Trends in the Seniors Housing Market

Trends in the
Seniors Housing Market
Presented to:
Southwest Mortgagee
Advisory Council
November 6, 2007
Types of Seniors Housing
Seniors Apartment Community
•
•
•
•
•
•
Legally restricted to seniors
Not required to be licensed
60 to 240 units typical size
Similar in design to “family”
complexes, except:
• Normally have elevators
• May have interior halls
• More common area
• Normally only 1 and 2 bedroom
plans (60/40 mix typical)
Often have rent/income restrictions
(LIHTC or HUD Section 202)
DO NOT provide care of any kind
Independent Living Facility (ILF)
•
•
•
•
•
•
Not required to be licensed
Average size is +/-150 units
Typically 30%-40% of building is
common area
Typical unit size is 400 to 1,000+ sf
Typical rents are $1,000 to $2,500
per unit per month
Services normally include:
• 1 to 3 meals per day
• Housekeeping
• Utilities
• Monitoring
• Activities and Transportation
Assisted Living Facility (ALF)
•
•
•
•
•
•
License required
Average size is +/-60 units
Typically 35%-50% of building is
common area
Typical unit size is 350 to 700 sf
Typical rents are $1,500 to $5,000
per unit per month
Services normally include:
• 3 meals per day
• Housekeeping
• Utilities
• Monitoring
• Activities and Transportation
• Assistance with ADLs
Nursing Facility (NF)
•
•
•
•
•
•
License required, Certificate of
need required in many states
Average size is +/-110 beds
Typically 50% or more of building
is common area
Units typically 300 to 500 sf and
house 1 to 4 beds
PP rents from $80 to $200+ per day
Services normally include:
• 3 meals per day
• Housekeeping
• Utilities
• Monitoring
• Activities and Transportation
• 24 hour nursing care
Specialty Care
•
•
•
•
Care for persons with Alzheimer’s
and related dementia is frequently
in special facilities (or wings of
larger facilities) specially designed
for the needs of this population.
Such facilities can be licensed as
assisted living or nursing homes.
There are also specialized facilities
for persons with mental health and
retardation. In Texas, these are
licensed as MHMR facilities.
In addition, there are rehabilitation
hospitals, long term acute care
hospitals, psychiatric hospitals,
etc. These are normally
considered health care and not
included in the spectrum of
seniors housing
Combinations
•
•
•
•
Facilities providing more than one
type of care are becoming more
and more common.
A Continuing Care Retirement
Community (CCRC) is a facility that
provides the full continuum of
care, from independent living to
nursing.
Facilities offering independent and
assisted living within a single
building or connected buildings
are also common
Other combinations include:
• Nursing and assisted
• Nursing and independent
Supply & Demand Trends
Growth in Elderly Population
Projected Growth in US Population 65+
90,000
Population (Thousands)
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
2000
2010
2020
2030
2040
Year
65 to 69
70 to 74
75 to 79
80 to 85
85+
2050
National Occupancy Trends
94.0%
Mean Occupancy
Rate
92.0%
90.0%
IL Occupancy
88.0%
AL Occupancy
SNF Occupancy
86.0%
84.0%
82.0%
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007
Quarter
Dallas/Fort Worth Market Snapshot
C MAP · 2nd Quarter, 2007
Dallas-Ft Worth-Arlington, TX MSA
Key Metrics of Dallas
Type of Service
Independent
Demand
Median Occupancy of Stabilized Properties
Average Occupancy of Stabilized Properties
Net Monthly Move-In Rate of Non-Stabilized Properties Open < 24 Mos.
