NIC’s Strategic Plan includes objectives to ‘expand the tent’ across five key focus areas – Active Adult, AgeTech, Capital for Operations, Middle Market, and Partnering for Health. Focus Area Committees (FACs) were formed to support these efforts. The Middle Market Committee is led by Chair Matthew Ruark of Keybank. We had a chance to talk with Ruark and hear his thoughts about this important committee.     

NIC: How did you first get involved with NIC as a volunteer?

Ruark: My experience as a volunteer leader with NIC goes back to 2018 when I was asked to serve on the Fall Conference Planning Committee, which was a great introduction to the role volunteer leaders play for NIC. The chance to interact and collaborate with some of the most talented individuals from across the industry was extremely rewarding. I have been fortunate to serve on the Fall Conference Planning Committee every year since, and have led conference sessions on topics from Debt and Equity, to ESG and Middle Market over the years. In 2019, I was asked to replace Carolyn Nazdin on the NIC Board as her term was expiring. This opportunity really elevated my exposure to NIC and what it means to be a volunteer leader. I have been a part of the 5-year Strategic Plan development, navigating the pandemic and many other interesting experiences as a board member. Over the years I have served on several different committees from Active Adult to DE&I and am currently the Chair of the Middle Market Focus Area Committee. I am also the Lead Instructor for a Level 2 NIC Academy course called Debt Financing Options for the Senior Housing and Care Industry. NIC is actively looking to expand the number of volunteer leaders. I would encourage anyone that wants to get involved and be a part of shaping the industry’s future to review the information on the website and fill out the interest form. My experiences have been tremendously rewarding on both a professional and personal level.

NIC: As the chair of the Middle Market Focus Area Committee, can you tell us about the composition of the committee?

Ruark: I believe housing and caring for the Middle Market is the biggest challenge the industry faces in the coming years, and NIC has been a leader in educating and increasing the awareness of the challenges the industry faces with our Middle Market population. I was honored when NIC CEO Ray Braun asked me to lead the Focus Area Committee. I am passionate about finding a solution to this challenge society faces.

The priority after being named chair was to develop the structure of the Committee. I was very focused on creating a committee that represented a diverse group of backgrounds and perspectives on how the Middle Market challenge can be addressed. The Committee is made up of 12 industry leaders that have experience ranging from For Profit to Non-Profit, and Ownership, Operating, and Capital backgrounds. I am fortunate to have Sophia Lukas of St. Paul’s Senior Services serve as the Vice Chair of the Committee.

I viewed my biggest challenge as Chair as how to engage and keep engaged such a talented group of doers! To create engagement opportunities, we formed four sub-committees and selected Chairs to each:

• Conference Planning – Tim Buchanan, Chair
• Research, Data and Analytics – Bob Kramer, Chair
• Education & Training – Kai Hsiao, Chair
• Finance – Lee Delaveris, Chair

One of the first priorities of the Committee was to create a mission statement…Identifying scalable solutions to make housing and care more accessible for older Americans in the middle market. The sub-committees are also creating thoughts around what success looks like, all in an effort to create accountability and be able to measure success.

NIC: Why do you think it’s important for NIC to focus on the Middle Market?

Ruark: As I mentioned before, I believe housing and caring for the Middle Market in the future is the most important challenge the industry faces. As NIC Co-founder and Strategic Adviser Bob Kramer has told me on many occasions, the industry must be part of the solution! To develop a solution, we must first define the Middle Market. NIC has committed a tremendous amount of resources to defining the Middle Market. As the leading organization in the industry, I believe NIC has a responsibility to be part of the solution and to this point NIC has been a leading voice.

The Middle Market will eventually be defined by multiple cohorts with different solutions. No one approach will solve the challenge. NIC is an incubator for thought and solution development. NIC brings industry leaders together to discuss and develop solutions openly. It is critical to have an organization like NIC to be a facilitator of solutions. The Middle Market challenge is too broad for any one organization to solve. This challenge will take the industry coming together to develop new structures for owners, operators, and capital. NIC is best positioned to lead this collective effort.      

