Senior housing investment returns have historically outperformed those of other property types—but it’s possible that won’t last forever.
That’s because the total annual investment return for seniors housing has been slowly trending down since mid-2014, when it hit 20.37%, according to data analyzed by the National Investment Center for Seniors Housing & Care (NIC).
Still, senior housing investment returns do continue to outperform the National Council of Real Estate Investment Fiduciaries (NCREIF) Property Index (NPI), NIC notes. The annual total seniors housing return through the first quarter of 2017, for instance, was 12.05%, which was higher than the NCREIF Property Index (NPI) outcome of 7.27%.
The NPI is a property-level index that tracks investment return performance for commercial real estate.
First-quarter 2017 investment return data for the NCREIF-reported seniors housing properties totaled 3.62%, made up of a 1.37% income return and a 2.25% capital return, NIC adds. Additionally, total returns for seniors housing on a 10-year basis surpassed the NPI by more than 400 basis points.
These performance measurements reflect the returns of 86 stabilized senior housing assets, valued at $4.1 billion in the first quarter of this year—which was the first quarter that the total value of the NCREIF universe of senior housing surpassed $4 billion, NIC says.
Written by Mary Kate Nelson