Percent Increase or Decrease in Units Occupied since Last Quarter
Supply
Total Number of Properties by Type of Service Provided1
Total Units in Inventory2
Penetration Rate3 of Total Units per 75+ Households
Total Number of New Properties Opened this Quarter1
Completions (Number of Units in New Properties Opened)
Number of Units Under Construction
Revenue
Median Monthly Revenue per Occupied Unit2,4
Average Monthly Revenue per Occupied Unit2,4
Affordability Index - Ratio of Price to Income
Adjusted Affordability Index - Affordability Index Including Home Value
Property
Median Age of Property in Years
Percent of Properties Reporting Need to Upgrade
Median Number of Units/Beds per Property
Percent of Properties For-Profit
Percent of Properties That Are Part of Chain
Assisted Living
Dementia Care
MSA
93.3%
90.1%
4.8
-0.2%
31 MSAs
96.1%
93.1%
5.8
-0.2%
MSA
93.9%
88.9%
5.2
-1.5%
31 MSAs
95.5%
90.9%
3.1
-0.5%
MSA
96.2%
85.3%
1.6
-0.8%
31 MSAs
96.2%
91.0%
1.3
-0.7%
MSA
87.4%
84.4%
5.7
-1.3%
31 MSAs
93.9%
90.8%
5.4
-0.3%
84
10,891
8.8%
1
237
358
1,771
245,216
5.3%
9
1,201
10,520
122
6,549
5.3%
1
50
40
3,216
174,112
3.7%
7
395
3,183
54
1,511
1.2%
1
25
112
1,333
34,890
0.7%
5
110
1,119
185
22,676
18.4%
0
0
614
4,548
558,886
12.0%
6
687
2,598
$2,001
$2,069
0.8
0.7
$2,261
$2,377
0.9
0.7
$2,716
$2,880
1.1
0.9
$3,290
$3,389
1.3
1.0
$4,348
$4,686
1.7
1.5
$4,800
$5,068
1.9
1.4
$3,468
$4,038
1.4
1.2
$5,630
$6,533
2.3
1.7
11
32.1%
120
76.2%
73.8%
18
35.4%
110
62.0%
66.8%
10
30.8%
50
85.2%
72.1%
12
36.8%
52
71.7%
62.0%
8
29.2%
28
87.0%
88.9%
8
33.5%
22
82.6%
75.5%
28
49.2%
120
85.4%
64.9%
32
46.7%
114
72.3%
61.7%
1. A property is counted once for each type of service it provides. Therefore, the sum of properties across types is greater than the total of properties on page 5.
2. Data are reported by unit for Independent Living, Assisted Living, and Dementia Care. Nursing Care data are reported by beds.
3. The supply of a type of unit (bed or apartment) relative to the number of 75+ households.
4. Revenue per Occupied Unit calculations use double the semi-private bed rates.
Nursing Care
Houston Market Snapshot
NIC MAP · 2nd Quarter, 2007
Houston-Baytown-Sugar Land, TX MS
Key Metrics of Houston
Type of Service
Independent
Assisted Living
Dementia Care
Nursing Care
Demand
Median Occupancy of Stabilized Properties
Average Occupancy of Stabilized Properties
Net Monthly Move-In Rate of Non-Stabilized Properties Open < 24 Mos.
