Senior Living NOI Predicted to Dip in 2018

Real estate investment trusts (REITs) with senior housing operating (SHOP) portfolios will probably see a decline in their SHOP net operating incomes this year, sector experts believe.

Specifically, SHOP will likely see net operating income (NOI) decline 1% in 2018, according to Newport Beach, California-based real estate research firm Green Street Advisors.

The dip will likely be short-lived, as the firm expects SHOP NOI is to grow 1.1% in 2019, 3.1% in 2020, 3.2% in 2021 and 3.2% in 2022.


Additionally, delivery of new senior housing assets is a “significant concern” for 2018 and 2019, as senior housing construction peaked in 2016 and 2017, according to Green Street.

All the while, the firm gave SHOP a score of 45 on its “Surprise Index,” which indicates that recent news concerning SHOP has been slightly more bad than good.

Still, Green Street is anticipating a risk-adjusted expected return rate of 6.9% for SHOP, as it believes that senior housing property values have room for 21% of extra growth.


Written by Mary Kate Nelson

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