National Investment Center (NIC) for Seniors Housing and Care released its 1Q2016 NIC Skilled Nursing Data Report, which provides operators and investors with time-series data through March 31, 2016, on key metrics such as occupancy and revenue per patient day by payor source. The newest report highlights an increase in occupancy and also the continued impact that Medicare Advantage plans are having on revenue.
“This report shows an increase in occupancy from the December 2015 low, which could be attributed to an increase in volume due to the flu season and other factors attributable to occupancy in the winter months, such as an increase in slips and falls and elective surgeries. We will have to see how the next quarter plays out as occupancy seems to have leveled off in March 2016,” said Bill Kauffman, senior principal at NIC. “The report also showed the continued pressure from Medicare Advantage plans as rates decreased 1.2% quarter-over-quarter.”
The 1Q2016 report provides monthly data collected by NIC from October 2011 through March 2016 on select metrics, including: occupancy, quality mix, skilled mix, patient day mix, and revenue per patient day by payor source. During this time period:
Occupancy increased in January and February of 2016 but leveled off in March to end at 83.4%. Occupancy is down 108 basis points from October 2011 as the decline in length of stay continues to be a challenge.
Skilled mix and quality mix increased to 26% and 35.5%, respectively, in the first quarter 2016 as seasonality continued to play a role at this time of year. However, the effect of seasonality was not as strong this year compared to the last couple of years, which could be attributed to the late flu season.
Managed Care (Managed Medicare) rates decreased 1.2% quarter-over-quarter and decreased 5.6% year-over-year.
Medicaid rates were flat quarter-over-quarter but increased .44% month-over-month and .72% year-over-year.
Currently the report provides aggregate data at the national level from a sampling of skilled nursing operators with multiple properties in the United States. NIC will grow its base of participating operators in order to provide data at localized levels in the future. Operators who are interested in participating can complete a participation form using the link below. NIC maintains strict confidentiality of all data it receives.https://www.nic.org/analytics/nic-initiatives/skilled-nursing-data-initiative
Real Estate Daily News Buzz July 5, 2016
Real Estate Daily News Buzz July 5, 2016
Real Estate Daily News Buzz is designed to give news snippets to readers that our (yet to be award winning) editors thought you could use to start your day. They come from various business perspectives, real estate, government, the Fed, local news, and the stock markets to save you time. Here you will find the headlines and what the news buzz of the day will be.
The Dow Jones industrial average climbed 19.38 points, or 0.1 per cent, to 17,949.37. The Standard & Poor’s 500 gained 4.09 points, or 0.2 per cent, to 2,102.95. The NASDAQ composite added 19.89 points, or 0.4 per cent, to 4,862.57.
U.S. crude rose 66 cents, or 1.4 per cent, to close at $48.99 a barrel in New York. Brent crude, used to price international oils, rose 53 cents to $50.35 a barrel in London. Natural gas rose 6 cents, or 2.2 per cent, to $2.9870 per 1,000 cubic feet. Wholesale gasoline rose 1 cent to $1.50 a gallon, while heating oil rose 2 cents to $1.51 a gallon.