Percent Increase or Decrease in Units Occupied since Last Quarter
Supply
Total Number of Properties by Type of Service Provided1
Total Units in Inventory2
Penetration Rate3 of Total Units per 75+ Households
Total Number of New Properties Opened this Quarter1
Completions (Number of Units in New Properties Opened)
Number of Units Under Construction
Revenue
MSA
95.2%
94.6%
13.8
4.5%
31 MSAs
31 MSAs
MSA
31 MSAs
MSA
31 MSAs
MSA
95.5%
88.4%
97.1%
96.1%
93.9%
96.2%
100.0%
93.1%
91.8%
90.9%
93.9%
91.0%
84.9%
90.8%
3.1
Protected
5.4
5.8
Protected
1.3
Protected
-0.5%
4.2%
-0.3%
-0.2%
-0.7%
3.5%
-1.0%
47
7,215
6.6%
2
308
237
1,771
245,216
5.3%
9
1,201
10,520
62
3,739
3.4%
1
50
0
3,216
174,112
3.7%
7
395
3,183
40
1,074
1.0%
1
25
19
1,333
34,890
0.7%
5
110
1,119
120
13,820
12.6%
0
0
360
4,548
558,886
12.0%
6
687
2,598
Median Monthly Revenue per Occupied Unit2,4
Average Monthly Revenue per Occupied Unit2,4
Affordability Index - Ratio of Price to Income
Adjusted Affordability Index - Affordability Index Including Home Value
Property
Median Age of Property in Years
Percent of Properties Reporting Need to Upgrade
Median Number of Units/Beds per Property
Percent of Properties For-Profit
Percent of Properties That Are Part of Chain
$2,194
$2,106
0.9
0.7
$2,261
$2,377
0.9
0.7
$3,419
$3,522
1.4
1.2
$3,290
$3,389
1.3
1.0
$4,566
$5,278
1.9
1.5
$4,800
$5,068
1.9
1.4
$3,625
$4,071
1.5
1.2
$5,630
$6,533
2.3
1.7
11
41.9%
139
76.6%
83.0%
18
35.4%
110
62.0%
66.8%
10
44.8%
59
85.5%
80.6%
12
36.8%
52
71.7%
62.0%
8
33.3%
24
95.0%
90.0%
8
33.5%
22
82.6%
75.5%
24
48.5%
116
80.0%
77.5%
32
46.7%
114
72.3%
61.7%
1. A property is counted once for each type of service it provides. Therefore, the sum of properties across types is greater than the total of properties on page 5.
2. Data are reported by unit for Independent Living, Assisted Living, and Dementia Care. Nursing Care data are reported by beds.
3. The supply of a type of unit (bed or apartment) relative to the number of 75+ households.
4. Revenue per Occupied Unit calculations use double the semi-private bed rates.
San Antonio Market Snapshot
NIC MAP · 2nd Quarter, 2007
San Antonio, TX MSA
Key Metrics of San Antonio
Type of Service
Independent
Demand
Median Occupancy of Stabilized Properties
Average Occupancy of Stabilized Properties
Net Monthly Move-In Rate of Non-Stabilized Properties Open < 24 Mos.
Percent Increase or Decrease in Units Occupied since Last Quarter
Supply
Total Number of Properties by Type of Service Provided1
Total Units in Inventory2
Penetration Rate3 of Total Units per 75+ Households
Total Number of New Properties Opened this Quarter1
Completions (Number of Units in New Properties Opened)
Number of Units Under Construction
Revenue
Median Monthly Revenue per Occupied Unit2,4
Average Monthly Revenue per Occupied Unit2,4
Affordability Index - Ratio of Price to Income
Adjusted Affordability Index - Affordability Index Including Home Value
Property
Median Age of Property in Years
Percent of Properties Reporting Need to Upgrade
Median Number of Units/Beds per Property
Percent of Properties For-Profit
Percent of Properties That Are Part of Chain
MSA
96.1%
95.7%
No Data
-0.6%
Assisted Living
Dementia Care
MSA
31 MSAs
31 MSAs
95.5%
96.1%
96.1%
93.1%
91.7%
90.9%
5.8
3.1
Protected
-0.2%
-0.5%
-3.1%
MSA
95.0%
91.6%
No Data
-1.5%
Nursing Care
31 MSAs
MSA
31 MSAs
96.2%
93.9%
89.6%
91.0%
87.4%
90.8%
Protected
1.3
5.4
-0.7%
3.3%
-0.3%
23
3,713
6.2%
0
0
65
1,771
245,216
5.3%
9
1,201
10,520
38
2,001
3.3%
0
0
50
3,216
174,112
3.7%
7
395
3,183
19
597
1.0%
0
0
0
1,333
34,890
0.7%
5
110
1,119
81
8,891
14.8%
1
146
0
4,548
558,886
12.0%
6
687
2,598
$2,137
$2,268
0.8
0.7
$2,261
$2,377
0.9
0.7
$2,627
$2,635
1.0
0.9
$3,290
$3,389
1.3
1.0
$4,698
$5,013
1.8
1.5
$4,800
$5,068
1.9
1.4
$3,501
$3,991
1.4
1.1
$5,630
$6,533
2.3
1.7
20
40.9%
120
52.2%
73.9%
18
35.4%
110
62.0%
66.8%
10
35.3%
50
76.3%
71.1%
12
36.8%
52
71.7%
62.0%
9
38.9%
21
73.7%
84.2%
8
33.5%
22
82.6%
75.5%
35
40.6%
119
79.0%
55.6%
32
46.7%
114
72.3%
61.7%
1. A property is counted once for each type of service it provides. Therefore, the sum of properties across types is greater than the total of properties on page 5.
