Insights in Seniors Housing & Care
The following analysis examines occupancy and year-over-year changes in inventory, and same-store asking rent growth—by care segment—within not-for-profit CCRCs and for-profit CCRCs in the 99 combined NIC MAP Primary and Secondary Markets. The analysis also explores occupancy by payment type (entrance fee CCRCs vs. rental CCRCs) as well as regional occupancy rates by profit status (not-for-profit CCRCs vs. for-profit CCRCs) during the fourth quarter of 2022.
NIC MAP®, powered by NIC MAP Vision, collects primary data on occupancy, asking rents, demand, inventory, and construction for more than 16,000 independent living, assisted living, memory care, skilled nursing, and continuing care retirement communities (CCRCs—also referred to as life plan communities) across 140 U.S. metropolitan markets. The dataset includes 1,160 not-for-profit and for-profit entrance fee and rental CCRCs in these 140 combined markets, including 1,084 in the 99 combined Primary and Secondary Markets.
The exhibit below shows that CCRC occupancy increased to 87.2% in the fourth quarter of 2022 for the 99 NIC MAP Primary and Secondary Markets aggregate, up 0.6 percentage points (pps) from the prior quarter. From its pandemic-record low, CCRC occupancy increased by 3.1pps but remained 4.3pps below its pre-pandemic level of 91.5% in the first quarter of 2020.
In comparison to CCRCs, occupancy for non-CCRCs stood at 80.9% in the fourth quarter of 2022, 6.3pps below that of CCRCs. Notably, during the height of the pandemic, non-CCRCs experienced a larger decline in occupancy rates. Specifically, the decline in occupancy rates for non-CCRCs (11.3pps) was nearly 4.0pps more than that of CCRCs (7.4pps).
The recently released COVID-19 study conducted by NORC at the University of Chicago, through a grant from NIC, found that CCRC residents were significantly safer from dying of COVID-19 than older adults living in skilled nursing properties and both non-CCRCs and non-congregate residential housing in the community at large.
Among the 1,084 CCRCs spread across the 99 Primary and Secondary Markets tracked by NIC MAP Vision, approximately 75% are operated as not-for-profit, and 25% are operated as for-profit.
In the fourth quarter of 2022, not-for-profit CCRC occupancy (88.2%) was 3.9pps higher than for-profit CCRCs (84.3%). Compared with the first quarter of 2020, not-for-profit CCRCs were 4.4pps lower, while for-profit CCRCs remained 4.1pps below pre-pandemic occupancy levels.
Notably, for-profit CCRCs are recovering relatively quickly from their pandemic record low but experienced the largest occupancy drop at the peak of the pandemic. On the other hand, not-for-profit CCRCs had relatively smaller occupancy declines and maintained higher occupancy rates.
Among the 1,084 CCRCs spread across the 99 Primary and Secondary Markets tracked by NIC MAP Vision, 64% are operated as entrance fee, and 36% are operated as rentals.
In the fourth quarter 2022, entrance fee CCRC occupancy (89.2%) was 5.4 percentage points higher than rental CCRCs (83.8%). Rental CCRCs are currently 5.2 percentage points below their pre-pandemic occupancy levels, while entrance fee CCRCs are 3.8 percentage points lower. Similar to the pattern based on profit status, rental CCRCs saw steeper drops in occupancy rates, but are rebounding more quickly – compared with entrance fee CCRCs.
A consistent pattern emerges from all these comparisons – CCRCs vs. non-CCRCs, not-for-profit CCRCs vs. for-profit CCRCs, and entrance fee CCRCs vs. rental CCRCs – properties where demand and occupancy contracted more severely during the height of the pandemic are rebounding more quickly. Interestingly, one of the findings from recently released research by NIC Analytics, exploring the interplay between inflation, in-place rate growth, demand, and occupancy in senior housing, was that the lowest occupied properties/segments were able to generate new demand and grow occupancy faster, but this occurred largely because of lower in-place rates and minimal or even negative rate growth. The fact that these properties/segments had minimal/negative rate growth also suggests that their demand and occupancy may have contracted more severely during the height of the pandemic, and to accelerate the recovery of occupancy, one potential option was likely to lower rates in an attempt to buy occupancy.
By Region - Not-for-Profit and Entrance Fee CCRCs Outperform For-Profit and Rental CCRCs Across All Regions
The exhibit below shows that in the fourth quarter of 2022, not-for-profit CCRCs had higher occupancy rates than for-profit CCRCs across all regions except in the Pacific. The largest differences in fourth quarter occupancy between not-for-profit CCRCs and for-profit CCRCs were in the Southwest (6.4pps), followed by the West North Central (5.8pps), then the Mid-Atlantic and Northeast (4.8pps and 4.7pps, respectively).
