First Quarter 2024 Senior Housing Returns; NPI Now Includes Seniors Housing as Standalone Sector 

by Caroline Clapp  / June 25, 2024

Research  • Blog

NCREIF publishes the most widely used private real estate investment benchmark in the U.S., the “NPI” (NCREIF Property Index), which tracks investment returns of more than 12,000 properties that are held by institutional investors. Seniors Housing is now included as a standalone sector in the NPI, a long awaited and highly important recognition for the sector that NIC has been striving toward.  

For more than two decades, NIC has participated in NCREIF membership and has appreciated the opportunity to bring NIC’s senior housing expertise to the organization, highlighting the property type’s unique investment characteristics.  

In the first quarter of 2024, NCREIF published its new Expanded NPI, which grew the index from real estate’s traditional “4 Food Groups” (Office, Retail, Industrial, Apartment) to include Seniors Housing. This sector is comprised of four subsectors: Independent Living, Assisted Living, Continuing Care, and Skilled Nursing.  

This expanded index – which now breaks out Seniors Housing from an “Other” subsector outside of the Index into its own standalone sector included in the Index – is important because private equity institutional investors are evaluated based upon their portfolio holdings versus their designated benchmark. As a result, a zero allocation to any category within the benchmark, e.g., Seniors Housing, requires an explanation to clients. Overall, including Seniors Housing in the flagship NCREIF index raises its visibility with investors and makes it more difficult to exclude from investment portfolios, which in turn should help drive capital into senior housing and care.  

When preparing to launch the Expanded NPI, NCREIF inquired whether senior housing should be included in the Residential sector. NIC highlighted the following distinctions for senior housing: 

  • Demand factors differ from traditional Residential and result in lower resident turnover, driving market fundamentals and investment returns that are uncorrelated (or at least less correlated) to traditional Residential.  
  • Higher level of operations than traditional Residential ranging from Lifestyle Coordinators at Active Adult communities; to dining, laundry, and transportation at independent living properties; to health care, ADL, and memory care services at assisted living and memory care communities. 
  • Due to larger operations and dual mandate of housing and care at higher acuity communities, senior housing operates under different regulations. 

Learn more about senior housing investment returns in the most recent quarter and longer term here