Recent interest rate cuts by the U.S. Federal Reserve have sparked optimism for senior living companies looking to expand in 2025. While the full effects of the rate cuts may not be felt immediately, industry experts believe they offer a sense of relief and could lead to increased mergers and acquisitions in the near future.
Lisa McCracken, from the National Investment Center for Seniors Housing & Care (NIC), views the rate cuts as providing “psychological relief” for investors already anticipating them. Steve Ervin of Berkadia notes that investors have been incorporating the potential rate cuts into their plans.
Ryan Saul, Managing Director at Senior Living Investment Brokerage, sees the rate cuts as a positive boost for the market and anticipates a rise in M&A activity. Aron Will of CBRE Capital Markets believes the cuts could attract institutional investors back into the market and improve overall investor sentiment.
According to Bill Kauffman of NIC, senior living companies with floating-rate loans could benefit the most from the rate cuts, leading to potential refinancing opportunities. While the cuts may not immediately impact land availability for new developments, they could make construction financing more accessible for some.
Looking ahead, industry experts remain cautiously optimistic about the future. The market is shifting away from distress-based transactions towards more positive investments, with the rate cuts setting the stage for further growth in the industry.
