Senior Housing Feasibility Study: Demand, Care Levels, CCRCs and Financing

A senior housing feasibility study tells a lender, bond buyer, developer or operator whether one proposed or existing community, on one site, can fill its units at supportable prices, hold them through resident turnover, staff its care levels, satisfy its licensing and contract rules, and pay its debt at the coverage the capital source requires. It answers product by product, because active adult housing, independent living, assisted living, memory care, skilled nursing and continuing care retirement communities (CCRCs) draw on different households, different payers, different regulators and different lenders.

Three facts frame almost every senior housing file in 2026:

• The oldest cohort is about to surge. The Census Bureau projects the population aged 85 and older to rise from 7.0 million in 2025 to 13.7 million in 2040, a 94.1 percent increase, and the steepest five-year step comes from 2030 to 2035, when it grows 30.6 percent (computed from [1]).
• Existing care beds are not full. Certified nursing homes reported 1,253,790 average daily residents in 1,562,040 certified beds in CMS's October 2026 file, an occupancy of 80.3 percent, ranging from 67.0 percent in Texas to 89.1 percent in New York (computed from [2]).
• Some states set presale floors in law. North Carolina will not issue a CCRC preliminary certificate, which is needed before construction, until binding agreements cover at least 50 percent of the new independent living units, and its permanent license needs 70 percent [3].

Growth in demand and slack in supply sit side by side. That is why the answer is always local and always specific to the product.

This page covers the whole senior housing spectrum. For the licensed care core, including the income-qualified penetration method, staffing at local wages and state assisted living licensing, see the assisted living feasibility study page, which this page does not repeat. State detail is on the senior housing pages for Kentucky, Mississippi, Nevada and New Mexico.

Every study ends in one of three conclusions. The project is feasible as proposed. It is feasible on stated conditions, such as a smaller first phase, higher presales, a larger operating reserve or a different unit mix. Or it is not feasible as proposed, and the report names what would have to change.

What is a senior housing feasibility study?

It is an independent analysis, written for a credit file, of whether a senior housing project can support its financing and its promises to residents. USDA's rule for its Business and Industry program describes the report as one "evaluating the economic, market, technical, financial, and management feasibility of the proposed project" [4]. Those five parts fit every capital source, and a senior housing study adds two more: the legal test that defines the product (an age restriction, a care license or a continuing care contract) and the payer mix that funds it.

Senior housing is not one property type. The products differ in who moves in, who licenses the building and who pays.

Exhibit 1. The senior housing spectrum a study must place the project on

Source: 24 CFR 100.305 [5]; HUD MAP Guide [6]; Fannie Mae Multifamily Selling and Servicing Guide, Part III, Chapter 5 [7]; Freddie Mac Optigo Seniors Housing Loan term sheet [9]; HUD Handbook 4232.1 [10] [16]; SBA SOP 50 10 8.1 [11]; 7 CFR 5001.105 [12]; Kentucky 902 KAR 20:480 [13]; 42 CFR 483.70 and 483.90 [15] [14]; North Carolina G.S. Chapter 58, Article 64A [3]; 26 U.S.C. 7872 and 145 [17] [18]; 2022 Economic Census payer data [8].

A feasibility study is not an appraisal. An appraisal estimates value at a date. A feasibility study tests whether the project works, under the capital source's rules, and what would have to change if it does not. Lenders often order both, and the two must agree on the operating projection.

Which senior housing product is the project, and why does that decide the study?

The product decides the demand pool, the competitive set, the regulator, the payer and the lender, so the study defines it before it counts anything. A building marketed as independent living that quietly delivers medication help is an assisted living building to a state surveyor. A campus that sells life care contracts is a CCRC to an insurance regulator, whatever its brochure says.

The study writes down the unit mix by care level, the services in each monthly fee, the contract type, the licenses held or sought, and any Medicare or Medicaid certification. Each choice changes the tests the file must pass.

Exhibit 2. How the analysis changes by product

Source: FSC study method. Rules behind each column are cited in the sections below.

The assisted living and memory care rows are covered in depth on the assisted living feasibility study page. This page concentrates on what is different elsewhere on the spectrum: the age-restricted and independent living tests, skilled nursing's federal and payer rules, and the CCRC's contract, presale, escrow, reserve and actuarial requirements.

How big is the senior housing industry in federal data?

It is a $283.7 billion employer industry. The 2022 Economic Census counted 93,576 establishments in nursing and residential care facilities (NAICS 623) with receipts of $283,683,193 thousand and 3,175,407 paid employees [19]. Three industries inside it are senior housing in the narrow sense: nursing care facilities, continuing care retirement communities and assisted living facilities for the elderly.

