For the seventh year in a row, there was a perfect correlation between the age of seniors housing communities sold and their average net operating income per unit, according to the Seniors Housing Acquisition & Investment Report. This makes sense, given that the newer communities should better reflect the current demand (by unit size, amenities, etc.) and require less capex to maintain their competitiveness. Newer communities also have an easier time attracting good staff and charging higher rents.

Those newest communities (built after 2013) had an average of $19,700 per unit of NOI, relatively consistent with recent levels. The next subset of properties built between five and 10 years ago brought in less cash flow, averaging $16,600 per unit, which is albeit the highest level for that group ever recorded, by far. The oldest properties, which now include nearly all of those constructed during the last building boom of the late-1990s and early-2000s, had an average of $10,100 per unit of NOI, close to the averages of the previous four years.

Anecdotally, we have heard some investors refer to these properties, which make up a significant portion of the industry’s inventory, as “old.” With as many renovations necessary to make those communities competitive these days, that yet again brings up the question of whether it is now cheaper to build or buy seniors housing properties. Either that, or the industry will find another use for some of the turn-of-the-century communities, like serving a more middle-market consumer.