NIC: What does the Middle Market Committee aim to accomplish in the next year?

Ruark: NIC has asked the Committee to create a 3-year plan to provide advice, guidance, and recommendations on conference programming; research, data, and analytics; NIC Academy programs; and new target audiences related to the Middle Market. The Committee’s recommendations will be provided to our fellow volunteers on the implementation committees for consideration. Beyond that, the Committee is focused on being a thought leader around our Mission Statement of Identifying scalable solutions to make housing and care more accessible for older Americans in the middle market. I look forward to seeing what this group of passionately committed volunteers can develop over the next year.

In the ever-evolving landscape of senior living, one thing remains constant: the need to adapt to changing consumer preferences. With the next generation entering retirement age, senior living operators are faced with the challenge of meeting the diverse and evolving needs and desires of this dynamic demographic.

Individuals born between 1946 and 1964 have long been known for their independence, individualism, and desire for choice. As they transition into retirement, they bring with them a set of preferences that differ significantly from previous generations. From lifestyle choices to amenities, baby boomers are reshaping the senior living industry in their image.

One of the most notable shifts in consumer preferences among baby boomers is a desire for active and engaging lifestyles. Unlike some previous generations, who may have viewed retirement as a time for relaxation and leisure, baby boomers are seeking opportunities for continued growth, learning, and adventure. Senior living operators are responding by offering a wide range of amenities and activities designed to cater to these interests, from fitness centers and outdoor recreational spaces to lifelong learning programs and volunteer opportunities. New options like SynchronyFit wellness programs, technology classes, and resident committees have been welcome additions to the Trilogy resident lifestyle. Our resident committees are identified and run by our residents. We have seen everything from knitting clubs who donate homemade blankets and other items to local hospitals, to singing ensembles and choirs who perform at our campus holiday events.

Additionally, placing a premium on flexibility and customization when it comes to their living arrangements is a clear expectation among prospective residents. Gone are the days of one-size-fits-all retirement communities. Instead, senior living operators need to embrace a more personalized approach, offering a variety of housing options ranging from independent living apartments to assisted living suites and memory care units. This allows residents to choose the level of support and assistance that best suits their individual needs, empowering them to maintain their independence while receiving the care they require. Trilogy’s continued focus on the full continuum of care has allowed the organization to place the consumer’s desire for flexibility and customization at the forefront. The ability to enjoy all stages of life from the same address provides a level of safety and convenience to our resident’s lives. The addition of boutique dialysis to the list of available services has provided even more opportunities for that personalized approach.

Technology is another area where senior living operators are adapting to meet the changing preferences of baby boomers. Given the technological advancements over the past several decades, boomers are more tech-savvy than previous seniors. They expect senior living communities to offer modern amenities such as high-speed internet access, smart home technology, and telehealth services. It is not only resident-facing technologies that must be incorporated, but also technologies that focus on operational efficiencies and caregiver performance, ultimately improving the overall resident experience. At Trilogy, exploring the impact of Artificial Intelligence and how AI can impact efficiencies in care and ease the caregiver burnout is paramount. By embracing technology, senior living operators can enhance the quality of life for residents while also improving operational efficiency and communication.

Furthermore, baby boomers are reshaping the dining experience in senior living communities. As a generation that grew up during the food revolution of the 1960s and 1970s, boomers have more adventurous palates and higher expectations when it comes to culinary offerings. Senior living operators are responding by providing diverse menus featuring fresh, locally sourced ingredients and accommodating special dietary needs and preferences. Additionally, many communities are incorporating farm-to-table initiatives and onsite restaurants to create a more restaurant-style dining experience for residents. We see this come to life at Trilogy through our Flavorful Balance program, prioritizing fresh ingredients and made from scratch menu items. We have also introduced a “Flavorful Dignity” program, allowing residents with mechanical food restrictions the joy of eating meals that look just like those who are not on a restricted diet.

