If you missed it, on Thursday we brought together a panel of experts are focusing on assisted living, retail, and hospitality. From cap rate movement to buyer competition, we discussed how COVID-19 has affected each of these asset classes at the macro level and how our experts have changed their investment criteria or revamped their operations.
The best performing retail assets are going to be neighborhood shopping centers, the American fabric of experiential shopping, which is not going away. Be in the line of development and as close to rooftops as possible.
Surprisingly, Baceline’s retail vacancy never dropped below 80%, in fact they are currently more leased than pre-COVID, which is a data point to suggest that retail was never going to completely go away and COVID was not the death knell it might have seemed to be.
The assisted living industry has been moving toward smaller properties for a while, but COVID has become a trend accelerant. A virus has a lower probability of spreading in 16-patient homes than 200-patient homes, coupled with the benefits of a true home feel and more dedicated relationships with staff and skilled nurses.
The challenges the industry has faced include visitation, up to 131 days of no visits allowed, caused excessive patient death due to feelings of abandonment or heartbreak. Despite having no COVID cases in patients, occupancy for Goodhorn Capital has dropped to 70% because potential customers have passed away in mass and no one is moving during a pandemic.
It’s estimated that when all is said and done, 25-35% of all COVID deaths will have happened inside an assisted living facility, not including those who were moved to hospitals before passing away. This is driving the trend to smaller boutique facilities that limit virus spread.
Resorts vs Hotels: resorts generate demand for overnight stays in the larger market. Hotels service the demand for overnight stays. Resort revenue is comprised 45-55% from rooms, the rest from high margin services like weddings, space rentals, F&B.
Because the hospitality space has been decimated, Josh had an opportunity to buy dilapidated opportunities at dirt value and convert them into award-winning resorts. Consequently, his rooms are booked out until the end of 2023!
Meanwhile, hotels are slow to grow for the next 4 years, with one major outlet suggesting occupancy rates will climb from 42% to 52% from 2020 to 2021.
Ben Lapidus – Moderator
The punch line for January’s webinar – The Future of Covid-Affected Asset Classes – Investors are bullish about their investment thesis, pleasantly surprised about the performance of their portfolio during COVID, and excited about what a post-COVID world will offer.
The full playback and others are available with ticket purchase to BEC 2021. Use code WINNERS30 for a 30% discount!
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.