Exhibit 3. Senior housing industries in the 2022 Economic Census

Source: U.S. Census Bureau, 2022 Economic Census, EC2262BASIC, United States, all establishments [19]. Per-establishment values and shares calculated by FSC.

Two points matter for a study. First, scale: the average CCRC establishment takes in about $7.1 million a year and employs about 76 people, close to a nursing home and almost four times an assisted living establishment. A CCRC is an operating business of hospital-like complexity sitting on a residential campus. Second, labor: payroll consumes about 40 percent of receipts in all three industries, and 42.5 percent in nursing care, so a staffing assumption off by a few points moves coverage more than almost any other input.

Who owns them: taxable and tax-exempt operators

Ownership differs sharply by product, and ownership decides which capital is open to the project.

Exhibit 4. Tax-exempt and taxable establishments, 2022

Source: U.S. Census Bureau, 2022 Economic Census, EC2262BASIC, establishments exempt from and subject to federal income tax [19]. Shares and per-establishment values calculated by FSC.

Nonprofit CCRCs are fewer but far larger: 30.9 percent of CCRC establishments earn 61.8 percent of CCRC receipts, at about $14.3 million each against $3.9 million for taxable CCRCs. That is the market that tax-exempt bonds serve, because a qualified 501(c)(3) bond finances property owned by a 501(c)(3) organization or a governmental unit [18]. It is also a market SBA cannot serve, since nonprofit businesses are ineligible for SBA business loans [20]. A for-profit CCRC sponsor and a nonprofit one are therefore building different capital stacks, and the study is written for the one in play.

Who pays for senior housing and care?

Residents and their families pay for most independent and assisted living, while government programs pay for most nursing home care. The 2022 Economic Census asked establishments to report revenue by type of payer, and the split is stark.

Exhibit 5. Revenue by type of payer, 2022

Source: U.S. Census Bureau, 2022 Economic Census, EC2262TYPEPAYER, NAICS 6231 and 6233, United States [8]. Shares of total receipts calculated by FSC; payer lines sum to 99.2 percent and 98.5 percent of receipts, and the remainder is not allocated by the Census Bureau. Medicare Advantage (Part C) is not in the Medicare line.

Out-of-pocket payment is 67.5 percent of CCRC and assisted living receipts but only 9.4 percent of nursing home receipts, where Medicare and Medicaid fee for service together reach 68.4 percent. The consequence for the study is simple. Independent living, assisted living and CCRC demand is a question of household wealth and willingness to pay, and it is tested against income and home values. Skilled nursing demand is a question of referrals and reimbursement, and it is tested against hospital discharges, Medicaid rates and Medicare rules. A campus with both carries both risks.

How fast is the older population growing?

Fast, but unevenly by age, and the unevenness is the point. From July 2020 to July 2025 the population aged 65 and older grew 15.5 percent to 64.6 million [21]. The 75 to 79 band grew 29.6 percent while the 85-and-older band grew 11.4 percent, because the large post-war birth cohorts had reached their late 70s but not yet their mid 80s.

Exhibit 6. U.S. population aged 65 and older by age band

Source: U.S. Census Bureau, Vintage 2025 national estimates, NC-EST2025-AGESEX [21]. Changes calculated by FSC.

That cohort now moves into the ages where senior housing demand is concentrated. The Census Bureau's 2023 projections show the 85-and-older population growing much faster than the 65-and-older population over the next fifteen years.

Exhibit 7. Projected U.S. population, thousands

Source: U.S. Census Bureau, 2023 National Population Projections, main series, Table 2 [1]. The projections are a separate series from the Vintage 2025 estimates in Exhibit 6, so 2025 values differ slightly.

From 2025 to 2040 the 85-and-older group is projected to grow 94.1 percent while the 65-and-older group grows 23.6 percent and the total population 5.1 percent (computed from [1]). The 2030 to 2035 step alone adds about 2.6 million people aged 85 and older. A project opening in 2028 that needs ten years of strong demand is betting on this wave; a project whose demand rests on residents in their late 60s and early 70s is not.

The study does not use national growth as local growth. It cuts the same Census series to the counties and tracts of the primary market area, projects them five years forward, and reports the 75-plus and 85-plus counts beside the 65-plus count so a reader can see which wave the project depends on.

Can older households in the market afford the project?

Many can, but wealth, not income, is what makes most private-pay senior housing affordable. The median household headed by someone 75 or older reported 2025 income of $50,880 [22], which would not carry most independent or assisted living fees on income alone. The same households held median home equity of $260,000 in 2023 [23].

