The National Investment Center for the Seniors Housing & Care Industry (NIC) recently released its quarterly MAP Data and Analysis report for the first quarter of 2014. The report is generally positive and includes a number of different data points that industry professionals will find interesting. As the senior housing market continues to grow, industry professionals and others who are interested in taking advantage of its strong dynamics by way of an acquisition, joint venture, or a different method should contact Cambridge Realty Capital to learn more about the many different financing options it offers to assist parties in these areas.
NIC’s MAP Data and Analysis Service tracks more than 12,500 properties in the country’s 100 largest metropolitan markets. Each quarter it releases a report on its findings and the report it just released for 2014’s first quarter is highly informative as it includes data on occupancy, absorption rates, inventory growth, and construction activity. For example, according to the report, occupancy gains in skilled nursing (SNF) and independent living facilities increased the average occupancy rate for senior housing communities to 89.8% during the first quarter of 2014. This is an increase of .1% from the previous quarter and .8% from a year earlier. The occupancy rate for SNFs was 88.4%, which is an increase of .4% from the previous quarter and this gain helped offset a small decrease in the occupancy rate for assisted living facilities (ALFs), which fell from 89.2% in 2013’s fourth quarter to 89.1% during the first quarter of this year. The occupancy rate for independent living properties also increased from 90% to 90.2% and this also helped offset the slight decrease in assisted living occupancy. With respect to absorption, senior housing’s annual absorption rate held steady at 2.2%. This is the same rate that the industry had in 2013’s fourth quarter.
The report also revealed that the annual inventory growth rate for senior housing was 1.4%, a figure which has more or less remained steady since the fourth quarter of 2011. For nursing care, the annual inventory growth rate was -.1% and this continued a trend of slightly declining inventory growth in this sector of the market. The report also states that current construction as a share of existing inventory was 3.1%, which is slightly lower than the 3.2% rate from the previous quarter. Similar to other economic reports that have been released lately, the NIC report also noted that the extreme weather conditions that the country experienced this winter may have played a role in construction activity in the sector. Lastly, with respect to market rates, annual asking rent growth was unchanged from the previous quarter and remained at 1.6%. The rate for assisted living facilities was 2.1% and the rate for independent living facilities was 1.4%. In both categories, rent growth was larger than the estimated increase in food costs and wages, which are two of the predominant operating expenses for senior housing facilities.
Overall, the report indicates that the senior housing market continues to perform well. Occupancy rates continue to increase even with additional facilities being built as the improving housing market, economy, and demographic changes continue to drive demand. As this dynamic continues, industry participants and others who are interested in obtaining the strong returns that are being generated by senior housing assets should continue to look to Cambridge Realty Capital for assistance in financing senior housing acquisitions, joint ventures, and other wealth generating transactions as well.
