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Industry heavyweights Welltower (NYSE: WELL), Ventas (NYSE: VTR) and Brookdale (NYSE: BKD) have recently released their Q423 and full-year results, revealing some key themes and trends in the senior housing industry. Overall, the news is positive, with a focus on achieving and surpassing the 80% occupancy threshold.
Ventas saw a 180-basis point increase in census in their same-store U.S. senior housing operating portfolio, reaching 80.9% in Q4. Justin Hutchens, EVP of senior housing and chief investment officer, noted that this marks an inflection point for the industry where margins begin to grow.
Despite some providers, like Brookdale, still falling below the 80% mark, the overall sector is at a turning point where leaders are closely considering the implications of reaching and exceeding this occupancy threshold.
Key Takeaways from Recent Earnings Results:
- Occupancy expectations and implications of surpassing 80%
- Pricing power remains strong but dynamics are shifting
- Challenges facing occupancy laggards in 2024
Occupancy Outlook:
Executives from Welltower, Ventas, and Brookdale all commented on the momentum around occupancy growth in Q4, traditionally not a strong period for move-ins. Welltower saw significant year-over-year growth, reaching 83.3% occupancy in their seniors housing operating portfolio.
Ventas also experienced accelerated occupancy growth at the end of 2023, with momentum continuing into 2024. Brookdale, on the other hand, demonstrated meaningful sequential occupancy growth despite falling short of the 80% mark.
Pricing Dynamics:
As market dynamics potentially impact pricing power, providers like Brookdale are carefully monitoring their rate strategies. While still pleased with their pricing strategy for 2023, the company is cautious about potential concessions and competitive responses.
Welltower’s Shankh Mitra highlighted the importance of balancing occupancy and pricing strategies, especially once occupancy surpasses the mid-80s. Providers may need to adjust their approach as they compete more on rate rather than occupancy.
