Survey says senior housing is profitable on all levels.

The overall financial performance of seniors housing appears to be steadily improving, with occupancy remaining high in all categories, and percentage increases in rental fees running ahead of broad inflation rates, according to The State of Seniors Housing 1997, a 52-page report just released by Coopers & Lybrand L.L.P. and the American Seniors Housing Association.

"With increasing demand, short supply and augmented management know-how, seniors housing in general is functioning more efficiently and, in the case of forprofit facilities, more profitably," said Patrick R. Leardo, Coopers & Lybrand's real estate industry chairman. "Large and small properties alike appear to be performing well."

The State of Seniors Housing 1997 summarizes data from fiscal year 1996, compiled from a survey of 268 seniors housing communities in 36 states, comprising more than 55,000 congregate/independent living units (for residents who require little, if any, assistance with daily activities); assisted living beds (for residents who need some help with the activities of daily living) and long-term care beds. The congregate category includes properties with congregate units only, and those with congregate units and assisted living beds. The assisted living category includes two subcategories: freestanding assisted living residences, and assisted living residences with skilled nursing. The CCRC category includes properties that have congregate assisted living and skilled nursing units

This year's survey does a superior job of distinguishing between the various property types and for the first time examines the performance of larger versus smaller assisted living residences.

"This report provides the most comprehensive and useful operational performance data for congregate, assisted living and continuing care retirement communities available anywhere," asserted David S. Schless, executive director of the Washington, DC-based American Seniors Housing Association. "There's been solid performance across all sectors. Performance difficulties once associated with congregate seniors housing have been largely eliminated."

As in previous years, congregate communities were the largest segment of the properties, surveyed, but for the first time they did not comprise the majority of property types. California had the highest number of properties surveyed, some 16 percent of the total. Approximately 80 percent of all communities surveyed are owned by for-profit entities, and about 80 percent of all communities offer rental payment plans for the housing and care of residents. Thirty-two percent of the CCRCs surveyed charge entrance fees of more than $10,000.

Some notable findings of the survey include:

* Median occupancy rates for all sample segments are over 94 percent;

* Annual resident turnover rates in assisted living communities catering to low-acuity residents are considerably less than for those catering to high-acuity residents;

* Median rental fees for independent living units and assisted living beds contained within CCRCs sampled are greater than for those contained within congregate care and stand-alone assisted living communities;

* Despite varying annual resident turnover rates between the three sample segments, marketing/advertising expenses per occupied unit are remarkably similar for each segment;

* Larger facilities in each sample segment enjoy higher operating margins due to economies of scale, but bottom-line results, as measured by net cash-flow per occupied unit, are apparently not affected by community size;

* Year-to-year percentage increases in rental fees for all communities exceed percentage increases in broad consumer price indices over the same period;

* On a "same store" basis, assisted living communities sampled had significantly larger percentage increases in key operating results, and enjoyed the highest percentage increase (15.7 percent) in net operating income;

* Median management fees, as a percentage of total revenues, are six percent for assisted living communities, five percent for congregate care communities, and 4.6 percent for CCRCs;

* Gross operating margins for congregate care communities exceed those of the other sample segments:

* Median debt service coverage ratios for all communities operated by for-profit owners exceed 1.4 for all sample segments:

* Median current returns on investment continue to increase from prior survey results.

The cover price of The State of Seniors Housing 1997 is $125, and volume discounts are available. To order, call Judy Sarch at [phone]. Any questions regarding the report should be directed to Mr. Leardo. He can be reached at [phone].