Financial & Investment Overview

Seniors housing has increasingly been drawing the attention of investors for many reasons.  Among them are the sector’s strong investment performance returns.  A measure of this performance return is evident by investment managers who own or manage seniors housing properties in a fiduciary setting.  This return performance is tracked and captured by data submissions from these investment managers to the National Council of Real Estate Investment Fiduciaries (NCREIF).

First-quarter 2018 investment return data for the NCREIF-reported seniors housing properties equaled 2.14%, composed of a 0.79% capital return and a 1.36% income return. The annual total return through the first quarter of 2018 was 12.79%, overshadowing the NCREIF Property Index (NPI) result of 7.12% and the apartment result of 6.38%. Despite the relatively strong showing, the total annual return for seniors housing has been trending down since mid-2014 when it peaked at 20.37%.   This pattern can also be seen in the broader index.

Looking more closely at the components of total returns, appreciation returns for seniors housing exceeded all major property types on a 10-year basis.  Hotel and office both experienced negative capital returns over this period, while seniors housing had a 3.73% capital return.   More recently, the capital return was 6.94% on a one-year basis, dwarfing all other property types except for industrial, which has benefited from e-commerce which has increased demand for last-mile warehouse space.

With the exception of the hotel sector, seniors housing income returns have also exceeded the NPI as well as the other main property types on both a one-year and a ten-year basis.

These performance measurements reflect the returns of 104 seniors housing properties, valued at $5.3 billion in the first quarter.  This is the first quarter that the market value of the NCREIF universe of seniors housing has exceeded $5 billion.

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