The older and the healthier you get, the more likely it is that you will be contributing to a boom in senior housing that has turned out to be quite profitable for investors in the first half of 2025.
During this period, sales volume approached $5.8 billion – up 71% year-over-year. Rolling four-quarter volume reached over $17.3 billion. The number of properties sold in the first half totaled 513, up 27.1%, and some 30,600 units changed hands, according to an analysis by Berkadia Seniors Housing.
The phenomenon is attracting both investors and lenders. Investors are especially focused on full acuity assets, as well as newer vintage, amenity-rich communities, both of which are believed to be best positioned to benefit from demographic demand, operational margin growth and limited new competition, the report said. In the absence of significant new construction, older communities built after 2015 that are priced well below replacement costs in well-located markets are also favored for their ability to earn higher rents.
As for funding, “new permanent loan volumes have reached their highest level since 2020, reflecting a broader trend of banks re-engaging in the sector, driven by improved occupancy and stabilized operations,” Berkadia noted. “Agency financing has remained a reliable source of capital for high-quality seniors housing assets,” while agencies and traditional lenders compete for business, benefiting borrowers.
The sector has also seen sustained rental rate growth. Annual increases have ranged from 6.5% to 8.5% depending on the level of care in Class A communities – almost double their historic range. And a majority of investors and operators are said to expect 5% to 7% increases in the coming year.
By sales volume, 54% of investment went into majority assisted living units for a total of $2.03 billion – up about $500 million year-over-year. The majority of independent living, with sales of $1.55 billion in just the first six months of 2025, is likely to nearly double sales for the period in 2024. Skilled nursing facilities scored 92% of their sales for the whole of 2024 in just the first half of 2025, totaling over $2.05 billion. The active adult sector was an exception, seeing a notable slowdown in the period.
As for total deal volume, 35% of it was associated with majority assisted living units and majority skilled nursing facilities. Majority independent living accounted for 27% of deal volume, continuing care retirement communities (CCRC) made up 3% and active adult took a 1% share. CCRC deal volumes are expected to equal the amount posted in 2024.
There was also a 200% increase in portfolio volume. Some 68% of the deals in the segment occurred in 2Q 2025, surpassing individual property sales by 10%, and creating a surge in the number of units traded.
REITs moving at “their torrid acquisition pace” have been among the busiest investors in 1H 2025, accounting for 43% of the total sales of $5.8 billion of all asset types, Berkadia reported, noting that private equity has been just as aggressive in the period. This rivalry has forced long-time industry participants, including large owner-operators, to up their game and refine their strategies to maintain a competitive edge, it said.
Fewer distressed assets and intensified bidding have raised pricing at both ends of the market. “The average price per unit for the top 25% of deals increased by 37% year over year, finishing the second quarter at $189,486. Conversely, properties that traded at the bottom of the pricing spectrum jumped by 48% annually to $72,717,” the report stated.
The average cap rate for majority independent and assisted living communities compressed by 60 basis points over the year to 7% by the end of June, or even lower.
The top metros by units sold were Dallas, New York City, Miami, Tampa, Seattle, Jacksonville, Chicago, St. Louis, Philadelphia and Houston.
In 1H 2025, there was a 26,000 drop in the total number of units under construction, or 13.8%. The largest construction pipelines are in Washington, DC, Los Angeles, the Bay Area, Dallas, Austin, California and the 1-95 corridor from Boston to D.C. Slowing projects helped drive demand up. The occupancy rate has risen sharply, especially in independent living communities, as the baby boomer generation reaches prime resident age.
According to Berkadia, senior housing represents a “compelling investment thesis: stable, inflation-protected income streams, growing price appreciation, and a supply-demand dynamic that favors experienced operators and newer, well-located, full-acuity products.”
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