Jan 11 - Recently published seniors housing data supports Fitch Ratings'
Stable Outlook for the U.S. healthcare REIT space. On Thursday Jan. 11, NIC MAP
-- a provider of data and analytics on the seniors housing and nursing care
industry -- published 4Q12 senior housing data that highlighted a steady
improvement in fundamentals, which we believe should lead to continued solid
property level cash flow growth in the sector in 2013.
NIC MAP reported that senior housing occupancy rose 100 basis points to 89.1% in
4Q12 from 4Q11 and annual rent growth was 2.2%. Notably, occupancy is up 210
basis points from the cyclical low in 1Q10. We expect fundamentals to remain
positive due to favorable demographics and muted new supply. According to NIC
MAP, there were only 10,500 new units under construction in 4Q12 compared to
over 22,000 during the recent peak 1Q08.
The NIC MAP data lends credence to the significant acquisition volume in the
senior housing sector, exemplified by the recently closed acquisition of Sunrise
Senior Living by Health Care REIT, Inc.
Separately, occupancy for skilled nursing facilities (SNF) declined by just 10
basis points to 88.1% in 4Q12 from 4Q'11 while rents grew 2.9%. We view the
modest decline in occupancy, combined with solid rent growth, as positive, given
the 11.1% payment reductions to SNFs in fiscal 2012 that was mandated by the
Centers for Medicare and Medicaid Services. However, the payment cuts combined
with higher rents have led to moderately declining rent coverage levels, which
is consistent with our previous outlook.
For more information on this topic, please see our recent report "2013 Outlook:
Additional information is available on www.fitchratings.com.
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expressed are those of Fitch Ratings.