CBRE Snags $250M Loan for Prime Industrial Portfolio “Becknell Industrial Operating Partnership LP, a joint venture between a fund managed by UBS Asset Management, Global Real Estate-US and Becknell Industrial, has received a $250 million loan for its Becknell Industrial Portfolio, which contains 140 Class A distribution properties located in core markets across the U.S. The portfolio includes more than 14 million square feet of space, and the properties are situated around transportation hubs in key distribution corridors, contributing to its appeal as an investment opportunity.” (Commercial Property Executive)
Avoid These 5 Traps When Buying Real Estate in Self-Directed IRAs Self-directed individual retirement accounts are catnip to real estate investors. These special IRAs allow investors to deploy their retirement capital into real estate and to enjoy the substantial tax benefits offered by IRAs. But in some cases, using a self-directed IRA for real estate investments can hurt investment results. (The Street)
SMU, Yale Trimmed Real Estate Investments Before Values Cooled “Large endowments including Southern Methodist University and Yale University reduced investments in real estate through the middle of last year before values cooled, a timely move that could help their performance. Southern Methodist’s $1.5 billion endowment decreased its real estate holdings by 84 percent to 1.2 percent — the biggest drop among schools — in the year ended June 2015 from two years earlier, according to responses to a congressional inquiry. Yale trimmed its allocation 31 percent to 14 percent in its $25.6 billion fund in the same period. The selloff may be a bright spot for endowments as they struggle to boost performance in the fiscal year that ended June 30. Real estate was one of the best-performing investment categories in fiscal 2015, prompting some endowments to cash in.” (Bloomberg)
U.S. Rent Growth Strong Amid Brexit Concerns “As the media is abuzz with talk of Brexit’s impact on the U.S., the multifamily industry is questioning whether Britain’s vote to leave the European Union will affect this currently booming market. In Yardi Matrix’s monthly report, the topic of Brexit was addressed along with the usual recap of market trends and rent growth. ‘We foresee little immediate impact on the U.S. multifamily market, largely because the United States is a relatively small trading partner,’ the report stated, ‘but the real danger is the potential that the process of splitting the European Union could create upheaval in global financial markets.’ The report contends that since less than 4 percent of U.S. goods end up in the U.K., it is unlikely that reduced demand from Britain would have a major impact on the U.S.” (MultiHousing News)
Seniors Housing Operators Share Their Secrets to Smart Growth at InterFace Conference in Chicago “The U.S. economy may be stuck in low gear, but tactical and targeted growth strategies can produce outsized returns in the seniors housing space, according to a panel of property owners and operators who spoke during France Media’s InterFace Seniors Housing Midwest conference. The event, which took place June 21 at The Westin Chicago River North hotel, attracted 265 attendees from the seniors housing industry. Close attention to rental rates and occupancies boosts top-line revenue growth, said panelist Joe Solari, vice president of corporate development at Capital Senior Living. The Dallas-based company owns and operates 126 independent and assisted living properties. ‘We focus on buildings that are less than 90 percent occupied,’ said Solari. Other successful growth strategies at Capital Senior Living include converting independent living units to those designed for a higher level of care, and the acquisition of stabilized communities in locales where the company already operates. ‘We can absorb these properties without almost any increase in corporate overhead,’ said Solari.” (REBusiness Online)
Historic theaters gain new life as retail stores“Downtown’s L.A.’s Broadway Theater District, home to one of the largest concentrations of historic movie palaces in the nation, is gaining a new lease on life that doesn’t involve showing films. Some of the dozen remaining theaters are turning to other uses: There’s a hotel, the occasional church and retail. The theaters may be unusual because of their opulence and because there are so many of them in such a small area, but they reflect a growing need by landlords to find alternative uses for the cavernous spaces as movie audiences gravitate away from single-screen theaters toward multiplexes and streaming video services.” (Los Angeles Times)
To fight foreclosures, NYC to buy long-unpaid mortgages“New York City is taking a novel approach to addressing enduring pockets of the home foreclosure crisis. It’s buying long-unpaid mortgages, with plans to help owners stay in their homes, if possible, or use the properties as affordable housing, if not. Mayor Bill de Blasio and other officials are announcing the $13 million program Thursday. Details of the program were provided to The Associated Press ahead of a planned afternoon announcement. So far, the effort involves 24 properties, containing a total of 41 homes and apartments. Officials say the cost includes millions in reserve for repairs that may not be required. They hope to expand the project.” (Crain’s New York)
Dick’s Sporting Goods wins bidding war “Dick’s Sporting Goods was the victor on Thursday at the bankruptcy auction for former rival Sports Authority Holdings. Dick’s bid $15 million for the brand name and other intellectual property, beating British-based Sports Direct International PLC’s $13 million bid, according to the Wall Street Journal. Dick’s also had the winning bid at the auction for 31 Sports Authority store leases, for an additional $8 million, the report said. The winning bids are subject to the approval of the U.S. Bankruptcy Court.” (Chain Store Age)
Google’s Chicago HQ Fetches Record Price “The 10-story office building at 1000 W. Fulton Market in Chicago’s West Loop—which serves as Google’s Midwest headquarters—will reportedly sell for a record $305 million after spending only a few months on the market, Crain’s Chicago Business reports. The sale price equates to roughly $574 per square foot, making it the third-largest per-square-foot price in Chicago history, according to the newspaper. American Realty Advisors of Glendale, Calif., has agreed to buy the 531,000-square-foot 1KFulton building from Sterling Bay, who purchased the asset back in November 2012 for $12 million. The developer then went ahead and converted the former Fulton Cold Storage building into state-of-the-art offices.” (Commercial Property Executive)
Large Anaheim Multifamily Project Gets Green Light“The mayor and city council of Anaheim have unanimously approved the development of Jefferson Stadium Park on a 17.6-acre site in the city’s Platinum Triangle. JPI will develop a mixed-use property on the site. JPI, a multifamily specialist, plans that Jefferson Stadium Park will be a 1079-unit apartment community that also includes a 1.1-acre public park and 14,600 square feet of community-oriented retail. Scheduled to break ground in December this year, Jefferson Stadium Park is directly adjacent to Angel Stadium of Anaheim, on the southwest corner of State College Boulevard and Gene Autry Way. Residents will have access to Anaheim’s Regional Transportation Intermodal Center (ARTIC), as well as including Major League Baseball’s Los Angeles Angels of Anaheim, and the National Hockey League’s Anaheim Ducks. The development is also one mile away from the Downtown Disney Shopping District, Disneyland and California Adventure theme parks.” (MultiHousing News)
Tucson’s Industrial vacancy rate increased from 9.3 percent at the end of 2015 to 9.4 percent in mid June indicating the continued weakness in this market. There seem to be some positive signs in Tucson’s general economic condition for the past six months with an optimistic outlook moving forward for the second half of 2016.