2. Data are reported by unit for Independent Living, Assisted Living, and Dementia Care. Nursing Care data are reported by beds.
3. The supply of a type of unit (bed or apartment) relative to the number of 75+ households.
4. Revenue per Occupied Unit calculations use double the semi-private bed rates.
Dallas/Fort Worth New Construction
NIC MAP · 2nd Quarter, 2007
Dallas-Ft Worth-Arlington, TX MSA
Properties with Units Under Construction (as of 5/31/07)
Property Name
Highland Springs V.3
Legacy at Willow Bend, The
Plaza At Edgemere Health Care ( The )
Trinity Terrace Retirement Care
Arbor House at Lewisville
Autumn Creek of Fossil Creek
Prairie Estates
Duncanville Healthcare & Rehab Center
Millbrook Healthcare & Rehab Center
Green Valley Healthcare & Rehab Center
Address
17901 Coit Rd
NW Spring Creek Pkway
8502 Edgemere
1600 Texas St.
Oakbend Dr & Rockbrook Dr
4501 Silver Sage Dr.
1350 Main St
419 S Cockrell Hill Rd
1850 W Pleasant Run Rd
6850 Rufe Snow Dr
City
Dallas
Plano
Dallas
Forth Worth
Lewisville
Fort Worth
Frisco
Duncanville
Lancaster
Fort Worth
ST
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
Zip Code
75252
75024
75225
76102
75067
76137
75034
75116
75146
76148
County
Collin
Collin
Dallas
Tarrant
Denton
Tarrant
Collin
Dallas
Dallas
Tarrant
Property Type
CCRC
CCRC
CCRC
CCRC
Dementia Care
Dementia Care
Nursing Care
Nursing Care
Nursing Care
Nursing Care
Property Construction Details by Type of Service
Property Name
Total Units by Type of Service
Highland Springs V.3
Legacy at Willow Bend, The
Plaza At Edgemere Health Care ( The )
Trinity Terrace Retirement Care
Arbor House at Lewisville
Autumn Creek of Fossil Creek
Prairie Estates
Duncanville Healthcare & Rehab Center
Millbrook Healthcare & Rehab Center
Green Valley Healthcare & Rehab Center
Property Type
CCRC
CCRC
CCRC
CCRC
Dementia Care
Dementia Care
Nursing Care
Nursing Care
Nursing Care
Nursing Care
Independent Living
Units
Open Date
358
115
May-08
115
Mar-08
48
Sep-07
80
Jul-08
Assisted Living
Units Open Date
40
40
Mar-08
Dementia Care
Open Date
Units
112
18
Mar-08
52
42
Sep-07
Sep-07
Nursing Care
Open Date
Units
614
60
Mar-08
180
125
125
124
Sep-07
Dec-07
Oct-07
Aug-07
Total
1124
115
233
48
80
52
42
180
125
125
124
Houston New Construction
NIC MAP · 2nd Quarter, 2007
Houston-Baytown-Sugar Land, TX
Properties with Units Under Construction (as of 5/31/07)