From an operator’s perspective, adapting to changing consumer preferences requires a commitment to innovation, flexibility, and continuous improvement. At Trilogy we take every opportunity to learn, not only from consumer research, but through our bi-annual customer satisfaction surveys, putting us on a continual mission to learn from feedback. By staying attuned to the evolving needs and desires of baby boomers, senior living communities can remain competitive in a rapidly changing market while providing residents with the high-quality care and lifestyle they deserve. As the boomer generation continues to redefine aging, senior living operators must be prepared to embrace change and seize new opportunities for growth and innovation.

Key Takeaways: 

Data from the recently released 1Q 2024 NIC MAP Vision Actual Rates Report show that: 

• The pace of growth in initial rates for all care segments (independent living, assisted living, and memory care) decelerated, indicating a trend towards alignment with inflation.
• Discounts remained highest in the independent living segment, followed by memory care and assisted living.
• The pace of move-ins remained strong and further improved compared to the previous quarter for independent living, assisted living, and memory care.    

The pace of growth in initial rates for all care segments decelerated in the first quarter of 2024. 

• For initial rates (move-in rates), the pace of growth slowed across all care segments in the first quarter of 2024. By March 2024, year-over-year increases were at 4.2% for independent living, 4.4% for assisted living, and 4.7% for memory care, down from 8.1%, 8.8%, and 7.7% in March 2023, respectively. The memory care segment showed the largest year-over-year increase for initial rates among the three care segments in March 2024. 

Discounts in the first quarter of 2024 remained highest in the independent living segment, followed by memory care and assisted living.

• In the independent living segment, discounts between asking rates and initial rates remained in the double digits, averaging about 12.7% in the first quarter 2024. The March discount was $507, equivalent to 1.4 months on an annualized basis, and has stayed above $400 since June 2023. In-place rates had a 0.6 month annualized equivalent discount compared with asking rates.
• Discounts in the assisted living segment were lower, averaging 8.8% in the first quarter of 2024, equivalent to 1.1 months on an annualized basis for initial rates compared with asking rates. The March discount was $506, equivalent to 0.9 month on an annualized basis.
• In the memory care segment, the average discount for asking rates compared with initial rates was 8.9% in the first quarter 2024. The dollar discount ($778) in March 2024 was the equivalent of 1.1 months.

The pace of move-ins remained strong and further improved compared to the previous quarter for independent living, assisted living, and memory care.  

• In the independent living segment, the pace of move-ins averaged around 2.2% of inventory in the first quarter 2024, compared to an average of 2.1% in the fourth quarter 2023. The pace of move-outs averaged around 2.1% in the first quarter 2024.
• For the assisted living segment, move-ins averaged 3.2% of inventory in the first quarter 2024 compared to 3.0% in the fourth quarter of 2023.
• Move-ins for the memory care segment averaged 3.7% of inventory in the first quarter 2024 compared to 3.4% in the fourth quarter of 2023.

Additional key takeaways are available to NIC MAP Vision subscribers in the full report.  

About the Report  

The NIC MAP Vision Seniors Housing Actual Rates Report provides aggregate national data from approximately 300,000 units within more than 2,700 properties across the U.S. operated by 35 to 40 senior housing providers. The operators included in the current sample tend to be larger, professionally managed, and investment-grade operators as a requirement for participation is restricted to operators who manage 5 or more properties. Visit NIC MAP Vision’s website for more information. 

“We have entered unprecedented times in the convergence of healthcare and housing. I am continually surprised how industry quasi-competitors come together in unity, advancement, and common spirit.” 

