NIC Notes

Insights in Seniors Housing & Care

By: Beth Mace  |  January 11, 2017

Seniors Housing Posts Strong Property Investment Returns

Economic Trends  |  Senior Housing

Investment returns for seniors housing historically have outpaced the overall NCREIF (National Council of Real Estate Investment Fiduciaries) Property Index (NPI), a property-level index that tracks investment return performance for commercial real estate. But while seniors housing returns outperformed the NPI in the third quarter of 2016, the total annual return for this sector has been slowly trending down since mid-2014.

Investment Returns Relatively Strong but Down from 2014 Peak

NCREIF reported that the investment returns for seniors housing properties tracked by the organization in the third-quarter 2016 equaled 2.22% (composed of a 0.80% capital return and a 1.41% income return). Seniors housing’s annual return through the third quarter of 2016 was 13.11%. It outperformed both the NPI (9.22%) and apartments (8.46%).

Despite the relatively strong showing, the total annual return for seniors housing has been slowly trending down since the mid-2014 peak of 20.37%. The annual appreciation return was 7.16% in the third quarter, the lowest for any trailing four-quarter period since early 2013. The income return remained near historic lows of 5.66% in the third quarter. The slowdown in annual income and capital returns has also been occurring for the broad NPI.

On a 10-year basis, total returns for seniors housing exceeded both the NPI and apartments by more than 400 basis points. These performance measurements reflect the returns of 78 seniors housing stabilized properties valued at $3.5 billion as of the third quarter 2016.

Property Investment Returns for the Period Ending 3Q 2016

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About Beth Mace

Beth Burnham Mace is a special advisor to the National Investment Center for Seniors Housing & Care (NIC) focused exclusively on monitoring and reporting changes in capital markets impacting senior housing and care investments and operations. Mace served as Chief Economist and Director of Research and Analytics during her nine-year tenure on NIC’s leadership team. Before joining the NIC staff in 2014, Mace served on the NIC Board of Directors and chaired its Research Committee. She was also a director at AEW Capital Management and worked in the AEW Research Group for 17 years. Prior to joining AEW, Mace spent 10 years at Standard & Poor’s DRI/McGraw-Hill as director of its Regional Information Service. She also worked as a regional economist at Crocker Bank, and for the National Commission on Air Quality, the Brookings Institution, and Boston Edison. Mace is currently a member of the Institutional Real Estate Americas Editorial Advisory Board. In 2020, Mace was inducted into the McKnight’s Women of Distinction Hall of Honor. In 2014, she was appointed a fellow at the Homer Hoyt Institute and was awarded the title of a “Woman of Influence” in commercial real estate by Real Estate Forum Magazine and Globe Street. Mace earned an undergraduate degree from Mount Holyoke College and a master’s degree from the University of California. She also earned a Certified Business Economist™ designation from the National Association of Business Economists.

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