Property Name
The Hampton at Willowbrook
The Conservatory at Alden Bridge
Tuscany Village
Grace Care Center of Katy
Grace Health Care & Rehab Center
Address
7450 Willowchase Blvd.
6203 Alden Bridge Dr
no address yet
23553 W Fernhurst Dr
9602 Huffmeister Rd
City
Houston
The Woodlands
Pearland
Katy
Houston
ST
TX
TX
TX
TX
TX
Zip Code
77070
77381
77584
77494
77095
Property Type
Combined
Independent Living
Nursing Care
Nursing Care
Nursing Care
County
Harris
Montgomery
Brazoria
Fort Bend
Harris
Property Construction Details by Type of Service
Property Name
Total Units by Type of Service
The Hampton at Willowbrook
The Conservatory at Alden Bridge
Tuscany Village
Grace Care Center of Katy
Grace Health Care & Rehab Center
Property Type
Combined
Independent Livin
Nursing Care
Nursing Care
Nursing Care
Independent Living
Units
Open Date
237
237
Assisted Living
Units Open Date
0
Dementia Care
Units
Open Date
19
19
Nov-07
Nursing Care
Units
Open Date
360
Nov-07
120
120
120
Dec-07
Feb-08
Aug-08
Total
616
19
237
120
120
120
San Antonio New Construction
NIC MAP · 2nd Quarter, 2007
San Antonio, TX MSA
Properties with Units Under Construction (as of 5/31/07)
Property Name
Silver Oak of New Braunfels
Incarnate Word Retirement Community
Address
1738 E Commons St
4707 Broadway Street
City
New Braunfels
San Antonio
ST Zip Code County
Comal
TX 78130
Bexar
TX 78209
Property Type
Assisted Living
CCRC
Property Construction Details by Type of Service
Property Name
Property Type
Total Units by Type of Service
Silver Oak of New Braunfels
Assisted Living
Incarnate Word Retirement Community
CCRC
Independent Living
Units
Open Date
65
65
Dec-07
Assisted Living
Units Open Date
50
Jan-08
50
Dementia Care
Open Date
Units
0
Nursing Care
Open Date
Units
0
Total
115
50
65
Texas Development Trends
• In Major Cities, lots of large campus style
developments
• Dallas – The Legacy & Highland Springs
• Fort Worth – Watermere & Stayton at Museum
Way
• Houston – The Buckingham & Village at
Gleannloch Farms
• Austin – Longhorn Village & Querencia at Barton
Creek
• Seeing lots of new “replacement” nursing homes
being built
• In second tier markets – lots of smaller free standing
IL and AL development.
Other Important Considerations
• Seniors Housing market somewhat dependent on
housing, and slowing housing market likely to have
an impact – primarily on independent living.
