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 SNF, AL Occupancy Rates Hold Mostly Steady for Last Quarter of 2017

The number of residents in skilled nursing facility (SNF) and assisted living (AL) buildings stayed mostly steady for the fourth quarter of 2017 when compared with the previous quarter, with the overall occupancy rate for seniors housing across all settings also unchanged at “relatively weak” levels, the National Investment Center for Seniors Housing and Care (NIC) said in its latest report.

In fresh data for the last quarter of 2017, NIC said the occupancy rates for seniors housing properties was 88.8 percent, unchanged from the third quarter of 2017 and down 0.7 percentage point from year-earlier number. The 88.8 percent mark is 1.8 percentage point above the measure’s low of 87 percent reached during the first quarter of 2010 and 1.4 percentage point off its most recent high of 90.2 percent in the fourth quarter of 2014.

In breaking out its data, NIC said occupancy rates for independent living and AL averaged 90.6 percent and 86.5 percent, respectively, during the final quarter of 2017. That left the occupancy rate for independent living unchanged from the prior quarter and down 0.5 percentage point from year-earlier results. The AL rate was also unchanged from the third quarter, but down 1.0 percentage point from year-earlier levels.

On the SNF front, the occupancy rate decreased by 0.1 percentage point in the fourth quarter of 2017 from 86.2 percent in the third quarter of 2017. NIC said the nursing care annual inventory growth rate was negative 0.1 percent in the fourth quarter, while annual absorption was down by a negative 1 percent. Private-pay rents for SNFs showed growth of 2.5 percent year-over-year for the fourth quarter of 2017 versus 2016.

Beth Burnham Mace, NIC chief economist, said in general there remains a lot of unfilled inventory in the seniors housing space, which “adds competitive pressure to the market and puts downward pressure on rate growth.”

NIC said the seniors housing annual absorption was 2.4 percent as of the fourth quarter of 2017, unchanged from the third quarter and down 0.1 percentage point from one year earlier. The seniors housing annual inventory growth rate in the fourth quarter was 3.2 percent, down 0.2 percentage point from the third quarter.

As for construction starts, building of new AL properties was the theme for the fourth quarter. NIC said seniors housing construction starts within the 31 Primary Markets during the fourth quarter of 2017 preliminarily tallied 6,069 units. This number includes 2,758 independent living units and 3,311 AL units.

“Despite the sustained softness in assisted living occupancy, assisted living properties continue to comprise the majority of the seniors housing units under construction,” said Chuck Harry, NIC’s chief of research and analytics. “In fact, the seniors housing construction level shares of 61 percent assisted living and 39 percent independent living have been quite steady for the last eight quarters, dating back to the first quarter of 2016.”

During the fourth quarter of last year, the average rate of seniors housing’s annual asking rent growth was 2.6 percent, down 0.1 percentage point from the prior quarter and down from 3.7 percent in the fourth quarter of 2016.

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