NIC’s Strategic Plan includes objectives to ‘expand the tent’ across five key focus areas – Active Adult, AgeTech, Capital for Operations, Middle Market, and Partnering for Health. Focus Area Committees (FACs) were formed to support these efforts.   The Partnering for Health Committee is led by Chair Jim Lydiard, Chief Strategy Officer at Pine Park Health. We had a chance to talk with Jim and hear his thoughts about this important committee.     

NIC: How did you first get involved with NIC as a volunteer? 

Lydiard: My involvement began at the 2020 NIC Spring Conference in San Diego. My former CareMore (now SCAN) leadership, Dr. Sachin Jain and Karen Schulte, asked that I attend on behalf of CareMore/Anthem, given my responsibilities overseeing our Touch program (the CareMore delivery program bringing benefits/care to members living in senior housing settings). We had recently entered  into an exciting partnership with Welltower and had hit our stride as an industry leader in the Institutional Equivalent Special Needs Plan evolution and were generating impressive resident care outcomes. In addition to joining the pre-conference leadership summit, I had the distinct pleasure of speaking on two panels. Prior to that conference, I thought my small space in healthcare was relatively unnoticed, too niche, not mainstream enough, etc. However, for those few days, and the years since, I have seen how vast the community of healthcare providers within senior housing has become. It was very inspiring, and I’ve since looked for ways to collaborate with NIC as often as possible.  

NIC: You are the chair of the Partnering for Health Focus Area Committee. Can you tell us about the composition of the committee? 

Lydiard: When asked to join and ultimately chair the committee, my first sense was one of honor followed by a sense of duty. We have entered unprecedented times in the convergence of healthcare and housing. I am continually surprised how industry quasi-competitors come together in unity, advancement, and common spirit. I have had the privilege of working alongside some of the brightest, most driven, and innovative leaders/organizations across both the care delivery and housing side of this space dating back to 2007. When thinking about others NIC needed to round out the ideal Partnering for Health Committee, I ultimately aimed for diversity above all else—seasoned vets, as well as newcomers; payers, as well as providers; Care Delivery Organizations, as well as true senior housing operators. And somewhat selfishly, I hoped to convene a group that would be a joy to be around while we build/curate together.  

NIC: Why do you think it’s important for NIC to focus on Partnering for Health? 

Lydiard: It continues to “take a village.” The average resident moving into IL/AL/MC/LTC is frailer and needs far more healthcare touches to age in place than ever before. I can probably count on one hand the number of organizations that are truly vertically integrated in senior housing. A (1) senior living owner/operator that is also (2) fully at healthcare risk of the residents, while (3) delivering the primary care is truly rare. Examples of even two of the three being done by the same operation is rare – and this doesn’t even factor in layers from within each of the three categories, such as pharmacy, data/analytics, mobile specialty, durable medical equipment, mobile lab, home health, hospice, etc. In almost all situations, partnerships are the only way to deliver the care these residents want, need, and deserve. Resident experience warrants cohesion, not more of the same fragmented healthcare system seniors have mostly experienced in the years leading up to moving into a community.  

NIC: What does the Partnering for Health Committee aim to accomplish in the next year? 

Lydiard: Recommendations for conference planning, NIC academy curriculum, research, position papers, and possibly ad hoc podcasts/forums. In the present time of innovation, it is mission critical the committee stays abreast on current events, trends, policy, and the countless ways audiences learn and apply action. As such, we expect various forums and output from the committee, ensuring those that routinely turn to and rely on NIC have the resources they need at their fingertips.  

NIC Analytics released the 4Q 2023 NIC Lending Trends Report. The complimentary quarterly report includes data trends over seven years for senior housing and nursing care construction loans, mini-perm/bridge loans, and permanent loans from 3Q 2016 through 4Q 2023. The survey reflects the contributions of 17 lenders.

For the sample of lenders in the NIC Lending Trends Report in the fourth quarter of 2023, government-related sources accounted for 72% of total loan balances, while banks represented 13%, and other lenders comprised 15%.

