LTC Properties, a self-administered real estate investment trust recently announced its results from operations for the nine months ending September 30, 2009, LTC Announces Third Quarter Operating Results. It not only made money, but it repaid debt secured by an assisted living facility.
I am only too familiar with the growing need for assisted and skilled nursing facilities in the United States, since I am responsible for my mother's care who has Alzheimer's. There is a growing, aging, baby boomer population that will be living longer. I look for investments where there is a need.
While there is and will be a growing need for assisted living and skilled nursing facilities, investing in the operations of these facilities are at an unusual and particular risk that concerns me. While there is considerable room for profit, there is a peculiar risk of total collapse. There are many and significant regulations that operators must adhere to, with little room for mistake. Any allegation of negligence or abuse at the facility, whether true or not, could bring the whole house of cards down, not just at the facility, but for the whole company.
On the other hand, investing in the properties and facilities for these operators seems to me to be a far better bet. The real estate investment vehicles should be able to insulate themselves from the liability that the operators are exposed while having the flexibility of providing facilities to different operators.
Investing in long-term care and other health care related facilities through mortgage loans,facility lease transactions and other investments may be a more conservative but likely profitable approach to senior living that I could get into.