Exhibit 8. Income and wealth by age of householder

Source: U.S. Census Bureau, CPS ASEC 2026, table HINC-02 [22]; Survey of Income and Program Participation, Wealth and Asset Ownership for Households: 2023, Tables 1, 2 and 4 [23]. Income shares calculated by FSC from published counts.

Three readings follow. First, 40.1 percent of households headed by someone 75 or older had net worth of $500,000 or more, so a wealth screen admits far more households than an income screen at the same fee. Second, home equity is most of that wealth: median net worth for the 75-plus group falls from $347,300 to $96,760 when home equity is removed. Third, entrance-fee and independent living demand therefore moves with local home prices and with how easily homes sell.

Lenders build that link into their own rules. Fannie Mae requires a lender financing an entrance-fee CCRC to analyze the range and weighted average of the community's entrance fees, which must be within the range of median home values in the local market [7]. The study runs that test with local data: the entrance fee schedule against the distribution of owner-occupied home values in the market area, net of selling costs and any mortgage, and the monthly fee against income plus a stated drawdown of the remaining assets.

For the step-by-step income-qualified penetration calculation used for assisted living, see the assisted living feasibility study and the income-qualified demand case study.

How does the study count demand for independent living and CCRC units?

It counts households that are old enough, wealthy enough and close enough, then asks what share of them the project must win against every competing unit. The arithmetic is the same family as the assisted living method; the inputs differ.

1. Market area by origin, not radius. The primary market area is drawn from where residents of comparable communities came from, from the sponsor's lead list and deposit holders' prior addresses, and from drive times. Adult children's locations are recorded as a secondary draw.
2. Age band by product. Independent living and CCRC independent units are counted from households headed by someone 75 or older, with a second count at 80 and older, because the typical move-in comes late. Active adult housing is counted from households aged 55 to 74.
3. Wealth before income. For an entrance-fee product the first screen is home value: owner households whose home would sell for at least the entrance fee after selling costs. For a rental product the screen is income plus a stated drawdown of assets over a stated period. Both screens are cut from Census tables for the market area, not national ratios.
4. Supply net of everything. Every competing independent unit, CCRC campus and age-restricted community is counted, with pipeline projects weighted by status.
5. Required capture. The share of qualified households the project needs, after competitors, is compared with what comparable projects in comparable markets actually achieved.
6. Deposits as evidence. For a CCRC, refundable reservations and binding agreements with 10 percent deposits are direct evidence of demand, and state law in North Carolina and Florida ties construction and opening to them [3] [24].

The study reports each input as verified or assumed, and it shows how the required capture moves when the wealth screen moves. A project that only works at a low screen is betting on households that cannot afford it.

How are competitors surveyed and fees positioned?

Every competing community is visited, priced and sorted by care level, because a directory list cannot show what residents actually pay. For each competitor the survey records units by type and care level, occupancy, base monthly fees, second-person fees, care charges and how they are tiered, entrance fees and refund plans, recent concessions, waiting lists and the year built. Pipeline projects are added with their approval and construction status.

The subject's fee schedule is then placed on that ladder. An independent living fee is compared with competitors offering similar unit sizes, meals and services, and with the household incomes and assets in Exhibit 8 cut to the market area. An entrance fee is compared with competing campuses' fees by refund plan, and with local home values, the test Fannie Mae applies to CCRC loans [7]. A nursing component is positioned on payer mix, star rating and staffing against the CMS profile of each nearby home [2].

Positioning is a judgment the study has to defend in writing. A project priced above every competitor needs a reason residents will pay more: newer units, a stronger care continuum, a better location or a contract feature others lack. A project priced below the market needs a budget that still clears coverage at those fees. Either way, the study shows the competitor data, explains each exclusion from the competitive set and dates every quote.

What does the nursing home market look like in federal data today?

It is large, mostly for-profit and well short of full. CMS's October 2026 Provider Information file lists 14,686 Medicare or Medicaid certified nursing homes with 1,567,009 certified beds [2]. Across the 14,620 homes that reported both beds and residents, average daily residents filled 80.3 percent of beds (computed from [2]).

Exhibit 9. Certified nursing homes by ownership and setting, October 2026

Source: Centers for Medicare and Medicaid Services, Nursing Home Provider Information, processing date October 1, 2026 [2]. All values calculated by FSC from the facility file. Facility counts include every listed home; beds, residents and occupancy cover homes reporting both fields.

Nursing homes inside CCRCs are smaller (a median of 70 beds against 101), staff more nursing hours per resident and carry higher star ratings on average. They hold 10.5 percent of certified homes and 8.1 percent of beds (computed). For a CCRC study that matters twice: the campus health center competes for outside admissions on quality as well as location, and its occupancy depends on the CCRC's own residents moving through the levels of care.

