‘Small and complex’ senior living and care industry ripe for investors

LONDON: A major player has made the case for now investing in the seniors living and care sector.

Despite the “temporary disruption” from the pandemic, market conditions are favorable for investing in senior living and care, Kurt Read, chair of the NIC Board of Directors and managing director of RSF Partners, said.

Demographics and the structural characteristics of the long-term care industry make this a good time to invest, he said.

“The population is aging, and the baby boomer generation that we’re shifting to serve is 62% larger than the Silent Generation. We are also living a lot longer once we get to age 65,” Read said. Smaller post-boom families mean that fewer family members will be available to care for their loved ones in the future, too, he added.

The senior living and care industry, he said, is “small and complex,” making up a minute portion of the commercial real estate market at large.

The aggregate value of the sector, in terms of real estate, is approximately $475 billion, Read said. “That is less than 3% of the $13 trillion commercial real estate market,” he said, adding that that small market has six subsectors: active adult, independent living, assisted living, memory care, skilled nursing and continuing care retirement communities.

“That small and complex industry combines to offer participants and investors a premium return for those that can execute,” Read said. Almost 60% of communities are in the hands of operators that have fewer than 10 properties, he added.

“It is notoriously difficult to scale successfully in this industry, but it creates an opportunity for those participants that are narrowly focused, cashily committed, well-capitalized and dedicated to the use of good data to make better decisions,” Read said.

Data show that occupancy is rebounding, the third quarter had record absorption, supply growth is moderating, rent growth is positive, housing prices are up and the single-family housing market is lifting, he said, enumerating reasons for investing.