• Texas still experiencing strong in-migration of
seniors
• Operator’s reporting strong growth in private pay
rates
• Nursing reimbursement rates up
• Texas Medicaid nursing rates up 3.0% on October
1, 2007
• Medicare nursing rates up 3.3% October 1, 2007
Cap. Rate Trends
Cap. Rates
15.50%
14.50%
13.50%
Median Cap
Rate
12.50%
11.50%
Skilled Nursing
Assisted Living
10.50%
Independent Living
Class A Apartments
9.50%
8.50%
7.50%
6.50%
5.50%
1Q
2Q 3Q
4Q
1Q 2Q
3Q 4Q
1Q 2Q
3Q 4Q
1Q
2Q 3Q
4Q 1Q
2Q
2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007
Quarter
Spread Between IL & Apts
3.00%
2.50%
Spread
2.00%
1.50%
1.00%
0.50%
0.00%
1Q
2003
2Q
2003
3Q
2003
4Q
2003
1Q
2004
2Q
2004
3Q
2004
4Q
2004
1Q
2005
2Q
2005
Quarter
3Q
2005
4Q
2005
1Q
2006
2Q
2006
3Q
2006
4Q
2006
1Q
2007
2Q
2007
Spread Between AL & Apts
4.50%
4.00%
3.50%
Spread
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
1Q
2003
2Q
2003
3Q
2003
4Q
2003
1Q
2004
2Q
2004
3Q
2004
4Q
2004
1Q
2005
2Q
2005
Quarter
3Q
2005
4Q
2005
1Q
2006
2Q
2006
3Q
2006
4Q
2006
1Q
2007
2Q
2007
Spread Between SNF & Apts
8.00%
7.00%
6.00%
Spread
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
1Q
2003
2Q
2003
3Q
2003
4Q
2003
1Q
2004
2Q
2004
3Q
2004
4Q
2004
1Q
2005
2Q
2005
Quarter
3Q
2005
4Q
2005
1Q
2006
2Q
2006
3Q
2006
4Q
2006
1Q
2007
2Q
2007
Spread Between IL & AL
1.80%
1.60%
1.40%
Spread
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
1Q
2003
2Q
2003
3Q
2003
4Q
2003
1Q
2004
2Q
2004
3Q
2004
4Q
2004
1Q
2005
2Q
2005
Quarter
3Q
2005
4Q
2005
1Q
2006
2Q
2006
3Q
2006
4Q
2006
1Q
2007
2Q
2007
Observations
• Seniors housing capitalization rates,
excepting the nursing sector, have trended
down with other real estate types
• Nursing home capitalization rates have not
trended down like the other sectors.
• The spread between independent living and
assisted living has compressed
A Few Recent Sales
Texas Town Villages
• Four IL communities, 3 in
DFW, 1 in Kansas
• 896 IL units, no AL
• Average year built: 2001
• Seller was original
developer (Cypress
Senior Living).
• Buyer is a JV between
CNL and ARC
• Sold 03/06
• Sales Price: $146,286,500
or $163,266 per unit
• Capitalization rate on first
year budgeted NOI: 6.69%
Veranda Preston Hollow
• Mixed AL/SNF Community
in Dallas
• 41 AL Beds, 131 Nursing
• Average year built: 2001
• Seller was original
developer
• Buyer is Dallas Home for
Jewish Aged
• Sold 07/31/07
• Sales Price: $19,000,000
or $110,465 per bed
• Capitalization rate on first
year budgeted NOI:
11.08%
5 Nursing Homes
•
•
•
•
Portfolio of 5 Texas SNFs
644 Total beds
Average year built: 2004
Seller was original
developer - partnership
of Stonegate and Javelin
• Buyer was Formation
Capital
• Sold May of 2006
• Sales Price: $75 Million
$117 K per bed
About Integra Realty Resources
Office Locations
Seniors Housing & Health Specialty Practice
• IRR Specialty Practice Groups are focused
upon specific industry sectors
• IRR’s Seniors Housing and Health Care
Specialty Practice includes 30 analysts in 14
offices
• “Core office” is Dallas with 14 team members
• 10 MAI designated appraisers nationally
• Certifications maintained in nearly every
state
• Completed in excess of 1,500 assignments
2002-2005
Specialty Practice Services
• Appraisals, ranging from single assets to multi-property
portfolios. Approved to prepare appraisals for FNMA,
Freddie Mac, HUD; and various banks, pension funds,
conduits and other lenders
• Market rent studies
• Purchase due diligence
• Expert witness
• Market and property assessments
• Ad valorem tax protests
• Market and feasibility studies
• Counseling services
Contact Data
Charles Bissell, MAI, CRE
National Practice Leader
Integra Realty Resources Seniors Housing
& Health Care Specialty Practice
12750 Merit Drive
Suite 801
Dallas, TX. 75251
Phone: 972 960 1222 ext. 102
Fax: 972 960 2922
Cell: 972 567 5380
www.irrshhc.com
[email protected]