SENIORS HOUSING AND CARE INDUSTRY

Posted by Bernie Reifkind on April 22, 2008

ANNAPOLIS, MD –Seniors housing and care “held its own” in the fourth quarter of 2007, despite the slowing economy. This industry pulse, taken by the National Investment Center for the Seniors Housing & Care Industry (NIC) through its NIC Key Financial Indicators, is updated quarterly and posted free of charge at www.NIC.org.

“The percentage of performing loans during the fourth quarter continued to be very strong at 99.5 percent,” said Robert G. Kramer, president of NIC. “So far, we’re not seeing any impact in our sector in terms of troubled loan performance. In fact, other seniors housing and care industry metrics would suggest that the performance of loans during the first half of 2008 will be similar to that from the fourth quarter of 2007.”

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.

Loan volume placed during the quarter also continued to be strong at $1.64 billion. However, it was down both quarter-over-quarter (from $2.15 billion) and year-over-year (from $2.22 billion).

On the occupancy front, percentage rates basically held steady, particularly quarter-over-quarter. But year-over-year, average independent living occupancy rates were down 200 basis points from 92.5 percent in the fourth quarter of 2006 to 90.5 percent in the fourth quarter of 2007. Also year-over year, average skilled nursing occupancy rates fell 250 basis points from 88 percent to 85.5 percent. More than 3,100 properties reported their occupancy data to NIC during the fourth quarter of 2007, representing about 365,000 units.

Capitalization rates also remained stable compared to the previous quarter. Only continuing care retirement communities showed a major downtick – of about 130 basis points – but that was from a relatively small sample of 13 transactions. Overall, about 220 transactions were reported to NIC for the fourth quarter of 2007, which came from a survey of all the major appraisal firms that do seniors housing appraisals.

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