Five Key Takeaways from NIC’s First Quarter 2020 Seniors Housing Data Release

Key takeaways from NIC MAP® Data Service client webinar on key seniors housing data trends during the first quarter of 2020.

NIC MAP® Data Service clients attended a webinar in mid-April on the key seniors housing data trends during the first quarter of 2020. Key takeaways included the following:

Takeaway #1: Seniors Housing Occupancy Largely Unchanged in 1Q 2020  

  • The first quarter data does not reflect the effects of the COVID-19 pandemic. It effectively sets the stage at the onset of the pandemic.
  • Dating back to late 2017, the seniors housing occupancy rate has been generally flat, with only 10 to 20 basis point changes from one quarter to the next.
  • More specifically, the occupancy rate for seniors housing was 87.7% in the first quarter of 2020, down 20 basis points from the fourth quarter of 2019 (87.9%) and from the first quarter of 2019.
  • For seniors housing, net absorption (3,078 units in the first quarter), was less than inventory growth (of 4,305 units).

NIC 1Q2020 Seniors Housing Data Release

Takeaway #2: One Third of Properties Have 95% or Higher Occupancy

  • There is a wide range of property level performance within the largest metropolitan markets. The average occupancy rate alone is not a tell-all indicator of a metro market.
  • The median occupancy rate—which is defined as the mid-point of the distribution, with an equal number of properties below that rate as above that rate—is pulled higher compared with the average occupancy rate because more than one-third of the properties within the 31 NIC MAP Primary markets have a 95% occupancy rate or higher. Moreover, more than half of all properties have rates higher than 90%.
  • The flip side is that the average occupancy rate is being pulled down by the 31% of properties with occupancy rates below 85%, with a full 22% of properties having occupancy rates less than 80%. Those 22% of properties with less than 80% occupancy are likely to have financial challenges in a COVID-19 environment.

NIC 1Q2020 Seniors Housing Data Release

Takeaway #3: Seniors Housing Occupancy Year-over-Year: 15 Markets Up, 15 Markets Down

  • This slide shows a comparison of occupancy rates among the NIC MAP Primary 31 seniors housing markets.
    • For perspective, the 31 Market average was 87.7%, as seen in the middle of the slide by the green bar. Fifteen markets had occupancy rates higher than the Primary Market average. Starting on the left is the market with the highest first-quarter occupancy rate: San Jose, at 95.0%, followed by San Francisco at 91.5%. Then there are five markets with occupancy rates at 90%: Minneapolis, Baltimore, Boston, Los Angeles, and Portland OR.  
    • At the other end of the spectrum is Houston, with an occupancy of 82.1%, followed by Atlanta (82.7%), Las Vegas (83.0%), San Antonio (83.5%) and Phoenix (84.2%).
    • In the first quarter, 15 markets had occupancy rates lower than year-earlier rates, while 15 had occupancy rates higher, and one was unchanged. The market with the most improvement was Cleveland where occupancy rose 3.5 percentage points to 84.9% from 81.4% one year ago, while the market with the greatest deterioration was Pittsburgh where occupancy fell more than three percentage points from 89.9% to 86.6%.

NIC 1Q2020 Seniors Housing Data Release
Takeaway #4: Annual 2019 Inventory Growth Slowed for Assisted Living

  • Since the onset of the pandemic, NIC has been conducting a weekly Executive Survey Insights, a new survey designed to collect timely insights into the impact of COVID-19 on operators in the seniors housing and skilled nursing sector.
  • The chart below presents findings from responses collected at the beginning of the pandemic in mid-March to the week ending April 12th. The data represents responses from 180 and 146 owners and C-suite executives across the nation who answered the questionnaire in Wave 1 and Wave 2, respectively.
  • Approximately one-third to one half of organizations reporting on their independent living, assisted living and memory care units in Wave 2—across their respective portfolios of properties—saw a decrease in occupancy from the prior month. Roughly one fourth saw a decrease compared with the prior week. There were more survey respondents reporting a decrease in occupancy in Wave 2 results than in Wave 1 results.
  • Conversely, roughly half to two-thirds of organizations reporting on their independent living, assisted living and memory care units in Wave 2 saw no change or an increase in occupancy rates from the time they responded April 1-April 12, 2020 to one month prior; down from roughly two-thirds to three-quarters in Wave 1.
  • Organizations with nursing care beds reported the largest directional declines in occupancy among the four segment types and more respondents reported declines in Wave 2 than in Wave 1. Nearly three-quarters to half of organizations with nursing care beds and assisted living units reported occupancy declines in Wave 2. This may be driven by fewer hospitals discharging patients to post-acute care settings for rehabilitative therapy as hospitals defer elective surgeries due to the pandemic.

