Rent Discounts Continue as In-Place Rate Growth Accelerates

The NIC MAP Data Service recently released national benchmark data through mid-year 2018 for actual rates and leasing velocity.  Key takeaways include:

• Average initial rates at the time of resident move in were below average asking rates for both majority independent living and majority assisted living properties, with monthly spreads larger for majority assisted living properties throughout the entire reported period.
• As of June 2018, initial rates for majority assisted living properties averaged 9.2% below the average asking rate, which equates to an average initial rate discount of 1.1 months on an annualized basis, up from 1.0 months in December 2017. The discount for majority independent living properties was smaller at the equivalent of 0.6 months rent and was down from 0.9 months in December 2017.
• Average in-place rate growth for majority assisted living properties has accelerated since year-end 2017, with the average in-place rate in June 2018 up 1.5% from the year-earlier average rate. Similarly, for majority independent living properties, in-place rate growth accelerated during the past six months, with year-over-year rate growth of 1.7% in June 2018. The acceleration could be seasonal, as leasing activity generally picks up during spring and summer months. Compared with year-earlier growth rates, the June pace is relatively steady.
• Growth rates for average majority independent living initial rates were 4.8% above year-earlier levels in June 2018, registering the strongest pace in the 17 months that NIC has reported annual growth rates and significantly more than the in-place rate growth of 1.7%. In the time that NIC has reported this data, annual growth in initial rates have generally been negative and underperformed rate growth for in-place rate, so the June pattern bears watching.
• Growth rates for average majority assisted living initial rates averaged 2.0% from year-earlier rates in June 2018, also above the in-place rate growth of 1.5%. Annual growth in majority assisted living move-in rates has been stronger than in-place rate growth, however, for only four of the past 12 months.
• The rate of move-ins exceeded or equaled the pace of move-outs in nine of the last 12 months for majority assisted living properties. In January and February, the rate of move-outs exceeded move-ins which may be related to the severity of the flu season. There was no clear monthly pattern for majority independent living properties in the past 12 months.

This Seniors Housing Actual Rates Report provides aggregate national data from approximately 250,000 units within more than 2,500 properties across the U.S. operated by 25 to 30 seniors housing providers. Note that this monthly time series is comprised of end-of-month data for each respective month.