Seniors Housing Market Overview NCREIF Fall Conference 2013 Eden Roc, Miami Beach, FL November 14, 2013 www.nic.org www.nicmap.org
This document was presented during the 2013 NCREIF Fall Conference. Seniors Housing Market Overview Market Composition & Size Market Fundamentals Capital Market Trends 2
Market Composition & Size
Seniors Housing & Care Continuum
Seniors Housing & Care Property Market Estimated National Counts As of 4Q12 Source: NIC Research & Analytics, NIC MAP Data & Analysis Service
Market Values by Property Type Implied Market Values ($B) As of 4Q12 1,400 1,200 1,000 800 600 400 200 0 Majority NC Majority AL Majority IL Seniors Housing and Care Hotels Apartments Source: NIC Research & Analytics, NIC MAP Data & Analysis Service
Seniors Housing Units by Campus & Profit Status Inventory (ths. Units) by Campus and Profit Status; MAP31 2007 2013Q3 180 160 140 120 100 80 60 40 20 0 Non-Profit For-Profit Non-Profit For-Profit Non-Profit For-Profit Non-Profit For-Profit CCRCs Independent Living Assisted Living Memory Care 7
Market Fundamentals
Occupancy Rises in Primary and Secondary Markets Seniors Housing Occupancy 4Q05 3Q13 93% 92% 91% 90% 89% MAP32-100 MAP100 MAP31 88% 87% 86% 2006 2007 2008 2009 2010 2011 2012 2013 9
Breadth of the Recovery by Primary Market Seniors Housing Occupancy by Metro Market As of 3Q13 100% Pre-recession Peak to Trough Range Current Quarter Occupancy 95% 90% 85% 80% 75% SJ PIT NY MIN POR BAL BOS DEN SF CLE DC ORL SAC KC DET SEA STL SA PHI MAP31 LA SD CIN TAM ATL RIV MIA HOU CHI DAL LV PHO 10
Most Properties Raising Asking Rents Modestly Seniors Housing Annual Rent Growth Distribution; MAP31 4Q06 3Q13 100% 90% 80% Rent Growth 3% or Greater 70% 60% 50% 40% Rent Growth Between 0% - 3% 30% 20% 10% Negative Rent Growth 0% 2007 2008 2009 2010 2011 2012 2013 11
Diverging Rent Growth Between Property Types Annual Rent Growth by Property Type; MAP31 4Q06 3Q13 5% 4% 3% 2% Majority AL 1% Majority IL 0% 2007 2008 2009 2010 2011 2012 2013 12
Occupancy Rises in Both Property Types Occupancy by Property Type; MAP31 4Q05 3Q13 93% 92% 91% 90% 89% Majority IL Majority AL 88% 87% 86% 2006 2007 2008 2009 2010 2011 2012 2013 13
Rolling 4-Quarter Absorption Majority Independent Living; MAP31 Majority Assisted Living; MAP31 5% 4% 3% 2% 1% 0% -1% 5% 4% 3% 2% 1% 0% 2007 2008 2009 2010 2011 2012 2013-1% 14
Rolling 4-Quarter Absorption vs. Construction Starts Rolling 4-Q Construction Starts vs. Inventory Majority Independent Living; MAP31 Majority Assisted Living; MAP31 Absorption 5% 4% 3% 2% 1% 0% -1% 5% 4% 3% 2% 1% 0% 2007 2008 2009 2010 2011 2012 2013-1% 15
Balanced Supply-Demand in the Near-term Seniors Housing Supply-Demand Forecast; MAP31 1Q06 3Q14 F Units 6,000 5,000 4,000 Inventory Growth (L) Absorption (L) Occupancy (R) Forecast 93% 92% 91% 3,000 90% 2,000 89% 1,000 88% 0 87% -1,000 86% -2,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 85% 16
