SENIORS HOUSING OCCUPANCY CONTINUES RECOVERY, REACHING 89.1%
NIC MAP® Data Shows Strong Absorption, Continued Rent Growth, and Slower Construction Activity
ANNAPOLIS, Md. – The seniors housing occupancy rate continued its recovery in the fourth quarter of 2012, while the pace of annual rent growth remained unchanged and overall construction activity declined, according to NIC MAP®, a data and analysis service of the National Investment Center for the Seniors Housing & Care Industry (NIC).
Overall, the average occupancy rate for seniors housing properties in the fourth quarter of 2012 was 89.1%, an increase of 0.3 percentage points from the prior quarter and a 1.0 percentage point increase from a year earlier. The seniors housing average occupancy rate has risen consistently during the past 11 quarters and is 2.1 percentage points above its cyclical low of 87.0% in the first quarter of 2010.
The occupancy rate for independent living properties and assisted living properties averaged 89.0% and 89.1%, respectively, in the fourth quarter of 2012. Both independent living and assisted living occupancies showed improvement over the prior quarter, rising 0.3 and 0.2 percentage points, respectively. The occupancy rate for independent living is now 2.2 percentage points above its cyclical low, while the occupancy of assisted living is 2.0 percentage points above its respective cyclical low. “Occupancy is now at a four-year high and, with inventory growth remaining tempered, seniors housing occupancy will likely continue to recover in the near-term,” says Mike Hargrave, vice president – NIC MAP.
During the fourth quarter of 2012, annual asking rent growth for seniors housing remained unchanged at 2.2% from the third quarter of 2012, and was 0.6 percentage points above the pace from the fourth quarter of 2011. “While annual rent growth did not accelerate this quarter, it continues to outperform core inflation, which has been slowing in recent months,” says Chuck Harry, NIC’s managing director and director of research and analytics.
Seniors housing annual absorption was 2.3% during the fourth quarter of 2012, compared to 2.2% during the third quarter of 2012 and 2.0% during the fourth quarter of 2011. “This is now the ninth consecutive quarter during which the pace of annual absorption is above that of annual inventory growth, which has resulted in the continued steady recovery in seniors housing occupancy during the past couple of years,” says Harry.
In the fourth quarter of 2012, the seniors housing annual inventory growth rate was 1.2%, compared to 1.3% in the third quarter of 2012 and 1.3% a year earlier. Current construction as a share of existing inventory for seniors housing was 2.0%, which is 0.2 percentage points below that of the previous quarter. “While there continues to be discussion of the industry entering a new development cycle, we continue to see relatively modest levels of construction starts. This implies, at least over the next four quarters, that near-term inventory growth will remain tempered,” says Harry.
The nursing care occupancy rate was 88.1% in the fourth quarter of 2012, which is an increase of 0.1 percentage points from the third quarter of 2012.
Nursing care annual inventory growth was -0.4% in the fourth quarter of 2012, continuing the established trend of slightly declining inventory growth. Private pay rents for the sector grew 2.9% year-over-year this quarter, which is unchanged from the pace reported in the third quarter of 2012.
This trend of occupancy increase should continue for atleast 4 quarters maybe more.. putting the sector into the range of 91%... setting the stage for slow new development.. tight credit conditions
will force the sector to continue aquisition startergies with reits once again leading the way...
we continue to see relatively modest levels of construction starts. This implies, at least over the next four quarters, that near-term inventory growth will remain tempered,” says Harry
Pin your ears back folks... I see Fve breaking that mental 86% number this quarter....
Should light up the sector again...Csu now above $20... Absorption is the key here.. .
Very nice q4 occupancy increase..sector wide.
Housing market continues to strengthen...lots of tail wind for the seniors sector.
Yes, I saw the same news with regards to increasing capacity utilization and the accompanying shallow new construction etc. This bodes extremely well for FVE and other companies who are in the long term senior care field. I fully expect a very nice share price rise out of FVE this coming week. Its an incredible value at $5.44. The potential for substantial gains going short and long term should be very attractive to the entire investment community. My guess is that FVE will be knocking on the $7.00/share door very soon.
Cheers and good investing,
Sentiment: Strong Buy