We have been approached by a number of senior housing projects in the past six months. A couple of the developments were in Florida, one was in Texas, and another was in California. We understand that there is a need for such projects in the U.S. due to the aging population. However, we are curious if any of the markets, such as Florida'shave become saturated and which markets offer the best value for senior housing.
Senior housing has become somewhat saturated in most tier 1 cities in U.S. However, we are still seeing some opportunities with healthy IRR and equity multiples. Florida has become very saturated, but other states like Texas and California are still some good options.
I think those are good markets to look at since both states are low tax states, and the benefits there for retirees under the new tax law are even more significant than previously. Also, other costs of living tend to be lower in the Sun Belt than in the Northeast, California and the Northwest, so many retirees tend to move there. You should just be careful of the locations in those markets, as each submarket can be very different. If it is independent living, the residents like real communities with activities of interest to them, nice places to walk or ride through, culture, nice retail and other amenities. Many places in these states have them while others do not. For assisted living and nursing homes, where people are confined, this is less important, but family who visits seniors in these facilities also like nice communities for their parents and loved ones, where possible. I think the states you mentioned are good ones but more than just the right state is required to make good investments.
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