Senior housing occupancy up from cyclical low

The average overall occupancy rate for senior housing properties in the fourth quarter of last year was 89.7 percent, an increase of 0.4 percentage points from the preceding quarter and a 0.7 percentage point increase from a year earlier, according to the National Investment Center for the Seniors Housing & Care Industry (NIC).

As of the fourth quarter of 2013, occupancy was 2.8 percentage points above its cyclical low of 86.9 percent during the first quarter of 2010, according to NIC’s MAP Data and Analysis Service, which tracks more than 12,600 properties on a quarterly basis in the 100 largest metropolitan markets.

The nursing care facility occupancy rate was 87.9 percent in the fourth quarter, an increase of 0.3 percentage points from the third quarter. The occupancy for assisted living properties was 89.2 percent, an increase of 0.1 percent and 2.5 percentage points above its cyclical low. The occupancy rate for independent living properties during the fourth quarter was 90 percent, an increase of 0.5 percentage points when compared with the previous quarter and 3.2 percentage points above its cyclical low.

RENT GROWTH

The rate of senior housing’s annual asking rent growth was unchanged during the fourth quarter of 2013, at 1.6 percent, and was 0.5 percentage points below its pace one year earlier during the fourth quarter of 2012.

“While seniors housing rent growth overall remained stable during the quarter, rent growth for independent living strengthened, while assisted living rent growth slowed,” says Chuck Harry, NIC’s managing director and director of research and analytics. ”Annual rent growth in independent living properties accelerated by 20 basis points, while the pace of annual rent growth in assisted living properties slowed by 30 basis points.”

Senior housing annual absorption was 2.2 percent as of the fourth quarter of 2013, compared with 2.0 percent during the third quarter of 2013 and 2.3 percent during the fourth quarter of 2012.

Nursing care facility private-pay rents grew 2.9 percent year-over-year this quarter, which is 0.1 percentage points above the pace of the preceding quarter.

CONSTRUCTION

The senior housing annual inventory growth rate in the fourth quarter of 2013 was 1.4 percent, a rate near which it has oscillated since the fourth quarter of 2011. Current construction as a share of existing inventory for senior housing was 2.9 percent, which is 0.3 percentage points below that of the previous quarter.

“While construction activity during the fourth quarter moderated slightly, in part due to a modest decline in the construction starts, it is far too soon to say if this is a trend or a one-quarter aberration,” Harry says.

Nursing care facility annual inventory growth was –0.1 percent in the fourth quarter of 2013, continuing the established trend of slightly declining inventory growth.

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