Housing Fundamentals and Trends in Seniors Housing Chuck Harry, Managing Director, NIC Mike Hargrave, Chief Market & Data Strategist, NIC
Agenda National Market Fundamentals Overview of Select Metropolitan Markets Seniors Housing Outlook Capital Market Trends
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National Market Fundamentals
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Seniors Housing Occupancy Flat in 1Q13 Seniors Housing Supply-Demand; MAP31 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Units
6,000
93%
5,000
92%
4,000
91%
3,000
90%
2,000
89%
1,000
88%
0
87%
-1,000
86%
-2,000
85% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
4
Seniors Housing Occupancy Compares Well Annual Change in Occupancy (Basis Points) 1Q07 – 1Q13 Apartment
Office
2008
2009
Retail
Hotels
Seniors Housing
600 400 200 0 -200 -400 -600 -800 2007
2010
Source: NIC MAP® Data & Analysis Service; MBAA; REIS; STR
2011
2012
2013
5
Seniors Housing & Care Occupancy Occupancy by Property Type 4Q05 – 1Q13 94% 93% 92% 91% 90% Majority IL CCRCs Majority AL Majority NC
89% 88% 87% 86% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
6
Occupancy Performance by Campus Type Occupancy Change (bps) by Campus Type; MAP31 As of 1Q13
Quarterly Change Annual Change
EF CCRCs (89.1%) Rental CCRCs (88.9%) Freestanding MC (85.2%) Freestanding AL (89.6%) Combined AL (88.7%) Freestanding IL (89.4%) Combined IL (89.4%) -150
-100
Source: NIC MAP® Data & Analysis Service
-50
0
50 100 Basis Points
150
200
250
7
Supply Pressuring Memory Care Occupancy Memory Care Supply-Demand; MAP31 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Units
600
Stabilized Occupancy (R)
98%
500
96%
400
94%
300
92%
200
90%
100
88%
0
86%
-100
84%
-200
82%
-300
80% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
8
Memory Care Construction is Pocketed Memory Construction by Metro Market As of 1Q13
30%
500
25%
400
20%
300
15%
200
10%
100
5%
0
0%
DAL HOU ATL CHI DEN MIN PHO BOS TAM LA CLE RIV SEA PHI ORL SJ KC DET NY BAL DC SAC SF CIN POR LV MIA STL SA PIT SD
Units
600
Units Under Construction (L) Construction vs. Inventory (R)
Source: NIC MAP® Data & Analysis Service
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Memory Care Construction Surging Rolling 4-Quarter Construction Starts vs. Inventory; MAP31 4Q06 – 1Q13 8% 7% 6%
Memory Care
5% 4% 3% Assisted Living
2%
Independent Living Nursing Care
1% 0% 2007
2008
2009
Source: NIC MAP® Data & Analysis Service
2010
2011
2012
2013
10
Rent Growth Less Volatile Annual Asking Rent Growth 1Q07 – 1Q13 Apartment
Office
Retail
Hotels
Seniors Housing
15% 10% 5% 0% -5% -10% -15% 2007
2008
2009
2010
Source: NIC MAP® Data & Analysis Service; MBAA; REIS; STR
2011
2012
2013
11
More Properties Raising Asking Rents Seniors Housing Annual Rent Growth Distribution; MAP31 4Q06 – 1Q13
Percent of Properties
60% 0 - 3%
50% 40%
≥ 3%
30% 20% < 0%
10% 0% 2007
2008
2009
Source: NIC MAP® Data & Analysis Service
2010
2011
2012
2013
12
Moderate Rent Growth in Most Markets Seniors Housing Annual Rent Growth by Metro Market As of 1Q13 DAL 2.9%
KC
0.8%
0.0% - 0.99%
NY CHI MIN SA STL SD RIV MIA CIN
1.9% 1.9% 1.9% 1.8% 1.4% 1.4% 1.4% 1.3% 1.3%
1.0% - 1.99%
Source: NIC MAP® Data & Analysis Service
TAM DC CLE PHO SF DET BAL LV ATL ORL PHI PIT SJ LA SAC
2.7% 2.7% 2.6% 2.5% 2.5% 2.5% 2.5% 2.4% 2.4% 2.3% 2.3% 2.2% 2.1% 2.1% 2.0%
2.0% - 2.99%
POR BOS HOU SEA DEN
3.4% 3.2% 3.2% 3.2% 3.0%
3.0% - 3.99% 13
Markets in Various Stages of Recovery Seniors Housing Occupancy by Metro Market As of 1Q13
Pre-Recession Peak to Trough Range 1Q13
96% 94% 92% 90% 88% 86% 84% 82% 80% 76%
SJ PIT BOS NY MIN BAL POR DET SF CLE KC DEN STL PHI DC SEA ORL SAC MAP31 SA SD RIV TAM LA ATL CIN MIA LV DAL HOU PHO CHI
