This has been a large factor in the success and appeal of the industry. Construction of new care facilities is booming. New investors and industry veterans are all taking action. The seniors housing industry is delivering the results that appeal to investors so much so that the industry has caught the attention of various foreign players.
Specifically, investors in China are showing a large amount of interest in American operations with the intention of bringing the logistics of our operating platforms to China.
US Seniors Housing Investments Shift with Chinese Money
Not long ago, a Chinese equity company tried to acquire Brookdale Senior Living, a giant American seniors housing operator. Also, a Chinese investment company named Keppel was in the works to buy Watermark Senior Living, another large assisted living operator in the U.S.
These Chinese investors have only purchased the operating platforms to these companies rather than the real estate themselves, while typically seniors housing investments revolve around the purchase of this real estate.
Why is that the case?
Usually, investors in China are prepared to purchase the company and real estate as a whole. But now, the Chinese government has banned the acquisition of foreign commercial real estate. Because of this, investors’ plans have changed so that they acquire only the operating entities of a seniors housing investment.
Because China lacks an efficient seniors housing model, Chinese investors have been extremely proactive in these types of sales.
Demand Fuels Sudden Global Interest in Seniors Housing in the U.S.
China’s senior population desperately needs assisted living facilities. The amount of people in China over the age of 65 is greater than the population of the United States as a whole. This makes it the largest assisted living market in the world.
Chinese innovators want to find a way around the “start-up” phase of the business rather than implementing their own assisted living model from scratch. They would rather borrow from the most successful models in America, transferring the existing operating systems into their own booming seniors housing industry.
China is not the only one showing this much interest in the U.S. seniors housing industry. Investments in the U.S. produce some of the highest returns in a real estate backed asset class which heavily appeals to those with capital to invest.
Foreign Involvement in the Future
This type of foreign interest and investment is only expected the grow. Change is inevitable, even though it makes many players in the industry uncomfortable.
It may be hard for American investors to truly believe that foreign entities want to invest in the U.S. seniors housing industry. After all, the industry has experienced some setbacks in terms of the market and its public appeal. In the past, Wall Street has displayed adverse behavior toward the industry’s operators which has greatly hurt valuations and weakened the public’s trust. The media has taken minor issues within the industry and blown them out of proportion, creating more trouble. Despite all of this, investors who come from places with no seniors housing industry are still interested in the potential of the U.S. industry model.
Regarding American operators’ feelings about this shift, smaller operators are more open to it than larger ones. However, Chinese investors offer a huge amount of capital that is hard to ignore.
Although foreign investments have increased facility valuations, the effects that the shift has had on the operational level are currently unknown. We are still unsure of the long-term effect of foreign involvement. All we can predict is the fact that it is inevitable.
Work with The Stahler Group to Handle Seniors Housing Investments
American investors face a very complicated marketplace as the global interest in the industry increases rapidly. Working with The Stahler Group will ensure that every decision you make is the correct one.
Our experts have years of experience and knowledge to help guide you through the seniors housing industry. When it comes to assisted living facilities, skilled nursing facilities, independent living facilities, and other healthcare properties, The Stahler Group knows all there is to know.
Seniors housing investments should always work in your favor no matter how many players crowd the industry. The Stahler Group makes certain that you always receive the correct information to make responsible decisions.