NIC Notes

Insights in Seniors Housing & Care


By: Beth Mace  |  March 22, 2021

Seniors Housing Annual Total Investment Returns Improve in Fourth Quarter 2020, but Remain Low

Market Trends  |  Seniors Housing

The total investment return for the seniors housing sector was a positive 0.71% in the fourth quarter of 2020. This marked the second consecutive quarterly gain after one quarter of negative returns in the second quarter of 2020 when total returns were negative 1.00%; that marked the first negative total return since 2012 and prior to that in 2009.

The income return remained positive in the fourth quarter, but at 0.91% it was the smallest increase on record as far back as 2003. The appreciation (capital/valuation) return fell 0.20%, the fifth consecutive quarterly decline. This contrasts with the NPI and apartments, where the valuation return turned positive in the fourth quarter. Many investors have reduced their appreciation expectations for seniors housing as the impact of the coronavirus has weighed heavily on their view of the sector. The valuation return is the change in value net of any capital expenditures incurred during the quarter.

Further, the one-year valuation return for seniors housing was a negative 2.89%, worse than in the NPI (-2.52%), apartments (-2.02%), or office (-2.73%) types. Retail was a negative 11.17% and hotel had a shockingly large negative appreciation return of 24.10%. Meanwhile, investors’ darling—the industrial sector—enjoyed a 7.04% appreciation return on a one-year basis.

Note that the performance measurement cited above for seniors housing reflects the returns of 145 seniors housing properties valued at $7.8 billion in the fourth quarter 2020. This was the highest property count and market value in the NCREIF time series for seniors housing.

See my full Quarterly Highlight in the recent National Council of Real Estate Fiduciaries (NCREIF) Real Estate Performance Report.


About Beth Mace

Beth Burnham Mace is the Chief Economist and Director of Outreach at the National Investment Center for Seniors Housing & Care (NIC). Prior to joining the staff at NIC, she served as a member of the NIC Board of Directors for 7 years and chaired NIC’s Research Committee. Ms. Mace was also a Director at AEW Capital Management and worked in the AEW Research Group for 17 years. While at AEW, Ms. Mace provided primary research support to the organization’s core and value-added investment strategies and provided research-related underwriting in acquisition activity and asset and portfolio management decisions. Prior to joining AEW in 1997, Ms. Mace spent ten years at Standard & Poor’s DRI/McGraw-Hill as the Director of the Regional Information Service with responsibility for developing forecasts of economic, demographic, and industry indicators for 314 major metropolitan areas in the U.S. Prior to working at DRI, she spent three years as a Regional Economist at the Crocker Bank in San Francisco. Ms. Mace has also worked at the National Commission on Air Quality, the Brookings Institution and Boston Edison. Ms. Mace is a member of the National Association of Business Economists (NABE), ULI’s Senior Housing Council, the Urban Land Institute and New England Women in Real Estate (NEWIRE/CREW). 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. Ms. Mace is a graduate of Mount Holyoke College (B.A.) and the University of California (M.S.). She has also earned The Certified Business Economist™ (CBE), which is the certification in business economics and data analytics developed by NABE. The CBE documents a professional’s accomplishment, experience, abilities, and demonstrates mastery of the body of knowledge critical in the field of economics and data analytics.

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