Scotiabank: Senior Housing Occupancy Will Not Begin Recovery Until Mid-2021

Senior housing occupancy will not begin to rebound until at least mid-2021 as seniors continue to postpone move-ins until Covid-19 is under control.

That is one of the main findings of a new survey on senior housing sentiment released by Scotiabank (NYSE: BNS). The results of the survey caused the financial services firm to take a more bearish outlook on the industry; Scotiabank now is not expecting to see senior housing occupancy for real estate investment trusts return to pre-pandemic levels until 2023.

In tandem with experience data services company Qualtrics, Scotiabank conducted an online survey from late October to early November of U.S. citizens in major senior housing markets, with incomes ranging between $75,000 and $125,000 annually, considering moving a parent, grandparent or themselves into a senior housing facility. The survey received 264 responses.


Despite the limited number of responses, Scotiabank believes that this is indicative of larger obstacles toward rebuilding occupancy and bringing move-in rates back to pre-pandemic levels.

“We model some pent-up demand benefit in mid/late 2021 from people that delayed move-ins this year; we estimate 50% of these delayed move-ins will return during the 18-month period starting July 2021,” Analyst Nick Yulico and Associate Joshua Burr wrote.

The survey revealed that 55% of respondents said Covid-19 affected their decisions to move into a senior housing facility later than previously planned.


For those putting off a move, 94% indicated they are waiting at least three months to make a move; 71% are holding off a move for at least six months; and 36% wanted to wait at least 12 months. Reasons for delaying the move included the availability and deployment of vaccines, concerns about rising Covid-19 cases, and assurances that facilities will be safer.

Moreover, 70% of respondents believe they are more likely to contract Covid-19 in a senior housing facility versus living at home. And, respondents indicated that they are significantly more concerned about contracting the seasonal flu in a senior living facility than they were prior to the pandemic.

“On a scale from 0-10 related to concern of contracting influenza in a seniors housing facility, 68% of respondents ranked concerns in the 8-10 bucket (vs. 36% prior to Covid-19),” the note on the survey results stated

And 78% indicated they were willing to reconsider delaying a move if there was a permanent monthly rent discount, with the average answer being around a 30% discount as enough to make a difference.

If occupancy is slow to rebound, health care REITs with significant exposure to senior housing will continue to feel pressure, the report noted. Welltower (NYSE: WELL) reported a 150 basis point occupancy decline in its senior housing operating portfolio (SHOP) in the third quarter of 2020. Ventas’ (NYSE: VTR) SHOP occupancy ended the quarter at 79.6%, although move-ins outpaced move-outs in October.

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