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
2
National Market Fundamentals
3
Seniors Housing Occupancy Flat in 1Q13
85%
86%
87%
88%
89%
90%
91%
92%
93%
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
2006 2007 2008 2009 2010 2011 2012 2013
Uni
ts
Seniors Housing Supply-Demand; MAP31 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Source: NIC MAP® Data & Analysis Service 4
Seniors Housing Occupancy Compares Well
Source: NIC MAP® Data & Analysis Service; MBAA; REIS; STR
-800
-600
-400
-200
0
200
400
600
2007 2008 2009 2010 2011 2012 2013
Annual Change in Occupancy (Basis Points) 1Q07 – 1Q13
Apartment Office Retail Hotels Seniors Housing
5
Seniors Housing & Care Occupancy
Majority IL
Majority AL Majority NC
CCRCs
86%
87%
88%
89%
90%
91%
92%
93%
94%
2006 2007 2008 2009 2010 2011 2012 2013
Occupancy by Property Type 4Q05 – 1Q13
Source: NIC MAP® Data & Analysis Service 6
Occupancy Performance by Campus Type
7
-150 -100 -50 0 50 100 150 200 250
Combined IL (89.4%)
Freestanding IL (89.4%)
Combined AL (88.7%)
Freestanding AL (89.6%)
Freestanding MC (85.2%)
Rental CCRCs (88.9%)
EF CCRCs (89.1%)
Basis Points
Occupancy Change (bps) by Campus Type; MAP31 As of 1Q13 Quarterly Change
Annual Change
Source: NIC MAP® Data & Analysis Service
Supply Pressuring Memory Care Occupancy
80%
82%
84%
86%
88%
90%
92%
94%
96%
98%
-300
-200
-100
0
100
200
300
400
500
600
2006 2007 2008 2009 2010 2011 2012 2013
Uni
ts
Memory Care Supply-Demand; MAP31 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R) Stabilized Occupancy (R)
Source: NIC MAP® Data & Analysis Service 8
Memory Care Construction is Pocketed
0%
5%
10%
15%
20%
25%
30%
0
100
200
300
400
500
600
DA
L H
OU
AT
L C
HI
DE
N
MIN
P
HO
B
OS
TA
M
LA
CLE
R
IV
SE
A P
HI
OR
L SJ
KC
D
ET
NY
BA
L D
C
SA
C
SF
CIN
P
OR
LV
M
IA
STL
S
A P
IT
SD
Uni
ts
Memory Construction by Metro Market As of 1Q13 Units Under Construction (L)
Construction vs. Inventory (R)
Source: NIC MAP® Data & Analysis Service 9
Memory Care Construction Surging
Independent Living
Assisted Living
Memory Care
Nursing Care 0%
1%
2%
3%
4%
5%
6%
7%
8%
2007 2008 2009 2010 2011 2012 2013
Rolling 4-Quarter Construction Starts vs. Inventory; MAP31 4Q06 – 1Q13
Source: NIC MAP® Data & Analysis Service 10
Rent Growth Less Volatile
Source: NIC MAP® Data & Analysis Service; MBAA; REIS; STR
-15%
-10%
-5%
0%
5%
10%
15%
2007 2008 2009 2010 2011 2012 2013
Annual Asking Rent Growth 1Q07 – 1Q13
Apartment Office Retail Hotels Seniors Housing
11
More Properties Raising Asking Rents
< 0%
0 - 3%
≥ 3%
0%
10%
20%
30%
40%
50%
60%
2007 2008 2009 2010 2011 2012 2013
Perc
ent o
f Pro
pert
ies
Seniors Housing Annual Rent Growth Distribution; MAP31 4Q06 – 1Q13
Source: NIC MAP® Data & Analysis Service 12
Moderate Rent Growth in Most Markets
Source: NIC MAP® Data & Analysis Service
DAL 2.9%TAM 2.7%DC 2.7%CLE 2.6%PHO 2.5%SF 2.5%DET 2.5%
NY 1.9% BAL 2.5%CHI 1.9% LV 2.4%MIN 1.9% ATL 2.4%SA 1.8% ORL 2.3%STL 1.4% PHI 2.3% POR 3.4%SD 1.4% PIT 2.2% BOS 3.2%RIV 1.4% SJ 2.1% HOU 3.2%MIA 1.3% LA 2.1% SEA 3.2%
KC 0.8% CIN 1.3% SAC 2.0% DEN 3.0%
3.0% - 3.99%0.0% - 0.99% 1.0% - 1.99% 2.0% - 2.99%
Seniors Housing Annual Rent Growth by Metro Market As of 1Q13
13
Markets in Various Stages of Recovery
76% 78% 80% 82% 84% 86% 88% 90% 92% 94% 96%
SJ
PIT
B
OS
N
Y M
IN
BA
L P
OR
D
ET
SF
CLE
K
C
DE
N
STL
P
HI
DC
S
EA
OR
L S
AC
M
AP
31
SA
SD
R
IV
TAM
LA
AT
L C
IN
MIA
LV
D
AL
HO
U
PH
O
CH
I
Seniors Housing Occupancy by Metro Market As of 1Q13 Pre-Recession Peak to Trough Range
1Q13
Source: NIC MAP® Data & Analysis Service 14
Overview of Select Metropolitan Markets