Other October 2026 facts from the same file belong in any skilled nursing study:

• Quality spread. Of 14,560 rated homes, 5,700 (39.1 percent) carried a one- or two-star overall rating and 3,154 (21.7 percent) carried five stars (computed from [2]).
• Turnover. The median home reported total nursing staff turnover of 44.7 percent and registered nurse turnover of 40.9 percent [2].
• Rural slack. Homes that CMS does not flag as urban ran at 74.9 percent occupancy against 81.8 percent for urban homes (computed from [2]).
• Distress lists. CMS listed 87 homes as Special Focus Facilities and 440 as candidates [2].

Supply against the oldest population, by state

National occupancy hides wide state differences, and so does a simple bed count. Dividing certified beds by the population aged 85 and older gives a rough supply ratio that a study then replaces with market-area figures.

Exhibit 10. Nursing home supply and occupancy, 15 states with the most certified beds

Source: CMS Nursing Home Provider Information, October 2026 [2]; U.S. Census Bureau, Vintage 2025 state civilian population by single year of age, SC-EST2025-AGESEX-CIV, top-coded row 85 [25]. Ratios, occupancy and growth calculated by FSC; homes not reporting both beds and residents are excluded.

The spread is the lesson. Missouri had 374.8 beds per 1,000 people aged 85 and older and filled 71.2 percent of them; Florida had 132.9 and filled 88.7 percent. California, Florida and New York ran near 89 percent with fewer beds per older resident. Texas had the most certified beds and the lowest occupancy of these states. A new skilled nursing project in a high-ratio, low-occupancy state has to show why referrals will choose it over empty beds nearby; in a low-ratio, high-occupancy state the question becomes staffing and licensing.

Which federal rules shape a skilled nursing building and its revenue?

A certified nursing home is built, staffed and paid under federal rules that a feasibility study has to cost out, because they fix the room plan, the life safety systems and the length of a Medicare stay.

Exhibit 11. Federal rules a skilled nursing study must reflect

Source: 42 CFR 483.5, 483.70 and 483.90 (revised as of October 1, 2025) [26] [15] [14]; 42 CFR 409.30 and 409.61 [27] [28]; CMS notice of CY 2026 Part A deductible and coinsurance amounts, 90 FR 52075 [29].

Staffing rules: what changed in 2024 and 2025

The federal staffing floor was raised and then withdrawn, so a study must cite the current state of the rule rather than a summary from 2024. The 2024 final rule set a minimum of 3.48 total nurse staffing hours per resident day, including 0.55 registered nurse hours and 2.45 nurse aide hours, and a registered nurse on site 24 hours a day, 7 days a week; that text appears in the October 2025 edition of 42 CFR 483.35 [30]. CMS then repealed those provisions by an interim final rule published December 3, 2025 and effective February 2, 2026, citing a public law that bars HHS from implementing or enforcing them until September 30, 2034 [31].

For a study, two things follow. The repealed standard is no longer a compliance cost. But the market's own staffing is still a cost and a competitive fact: the median certified home reported 3.71 total nurse staffing hours per resident day in October 2026, above the repealed 3.48 floor, with 0.59 registered nurse hours and 2.25 nurse aide hours [2]. A budget below the local norm will show up in star ratings and referrals. State staffing rules also apply; Mississippi, for example, requires 3.0 hours of nursing care per resident per 24 hours in an Alzheimer's unit [32].

Medicare rates and their annual reset

Medicare pays skilled nursing facilities under a prospective payment system that CMS updates each fiscal year. The fiscal year 2027 final rule was published July 31, 2026 and took effect October 1, 2026 [33]. A study states which year's rates it uses, applies the published update rather than a generic inflation factor, and runs a case in which Medicare days fall, because Medicare fee-for-service revenue was 26.0 percent of nursing home receipts in 2022 [8] and a referral shift moves it quickly.

What must active adult and age-restricted housing prove?

It must prove that it legally qualifies as housing for older persons and that enough 55-plus or 62-plus households will choose it over ordinary apartments. The Fair Housing Act exempts housing for older persons from its familial status rules only if the housing meets one of the statute's tests [34], and a study that projects age-restricted rents has to show the operator can keep meeting it.

Exhibit 12. Federal tests for age-restricted senior housing

Source: 42 U.S.C. 3607 [34]; 24 CFR 100.303, 100.305 and 100.307 (revised as of April 1, 2025) [35] [5] [36]; HUD MAP Guide 4430.G, Chapter 3 [6].

The 80 percent rule leaves room for up to 20 percent of occupied units without a 55-plus resident, and the 25 percent threshold gives a new building time to fill. But the leasing plan, the rules and the survey process have to be built in from the start, because the exemption is claimed and proved by the operator. HUD's Section 202 program defines an elderly household as one in which at least one person is 62 or older at initial occupancy [37]; a study for a subsidized project uses that definition and the program's income limits, not market-rate assumptions.

