We are now halfway through 2022, and 15 months into the post-pandemic recovery. But with interest rates and inflation rising, there could be new headwinds to a full recovery. Speaking of full recovery, most of the talk has been about getting back to pre-pandemic levels of occupancy, NOI and NOI margin. That is certainly a first step. But there is a big difference between pre-pandemic levels, and say, those levels in 2016 or 2017 which, at a minimum, should really be the target. For example, Welltower’s SHOP portfolio of 51,000 seniors housing units had a 91.0% occupancy rate and margin of 32.8% in the first quarter of 2016. By the fourth quarter of 2019, with 70,000 units, they had fallen to 86.1% and 29.8%, respectively. That compares with 76.3% and 20.1%, respectively, in the first quarter this year. Ventas had similar numbers, as did Brookdale Senior Living.
These three currently combine for about 200,000 seniors housing units, so are pretty representative of the market. So, we have to decide where the bar is going to be set, and what the target is. Is it going to be the 2019 performance, which has seen a steady drop since 2016? Or the numbers put up in the 2016 era before the overdevelopment had its real impact? In order to understand and try to predict what will happen in the next 10 years, you really have to understand what happened in the previous 10 years, and why. We are going to start to put these analytics up on our LevinPro platform, with a lot more rich content to come, such as what happened to operating expenses per unit over the past six years or so.
