WALA Presentation 2009
Upcoming SlideShare
Loading in...5
×

Like this? Share it with your network

Share

WALA Presentation 2009

  • 594 views
Uploaded on

Visual effects of demographics and the housing cycle on the seniors housing and long-term care industry

Visual effects of demographics and the housing cycle on the seniors housing and long-term care industry

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
594
On Slideshare
593
From Embeds
1
Number of Embeds
1

Actions

Shares
Downloads
13
Comments
0
Likes
0

Embeds 1

http://www.slideshare.net 1

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Investment in the Senior Living and Long Term Care Property Sector Exploration of Risk and Return The World Turned Upside Down
  • 2. • Elaine Worzala, Professor and Director, Center for Real Estate Development, Clemson University o • Judy Karofsky, President, Real Estate Insites, LLC, Madison, WI o • Jeffrey A. Davis, Chairman, Cambridge Realty Capital Companies, Chicago, IL o Funded by the Real Estate Research Institute 2007 - 2008 The World Turned Upside Down
  • 3. We are all getting older Increasing demand for assisted living We are living longer Demographics The World Turned Upside Down
  • 4.  100,000 U.S. Population (in thousands) 80,000 60,000 40,000 20,000 0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 65-74 75-84 85+ U.S. Population Over 65 U.S. Census Bureau The World Turned Upside Down
  • 5. 25.0% % of Total U.S. Population 20.0% 15.0% 10.0% 5.0% 0.0% 00 10 20 30 40 50 60 70 80 90 00 10 20 30 40 50 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 65+ 85+ Growth of Population Over 65 The World Turned Upside Down
  • 6. Housing Increasing demand Personalized for supportive services assisted living Health Care Basic Human Needs The World Turned Upside Down
  • 7. Medicare Women in the workforce Increased Divorce demand for rates assisted living Smaller family size Job mobility Legal/Societal Changes The World Turned Upside Down
  • 8. Recruitment Increased demand for assisted living Retention Economic Development The World Turned Upside Down
  • 9. 19% 46% 18% 17% Independent Living Units CCRC's Assisted Living Units Nursing Home Beds Almost 4,000,000 Seniors In professionally managed properties NIC The World Turned Upside Down
  • 10. Medical Office Hospitality Multifamily Hybrid Real Estate Type The World Turned Upside Down
  • 11. Age Facility Type Region Fragmented Industry The World Turned Upside Down
  • 12. Legal/ Variance Location Physical Business Attributes Political Dynamics in Cash Model Issues Flow Variance in Cash Flow = Risk The World Turned Upside Down
  • 13. Proactive management Variance in cash flow Housing Services and alternatives health care Variance in Cash Flow = Risk The World Turned Upside Down
  • 14. Real Estate Considerations The World Turned Upside Down
  • 15. Area Competitive market supply Linkages Location The World Turned Upside Down
  • 16. Need based amenities Lifestyle attractions Physical Attributes The World Turned Upside Down
  • 17. Legal/Political The World Turned Upside Down
  • 18. Decision Medical Residents professionals Adult Caregivers children Dynamics The World Turned Upside Down
  • 19. High-quality, professional staff and management Labor cost containment and mitigation of occupancy risk Business Model The World Turned Upside Down
  • 20. Performance Benchmarks The World Turned Upside Down
  • 21. Data Sources The World Turned Upside Down
  • 22. 93.8% Independent Living 90.7% Assisted Living 94.0% CCRC 92.9% All Communities 2006 Median Occupancy Rates State of Seniors Housing The World Turned Upside Down
  • 23. Independent Living Only 95.0% Independent and Assisted 95.7% Assisted without Alzheimer's 93.3% Assisted with Alzheimer's 94.4% CCRC 90.7% All Communities 94.4% 2007 Median Occupancy Rates State of Seniors Housing The World Turned Upside Down
  • 24. Independent Living Only 93.1% Independent and Assisted 93.8% Assisted without Alzheimer's 90.6% Assisted with Alzheimer's 92.0% CCRC 93.6% All Communities 92.6% 2008 Median Occupancy Rates State of Seniors Housing The World Turned Upside Down
  • 25. 2007 2008 95.7% 95.0% 94.4% 94.4% 93.8% 93.6% 93.3% 93.1% 92.6% 92.0% 90.6% 90.7% Assisted with Assisted Independent Independent CCRC All Alzheimer's without and Assisted Living Only Communities Alzheimer's 2007 - 2008 Median Occupancy Rates State of Seniors Housing The World Turned Upside Down
  • 26. 102.0% All Stabilized Assisted Living Properties 100.0% 98.0% 96.0% Median 94.0% Average 92.0% 90.0% 88.0% 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 Minneapolis-St. Paul Bloomington, MN-WI MSA Occupancy Rates NIC MAP The World Turned Upside Down