Demand for active adult housing comes from younger, healthier households than independent living. Exhibit 8 shows that householders aged 65 to 69 had a median 2025 income of $71,400 against $50,880 for those 75 and older [22]. Active adult projects usually compete on rent with conventional apartments, so the study surveys both and tests whether the age restriction, amenities and services justify any premium.

How is a CCRC different from other senior housing?

A CCRC sells a promise, not only a unit. The resident pays an entrance fee and monthly fees, moves into independent living, and is entitled to assisted living or nursing care later under the terms of the contract. Federal tax law describes the classic version: a written contract under which the resident first lives in a separate, independent living unit, is then provided long-term and skilled nursing care as health requires, and pays no additional substantial payment when care needs rise [17]. Contracts that charge market rates for later care, or refund part of the entrance fee, sit at other points on the same spectrum, and the contract type changes the economics.

That promise creates liabilities a rental building does not have. The provider owes future care to today's residents, may owe refunds when residents leave or die, and must keep the campus full of new entrants whose fees fund the obligations of those already there. A CCRC study therefore has to test four things a rental study does not:

1. Presales. Whether enough future residents will sign binding agreements and pay deposits before construction to satisfy the state and the bond buyers.
2. Entrance fee pricing. Whether the fee schedule fits the market's home values and whether the refund plan is affordable.
3. Actuarial balance. Whether fees, over residents' lifetimes, cover the care promised.
4. Reserves and liquidity. Whether the provider can fund the reserves the state requires and still meet debt service during fill-up.

What does the actuary test, and how does the feasibility study connect to it?

The actuary tests whether the community is in satisfactory actuarial balance, and the feasibility study supplies the market and fill-up assumptions that test depends on. Actuarial Standard of Practice No. 3, revised in September 2021, governs actuaries working for CCRCs and at-home programs and is effective for work performed on or after June 1, 2022 [38].

Exhibit 13. The actuarial balance test and what the study feeds it

Source: Actuarial Standards Board, ASOP No. 3, Continuing Care Retirement Communities and At Home Programs, Doc. No. 202 [38]; North Carolina G.S. 58-64A-210 [3]; Fannie Mae Multifamily Selling and Servicing Guide, Part III, Chapter 5 [7].

The practical rule is consistency. The actuary, the feasibility consultant, the CPA who examines the forecast and the bond offering must all use the same fill-up, the same fees and the same turnover. When they do not, the reviewer will find the gap.

What do state CCRC laws require before construction and before opening?

They require a feasibility study, presales backed by deposits, escrow of entrance fees and reserves, and they tie each step of development to an approval. North Carolina and Florida show the pattern. North Carolina replaced its CCRC statute with Article 64A of Chapter 58, effective December 1, 2025 [3], and its Department of Insurance now licenses new communities in four stages: a permit to accept deposits, a start-up certificate, a preliminary certificate and a permanent license [39]. Florida regulates CCRCs under Chapter 651 of its statutes.

Exhibit 14. CCRC development rules in North Carolina and Florida

Source: North Carolina G.S. 58-64A-60, 58-64A-65, 58-64A-140, 58-64A-160 and 58-64A-210 [3]; North Carolina Department of Insurance [39] [41]; Florida Statutes 2025, sections 651.022, 651.023, 651.035 and 651.055 [40] [24] [42] [43].

North Carolina also asks the preparer to give an opinion on the study's underlying assumptions, including whether they are reasonable and proper, and to state their experience preparing similar studies [3]. Florida asks for the preparer's name and experience as well [40]. Those are not formalities. They are why a CCRC study has to show its work.

How the reserve requirement moves with occupancy

North Carolina's operating reserve falls in steps as independent living occupancy rises, which makes occupancy a liquidity driver as well as a revenue driver.

Exhibit 15. North Carolina operating reserve schedule, with an illustrative budget

Source: North Carolina Department of Insurance, Operating Reserve, under Part 11 of Article 64A [41] [3]. The $20,000,000 operating budget is an assumption; reserve amounts are model outputs.

In this illustration, moving from 85 percent to 90 percent average independent living occupancy releases $2,500,000 of required reserve. A fill-up that stalls in the low 80s keeps the reserve high just when operating cash is weakest. The study therefore sizes the reserve by year from its own occupancy forecast, not from the stabilized level.

Presale milestones for an illustrative 200-unit phase

Exhibit 16. Units that must be under agreement at each milestone, 200 independent living units

Source: rules as cited; unit counts are model outputs for an assumed 200-unit phase.

