Ziegler recently came out with its quarterly analysis of the CCRC market (LPC for the not-for-profit world, but we still prefer to use CCRC), and once again, their performance is rocking. Ziegler uses statistics provided by NIC MAP. CCRC occupancy far exceeds assisted living and independent living communities on average, and not-for-profit CCRCs are performing better than for-profits.
In the fourth quarter of 2022, occupancy at NFP CCRCs averaged 88.2%, while for profits were 84.3%. Not bad, right? CCRCs in general performed better during the pandemic than other senior living property types partly because their residents tend to be healthier. This makes sense.
Two months ago, I toured a beautiful community in Scottsdale, Arizona, owned and operated by Senior Resource Group, that was 12 years old and was just beginning an expansion to double its size to about 400 units. This week, I toured another SRG community, this time in Santa Barbara, California, that was originally built in 2003 and 2004. It has 363 units, with 92 “super-independent” living units (my term), 154 traditional IL units with interior corridors, 97 assisted living units and 20 memory care units. It was huge.
Pre-pandemic, its occupancy was at 95%, but slid to just below 80% 12 months later, bottoming in March 2021, like most communities nationwide. It was the assisted living component that lost most of the occupancy percentage drop, but not because of deaths. And across the senior living sector nationally, assisted living seemed to suffer the most.
Today, two years after the bottom, this community is back at 95%, and should be at 97% in a month based on scheduled move-ins. That will be a more than 1,700 basis point increase in just two years. According to the ED, demand has never been higher. Now, she did say this was not a true CCRC because it did not have a nursing unit, but those are declining in numbers in many CCRCs today anyway.
Santa Barbara is a competitive market, with one NFP CCRC (with a nursing center) having recently invested in a $50 million expansion/renovation to drive demand. I have wandered around that one as well. So, for SRG to reach these levels again shows the resiliency of this type of community. Having a good local market does not hurt, and good management does not hurt either.
For all the troubles our industry is having, and with some lenders and investors holding back, there are still some very bright spots out there, and we should all focus on why and how they are doing so well, and then go out and execute. Cindy, are you and your Board listening?
