Senior housing situation strengthens in 2012 despite smaller transactions

The senior housing market has improved.

Multiple reports from the National Investment Center for the Seniors Housing and Care Industry showed that commercial property managers who have specialized business in the senior market may have witnessed an improvement in sales, despite transactions totaling far less than in 2011.

During the second quarter, the occupancy rate for senior housing rose 0.3 percentage points compared to the previous three months, the report said, according to National Real Estate Investor. This helped improve total year-over-year growth by 0.9 percentage points to a total of 88.6 percent.

In addition, the average occupancy rate for properties focused on independent living rose to 1.5 percentage points above its low point in this cycle, the report said. The occupancy rate for assisted living setups was also 1.5 percent improved when compared to the cyclical low.

"Occupancy is now at a four-year high and the supply-demand fundamentals suggest that the recovery will continue in the near term," Michael Hargrave, vice president of NIC MAP, told the news source.

Senior housing experienced an annual rent growth improvement of 0.4 percentage points during the second quarter when compared to the same point in  2011, the report explained. This brought the figure to 1.9 percent, which helped annual rent rise to the highest point since the end of 2009.

Annual absorption improved to 2.3 percent in the second quarter, which was a significant improvement from the same point last year, which only had growth of 1.7 percent, the report said. Inventory had a growth rate of 1.3 percent, an improvement of 20 basis points. Existing inventory did not change quarter-over-quarter, as it held at 2.1 percent.

However, the financial total of transactions during the first half of 2012 pales in comparison to the same period in 2011, NIC explained. Nearly $16 billion in deals were closed during the first two quarters last year, but the first part of 2012 experienced only slightly more than $2 billion.

"I don't think we'll be within shooting distance from the 2011 numbers, but that was an exceptional moment," Bob Kramer, NIC president, told the news source. "Full year 2011 investment sales totaled $27.4 billion. If we achieve 50 percent of that it would be a very, very active year."

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