15
Atlanta Metropolitan Market
Atlanta
MAP31
83%
84%
85%
86%
87%
88%
89%
90%
91%
92%
2006 2007 2008 2009 2010 2011 2012 2013
Atlanta’s Seniors Housing Occupancy 4Q05 – 1Q13
Source: NIC MAP® Data & Analysis Service 16
Atlanta Metropolitan Market
83%
84%
85%
86%
87%
88%
89%
90%
91%
92%
-200
-100
0
100
200
300
400
500
600
700
2006 2007 2008 2009 2010 2011 2012 2013
Uni
ts
Atlanta’s Seniors Housing Supply-Demand 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Source: NIC MAP® Data & Analysis Service 17
Miami Metropolitan Market
Miami
MAP31
85%
86%
87%
88%
89%
90%
91%
92%
2006 2007 2008 2009 2010 2011 2012 2013
Miami’s Seniors Housing Occupancy 4Q05 – 1Q13
Source: NIC MAP® Data & Analysis Service 18
Miami Metropolitan Market
85%
86%
87%
88%
89%
90%
91%
92%
-400
-300
-200
-100
0
100
200
300
2006 2007 2008 2009 2010 2011 2012 2013
Uni
ts
Miami’s Seniors Housing Supply-Demand 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Source: NIC MAP® Data & Analysis Service 19
Orlando Metropolitan Market
Orlando MAP31
83%
84%
85%
86%
87%
88%
89%
90%
91%
92%
2006 2007 2008 2009 2010 2011 2012 2013
Orlando’s Seniors Housing Occupancy 4Q05 – 1Q13
Source: NIC MAP® Data & Analysis Service 20
Orlando Metropolitan Market
83%
84%
85%
86%
87%
88%
89%
90%
91%
92%
-200
-100
0
100
200
300
400
500
600
700
2006 2007 2008 2009 2010 2011 2012 2013
Uni
ts
Orlando’s Seniors Housing Supply-Demand 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Source: NIC MAP® Data & Analysis Service 21
Dallas Metropolitan Market
Dallas
MAP31
80%
82%
84%
86%
88%
90%
92%
2006 2007 2008 2009 2010 2011 2012 2013
Dallas’s Seniors Housing Occupancy 4Q05 – 1Q13
Source: NIC MAP® Data & Analysis Service 22
Dallas Metropolitan Market
80%
81%
82%
83%
84%
85%
86%
87%
88%
89%
-200
-100
0
100
200
300
400
500
600
700
2006 2007 2008 2009 2010 2011 2012 2013
Uni
ts
Dallas’s Seniors Housing Supply-Demand 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Source: NIC MAP® Data & Analysis Service 23
Houston Metropolitan Market
Houston
MAP31
84%
85%
86%
87%
88%
89%
90%
91%
92%
93%
2006 2007 2008 2009 2010 2011 2012 2013
Houston’s Seniors Housing Occupancy 4Q05 – 1Q13
Source: NIC MAP® Data & Analysis Service 24
Houston Metropolitan Market
82%
84%
86%
88%
90%
92%
94%
-200
-100
0
100
200
300
400
2006 2007 2008 2009 2010 2011 2012 2013
Uni
ts
Houston’s Seniors Housing Supply-Demand 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Source: NIC MAP® Data & Analysis Service 25
Chicago Metropolitan Market
Chicago
MAP31
82%
83%
84%
85%
86%
87%
88%
89%
90%
91%
92%
2006 2007 2008 2009 2010 2011 2012 2013
Chicago’s Seniors Housing Occupancy 4Q05 – 1Q13
Source: NIC MAP® Data & Analysis Service 26
Chicago Metropolitan Market
82%
83%
84%
85%
86%
87%
88%
89%
90%
91%
-200
-100
0
100
200
300
400
500
600
700
2006 2007 2008 2009 2010 2011 2012 2013
Uni
ts
Chicago’s Seniors Housing Supply-Demand 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Source: NIC MAP® Data & Analysis Service 27
Kansas City Metropolitan Market
Kansas City
MAP31
82%
83%
84%
85%
86%
87%
88%
89%
90%
91%
92%
2006 2007 2008 2009 2010 2011 2012 2013
Kansas City’s Seniors Housing Occupancy 4Q05 – 1Q13
Source: NIC MAP® Data & Analysis Service 28
Kansas City Metropolitan Market
80%
82%
84%
86%
88%
90%
92%
-200
-100
0
100
200
300
400
2006 2007 2008 2009 2010 2011 2012 2013
Uni
ts
Kansas City’s Seniors Housing Supply-Demand 1Q06 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Source: NIC MAP® Data & Analysis Service 29
Charlotte Metropolitan Market
Charlotte
MAP31
85%
86%
87%
88%