NIC 1Q2020 Seniors Housing Data Release

If your organization would like to participate in the weekly Executive Survey, please click here to access the survey tool. 

Key Takeaway #5: Seniors Housing Pricing Off Recent High

  • This slide presents the rolling four-quarter price per unit for seniors housing and price per bed for nursing care.
  • The price per unit and price per bed came off their recent highs as both seniors housing and nursing care decreased from the fourth quarter 2019.
  • Seniors housing decreased 2% quarter-over-quarter to end the first quarter at $193,200 price per  -unit, but that was an increase of 14% from the prior year.
  • Nursing care decreased slightly to end the quarter at $78,700 price per bed, however that was also an increase from the prior year, increasing 20% year-over-year.

NIC 1Q2020 Seniors Housing Data Release

 

 

 

4Q2019 Seniors Housing Actual Rates Report Key Takeaways

The NIC MAP® Data Service released national monthly data through December 2019 for actual rates and leasing velocity.

The NIC MAP® Data Service recently released national monthly data through December 2019 for actual rates and leasing velocity. In this release, NIC also provided data on three metropolitan areas for which there is enough data to report upon:  Atlanta, Philadelphia and Phoenix. 

Key takeaways from the 4Q2019 Seniors Housing Actual Rates Segment Reports include:

  • Average initial rates for residents moving into independent living, assisted living and memory care segments were below average asking rates, with monthly spreads generally largest for memory care, followed by assisted living segments and then independent living segments. Care segments refer to the levels of care provided to a resident living in an assisted living, memory care or independent living unit.
  • As of December 2019, initial rates for assisted living care units averaged 8.1% ($414) below average asking rates. This equates to an average initial rate discount of 1.0 months on an annualized basis, the same as the year-earlier discount.
  • The average discount for the memory care segment was the largest of the three segment types and averaged 12.3% below average asking rates. This equates to an average initial rate discount of 1.5 months on an annualized basis. In October 2019, the discount was the same.
  • Of the three metropolitan markets for which NIC MAP is currently reporting data (Phoenix, Philadelphia and Atlanta), the largest discounts occurred in Atlanta in December 2019. As of December 2019, initial rates for assisted living segments in Atlanta averaged 16.3% below their average asking rate, which equates to an average initial rate discount of 2.0 months on an annualized basis, up from 1.3 months one year earlier. This was higher than the comparable discount of 1.0 month for the nation and 0.4 month for Philadelphia. Moreover, in Atlanta, the average discount for independent living segments was slightly more than assisted living and equivalent to 2.1 months in December.
  • Higher discounts in Atlanta make sense, since that market had the second lowest seniors housing occupancy rate of the 31 Primary NIC MAP markets in the fourth quarter of 2019 (82.7% versus 88.0% for the Primary Market average), as well as the third-highest share of construction versus inventory (12.1% versus 6.7% for the Primary Market average).
  • At the national level, average asking rates for residents moving into independent living, assisted living and memory care segments were above in-place rates, with monthly differences generally largest for assisted living, followed by memory care segments and then independent living segments.
  • Average asking rates for the independent living segment exceeded in-place rates since March 2018 and the monthly gap between these rates was 3.4% or $119 in December 2019.

The NIC Actual Rates initiative is driven by the need to continually increase transparency in the seniors housing sector and achieve greater parity to data that is available in other real estate asset types. Now, more than ever, in the world of the COVID-19 pandemic, having access to accurate data on the actual monthly rates that a seniors housing resident pays as compared to property level asking rates helps NIC achieve this goal. That said, the data reported in this blog post does not reflect the effects of the pandemic, but better serves as a baseline for the conditions that prevailed prior to the coronavirus.

This Seniors Housing Actual Rates Report provides aggregate national data from approximately 300,000 units within more than 2,500 properties across the U.S. operated by 25 to 30 seniors housing providers. Note that this monthly time series is comprised of end-of-month data for each respective month. The operators included in the current sample tend to be larger, professionally managed, and investment-grade operators as we currently require participating operators to manage 5 or more properties.