78%
Source: NIC MAP® Data & Analysis Service
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Overview of Select Metropolitan Markets
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Atlanta Metropolitan Market Atlanta’s Seniors Housing Occupancy 4Q05 – 1Q13 92% 91% 90% MAP31
89% 88%
Atlanta
87% 86% 85% 84% 83% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
16
Atlanta Metropolitan Market Atlanta’s Seniors Housing Supply-Demand 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Units
700
92%
600
91%
500
90%
400
89%
300
88%
200
87%
100
86%
0
85%
-100
84%
-200
83% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
17
Miami Metropolitan Market Miami’s Seniors Housing Occupancy 4Q05 – 1Q13 92% 91% 90% MAP31
89% 88%
Miami
87% 86% 85% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
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Miami Metropolitan Market Miami’s Seniors Housing Supply-Demand 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Units
300
92%
200
91%
100
90%
0
89%
-100
88%
-200
87%
-300
86%
-400
85% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
19
Orlando Metropolitan Market Orlando’s Seniors Housing Occupancy 4Q05 – 1Q13 92% 91% 90%
Orlando MAP31
89% 88% 87% 86% 85% 84% 83% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
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Orlando Metropolitan Market Orlando’s Seniors Housing Supply-Demand 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Units
700
92%
600
91%
500
90%
400
89%
300
88%
200
87%
100
86%
0
85%
-100
84%
-200
83% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
21
Dallas Metropolitan Market Dallas’s Seniors Housing Occupancy 4Q05 – 1Q13 92% 90% MAP31 88% 86%
Dallas
84% 82% 80% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
22
Dallas Metropolitan Market Dallas’s Seniors Housing Supply-Demand 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Units
700
89%
600
88%
500
87%
400
86%
300
85%
200
84%
100
83%
0
82%
-100
81%
-200
80% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
23
Houston Metropolitan Market Houston’s Seniors Housing Occupancy 4Q05 – 1Q13 93% 92% 91% 90% MAP31
89% 88% 87% 86%
Houston
85% 84% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
24
Houston Metropolitan Market Houston’s Seniors Housing Supply-Demand 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Units
400
94%
300
92%
200
90%
100
88%
0
86%
-100
84%
-200
82% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
25
Chicago Metropolitan Market Chicago’s Seniors Housing Occupancy 4Q05 – 1Q13 92% 91% 90% MAP31
89% 88% 87% 86% 85%
Chicago
84% 83% 82% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
26
Chicago Metropolitan Market Chicago’s Seniors Housing Supply-Demand 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Units
700
91%
600
90%
500
89%
400
88%
300
87%
200
86%
100
85%
0
84%
-100
83%
-200
82% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
27
Kansas City Metropolitan Market Kansas City’s Seniors Housing Occupancy 4Q05 – 1Q13 92% 91%
Kansas City
90% MAP31
89% 88% 87% 86% 85% 84% 83% 82% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
28
Kansas City Metropolitan Market Kansas City’s Seniors Housing Supply-Demand 1Q06 – 1Q13
Units
400
Inventory Growth (L) Absorption (L) Occupancy (R)
92%
300
90%
200
88%
100
86%
0
84%
-100
82%
-200
80% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
29
Charlotte Metropolitan Market Charlotte’s Seniors Housing Occupancy 1Q08 – 1Q13 92% 91%
Charlotte
90% MAP31
89% 88% 87% 86% 85% 2008
2009
2010
Source: NIC MAP® Data & Analysis Service
2011
2012
2013
30