Deposits matter as much as counts. At an assumed $500,000 entrance fee, a 10 percent deposit is $50,000, but a Florida reservation counts with the lesser of $40,000 or 10 percent [24], so $40,000 qualifies there. The study reports presales by unit type and price, because the cheapest units usually sell first and a 50 percent count can hide a much weaker share of entrance fee dollars.

How should fill-up be projected for a new community?

As a range of monthly paths tied to evidence, not a single curve. The base case starts from move-ins the project can document (signed agreements, deposits and waiting lists) and adds monthly net absorption supported by comparable openings in the market. The downside case slows both. Interest reserves, operating deficit funding and the state reserve are then sized to the downside case, not the base case.

Exhibit 17. Fill-up scenarios for an illustrative 160-unit independent living community (model output)

Source: model output from assumed inputs. The 90 percent mark matches the USDA occupancy ceiling for assisted living and similar residential facilities [44] and the top step of North Carolina's reserve schedule [41].

The last row is the useful one. In this model, doubling the units occupied at the end of the first month cuts the severe case from 36 months to 23. Presales are the cheapest risk control a CCRC or independent living sponsor has, and the North Carolina rule that 70 percent of new independent living units be under binding agreement before a permanent license [3] would put 112 of these 160 units under contract before opening.

The fill-up check below tests a four-year occupancy path. Enter projected year-end occupancy for years one to four, a comparison path (the lease-up record of comparable openings that the study documents) and the project's break-even occupancy. The tool shows the gap in each year, counts the years your path runs above the comparison, and names the first year that covers break-even. A path above the comparison in two or more years needs named evidence, such as presales, a waiting list or the operator's own lease-up record. Every input, including the comparison path, is illustrative and is not market data, so treat the result as a prompt for evidence, not a finding.

Which permanent lenders finance senior housing, and what do they test?

Freddie Mac's seniors loan finances acquisitions and refinances, HUD Section 232 insures new construction and substantial rehabilitation as well as existing projects, and each program sets its own leverage and coverage by care level. The gradient is consistent: the more care a property provides, the lower the leverage and the higher the coverage.

Exhibit 18. Leverage and coverage by care level, Freddie Mac and HUD Section 232

Source: Freddie Mac, Optigo Seniors Housing Loan term sheet (4/26), terms over 7 years unless noted [9]; HUD Handbook 4232.1, Section II, Chapter 3 [16]. Freddie Mac terms are subject to change without notice; HUD figures are benchmarks that require substantial justification to exceed.

Freddie Mac's sheet adds rules a study must respect: properties may include skilled nursing only up to 20 percent of net operating income, and the product finances acquisitions and refinances [9]. The program's securitization handout reports more than $36 billion of loans purchased in support of more than 2,070 seniors housing facilities [45]. HUD allows up to 25 percent of the beds in a Section 232 project to be independent living, and a project with more can be insured under two loans, part under Section 232 and part under Section 221(d)(4) or Section 231 [10].

Exhibit 19. Fannie Mae seniors housing rules a study should anticipate

Source: Fannie Mae Multifamily Selling and Servicing Guide, Part III, Chapter 5: Seniors Housing Properties [7].

Two of these rules shape a feasibility study directly. The minimum vacancy factor penalizes small assisted living buildings: a 50-unit building carries a 10 percent floor where a 60-unit building carries 5 percent, which can decide the unit count. And the CCRC test means a new CCRC is not an agency borrower until it has five years of 90 percent occupancy, so its first permanent capital is usually bonds or bank debt.

How do SBA, USDA and tax-exempt bonds treat each senior housing product?

Eligibility follows the license and the borrower. The table below sets out which programs can finance which products before any credit analysis begins.

Exhibit 20. Program fit by senior housing product

Source: SBA SOP 50 10 8.1 [11]; 13 CFR 120.110 and 120.160 [20] [46]; 7 CFR 5001.105, 5001.118, 5001.304 and 5001.306 [12] [47] [44] [48]; HUD Handbook 4232.1 [10] [16] [49]; HUD MAP Guide [6]; Fannie Mae Multifamily Selling and Servicing Guide [7]; Freddie Mac [9]; 26 U.S.C. 145 [18].

SBA 7(a) and 504

SBA finances licensed care, not housing. The SOP makes eligibility turn on the license: businesses licensed as nursing homes, assisted living facilities or state-licensed equivalents that provide healthcare or medical services are eligible [11]. Projections for a start-up or construction loan must reach debt service coverage of 1.15 within 2 years of funding or of the end of construction [11], and an initial acquisition must show 1.25 on historical or adjusted cash flow [11]. Nursing homes, including assisted living facilities, are on SBA's list of limited or special purpose property [11], so a 504 borrower contributes at least 15 percent, or 20 percent for a new business [51]. The 504 chapter lists triggers for a feasibility study, including market saturation, a highly specialized project property and a project size disproportionate to the community it serves [11]. More on the program is on the SBA feasibility study page.

