Occupancy for life plan communities dipped to 85.7% in the fourth quarter of 2020, representing a new low for the product type, but the rate is still far higher than what the wider industry is seeing.
That’s according to a new analysis from specialty investment bank Ziegler and Lana Peck, senior principal with National Investment Center for Seniors Housing & Care (NIC). The analysis is based on insights from the NIC MAP Data Service, and includes data from more than 1,200 not-for-profit and for-profit entrance fee and rental life plan communities in 140 combined markets.
The analysis shows that life plan communities shed about 90 basis points of average occupancy in the fourth quarter of 2020 compared to the previous quarter. At 85.7%, current occupancy levels represent a 350 basis points drop since before the second quarter of 2020, when life plan community occupancy hovered around 91% for 22 consecutive quarters.
While the Q4 occupancy was a record low for life plan community providers, it’s still well above occupancy rates for the wider senior living industry, which dropped to 80.7% in the fourth quarter of 2020, according to the NIC Map Data Service. Excluding life plan communities, senior living occupancy rates were even lower at 76.6% for the fourth quarter of last year.
Occupancy rates also differed among different types of life plan communities, and by geography.
Entrance-fee communities had an average occupancy of 88% in the fourth quarter of 2020, while rental communities sat at 81.7%. Not-for-profit communities also had higher occupancy rates than their for-profit counterparts at 87.3% and 81.2%, respectively. And life plan communities in the Pacific Northwest had the highest occupancy rates of 87.9%, while communities in the Southwest had the lowest at 80%.
Same-store, year-over-year asking rent growth in the fourth quarter of 2020 was 2.4%, which is below the 4.7% watermark reached in the first quarter of 2019, but above the low of 2.1% seen at the end of 2010 and 2013, and in the beginning of 2014, according to the data.
Year-over-year asking rent growth varied by 30 basis points for life plan communities, but 220 basis points for non-life plan communities.
Life plan communities also saw weaker average inventory growth in the fourth quarter of 2020 than other kinds of senior living communities, according to the analysis. Inventory growth for non-life plan communities’ memory care and independent living segments averaged 4.4% and 3.8%, respectively, in the fourth quarter of 2020. One exception was the nursing care segment, an area where life plan communities saw no inventory growth. For comparison, non-life plan communities saw nursing care inventory decline by 0.3% as a result of units or beds taken offline or converted to another care segment.
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