Ventas has five senior-housing communities in the Houston area, which generate annualized net operating income of $7.7 million.
“There is new construction, but we feel OK about it,” Cafaro said of Houston.
Nationally, the inventory of senior-housing units is at the highest since at least the fourth quarter of 2005, according to the National Investment Center. Demand has so far kept pace, with occupancies climbing to 89.8 percent, the highest since 2008. The average rent rose to $3,415 per unit in the first quarter, up 2 percent from a year earlier, and is at the highest since at least 2005.
‘A Concern’
“The supply issue is a concern,” said Goltra of Forward Management, which oversees more than $5 billion of assets. The firm had shares of Ventas, HCP and Health Care REIT as of the end of March, according to data compiled by Bloomberg. “Supply is a concern, but this demographic wave is real.”
While construction slipped in the first quarter, the decrease may have been related to weather, the National Investment Center said last month. Construction as a percentage of inventory has hovered at more than 3 percent in the past year, a rate unmatched since the first quarter of 2009.
“There’s a lot of people that have begun to develop now,” Gehl said. “You’re seeing lots of shovels going into the ground now.”