USDA Business and Industry and Community Facilities

USDA's test is medical, not only licensed. Business and Industry guarantees finance nursing homes and assisted living facilities where constant medical care is provided and available on site, treat independent living as residential property, and allow a mixed campus only on the optional-services or predominant-need tests [12]. The rural test excludes cities and towns of more than 50,000 inhabitants [4]. Community Facilities grants go to public bodies, nonprofit corporations and federally recognized tribes in rural areas of 20,000 or fewer [52] [53]. Community Facilities guarantees require a financial feasibility report on every loan from a qualified firm or individual acceptable to the Agency, and cap occupancy in projections for assisted living, skilled nursing and similar facilities at 90 percent [44]. See the USDA feasibility study page.

Tax-exempt bonds and continuing disclosure

Nonprofit CCRCs can borrow through qualified 501(c)(3) bonds, which require that all property financed by the net proceeds be owned by a 501(c)(3) organization or a governmental unit [18]. A public offering of $1,000,000 or more brings the continuing disclosure rule: the dealer selling the bonds must reasonably determine that the borrower has undertaken to provide annual financial information and notice of listed events, such as principal and interest payment delinquencies, within ten business days of the event [50]. The feasibility study's forecast becomes the baseline investors compare those annual filings against. North Carolina adds that five-year prospective financial statements in a CCRC disclosure statement must be compiled or examined by an independent certified public accountant [3].

Which state licensing rules must the study cite?

Every licensed component needs its state category, its approvals and its timeline in the report, from the state's own text. Rules differ even among neighboring states.

Exhibit 21. Examples of state rules that change a senior housing study

Source: Kentucky 902 KAR 20:480 [13]; Mississippi State Department of Health, Minimum Standards for Personal Care Homes, Assisted Living [54]; Nevada Revised Statutes Chapter 449 [55]; New Mexico 8.370.14 NMAC [56]; North Carolina G.S. Chapter 58, Article 64A [3] [39]; Florida Statutes 651.023 [24].

The state pages for Kentucky, Mississippi, Nevada and New Mexico set out each state's license categories, demographics and supply. For assisted living license categories in the largest states, see the assisted living feasibility study. HUD also asks the lender to submit a copy of any certificate of need the state requires for assisted living or board and care [10].

Which assumptions decide coverage, and how are they stress-tested?

A handful of inputs move coverage more than everything else: stabilized occupancy, the monthly fee or care rate, labor cost, the speed of fill-up, the payer mix in any nursing component, and the interest rate. The study tests each alone and then together.

Exhibit 22. Coverage sensitivity for an illustrative stabilized independent living community (model output)

Source: model output from assumed inputs. The 1.30x comparison is Freddie Mac's independent living coverage [9]; 1.45 is HUD Section 232's benchmark [16]. These are illustrations, not market facts.

Revenue is the most powerful lever in this model: a 5 percent revenue miss costs 0.21 of coverage, more than a 10 percent labor overrun. Most senior housing expenses are fixed in the short run, so a small occupancy miss falls almost entirely to net operating income. For a nursing component the study adds payer cases: Medicare days down, Medicaid share up and a rate freeze, since payer mix in nursing care runs through government programs (Exhibit 5).

What the operating budget must carry

The budget is built by department and by care level, not as a percentage of revenue. Payroll is the largest line: it ran from 39.5 percent of receipts in assisted living to 42.5 percent in nursing care in the 2022 Economic Census [19], so staffing is priced position by position at local wages, with any state minimum ratios applied first. Dining, housekeeping, utilities, insurance, property tax, marketing during fill-up and a management fee follow. Capital needs are budgeted separately; Fannie Mae sets a floor of $300 per unit per year for replacement reserves without skilled nursing and $450 with it [7]. The detailed staffing build for licensed care is set out on the assisted living feasibility study page and in the labor, staffing and margin case study.

How is a feasibility study different from an appraisal for senior housing?

The appraisal answers what the property is worth; the feasibility study answers whether the project works and on what conditions. In senior housing the difference is sharper because much of the value sits in the operating business. Fannie Mae will not buy a seniors housing loan whose balance exceeds the share of value attributed to land and improvements, excluding business value, goodwill and personal property [7]. HUD sizes Section 232 loans from the appraiser's value and the lender's net operating income [16].