While these trends are certainly interesting aggregated across the states, actual rate data is even more useful at the CBSA level. As NIC continues to work towards growing the sample size to be large enough to release more data at the CBSA level, partnering with leading software providers like Yardi, PointClickCare, Alis, and MatrixCare makes it easier for operators to contribute data to the Actual Rates initiative. NIC appreciates our partnerships with software providers and our data contributors and their work in achieving standardized data reporting.

If you are an operator or a software provider interested in how you can contribute to the Actual Rates initiative, please visit nic.org/actual-rates.

Learn more about the NIC MAP® Data Service.

Initial Jobless Claims Lower, but Still Nose-bleedingly High

Initial Jobless Claims Lower, but Still Nose-bleedingly High

The Department of Labor reported that 3.8 million Americans filed for unemployment insurance benefits in the week ending April 25, 2020 as the COVID-19 pandemic continues to cause businesses to lay off or temporarily furlough workers. This was a decline of 603,000 from the previous week’s upwardly revised level of 4.4 million. The speed and scale of the job losses is unprecedented. In the past six weeks, approximately 30 million people have filed claims. By comparison, 9 million jobs were lost over the course of the 2007-2009 recession.

employment blog 4.30

Continuing claims for regular benefits, which are reported with an extra week’s lag, rose 2.2 million to 18 million. This measure, which accounts for people who are continuing to receive benefits, reached a record high. This has also pushed the insured unemployment rate (the share of the labor force that claims unemployment benefits) higher. The insured unemployment rate was 12.4% in the week ending April 18, an increase of 1.5 percentage points from the prior week and up from 1.2% pre-COVID-19. This also marks the highest level of the rate in the history of the data series.

Jobless claims are laid-off workers’ applications for unemployment insurance payments. Gig-economy workers, self-employed people and those seeking part-time work are now eligible to apply for benefits in an expanded unemployment assistance program recently created in response to the pandemic. Further, more than 40 states were paying recipients an additional $600 a week in enhanced unemployment benefits on top of the usual stat payments.

The largest increases in initial claims for the week ending April 18 were in Florida, Connecticut, West Virginia, Louisiana, and Texas.

employment blog 4-30 2

Separately, the Commerce Department reported yesterday that real GDP growth fell at an annualized rate of 4.8% in the first quarter, down from positive 2.1% growth in the fourth quarter of last year. This was the worst quarterly GDP performance since 2008 and marked the first quarter of the 2020 recession. Second quarter projections range from a decline of 30% to 40% at an annualized rate. Two quarters of negative GDP growth signal an official recession. Consumer spending fell at an annualized pace of 7.6% while business investment plunged 8.6%. Surprisingly, health care spending plummeted by 18% which, given its importance in the economy, was enough on its own to subtract 2.3% points from overall GDP growth. Even though COVID-19 is boosting some hospital and public health activity, non-emergency hospital visits have been postponed and other health care providers, like dentists, have been shut. Helping to offset these declines was residential investment which increased by a whopping 21% as low mortgage rates boosted construction and home sales earlier in the year. This is not likely to continue as the home sales market has also been affected by the pandemic.

In the meantime, the April FOMC meeting took place yesterday. Federal Reserve officials emphasized downside risks to the economy due to the coronavirus and a continued desire and willingness to provide support through monetary policy. Over the next few months, the Fed is expected to continue to expand its balance sheet toward $10 trillion, equivalent to about 50% of GDP. The Fed’s focus will be on establishing and expanding its credit facilities for the private sector. Interest rates are likely to stay low until the jobless rate returns to the “natural rate” of between 4.0% to 5.0%, which is not likely to occur until 2022 or later according to Bloomberg analysts. As recently as February, the unemployment rate was 3.5%, a 50-year low. In March, the rate had already increased to 4.4%. Analysts project a rate as high as 15% to 20% in the coming months as the ranks of the unemployed continue to swell.

The first phase of the Fed’s emergency actions was focused on supplying liquidity to financial institutions and ensuring that key financial markets did not seize up. The second phase being implemented now will see the Fed go further than ever before in buying private sector assets and lending directly to non-financial businesses.

Executive Survey Insights  | Wave 4, Week Ending April 26, 2020

A NIC report developed to provide timely insights from owners and C-suite operators on the pulse of seniors housing and skilled nursing sectors. Wave 4.

A NIC report developed to provide timely insights from owners and C-suite operators on the pulse of seniors housing and skilled nursing sectors.

