Average occupancy for life plan communities rose to 85.7% in the fourth quarter of 2021, representing a gain of 1.4 percentage points from pandemic lows seen in the first two quarters of last year.
But despite the rebound in occupancy, life plan communities still have more occupancy to regain before the sector is back to pre-pandemic levels. Average occupancy for life plan communities in 4Q21 lagged 5.9 percentage points behind average occupancy rates for similar communities in the first quarter of 2020.
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 NIC MAP Vision data from 1,180 non-profit and for-profit entrance-fee and rental life plan communities in 140 combined markets.
The report comes on the heels of “bullish” fourth quarter senior housing NIC MAP occupancy data released in December. During 4Q21, average senior housing occupancy rose to 81%.
Average occupancy for all types of entrance-fee life plan communities registered at 88% in the fourth quarter of 2021, while occupancy for all types of rental life plan communities was 81.7%.
The highest year-over-year asking rent growth was in the entrance-fee life plan community assisted living segment, which rose 4.4% in Q421 compared with the same period in 2020. Although conventional wisdom suggests that rent growth would be higher in a community offering primarily rental contracts, entrance-fee life plan communities have higher occupancy, which would help them drive rates. They also typically attract residents who carry a higher net worth, lower age of entry, and longer length of stay.
“Any or all of these factors may help to explain the reasons why average entrance-fee LPC monthly fee levels are higher than rental LPC monthly fees for each care segment,” the report noted.
Among the more than 1,100 life plan communities tracked by NIC MAP Vision, about 52% are primarily entrance-fee models, with the remaining 48% operating on a mostly rental basis.
Broken down by unit type, independent living units in entrance-fee communities had the highest occupancy rate in 4Q21 at 90.5%, followed by entrance-fee memory care units (86.8%) and entrance-fee assisted living units (86.7%).
The largest disparity between entrance-fee communities and rental communities was in the memory care segment, with entrance-fee communities reporting 7.5 percentage points higher occupancy for the segment.
Life plan community occupancy also varied by region, with the Pacific, Mid-Atlantic, and Northeast regions reporting the highest average occupancy rates, ranging from 88.5% to 88.2% in 4Q, according to the report. The lowest average life plan occupancy was seen in the Southwest region, which registered 80.8% during the quarter.
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