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Senior-care sector sees rise in demand, share prices


By Beth Kutscher
Posted: January 29, 2013 - 5:45 pm ET
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Occupancy rates at senior-living centers are on the rise as the demand for housing grows and the pace of construction activity slows down, according to a report.

The report from the National Investment Center for the Seniors Housing & Care Industry found that the occupancy rate for the fourth quarter of 2012 was 89.1%, a 1 percentage point increase over the same quarter of the previous year.

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The increase also represents the 11th consecutive quarter of growth, the report said.

Darren Lehrich, an analyst at Deutsche Bank, said in a note to clients that the senior housing sector last week outperformed the S&P 500 (2.5% vs. 1.1%).

He added that the publicly traded senior living industry has gotten a boost from positive housing data—which have shown increases in new home prices and new home sales and which generally serve as a good indicator for senior housing trends.

The housing recovery has lifted shares of major players in the senior-care space.

At the closing bell Tuesday, Brookdale Senior Living, Brentwood, Tenn., had edged up nearly 12% since Jan. 2; Emeritus Corp., Seattle, 9%; and Capital Senior Living, Dallas, 11.4%.

At National Healthcare Corp., Murfreesboro, Tenn., occupancy rates have declined from a high of 92% to a still-healthy 90%-91% because of Medicaid reductions, spokesman Gerald Coggin said.

Speaking at a newly renovated facility in Franklin, Tenn., Coggin noted that the company continues to build assisted-living centers and has seen a move toward smaller facilities that offer more services, including short-term rehabilitation and memory-care programs.

The National Investment Center report also found that annual asking rent increased 2.2%, the same increase as the previous quarter, but still outperformed core inflation. Meanwhile, inventory grew only 1.2%, representing a slowdown compared to last quarter and fourth quarter of last year, when inventory increased 1.3%. Construction has also slowed in the industry, according to the report.


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