  • 27. 100.0% All Stabilized Assisted Living Properties 98.0% 96.0% 94.0% Median Average 92.0% 90.0% 88.0% 86.0% 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 Kansas City, Minneapolis, St. Louis MSAs Occupancy Rates NIC MAP The World Turned Upside Down
  • 28. 4th Quarter 2008 96.0% 94.0% 93.7% 93.1% 94.0% 92.0% 90.0% 88.0% 86.2% 86.0% 83.7% 84.0% 82.0% 80.0% 78.0% Boston Minneapolis Houston Seattle Detroit Assisted Living National Occupancy Rates NIC MAP The World Turned Upside Down
  • 29. 55.9% 54.2% 55.1% 33.9% 31.1% 31.8% 2006 2007 2008 Independent Living Assisted Living Turnover Rates State of Seniors Housing The World Turned Upside Down
  • 30. Assisted Living with Alzheimer's 17 21 All Assisted Living 38 Independent Living 77 CCRC Months Typical Length of Stay State of Seniors Housing The World Turned Upside Down
  • 31. Occupancy vs. Age Assisted Living 93.0% 92.0% 91.0% 90.0% 89.0% 88.0% 87.0% 86.0% 85.0% 84.0% 2 to 10 Years Old 10 to 25 Years More than 25 Years 2007 2008 Median Occupancy Rates State of Seniors Housing The World Turned Upside Down
  • 32. Assisted Living Year End 100.0% 98.0% 100.0% 95.0% 88.2% 90.0% 85.3% 85.0% 80.0% 75.0% Upper Quartile Lower Quartile 4Q2007 4Q2008 Overall Occupancy Decline NIC MAP The World Turned Upside Down
  • 33. $60,000 $57,614 $50,000 $40,000 $38,611 $38,402 Assisted with Alzheimers $30,000 Independent and Assisted Assisted without Alzheimer's $20,000 $10,000 $0 2006 2007 2008 Median Total Revenue State of Seniors Housing The World Turned Upside Down
  • 34. $57,614 $55,545 $60,000 $49,576 $50,000 $38,402 $38,611 $37,206 $40,000 $34,911 $34,022 $32,212 $30,000 $20,000 $10,000 $0 Assisted with Independent and Assisted without Alzheimers Assisted Alzheimer's 2006 2007 2008 Median Total Revenue State of Seniors Housing The World Turned Upside Down
  • 35. Minneapolis $3,300 All Assisted Living Properties $3,232 $3,183 $3,200 $3,109 $3,091 $3,100 $3,061 $3,038 $3,038 $3,024 $3,000 $2,890 $2,900 $2,800 $2,700 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 Average Monthly Revenue per Occupied Unit NIC MAP The World Turned Upside Down
  • 36. Minneapolis Metro Assisted Living 4th Quarter 2008 94.5% 94.7% 0.95 0.94 93.0% 0.93 92.1% 0.92 90.7% 0.91 0.9 0.89 0.88 Up to $2,470 $2,470 to $2,741 to $3,141 to $3,900 plus $2,741 $3,141 $3,900 Average Unit Occupancy by Revenue per Occupied Unit NIC Map The World Turned Upside Down
  • 37. $19,777 $20,000 $18,000 $15,956 $16,000 $13,423 $13,143 $14,000 $12,491 $11,795 Assisted Living with $11,187 $12,000 $10,609 Alzheimer's $10,000 $9,058 Assisted Living without Alzheimer's $8,000 Independent and Assisted $6,000 $4,000 $2,000 $0 2006 2007 2008 Median Net Operating Income Per Occupied Unit State of Seniors Housing The World Turned Upside Down
  • 38. $19,777 $20,000 $18,000 $15,956 $16,000 $13,423 $13,143 $14,000 $12,491 $11,795 $11,187 $12,000 $10,609 $9,058 $10,000 $8,000 $6,000 $4,000 $2,000 $0 Assisted Living with Assisted Living without Independent and Alzheimer's Alzheimer's Assisted 2006 2007 2008 Median Net Operating Income Per Occupied Unit State of Seniors Housing The World Turned Upside Down
  • 39. NOI vs. Age $45.29 Assisted Living 50 $42.15 45 40 $34.01 $30.79 35 $28.84 $28.32 30 25 20 15 10 5 0 2 to 10 Years Old 10 to 25 Years More than 25 Years 2207 2008 Net Operating Income Per Resident per Day State of Seniors Housing The World Turned Upside Down
  • 40. Observations The World Turned Upside Down
  • 41. Risky Business The World Turned Upside Down
  • 42. Real Estate Investment Mean “Risk” Net lease properties 2.04 Warehouse market Regional mall Apartment market Power retail center Diversified public real estate investment trusts Diversified private real estate investment trusts Age restricted apartments (over 55) Central business district offices Strip mall Flexible R&D Private commingled real estate funds Suburban offices Senior housing specialized REIT’s Real estate mortgage investment conduits Senior housing independent living Full service lodging Licensed assisted living facility (stand alone) Health care operating companies Continuing care retirement communities Extended stay lodging Hybrid independent living and assisted living facilities Skilled nursing facilities (primarily long-term care_ Skilled nursing facilities (subacute/short-term rehab) Licensed Alzheimer’s/dementia facility 4.25 Alternative Risk Ratings The World Turned Upside Down
  • 43. What now? The World Turned Upside Down
  • 44. How can we get our balance back? The World Turned Upside Down
  • 45. Back to Basics The World Turned Upside Down