The average sale price for an Industrial building increased from $41.00 per square foot at the end of 2015 to $46.00 per square foot in June of this year.
Currently, there are 71 Industrial buildings for sale 1,000 square feet or larger with 41 having been sold since the beginning of this year. This trend leaves us with about a one-year supply which is a vast improvement over the last 6 to 7 years.
Several of the larger lease signings since the first of the year were:
Sun Valley Supply, 22,398-square-feet at Wetmore and Grant, a major homebuilder supply company headquartered out of Phoenix catering to the homebuilding trade;
60,000-square-feet by Autobalm Indoor Speedway at 300 S. Tool Avenue;
20,000-square-feet to Community Bridges at 250 S. Tool Avenue;
33,797-square-feet to Hilliard Creations at 700 E. Fair Street; and
12,800-square-feet to a moving and storage company at 5455 S. Nogales Highway.
Lease rates have declined slightly from the beginning of the year from $6.79 per square foot to $6.77 per square foot, a meaningless amount, but nevertheless confirming that it’s still a tenant’s market until rents head in the opposite direction.
The one bright spot is the housing market which will have a positive effect on the Industrial market for the next several years. When the market went south in 2008, many suppliers of product for the homebuilding trade retrenched or pulled out of Tucson. Tucson’s housing sales have increased 10 percent over last year and with the announced move of Caterpiller to Tucson starting this summer and continuing through 2008 relocating it’s mining equipment business from Peoria and Decatur, Illinois and South Milwaukee to Tucson, these additional home sales will fuel this market.
Caterpiller purchased Bucyrus International in Milwaukee in 2011, the builder of large steam shovels, some the size of two garages. These shovels helped build the Panama Canal back when. The new complex will be built just west of the freeway and accommodate over 600 higher paying jobs (averaging $90,000/year) consisting of Surface Mining and Technology Divisions with employees in executive management, engineering and product development. This influx of higher-wage earners over the next two years will stimulate the home building trade and all the contractors, roofers, concrete contractors, plumbers, electricians, etc. that cater to this trade that have taken up space in the past will do so again in the warehouses and contractor yards around Tucson.
There are currently no new buildings under construction. The largest occupancy over the past six months is the new 800,000 square-foot warehouse for Home Goods in the airport area.
Net absorption of Industrial space was a negative 108,038 square feet as compared to a positive 2,541 square feet in the fourth quarter of 2015 and a positive 69,046 square feet in the second quarter of 2015.
Along with Comcast’s new call center employing around 1,100 people in American Furnishings old retail space on Oracle Road, Comcast and Caterpiller are basically office users. What runoff to the Industrial market will develop from suppliers to these companies remains to be seen, but definitely a boost to Tucson’s overall economy, which finally should break out of its doldrums.
The past several years have seen positive vitality in the first half of the year only to drop off in the second half of the year.
We believe we are now finally in an upward trend for the balance of 2016 which should reduce vacancy rates, increase rental rates moderately and increase the depressed values of industrial properties.
For additional information, Chuck Blacher can be contacted at 520-360-7800.
Managed Medicare Rates Decreased 5.6% Year-over-Year
