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Last year, operators and properties in rural and tertiary markets faced challenges of stagnant occupancy and rising expenses, leading to “death spirals.” In 2024, these conditions persist, with some properties being acquired by well-capitalized players. The U.S. Federal Reserve has signaled potential interest rate cuts, providing hope for relief. Senior living companies are preparing for future development and taking advantage of distressed opportunities. Despite a challenging interest rate environment, lenders and operators are adapting to the new market conditions.
Operators are finding creative solutions to streamline operations and manage costs in the face of rising expenses. Successful distress-driven transactions involve third-party management to stabilize property performance. The Federal Reserve’s interest rate cuts are expected to boost M&A activity in the senior housing market. Companies like Welltower and Ventas are transacting at favorable rates, while smaller organizations face financing challenges.
There remains a stark contrast between rural and metro markets. Rural communities must innovate in financing and staffing to navigate the higher cost environment. Third-party management companies are managing distressed properties and working towards operational stability. The industry is adapting to the changing landscape, with a focus on creative solutions and strategic partnerships.
