The senior housing sector posted a 0.71% total investment return in the fourth quarter, marking the second consecutive quarter of positive returns since the COVID-19 pandemic pushed returns into negative territory. That’s according to the latest quarterly highlight report from the National Council of Real Estate Investment Fiduciaries. In the second quarter of 2020, total returns were –1%, which marked the first negative total return since 2012 and, prior to that, 2009.
National Investment Center for Seniors Housing & Care Chief Economist Beth Mace discussed the data Monday in a blog post.
The income return also remained positive in the fourth quarter, but at 0.91%, it was the smallest increase on record as far back as 2003, according to NCREIF. The sector’s appreciation (capital / valuation) return also fell 0.20%, the fifth consecutive quarterly decline. This contrasts with the NCREIF Property Index and apartments, where the valuation return turned positive in the fourth quarter.
“Many investors have reduced their appreciation expectations for seniors housing as the impact of the coronavirus has weighed heavily on their view of the sector,” Mace said. “The valuation return is the change in value net of any capital expenditures incurred during the quarter.”
NCREIF reported that the sector’s one-year valuation return emerged as -2.89%, slightly worse than the NPI (–2.52%), apartments (–2.02%) or office (–2.73%) types. The sector still fared much better than retail (–11.17%) and hotel (–24.10%). Meanwhile, the industrial sector enjoyed a 7.04% appreciation return on a one-year basis.