  • 46. 100,000 s) thousand 80,000 60,000 High-quality, lation (in professional 40,000 staff and management U.S. Popu 20,000 30 2040 2050 2010 2020 20 80 1990 2000 0 1950 1960 1970 19 20 1930 1940 1900 1910 19 75-84 85+ 65-74 Labor cost 25.0% Housing containment % of Total U.S. Population 20.0% 15.0% and mitigation of 10.0% occupancy risk 5.0% 0.0% 00 10 20 30 40 50 60 70 80 90 00 10 20 30 40 50 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 65+ 85+ Review The World Turned Upside Down
  • 47.  Dems power stimulus bill through Congress  Passage of $787 billion legislation hands Obama a critical political victory A Gloomy Outlook for Housing Home Sales’ Big Season Dane County home sales continue to slip It’s about the Housing The World Turned Upside Down
  • 48. 1990-2008 Growth Rates 120.0% 100.0% 80.0% 60.0% 45.9% 40.0% 31.1% 20.0% 0.0% -20.0% Sales of existing single-family homes, condos, and co-ops NAR The World Turned Upside Down
  • 49. 2000-2008 Growth Rates 30.0% 20.0% 10.0% -7.6% -7.8% 0.0% -10.0% -20.0% -30.0% Sales of existing single-family homes, condos, and co-ops NAR The World Turned Upside Down
  • 50. 2007-2008 “Growth” Rates 0.0% -5.0% -10.0% -15.0% -14.9% -20.0% -19.2% -25.0% Sales of existing single-family homes, condos, and co-ops NAR The World Turned Upside Down
  • 51. 1990-2008 Growth Rates 120.0% 100.0% 80.0% 60.0% 45.9% 40.0% 31.1% 20.0% 0.0% -20.0% Sales of existing single-family homes, condos, and co-ops NAR The World Turned Upside Down
  • 52. Risk Mitigation The World Turned Upside Down
  • 53. The World Turned Upside Down
  • 54. 1,380 Assisted Living Units 11% 25% Efficiencies 64% One bedroom Two bedroom Unit Mix Madison MSA NIC MAP The World Turned Upside Down
  • 55. 3,826 Assisted Living Units 7% 32% Efficiencies 54% One bedroom Two bedroom Unit Mix Milwaukee MSA NIC MAP The World Turned Upside Down
  • 56. Madison Milwaukee 7% 11% 32% 25% 54% 64% Efficiencies One bedroom Two bedroom Efficiencies One bedroom Two bedroom Unit Mix NIC MAP The World Turned Upside Down
  • 57. 1,291 Assisted Living Units 4% 17% 33% 1970's 1980's 1990's 46% Since 2000 Segment Opening Year Madison MSA NIC MAP The World Turned Upside Down
  • 58. 3,719 Assisted Living Units 3% 8% 29% 20% 1960's 1970's 1980's 1990's 39% Since 2000 Segment Opening Year Milwaukee MSA NIC MAP The World Turned Upside Down
  • 59. Madison Milwaukee 1960's 3% 8% 1970's 4% 29% 1970's 20% 1980's 33% 17% 1980's 1990's 1990's 46% Since Since 2000 39% 2000 Segment Opening Year NIC MAP The World Turned Upside Down
  • 60. The World Turned Upside Down
  • 61. First Impressions The World Turned Upside Down
  • 62. The nicest people are here Fully Integrated Marketing The World Turned Upside Down
  • 63. Lasting Impressions The World Turned Upside Down
  • 64. Real Estate Investment Mean “Risk” Net lease properties 2.04 Warehouse market Regional mall Apartment market Power retail center Diversified public real estate investment trusts Diversified private real estate investment trusts Age restricted apartments (over 55) Central business district offices Strip mall Flexible R&D Private commingled real estate funds Suburban offices Senior housing specialized REIT’s Real estate mortgage investment conduits Senior housing independent living Full service lodging Licensed assisted living facility (stand alone) Health care operating companies Continuing care retirement communities Extended stay lodging Hybrid independent living and assisted living facilities Skilled nursing facilities (primarily long-term care_ Skilled nursing facilities (subacute/short-term rehab) Licensed Alzheimer’s/dementia facility 4.25 Alternative Risk Ratings The World Turned Upside Down
  • 65. Real Estate Investment Mean “Risk” Licensed Alzheimer’s/dementia facility 2.04 Skilled nursing facilities (subacute/short-term rehab) Skilled nursing facilities (primarily long-term care) Hybrid independent living and assisted living facilities Extended stay lodging Continuing care retirement communities Health care operating companies Licensed assisted living facility (stand alone) Full service lodging Senior housing independent living Real estate investment mortgage conduits Senior housing specialized REIT’s Suburban offices Private commingled real estate funds Flexible R&D Strip mall Central business district offices Age restricted apartments (over 55) Diversified private real estate investment trusts Diversified public real estate investment trusts Power retail center Apartment market Regional mall Warehouse market Net lease properties 4.25 New View? The World Turned Upside Down
  • 66. Judy Karofsky Real Estate Insites, LLC jfk@chorus.net The World Turned Upside Down