Creating Opportunities in an Uncertain Environment

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3 min read

While I often talk about public policy, one of my primary tasks as Executive Director of NH&RA is to identify new business opportunities for our members. Sometimes these opportunities manifest themselves in new programs enacted by Congress, innovative financing structures, or inefficiencies in the capital markets.

During NH&RA’s 2013 Annual Meeting & Pre-Conference Symposium on Senior Housing in early March, a number of NH&RA members shared some useful insights about opportunities that I want to share.

One is that it is time to rethink how we finance, deliver, and market “Senior Housing.” Demographics suggest a need for more diverse housing options in the future to accommodate our ever-larger aging population. During the conference, we heard many great statistics. But perhaps the most compelling is that private-pay housing for individuals 55 or older has only a 7% penetration rate. This is a “blue ocean” market space and ripe growth opportunity for developers of both affordable and market-rate apartments targeting this age group.

The U.S. Department of Housing and Urban Development’s MAP and LEAN programs, providing accelerated processing for new FHA-insured mortgages for multifamily housing projects and health care facilities, continue to offer historically cheap capital to finance these residential communities.

Programs such as Medicaid waivers, the Program of All-Inclusive Care for the Elderly (PACE), and HUD’s Assisted Living Conversion Program create opportunities to fund services in rental communities for individuals who might otherwise be forced to live in a nursing home.

The most innovative developers and owners are leveraging traditional resources like Section 8 rental assistance, tax credits, and HUD grants, and forging creative new partnerships with local hospital systems, universities, community service groups, and other organizations.

Speakers at our senior housing symposium warned NH&RA members to be careful in branding and designing new residential communities for age 55-plus residents and in selecting the services to be offered. Paternalism and ageism are major potential pitfalls. Residents of age-qualified housing don’t see themselves as “seniors.” So be mindful in branding your community and in communicating with residents, the speakers told us. They advised being creative in designing a new community, saying today’s 55-plus residents want larger units, different amenities, and more choice of services than those available today at many older developments.

Senior housing is not the only opportunity, though. Many developers said they are finding opportunities in partnering with local housing authorities: through joint ventures, project-based vouchers, and HUD’s Rental Assistance Demonstration program. There are opportunities in smaller geographic markets as well. Major metro markets have seen strong demand for multifamily rental housing for several years now. Several attendees, though, said there is also significant interest, activity, and rising prices today for income-restricted multifamily properties in secondary and tertiary markets. Several owners said there has never been a better time to sell.

If you aren’t already an active member of NH&RA, now is a great time to get involved. While uncertainty may still be hanging over Washington, where NH&RA members convene there are always solutions.

Thom Amdur is Associate Publisher of Tax Credit Advisor and Executive Director of National Housing & Rehabilitation Association