Seniors Housing Occupancy Reverses from Pandemic-Related Lows

Seniors housing occupancy in Q3 2021 reversed from its pandemic-related low of the quarter before to top the 80% mark, according to new NIC MAP data. 

Measured at 80.1%, this is a 1.4 percentage point increase from its pandemic-related low of 78.7% in the second quarter. 

A significant rebound in demand and modest increase in supply contributed to the occupancy rate increase, according to NIC. Occupancy increased for assisted living, independent living, and nursing care properties.

Demand increased by 12,318 units in NIC MAP’s Primary Markets, the strongest unit increase since NIC MAP Vision began reporting the data in 2005. At the same time, inventory increased by 3,441 units—the smallest unit count increase since the first quarter of 2019—while the number of units under construction were the fewest since 2015.

“Notably, seniors housing construction starts amounted to only 1.9% of the existing inventory in the third quarter on a rolling four-quarter basis, one of the lowest rates since 2011,” said NIC’s chief economist, Beth Burnham Mace in prepared remarks.

“Industry leaders should keep an eye on this trend because it suggests that there may be a window of limited inventory growth and potential promising investment opportunities next year.”

By sector:

• Assisted living occupancy increased to 76.9%, up from its pandemic low of 75.4% in the first quarter of 2021 but still below its pre-pandemic level of 85%.
• Independent living occupancy increased to 83.2%, up from its pandemic low of 81.8% in the first quarter of 2021 but still below its pre-pandemic level of 89.7%.
• Nursing care occupancy increased to 76.3%, up from its pandemic low of 74.1% in the first quarter of 2021 but still below its pre-pandemic level of 86.6%.

“The pop in occupancy, slowdown in inventory growth, and jump in demand are all encouraging for the trajectory of the occupancy recovery,” Chuck Harry, NIC’s chief operating officer, said in prepared remarks. “But it’s important to acknowledge that the senior housing occupancy rate is still well below its pre-pandemic peak, so we need to continue to monitor future data before declaring recovery from the pandemic.”

San Jose (85.9%), San Francisco (84.5%), and Portland, OR (84.3%) had the highest senior housing occupancy rates of the 31 metropolitan markets that encompass NIC MAP’s Primary Markets. The markets experiencing the lowest occupancy rates included Houston (74.8%), Cleveland (75.5%), and Atlanta (75.8%).

LTC Properties’ ‘Proud of Its Balance Sheet’

NIC this week interviewed Wendy Simpson, chairman and CEO at LTC Properties, about the senior housing recovery and outlook.

On the challenges she faced the past year and what creative financing solutions LTC implemented for its clients and prospective clients, Simpson shared, “From our point of view our challenge was revenue insecurity. Operators had massive issues.

“We were a cheerleader to provide rent abatements and other deferrals for operators. We also stepped up financially to support our operators by providing a level of rent abatement in 2021 which gave them additional cash to help defray the costs of the impact of the pandemic.

“We’re pleased with the opportunities we see in shorter-term financing and bridge lending as we ramp up revenues from the properties with new operators.”

Simpson said she was most proud of her company’s balance sheet.

“While it’s nail biting right now, we have maintained and not cut our dividends during this period of stress in the industry. Even though we have remained small, we’re stable and secure. We’re open about the challenges we’ve had with our operators, but we’ve worked with them and kept our shareholders and market analysts informed. 

“For the first time in six quarters, I’m somewhat looking forward to our earnings call in October. I think we have a pretty bright 2022. It’s nice to be looking up and 2022 seems like a much better year.”