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Shouldn't vary too much from a standard mf model. Just add a line or two in the revenue section for services.
So I wasn’t sure if this was the case or not. Some Senior Housing models can get more detailed with staffing, dietary, etc.
Yeah for some mf deals we also break down union labor and their health insurance and benefits for details. May take a bit, but just roll them up to a single "Labor cost" line in the main tab and break them down at a separate tab to show you put thoughts into it. If you don't have experience, doubt they would ask you to go too deep.
2-year experience in this sector:
Faced multifamily tests for previous role and a couple of other interviews.
Senior Housing does not necessarily involves care but as other monkeys indicated, be ready for it and other revenue/costs line items.
Big thing is also DEF/DMF: Elderly paying an "enjoy now pay letter fee" that will be deducted at unit sale if not a rental model (can be shared ownership or outright sale). Usually capped at 10%/20% of the home value, accruing each year and kicking in at sale - Can't imagine a modeling test with DMF but definitely worth a read even to chat during interviews.
Potentially a service charge, potential ground rent...
As you quoted, can be very granular. Auriens (Oaktree Company) in London has a separate model for the pool P&L as an example... On the other hand, their modeling test was a 40+ land plots across Europe acquisition with different exit periods, whole analysis driven by Index&Match (weirdest ever).
Good luck!
Are you still in this sector? Can I PM?
Did you receive an offer from Auriens ?
Associate 3 in RE - OtherDid you receive an offer from Auriens ?No, I worked in smaller shops up until now. I'm looking to break into larger shops now. Also, I’m US based.
It’s basically multifamily. The only item you might account for, though it’s probably overkill unless it’s a value add acquisition - average length of stay and move outs.
Effectively, you may only increase rents on in place tenants as they move out (unfortunately this usually means deceased). So if you have 60 beds in a 100 bed community occupied and you assumed an average length of stay of 30 months. Every month you have 2 move outs. Those two units are then put into your bucket to renovate and/or increase rents. You now have 40 vacant units plus two move outs and you slowly increase rents in than manner. Or you can just increase rents on your in place tenants too. But depends on the business plan.
This is a pretty ignorant view.
OP - Be prepared to model in variable expenses on a per day basis. Usually this would include food, utilities / labour (fixed and variable component). From a revenue perspective your base rent can only increase by the rental guideline, however, the service and ancillary can breakdown in a pretty detailed view. Again this would be on a per day basis. Further, make sure to include a detailed lease-up worksheet to show how you're going from spot to stabilized.
Got it thanks for the detailed response. Do you have a model or a practice test that you would be willing to share?
What a depressing asset class to work within. Can’t imagine being in a role specifically in only Senior Housing.
No kidding. Been adjacent/involved in it before and somewhat currently. COVID was fucking depressing.
I would add that I find it an overbuilt space, far less in demand than people think due to the practical constraint on the number of people who can actually afford to live in it (talking private pay AL/IL/MC here).
Pro tip: look at the number of “qualified caregivers” per square mile or within any given submarket per the average OM book. Then read the fine print and see what they call a “qualified caregiver”. Ask yourself if a guy making $100k can really afford to put his 80 year old mom in a $10k per month AL residence.
I don’t see the runway here that some do. I see an industry cluttered with 80% occupied, non-cash flowing, gorgeously built but operationally thorny properties that will be recapped every few years until people realize that no big rush of affluent boomers is coming over the hill to fill these things. Just my two cents.
Agreed, I think the Class A properties will start to trade well below replacement cost as no one will be paying the 10k a month rent and shifting to the 4500-6000 a month facilities that are just as nice and provide the same quality of care. I think over the next cycle active adult will be the real winner.
Suit yourself… baby boomers were born after 1945, by definition, which means the oldest are currently 78. Aging into senior housing really starts at 80+, so we’re about to see some really killer years, especially with the decline in construction starts over the past year
Sexy sector to talk about? No… sexy sector to have an economic interest in? 100%
Bump - if you are modelling this from a LP perspective - your income would just be the rental income on the lease right? Would you then still need to model out the operational aspect?
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