Not-For-Profit CCRCs. The Mid-Atlantic (91.1%), Northeast (90.6%), and Pacific (88.2%) regions had the strongest occupancy rates in the fourth quarter of 2022. The Southeast region had the lowest occupancy at 85.3%.
For-Profit CCRCs. The Pacific (90.8%), Mid-Atlantic (86.3%), and Northeast (85.9%) regions had the strongest occupancy rates in the fourth quarter of 2022. The Southwest and West North Central regions had the lowest occupancy at 80.2%.
In the fourth quarter of 2022, entrance fee CCRCs had higher occupancy rates than rental CCRCs across all regions. The most significant difference between entrance fee and rental occupancy was reported for the Southeast region, where entrance fee CCRC occupancy was 7.6pps higher than rental, followed by the West North Central (6.2pps), and the Mountain (5.3pps).
Entrance Fee CCRCs. The Northeast, Pacific, and Mid-Atlantic regions had the strongest entrance fee CCRC occupancy rates - all above 90%. The smallest CCRC occupancy was in the Southwest region at 86.1%.
Rental CCRCs. The Mid-Atlantic, Northeast, and Pacific regions had the highest occupancy rates, ranging from 86.1% to 87.8%, whereas the Southeast region had the lowest occupancy rate of 79.8%, the only region with an average occupancy rate below 80%.
4Q 2022 Not-For-Profit vs. For-Profit CCRCs - Market Fundamentals by Care Segment
The exhibit below illustrates the relative market performance of not-for-profit CCRCs compared with for-profit CCRCs by care segment in the fourth quarter of 2022 and includes year-over-year changes in occupancy, inventory, and asking rent growth.
Occupancy. Overall, the occupancy rate for not-for-profit CCRCs continued to outpace that of for-profit CCRCs across all care segments. The difference in fourth quarter occupancy rates between not-for-profit CCRCs and for profit CCRCs was largest for the assisted living segment (4.5pps), and smallest for the nursing care segment (1.7pps).
The not-for-profit CCRC independent living care segment had the highest occupancy (90.8%) in the fourth quarter of 2022, followed by not-for-profit CCRC assisted living and memory care segments (87.5% and 86.5%, respectively). Although in terms of occupancy improvements from one year ago, the independent living segment had the smallest gain across all care segments for both not-for-profit CCRCs and for-profit CCRCs. The largest occupancy gains from one year ago were seen across all care segments within for-profit CCRCs.
Asking Rent. The monthly average asking rent for not-for-profit CCRCs across all care segments remained higher than for-profit CCRCs except in the independent living care segment. The highest year-over-year asking rent growth for both not-for-profit and for-profit CCRCs was noted in the independent living segment (4.2% and 4.5%, respectively).
Note, these figures are for asking rates and do not consider any discounting that may be occurring. Learn more about actual in-place rates, i.e., the effective rates or the rates that are “actually being paid” to live in senior housing.
Inventory. From year-earlier levels, inventory across for-profit CCRCs decreased (or shifted) across all care segments, while not-for-profit CCRCs saw increased/relatively stable inventory in all but nursing care. Nursing care inventory for both for-profit and not-for-profit CCRCs experienced the largest declines from year-earlier levels (negative 5.2% and 2.6%, respectively). The highest year-over-year inventory growth was reported for the not-for-profit CCRC memory care segments and independent living segments (1.4% and 0.4%, respectively).
Negative inventory growth can occur when units/beds are temporarily or permanently taken offline or converted to another care segment, outweighing added inventory. 
In conclusion, the senior housing industry can benefit from the occupancy success lessons of CCRCs. Collaboration and shared knowledge can be the key to achieving this goal. By learning from each other’s best practices, the industry can better serve its residents and prepare for any future challenges that may arise.
Look for future blog posts from NIC to delve deep into the performance of CCRCs.
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This article originally appeared in Ziegler's Senior Living Finance Z-News.
Omar Zahraoui, Principal at the National Investment Center for Seniors Housing & Care (NIC), is a seniors housing research professional with expertise in providing quantitative analysis and insights on seniors housing & care market data; building new products and reporting capabilities, including dashboards and proformas for clients and internal stakeholders; and implementing new processes and data solutions. Prior to his current role, Zahraoui worked as a data analyst, at Calpine Corporation, supporting the development of new-business strategy initiatives, analyzing sales and financial data, and developing statistical modeling of consumers’ behaviors to drive business performance. Zahraoui holds a Bachelor’s degree in Business Administration with concentrations in Finance and Management, a Master in Corporate Finance from IAE Lyon School of Management at Jean Moulin Lyon III University in France, and a Master of Science in Management Information Systems and Data Analytics from Pace University.
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