Market Forces Recap

At its May meeting, the FOMC voted unanimously to maintain the fed funds rate in the target range of 5.25%-5.5% for the sixth consecutive meeting.

The FOMC comments highlighted that risks to achieving the Fed’s employment and inflation goals have moved toward a better balance over the past year. However, the Fed reiterated its stance on rate cuts, stating that it does not expect to cut rates until it has greater confidence that inflation is moving sustainably toward 2%.

Looking ahead: In May, the Fed stated that starting June 1, 2024, the Fed will slow the pace of quantitative tightening, reducing the cap on the amount of treasury securities rolling off the balance sheet. While recent months have delivered mixed results on key inflation indicators, many market expectations include a potential rate cut by late 2024 or early 2025.

Takeaways from the 4Q 2023 NIC Lending Trends Report

• Permanent financing for senior housing and nursing care remained inconsistent across lender types, reflecting ongoing challenges in the lending environment, including tighter lending standards, wider spreads, and lower loan proceeds.
• Mini-perm/bridge debt issuance for senior housing showed a slight uptick but remained near the time series low.
• New construction loan closings for senior housing saw a slight uptick from the previous quarter, which had somewhat non-existent activity. However, the volume remained well below historical standards.
• Related to construction activity, analysis in the previously released NIC SHARK report showed indications of increased activity in the Mid-Atlantic region, with construction figures showing positive growth in the fourth quarter of 2023 compared to 2019 levels.
• Fourth quarter survey data reveals a reduced total balance of delinquent loans for senior housing, down by 13% from the time series high recorded in the third quarter of 2023. Delinquencies as a share of total loans also decreased among contributors to 4.1% for senior housing, down from 4.4% in the third quarter of 2023. Conversely, the delinquency rate for nursing care rose to a time series high of 2.1% from 0.6% in the third quarter.

• Total loan balances for senior housing decreased, on a same-store quarter-over-quarter basis. This decline may reflect a combination of factors, including market conditions, lender caution, some loans coming off the books, and possibly distressed properties.

From the Field: 4Q 2023 Survey Comments

As part of the survey process for the NIC Lending Trends report, we ask data contributors questions about the lending environment for senior housing and nursing care. The following summarizes responses related to changing capital market conditions, lending patterns, and any notable trends they are observing in the market.

The lending market for senior housing and nursing care in the fourth quarter of 2023 continued to show improving T3 NOI over T12 NOI, movement in the positive direction, but investment opportunities remain suppressed due to higher interest rates and limited investment sales.

Some lenders maintained their existing lending positions set forth in the first half of 2023, while others expressed optimism about potentially loosening requirements in 2024.

Many contributors reported primarily focusing on current relationships and stabilized properties, as rising rates affected credit quality, requiring lower requested loan amounts to meet the minimum DSCR. However, many contributors reported that there was an increasing pace of applications underwritten and approved throughout the fourth quarter. This suggests that while challenges exist, there is a continued interest in lending to the senior housing and nursing care sectors, with lenders adjusting strategies to navigate the current market conditions.

Download the complimentary 4Q 2023 NIC Lending Trends Report for full details on these and other trends in senior housing and skilled nursing lending. 

Note: These data are not to be interpreted as a census of all senior housing and skilled nursing lending activity in the U.S., but rather reflect lending activity from participants included in the survey sample only. 

Interested in participating? The NIC Lending Trends Report helps NIC Analytics deliver on NIC’s mission to enable access and choice by further enhancing transparency of capital market trends in the senior housing and care sectors. We very much appreciate our data contributors. This report would not be possible without them. 

If you would like to participate and contribute your data, please contact us at analytics@nic.org. As a courtesy for providing data, data contributors receive this report early before publication on the website. The information provided as part of the survey will be kept strictly confidential. Individual answers will be combined with the answers of all other respondents. Data acquired from this survey will only be reported in the aggregate, and therefore, the resulting aggregated data will not be attributed to you or your company upon distribution.