CCRCs Not Yet Participating in Market Recovery Vacant Units by Campus Type; MAP31 4Q05 3Q13 30,000 25,000 CCRCs 20,000 15,000 Assisted Living* Independent Living* 10,000 5,000 0 2006 2007 2008 2009 2010 2011 2012 2013 * Combined and freestanding properties. Excludes CCRCs. Freestanding Memory Care 17
Construction Activity Continues to Rise Units Under Construction by Campus Type; MAP31 4Q05 3Q13 12,000 10,000 8,000 Assisted Living* 6,000 4,000 Independent Living* 2,000 0 2006 2007 2008 2009 2010 2011 2012 2013 * Combined and freestanding properties. Excludes CCRCs. CCRCs Freestanding Memory Care 18
80% of Unit Construction is in New Properties Units Under Construction By Campus Type; MAP31 As of 3Q13 Expansions New Properties Assisted Living Independent Living CCRCs Freestanding Memory Care 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 19
3Q13 Construction Rankings: Top 10 Metro Markets CCRCs Independent Living* Assisted Living* Freestanding Memory Care MIN DAL MIN DEN CHI SF HOU HOU DET BAL PHO CLE SJ HOU BOS CHI KC LA NY DAL PIT SA PHI MIN DEN NY DEN SA PHI KC ATL SEA BOS DEN DAL TAM CLE MIA SEA RIV 0 500 1,000 0 500 1,000 Units Under Construction 0 500 1,000 0 500 1,000 * Combined and freestanding properties. Excludes CCRCs. 20
Capital Market Trends
Institutional Interest in Seniors Housing is High Relative Attractiveness of Property Types for New Investments 2010 2013 (Ratings: 1 = least attractive, 5 = most attractive) + Seniors Housing Medical Office Industrial / R&D 2013 2012 2011 2010 Multifamily Retail Office Infrastructure Hotel 1 2 3 4 5 Source: 2013 Plan Sponsor Survey; Kingsley Associates; Institutional Real Estate, Inc. 22
Rolling 4-Quarter Transactions Volume of $14.2B U.S. Seniors Housing & Care Transactions Volume (in Billions) 1Q08 3Q13 $30 Rolling 4-Quarter Quarterly $25 $20 $15 $10 $5 $0 2008 2009 2010 2011 2012 2013 * Volume for 3Q13 is preliminary. Closed transactions only. 23
Increased Activity from Institutional Buyers U.S. Seniors Housing & Care Transactions by Buyer (in Billions) 1Q08 3Q13 $12 $10 $8 User/Other Public Private Institutional $6 $4 $2 $0 2008 2009 2010 2011 2012 2013 * Volume for 3Q13 is preliminary. Closed transactions only. 24
Premium is Paid for Portfolios U.S. Seniors Housing & Care Rolling 4-Quarter Price Per Unit ($Ths) 1Q08 3Q13* $250 $200 $150 Portfolio Non-Portfolio $100 $50 $0 2008 2009 2010 2011 2012 2013 * Pricing for 3Q13 is preliminary. Closed transactions only. 25
Pricing Relatively Unchanged from Prior Quarter U.S. Seniors Housing & Care Rolling 4-Quarter Price Per Unit ($Ths) By Property Type 1Q08 3Q13* $180 $160 $140 $120 Seniors Housing $100 $80 $60 Nursing Care $40 $20 $0 2008 2009 2010 2011 2012 2013 * Pricing for 3Q13 is preliminary. Closed transactions only. 26
Cap Rates Holding Steady U.S. Seniors Housing & Care Rolling 4-Quarter Cap Rate/Yield By Property Type 1Q08 3Q13* 14% 12% Nursing Care 10% 8% Seniors Housing 6% 4% 2% 10-Year Yield 0% 2008 2009 2010 2011 2012 2013 * Pricing for 3Q13 is preliminary. Closed transactions only. 27
National Investment Center for the Seniors Housing & Care Industry NIC MAP Data & Analysis Service 410.267.0504 www.nic.org www.nicmap.org 28