NIC’s weekly Executive Survey of operators in seniors housing and skilled nursing is designed to deliver transparency into market fundamentals in the seniors housing and care space at a time where market conditions are rapidly changing—providing both capital providers and capital seekers with data as to how COVID-19 is impacting the space, helping leaders make informed decisions.

This week’s sample (Wave 4) includes responses collected April 20-26, 2020 from owners and C-suite executives of 94 seniors housing and skilled nursing operators from across the nation. Detailed reports for each “wave” of the survey can be found on the NIC COVID-19 Resource Center webpage under Executive Survey Insights.

Summary of Insights and Findings

Changes in occupancy rates continued to show declines and move-in rates continued to decelerate for many organizations in Wave 4. The primary reason cited for deceleration in move-ins continues to be slowdowns in leads conversions and sales. However, in Wave 4, more organizations reported an organization-imposed ban on settling residents into their communities than in prior waves of the survey.

  • Organizations with assisted living residences and nursing care beds reported the largest declines in occupancy changes from one-month prior among the four segment types. In Wave 4, approximately 80% of survey respondents reported declines in occupancy from the prior month for assisted living units and nursing care beds. For the assisted living care segment, organizations reporting declines in Wave 4 are up to 81% from 65% in Wave 3. However, the proportion of organizations reporting nursing care segment occupancy declines in Wave 4 was similar to Wave 3 (84%).
  • Compared with one week earlier, higher shares of organizations reported occupancy declines in Wave 4. Consistent with Waves 2 and 3, about two-thirds of organizations reporting on their nursing care segments noted declines in Wave 4.
  • Around 70% of organizations reported the pace of move-ins decelerated in the past 30 days for their independent living, assisted living and memory care segments in Wave 4. Only about one-third to one-quarter report no change in the pace of move-ins for these care segments. While the majority of organizations reporting on their nursing care segments in Wave 4 note a deceleration in move-ins (76%) the share is lower compared to Wave 3 (87%).
  • More respondents in Wave 4 cited an organization-imposed ban on settling new residents into their communities than in the prior two waves of the survey. Some reasons for deceleration in move-ins written into the survey comments included fewer hospital referrals and elective surgery rehab residents, moratoriums on tours, more stringent health screenings, and not wanting to admit residents into a 14-day quarantine.
  • The majority of respondents continue to report no change in the pace of move-outs in the past 30-days. The independent living segment reported the most stability in Wave 4 with about three-quarters of organizations reporting no change in the pace of move-outs. In contrast, about one-third of organizations with nursing care beds report accelerated move-outs in Waves 2, 3 and 4. Of note, in Wave 4, about one-quarter of organizations with assisted living units report an acceleration in move-outs in the past 30-days (24%), an increasing trend across waves of the survey, and up from 17% in Wave 3.

Wave 4 Survey Demographics

  • Responses were collected April 20-26, 2020 from owners and C-suite executives of 94 seniors housing and skilled nursing operators from across the nation.
  • Nearly two-thirds of respondents were exclusively for-profit providers (62%), more than one-quarter (28%) were exclusively nonprofit providers, and 10% operate both for-profit and nonprofit seniors housing and care organizations.
  • Owner/operators with 1 to 10 properties comprise 56% of the sample. Operators with 11 to 25 properties make up 17%, while operators with 26 properties or more make up 27% of the sample.
  • Many respondents in the sample report operating combinations of property types. Across their entire portfolios of properties, 80% of the organizations operate seniors housing properties (IL, AL, MC), 36% operate nursing care properties, and 34% operate CCRCs (aka Life Plan Communities).

Key Survey Results

Change in Occupancy by Care Segment

Respondents were asked: “Considering the entire portfolio of properties, overall, my organization’s occupancy rates by care segment are… (Most Recent Occupancy, Occupancy One Month Ago, Occupancy One Week Ago, Percent 0-100)”

  • About two-thirds (68%) of organizations reporting on their independent living and memory care units in Wave 4—across their respective portfolios of properties—experienced a decrease in occupancy from the prior month. Roughly one-third of respondents with independent living and memory care segment units (32%, respectively) saw no change or an increase in occupancy rates from the time they responded April 20-April 26, 2020 to one month prior, down from 49% and 42% in Wave 3.
  • In contrast, 81% of respondents with assisted living units and 82% of respondents with nursing care beds reported a decline in occupancy from the month prior. For the assisted living care segment, organizations reporting declines in Wave 4 are up from 65% in Wave 3 to 81%. The proportion of organizations reporting nursing care segment occupancy declines in Wave 4 was similar to Wave 3 (84%).
  • Regarding the change in occupancy from one week ago, roughly two-thirds to one-half of organizations with independent living, assisted living and memory care segment units noted no change (between 66% and 49%); however, respondents for all three care segments reported slightly higher shares of occupancy declines. In Wave 4, about two-thirds of the organizations reporting on their nursing care segments noted declines from one week prior (62%), consistent with Waves 2 and 3 (62% and 67%, respectively).