89%
90%
91%
92%
2008 2009 2010 2011 2012 2013
Charlotte’s Seniors Housing Occupancy 1Q08 – 1Q13
Source: NIC MAP® Data & Analysis Service 30
Charlotte Metropolitan Market
85%
86%
87%
88%
89%
90%
91%
92%
-100
-50
0
50
100
150
200
250
2009 2010 2011 2012 2013
Uni
ts
Charlotte’s Seniors Housing Supply-Demand 2Q08 – 1Q13
Inventory Growth (L) Absorption (L) Occupancy (R)
Source: NIC MAP® Data & Analysis Service 31
Outlook for Seniors Housing Market Fundamentals
32
Tempered Independent Living Construction
0%
1%
2%
3%
4%
5%
6%
7%
0
3,000
6,000
9,000
12,000
15,000
18,000
21,000
2006 2007 2008 2009 2010 2011 2012 2013
Uni
ts
Majority Independent Living Construction Activity 1Q06 - 1Q13
Construction Started in Prior Quarters (L) Units Started Construction (L) Construction vs. Inventory (R)
Source: NIC MAP® Data & Analysis Service 33
New Property Lease-up Improving
Quarterly
Rolling 4-Quarter
40%
45%
50%
55%
60%
65%
70%
75%
2007 2008 2009 2010 2011 2012 2013
Independent Living Occupancy; MAP31 Properties Less than 2 Years Old 1Q07 – 1Q13
Source: NIC MAP® Data & Analysis Service 34
Assisted Living Construction Surpasses Prior Peak
Source: NIC MAP® Data & Analysis Service
0%
1%
2%
3%
4%
0
2,000
4,000
6,000
8,000
2006 2007 2008 2009 2010 2011 2012 2013
Uni
ts
Majority Assisted Living Construction Activity 1Q06 - 1Q13 Construction Started in Prior Quarters (L)
Units Started Construction (L) Construction vs. Inventory (R)
35
Searching for Lease-up Traction
Quarterly Rolling 4-Quarter
40%
45%
50%
55%
60%
65%
70%
75%
2007 2008 2009 2010 2011 2012 2013
Assisted Living Occupancy; MAP31 Properties Less than 2 Years Old 1Q07 – 1Q13
Source: NIC MAP® Data & Analysis Service 36
Searching for Lease-up Traction
Quarterly Rolling 4-Quarter
40%
45%
50%
55%
60%
65%
70%
75%
2007 2008 2009 2010 2011 2012 2013
Memory Care Occupancy; MAP31 Properties Less than 2 Years Old 1Q07 – 1Q13
Source: NIC MAP® Data & Analysis Service 37
Seniors Housing Occupancy Flat in 1Q13
85%
86%
87%
88%
89%
90%
91%
92%
93%
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
Uni
ts
Seniors Housing Supply-Demand Forecast; MAP31 1Q06 – 1Q14’F
Inventory Growth (L) Absorption (L) Occupancy (R)
Source: NIC MAP® Data & Analysis Service
Forecast
38
Capital Market Trends
39
Transactions Volume Nearly $5B in 1Q13
$0
$5
$10
$15
$20
$25
$30
2008 2009 2010 2011 2012 2013
Seniors Housing & Care Transactions Volume (in Billions) 1Q08 – 1Q13
Rolling 4-Quarter Quarterly
Source: NIC MAP® Data & Analysis Service 40
Overall Pricing Rises 22% in 1Q13
All Transactions Portfolio
Non-Portfolio
$0
$50,000
$100,000
$150,000
$200,000
$250,000
2008 2009 2010 2011 2012 2013
Seniors Housing Rolling 4-Quarter Price Per Unit By Transaction Type | 1Q08 – 1Q13
Source: NIC MAP® Data & Analysis Service 41
Seniors Housing Cap Rates Flattening
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
2008 2009 2010 2011 2012 2013
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
Source: NIC MAP® Data & Analysis Service 42
Institutional Interest in Seniors Housing High
Source: 2013 Plan Sponsor Survey; Kingsley Associates; Institutional Real Estate, Inc. 1 2 3 4 5
Hotel
Infrastructure
Office
Retail
Multifamily
Industrial / R&D
Medical Office
+ Seniors Housing
2013 2012 2011 2010
Relative Attractiveness of Property Types for New Investments by Year 2010 – 2013 (Ratings: 1 = least attractive, 5 = most attractive)
43
Questions? Chuck Harry, Managing Director, NIC [email protected]
Mike Hargrave, Chief Market & Data Strategist, NIC [email protected]
www.nic.org | www.nicmap.org | 410-267-0504
44