The study therefore gives the appraiser a projection it can rely on: stabilized income by care level, the fill-up and its losses, the management fee, and the reserves. The two documents should agree on the operating forecast and disagree only where their questions differ. The study contains no opinion of value. More on that split is in the going-concern and real estate value case study.

What happens after closing: how is performance measured against the study?

The study becomes the baseline. Lenders, bondholders and state regulators all receive operating data after closing, and the projections in the study are what that data is measured against. A good study names the metrics that will be reported and the dates.

Exhibit 23. Post-closing reporting a senior housing study should anticipate

Source: as cited in each row.

Monitoring against the study turns early variance into action: a stalled presale count, an occupancy tier that keeps the reserve high, a payer shift in the health center. The earlier it is seen, the more options the sponsor and lender have.

What must a senior housing feasibility study contain?

1. A conclusion first: feasible, feasible on stated conditions, or not feasible as proposed, with the conditions or changes spelled out.
2. The product defined: units by care level, services in each fee, contract type, licenses and certifications.
3. The legal test for each component: the age restriction, the care license, the CCRC certificate or the Medicare and Medicaid certification.
4. A primary market area drawn from resident origin, with age bands of 55 to 74, 75 and older, and 85 and older as the product requires.
5. Income, asset and home value screens from market-area Census data.
6. A survey of every competing community by care level, with occupancy, fees, entrance fees, refund plans, concessions and pipeline.
7. For nursing components, CMS data on competing homes: beds, occupancy, staffing, turnover and star ratings.
8. Presales, deposits and waiting lists by unit type and price, measured against the state milestones.
9. Monthly fill-up with base, downside and severe cases.
10. Revenue by care level and payer, with Medicare and Medicaid assumptions tied to published rules.
11. Staffing by position and shift at local wages, and any state minimums.
12. A development budget with sources and uses, reserves required by the state and the lender, and interest during construction.
13. Coverage by year against the capital source's test, with sensitivity cases.
14. Coordination with the actuary and any CPA examination of the forecast, on one set of assumptions.
15. Every source dated, with assumptions and model outputs labeled.

What does a senior housing feasibility study cost, and how long does it take?

A senior housing study is quoted at a fixed fee of $14,000 to $26,000 and delivered in 6 to 10 weeks. The fee is set before work begins, is not a percentage of the loan and does not depend on the conclusion. The turnaround runs from the date the document set is complete. Where a bond offering needs a CPA firm's examination of the forecast, or a CCRC needs an actuarial study, those are separate engagements that the feasibility study coordinates with. You can estimate your fee before calling.

To start, the study needs the site, the unit mix by care level, the development budget or purchase contract, rate sheets and any entrance fee and refund schedules, presale and deposit records, the operator and management agreement, the licensing and certificate-of-need position, and the capital source in view.

How the study runs

1. Scoping. Confirm the product, the capital source and the tests that apply, including any state CCRC milestones.
2. Document intake. Plans, budget, fee schedules, presale records and, for an operating community, trailing financials, census and payer mix.
3. Field and market research. Site visit, competitor survey by care level, demographic and wealth analysis, CMS and state licensing data.
4. Model. Monthly fill-up and cash flow by care level, with base, downside and severe cases, reserves and coverage.
5. Review. The draft is checked against the lender's, regulator's and actuary's questions and revised only for new facts.
6. Final report. Signed by Sarrah Allen, MAI, who answers the lender's and regulator's follow-up questions. More about the practice is on the about page.

Download the evidence behind this page's exhibits (CSV, 588 data points with sources)

Who signs your study

FSC Consulting, Inc. is led by Sarrah Allen, MAI, a Member of the Appraisal Institute, who signs every study the practice issues. The certification page names the lead analyst who performed the research and modeling, the senior reviewer who checked it, the data sources used and the independence representations made. Both sign. The person who signs answers questions from the lender, the agency or the bond banker after delivery, as part of the fee.

Independence on a senior living file

• No ownership, development, operating or management interest in any community the practice evaluates.
• No referral fees from operators, developers, management companies or brokers.
• No advisory work for the operator of any community evaluated within the prior 24 months.
• Conflicts are disclosed in the engagement letter before work begins, including prior work on a competing community in the same market. The sponsor or lender may terminate at that point with a full retainer refund.
• No advocacy work: the conclusion follows the evidence, whatever it is.

Quality and coverage

• Four-pass review: lead analyst, senior analyst, and a second senior reviewer who took no part in the primary analysis.
• Errors and omissions insurance of $1 million; a certificate is available before the engagement letter is signed.
• Licensed data: CoStar, Esri Business Analyst, Moody's Analytics and RMA Annual Statement Studies, with seniors housing data subscriptions added per engagement.

More about the practice and the person who signs →