What do the occupancy numbers recently released by Brookdale Senior Living portend for the seniors housing industry? As expected, the company announced a decline in its occupancy, posting an 80 basis point drop from the previous quarter at its legacy Brookdale properties, and a sequential 110 basis point drop at its legacy Emeritus properties. When compared to the first quarter of last year, the decline is even more pronounced, with occupancy at both groups of properties falling 110 basis points and 200 basis points, respectively.
Even when taking into account the expected negative effects of the Emeritus merger at the community level, an especially harsh winter and a relatively ineffective flu vaccine, those numbers may tell another story.
Namely, could the newly constructed units that we keep hearing about already be impacting the market? It is a few quarters earlier than we predicted, but also considering the recent NIC MAP data released, where we saw absorption fall to a six-year low of 0.4% (compared to an average of 2.2% since the first quarter of 2010).
And who else would this new construction affect more than the Emeritus properties, which are typically on the lower end in terms of quality and age, and may be quickly overlooked if a brand new community opens up down the street.
According to NIC MAP, average occupancy for assisted living dropped by 60 basis points from the previous quarter, while independent living saw no change. Given the harsher winter and flu season, a fall in move-ins makes sense, but why just in the more needs-based assisted living, where we have seen most of the new construction…