    NIC Executive Survey Insights Wave 4 Change in Occupancy by MonthNIC Executive Survey Insights Wave 4 Change in Occupancy by Week

Pace of Move-Ins and Move-Outs

Respondents were asked: “Considering my organization’s entire portfolio of properties, overall, the pace of move-ins and move-outs by care segment in the past 30-days has…”

  • In Wave 4, between 67% and 71% of organizations reporting on their independent living, assisted living and memory care segments noted that the pace of move-ins decelerated. Between 26% and 30% reported no change in the pace of move-ins for these care segments.
  • While the majority of organizations reporting on their nursing care segments in Wave 4 note a deceleration in move-ins (76%) the share is lower compared to Wave 3 (87%).

NIC Executive Survey Insights Wave 4 Pace of Move-Ins Past 30 Days

Reasons for Deceleration in Move-Ins

Respondents were asked: “The deceleration in move-ins is due to…”

  • In Waves 3 and 4, roughly two-thirds to one-half of respondents attributed the deceleration in move-ins to a slowdown in leads conversions/sales or resident or family member concerns. However, more respondents in Wave 4 cited an organization-imposed ban on settling new residents into their communities than in the prior two waves of the survey (61% vs. 41% and 49%, respectively).

NIC Executive Survey Insights Wave 4 Deceleration of Move-Ins

Move-Outs

  • Between 76% and 64% of organizations reporting on their independent living, assisted living and memory care units saw no change in move-outs in the past 30-days. Assisted living saw a greater share of accelerated move-outs in Wave 4 than in Wave 3 (24% vs. 17%). Similar to Waves 2 and 3, about one-third of organizations with nursing care beds noted an acceleration in move-outs in Wave 4 (34%).

NIC Executive Survey Insights Wave 4 Pace of Move-Outs

This weekly survey is designed for operators to capture high level metrics with minimal time lag to market on important trends for operators and investors. While survey questions will evolve over time, primary key metrics will continue to include changes in occupancy, move-ins, and move-outs as well as COVID-19 related data. With increased participation, future reports will provide COVID-19 related incidence data in seniors housing and care properties, including levels of testing being conducted at the property-level and lab-confirmed positive cases across the industry.

NIC wishes to thank survey respondents for their valuable input and continuing support for this effort to bring clarity and transparency into market fundamentals in the seniors housing and care space at a time where trends are rapidly changing. Your support helps provide both capital providers and capital seekers with data as to how COVID-19 is impacting the space, helping leaders make informed decisions. 

If you are an owner or C-suite executive of seniors housing and care properties and have not received an email invitation but would like to participate in the current Executive Survey, please click here for the current online questionnaire.

Leadership Huddle: Research Directors See Opportunities Post-COVID

NIC webinar focused on outlook for U.S. economy over the next year, current capital market conditions and assessments on the seniors housing sector.

While the latest NIC data show skilled nursing and seniors housing occupancy and move-in rates declining and daily headlines seem to spotlight COVID-19 infections whenever they occur in these communities, the outlook from some of the sector’s most prominent analysts, while clear-eyed on short-term impacts and challenges, is not all bad. In fact, they see opportunities post-COVID. The third of NIC’s new series of “Leadership Huddle” webinars, held Thursday, April 23, drew over a thousand registrations from across the sector, and delivered again on the expectation of new data, expert analysis, and substantive discussion.

Hosted by NIC Chief Economist Beth Mace, the webinar, titled, “Prominent Real Estate Research Directors Discuss Market Trends and the Economic Outlook,” focused on the outlook for the U.S. economy over the next year, observations on current capital market conditions and assessments on the seniors housing sector from the point of view of investors. As Mace said in her opening remarks, she was joined by, “three of the most respected and brilliant minds in the commercial real estate industry.” As panelist Mary Ludgin, Senior Managing Director of Global Investment Research for Heitman pointed out, she and her fellow panelists, “bring insights that we’ve learned across the three prior recessions.”

