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. 

This article is the third in a series showcasing parent/child duos across the senior housing and care industry. My conversation with Patricia Will, Belmont Village Senior Living, and her son, Aron Will, CBRE Capital Markets, offers insights into why this is becoming a common trend. 

Tell us about your background. 

Patricia: In the process of trying to find care for my mother-in-law with Alzheimer’s, I realized there simply wasn’t a place with the capabilities to effectively care for her. 

My background is in commercial real estate, specifically as a developer for medical properties. My acumen as a developer and my needs as a daughter-in-law converged at the founding of Belmont Village. I knew we could make a better building, but we needed to figure out how to bring it to life. We wanted to create a place that would foster a sense of independence in each of our residents—a place where getting older wasn’t the end of the road, but rather a new opportunity. 

We developed and expanded our relationships in the medical community and schools of hospitality to merge the best of both worlds. We took all that we had learned—from seniors, families, and gerontology experts—and built a community around them. Today, Belmont Village has expanded to 35 communities in eight states and Mexico City—thirty-three of which were developed and are still owned by us in joint ventures. 

As a mom doing all this while my children, Aron and his younger brother Adam, were growing up, I never really knew how it would affect them. Aron got dragged to more negotiations, job sites, and eventually building openings than he cared to at the time.  

Aron: I soaked it up through osmosis. I started with the predecessor to CBRE Capital Markets 17 years ago. It was one of the largest mortgage banking and real estate investment banking companies in the country. Fast forward to 2009 and I approached our leadership team about starting a dedicated seniors housing finance practice on the mortgage banking side.  

In 2010, after the executive leadership team at my company defected, CBRE corporate leaders gave me the opportunity to run the seniors housing finance business that I helped create. Even though it was atypical to have someone in their 20s at that level position, they were confident in my commitment to the task knowing that I’d grown up in the industry and had already begun to scale the business. Within three years, we grew to become the largest combined mortgage banking and agency finance practice in the industry—a designation we’ve maintained to this day. Today, I have a broader responsibility for the practice group including investment sales and equity capital markets. Additionally, I’ve been deeply involved in our two debt platforms and I manage 15 professionals nationally across our three senior housing verticals. 

Patricia: Adam works at Belmont as Vice President of Communications. I never imagined that both my sons would be in some phase of the business!  

Where do you see the industry headed for the next generation?  

Patricia: I honestly can’t think of a business with a better demand profile over the next 20-30 years. I’m very bullish on the space. 

In the major markets like coastal California and South Florida, the barriers to building will constrain supply relative to burgeoning demand. For example, in coastal California it takes on average anywhere from three to eight years for us to entitle a site. But these are large markets with tremendous affluence. This means that if you know how to create supply and bring it alive for the coming generation, you have a great business. 

Multiple recessions have also taught us that demand for our product is not cyclical. This is why I think we’re a great space for young people to pursue careers. 

How do you find the balance between what’s worked for so long and adapting to the ever-changing world?  

Aron: I’m an old soul. For example, I’m a huge proponent of working in the office. You can’t beat the collaboration that happens when you pull a colleague into your office to listen in on a call ad hoc. 

There’s a dearth of high-quality personnel in our industry and a glaring age gap. I think there’s a tremendous opportunity for the next generation, which is why through my involvement in NIC, I helped grow a university internship program placing best in class BBAs and MBAs from top tier schools into the industry. Why should hospitality have fabulous recruiting and a multitude of different programs with very different curriculum and a strategic recruiting methodology, and not the seniors housing sector? 

As an asset class, we’re large enough now that young people should make a very conscious decision to seek out a career in senior living. We’re going to come out of this stronger than a lot of other asset classes and the next generations entrance into the sector should be deliberate and not by happen stance.  

Patricia: So many entrepreneurs in our industry groom their children to be their successors. Having grown up in a family business, I never dreamt of making that a requirement—my sons can and do choose what they want to do. But you need to have a succession plan.   

Many entrepreneurs make the terrible mistake of sticking around too long, particularly in a business that’s scaled and matured. At that point, there’s a different kind of leader required—one who’s more process driven. Hard as it is, we entrepreneurs need to know when to cede the reins. I’m no longer in the best position to administer the business, but I love to be the spark plug to spur investment and innovation. 

How do you keep home and work separated? 

Aron: Lately, I’ve been very conscientious and deliberate about not monopolizing conversations. We didn’t start that way. We conversed about work probably to a point where it was an annoyance to both my wife and dad. Whether it’s a specific transaction or news of what’s going on in the industry, there’s a lot to talk about. We’ll break away from the group for those discussions.  

Patricia: To add to that, the advent of grandchildren is a great antidote to talking about anything that doesn’t concern them because basically they take over and we happily oblige. Aron and I have learned that you can steal a few moments to collaborate early in the morning as opposed to taking over family time at dinner.   

*Interviews edited for length 

NIC’s Strategic Plan included objectives to “’expand the tent’ into five Focus Areas – selected by the NIC Board because of their increasing impact on the senior housing and care industry and the benefit of integrating subject matter expertise into the NIC ecosystem of offerings.  

Focus Area Committees (FACs) were created to support these efforts and include subject matter experts and industry experts in the five Focus Areas who will make recommendations for including the Focus Area in conference sessions; research, data, and analytics; and educational and training programs. 

The Active Adult Committee, led by Chair Mitch Brown and Vice Chair Jane Arthur-Roslovic, will explore the extension of senior living to this emerging product type.  

The AgeTech Committee, led by Chair Michael Kurliand and Vice Chair Abby Levy, will explore technology to facilitate senior living and senior housing operations. NIC’s focus is on technology improving operating and health outcomes.  

The Capital for Operations Committee, led by Chair Fee Stubblefield and Vice Chair Madisen Medley, will focus on any capital (debt or equity) use in senior housing that invests in or lends to an owner, operator, and/or management company, and is not secured by real estate.  

The Middle Market Committee, led by Chair Matt Ruark and Vice Chair Sophia Lukas, examines housing and care options for older Americans with too much income to qualify for government subsidies, but inadequate income for traditional senior housing and care. NIC will showcase successful middle market models.  

The Partnering for Health Committee, led by Chair Jim Lydiard and Vice Chair Joelle Poe, focuses on the intersection of health care and senior housing and care, and will examine value-based care and wellness in senior living.  

FAC volunteers recently kicked off their important work together in Annapolis, MD with a networking reception and dinner, a general session on NIC’s strategic objectives, and individual committee meetings to begin drafting their recommendations.   

The FAC volunteers have already impacted NIC’s future activities to advance our mission. NIC stakeholders can look forward to quality content, research, and educational offerings in each of the five Focus Areas soon. The work of each of the five Focus Areas will be highlighted in upcoming NIC Insider articles – stay tuned! 

Full committee member lists are available on NIC.org.