Charlotte Metropolitan Market Charlotte’s Seniors Housing Supply-Demand 2Q08 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Units
250
92%
200
91%
150
90%
100
89%
50
88%
0
87%
-50
86%
-100
85% 2009
Source: NIC MAP® Data & Analysis Service
2010
2011
2012
2013
31
Outlook for Seniors Housing Market Fundamentals
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Tempered Independent Living Construction Majority Independent Living Construction Activity 1Q06 - 1Q13 21,000
Units Started Construction (L)
18,000
Units
7%
Construction Started in Prior Quarters (L)
6%
Construction vs. Inventory (R)
15,000
5%
12,000
4%
9,000
3%
6,000
2%
3,000
1%
0
0% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
33
New Property Lease-up Improving Independent Living Occupancy; MAP31 Properties Less than 2 Years Old 1Q07 – 1Q13 75% 70%
Quarterly
65%
Rolling 4-Quarter
60% 55% 50% 45% 40% 2007
2008
2009
Source: NIC MAP® Data & Analysis Service
2010
2011
2012
2013
34
Assisted Living Construction Surpasses Prior Peak Majority Assisted Living Construction Activity 1Q06 - 1Q13 Construction Started in Prior Quarters (L) Units Started Construction (L)
8,000
4%
Units
Construction vs. Inventory (R) 6,000
3%
4,000
2%
2,000
1%
0
0% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
35
Searching for Lease-up Traction Assisted Living Occupancy; MAP31 Properties Less than 2 Years Old 1Q07 – 1Q13 75% 70% 65% Quarterly Rolling 4-Quarter
60% 55% 50% 45% 40% 2007
2008
2009
Source: NIC MAP® Data & Analysis Service
2010
2011
2012
2013
36
Searching for Lease-up Traction Memory Care Occupancy; MAP31 Properties Less than 2 Years Old 1Q07 – 1Q13 75% 70% 65% 60%
Quarterly Rolling 4-Quarter
55% 50% 45% 40% 2007
2008
2009
Source: NIC MAP® Data & Analysis Service
2010
2011
2012
2013
37
Seniors Housing Occupancy Flat in 1Q13 Seniors Housing Supply-Demand Forecast; MAP31 1Q06 – 1Q14’F
Units
6,000
Inventory Growth (L) Absorption (L) Occupancy (R) Forecast
93%
5,000
92%
4,000
91%
3,000
90%
2,000
89%
1,000
88%
0
87%
-1,000
86%
-2,000
85% 2006
2007
2008
Source: NIC MAP® Data & Analysis Service
2009
2010
2011
2012
2013
2014
38
Capital Market Trends
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Transactions Volume Nearly $5B in 1Q13 Seniors Housing & Care Transactions Volume (in Billions) 1Q08 – 1Q13
Rolling 4-Quarter Quarterly
$30 $25 $20 $15 $10 $5 $0 2008
2009
Source: NIC MAP® Data & Analysis Service
2010
2011
2012
2013
40
Overall Pricing Rises 22% in 1Q13 Seniors Housing Rolling 4-Quarter Price Per Unit By Transaction Type | 1Q08 – 1Q13 $250,000
$200,000
Portfolio All Transactions
$150,000 Non-Portfolio $100,000
$50,000
$0 2008
2009
2010
Source: NIC MAP® Data & Analysis Service
2011
2012
2013 41
Seniors Housing Cap Rates Flattening Cap Rates by Property Type January 2008 – February 2013
Seniors Housing (Rolling 12-months) Apartments (Rolling 3-months) Office (Rolling 3-months) 10-Year Treasury
10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%
2008
2009
Source: NIC MAP® Data & Analysis Service
2010
2011
2012
2013 42
Institutional Interest in Seniors Housing High Relative Attractiveness of Property Types for New Investments by Year 2010 â&#x20AC;&#x201C; 2013 (Ratings: 1 = least attractive, 5 = most attractive) 2013
2012
2011
2010
+ Seniors Housing Medical Office Industrial / R&D Multifamily Retail Office Infrastructure Hotel 1 2 3 4 Source: 2013 Plan Sponsor Survey; Kingsley Associates; Institutional Real Estate, Inc.
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Questions? Chuck Harry, Managing Director, NIC charry@nic.org
Mike Hargrave, Chief Market & Data Strategist, NIC mhargrave@nic.org www.nic.org | www.nicmap.org | 410-267-0504
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