Press Room – 2008 NIC Press Releases
Seniors Housing and Care Indicators Show Loan Volume and Performance Up in the Third Quarter of 2007
FOR IMMEDIATE RELEASE: February 21, 2008
Contact: Renee Tilton, (410) 626-0805 or rtilton@crosbymarketing.com
Annapolis, Md. – Total loan volume outstanding in seniors housing and care grew to $20.5 billion during the third quarter of 2007, according to the NIC Key Financial Indicators™ released today by the National Investment Center for the Seniors Housing & Care Industry (NIC). This amount was 8.5 percent higher than the second quarter, when outstanding loan volume stood at $18.9 billion.
“This growth in loan volume is due to a huge – 481 percent – increase in skilled nursing facility placements in the third quarter, which was largely due to a single loan of over $1 billion,” said Robert G. Kramer, president of NIC. “But independent living volume was down 43 percent from the previous quarter and down 61 percent when compared to the same quarter a year ago.”
Loan performance during the third quarter also continued to be very strong at 99.4 percent. “There was some increase in the absolute amount of loan dollars not performing,” continued Kramer, “but the amount that moved into those categories was counter-balanced by an 8.5 percent increase in total outstanding loans. As a result, the percentage of delinquent or restructured short- and long-term loans went down, even though the absolute loan dollars not performing went up slightly.”
The loan data collected by NIC represents the quarterly lending activity of major national lenders (non-REITs) that make permanent and short-term debt investments in seniors housing and care. This includes data provided by Fannie Mae, Freddie Mac, and several of the larger credit companies and banks.
Mean occupancy was up slightly during the third quarter for assisted living, skilled nursing and continuing care retirement communities (CCRCs), but was down slightly for independent living. However, most sectors were down from the third quarter of 2006 from 93 to 91 percent for independent living, 89.5 to 88 percent for assisted living and 88 to 86 percent for skilled nursing. The only exception was CCRCs, which stayed steady at 91.5 percent.
“There’s a bit of softness that we’re seeing in terms of independent living occupancy and revenue per occupied unit or what we like to call REVPOR growth,” said Dr. Lawrence Horan, financial research and analysis director for NIC. “But at the same time, we have to remember that these numbers were near historic highs.”
Capitalization rates for the third quarter of 2007 may have reflected this concern among lenders. Mean capitalization rates were up sequentially by 50 basis points for assisted living and 120 basis points for CCRCs, but edged lower by 50 basis points for independent living and 30 basis points for skilled nursing. The fourth quarter data should offer a better read on the impact of the credit crunch on seniors housing.
Each quarter, the nation’s leading senior living lenders, owners/operators and appraisal professionals report their key financial and performance data to NIC. The results are posted free of charge as the NIC Key Financial Indicators™ at natinvcenterdv.wpengine.com/kfi/.
About NIC
Founded in 1991, this nonprofit organization provides information about business strategy and capital formation for the senior living industry. Proceeds from its annual conference – scheduled next for September 10-12, 2008, in Chicago, IL – are used to fund research and data that lead to informed investment decision-making to advance the seniors housing and care industry. For more information, visit natinvcenterdv.wpengine.com or call (410) 267-0504.