Mace presented new findings released that morning from Wave 3 of the weekly “NIC Executive Survey,” saying, “We would expect, due to the COVID, that you’re going to see a decrease in the occupancy rates, and in fact that’s what we have seen.” 84% of respondents with nursing care beds reported declines in occupancy, as did 65% reporting on assisted living, 58% memory care, and 51% on independent living. The survey, which showed results for the week ending April 19, 2020,also reflects a slowdown in move-in rates, with 87% of the respondents reporting a deceleration in move-ins for skilled nursing, 74% for assisted living, and 71% for independent living. Survey findings and analysis are posted weekly on the NIC Notes blog.

Discussing what the economy will look like a year from now,  the panelists generally agreed that much depends on COVID-19-related factors, such as when a vaccine becomes available, testing of the general population occurs, and businesses are able to reopen. They also agreed that, while some return to ‘normalcy’ can be expected, not every sector will look the same. Calvin Schnure, SVP of Research & Economic Analysis at Nareit, said, “Keep in mind it’s not affecting all parts of the economy evenly, and there are going to be some things like travel, restaurants, theatres, and so on, that may not come back at all. The rest of this economy was in fairly good shape before this crisis hit, and that’s going to help lift the economy, but there are going to be different patterns of spending and patterns of activity.”

When asked what he’s telling his investment committee today, Michael Acton, Managing Director and Head of Research for AEW Capital Management, focused on the near-term impact on NOI, as well as cap rates, but indicated that the crisis will yield opportunities for investors who are ready for them. “There are going to be a lot of opportunities that show up, going forward from here. You can’t have a ten or eleven-year expansion without a lot of people being drawn into industries and investment opportunities that maybe they really shouldn’t be in. There’s very quickly going to be a revelation of weak hands versus very strong hands…we’re trying to get everybody…to be ready to act when things start to present themselves.”

Regarding lessons learned from the 2008/09 recession, Acton said that in general, you need to “triage” in three stages. First, you need to understand the debt maturities of your assets. Second, you need to keep an open dialog between your investors, asset managers and operators, and third you need to keep your team in place. “Things get harder through these events”. You also need to be sure that your capital structure has the flexibility that may be needed in a more challenged investment and economic environment.  

Responding to the same question about what she is telling her investment committee, Ludgin pointed to the bid/ask spread, saying, “We don’t know what valuation metrics will be or what they should be. We don’t know what cash flows are, and therefore we’ll have buyers that have one view of value and sellers that have another view.” She expects to see, “a lot of structured transactions come out of this where those would-be sellers need capital, but they don’t want to sell at the prices buyers are willing to pay.”

Acton pointed to pricing decline patterns seen in REITs over the past several decades, and the fact the biggest declines historically have been closely followed by, “very outsized performance.” He commented that, “these periods of sharp decline, whether it is in the private market or the public market, do create very interesting entry points for investors.” But Acton also said that the seniors housing sector will face numerous challenges in the coming months. Move-ins, and, as a result, occupancy, will drop until the COVID-19 public health crisis is resolved.

As in the 2008 financial crisis, seniors who have trouble selling their homes will be unable to move in, and some adult children will be unable to support move-ins, due to the financial impacts of the crisis. While acknowledging higher infection rates and worse outcomes in skilled nursing, Acton’s big-picture view is that seniors housing is still a very sound sector. He said, “There are a lot of headlines out there that are making people anxious and nervous, but I think the (senior housing) sector as a whole is demonstrating that this is actually a remarkably safe place for your parents to be.”

For Schnure, the biggest risk facing the sector is that the “rising wave of older Americans moving into senior housing” might be “delayed” or even not occur at all. Comparing the sector to those which have seen less construction of supply in recent years, such as office, he pointed out that, with the high supply now on the market, seniors housing has less ability to absorb a drop in demand. He said, “seniors housing has to be able to absorb a fair amount of cushion, so that gives some extra work to do with this crisis.”

In Ludgin’s view, the complexity and operational expertise it takes to do well in a sector in which, “you have to get a lot of things right,” hasn’t been fully reflected in current pricing. She said, “So, I anticipate that there will be an expansion of cap rates in this sector, on a relative basis, in the near term. However, in the long term, she sees that demand remains “extremely strong,” saying, “This pandemic is not going to change that meaningfully, so I stay positive on this sector, but expect some near-term repricing.”

Webinar recordings and recap articles are available for this and prior webinars in the series, on the NIC Covid-19 Resource Center.  webinar2headshotsemail-Recovered-1