Seniors housing has been kind tosavvy investors who bought in over flashier office, retail, and multifamily deals. But according to Capitol Seniors Housing's Scott Stewart (top middle), the secret may be out. (Probably because seniors don't like when you whisper.) Scott tells us that while the future remains bright for the sector, hungry investors are arriving on the scene: "Institutional groups used to stay away because they didn't understand it, but a flood of capital has come in the past three or four years." With Scott are colleagues (bottom row) Scott Hillman, Hanneke Talbot, Scott Moorhead and (top) Kyle Henderson, Paul Weir, Fred Moon, and Janice Kruger.
Scott tells us what ultimately drives demand for seniors housing is demographics. He cites a US Census figure that 10,000 Baby Boomers will turn 65 every day for the next 18 years. (The Olive Garden will live to regret its AARP discount.) Plus, many future residents are turning a corner in terms of accepting the lifestylethe acceptance ratio of the product has doubled in the last decade but remains in the single digits, he says. "And it's a product that's constantly being reinvented," Scott points out, as operators add more amenities and activities.
This year, CSHwhich counts the Harvard endowment as an investment partneris chasing both stabilized properties and new development, Scott tells us.He says the lack of new construction in the industry is "counterintuitive" since demand from renters remains high. Health Care REIT SVP Mike Noto (above) touched on the problem at our annual Houston Healthcare Real Estate Summit Wednesday: Skilled nursing has fallen into disfavor with investors thanks to low reimbursements from insurance companies. He says the lack of development is a significant problem since the average stay in assisted living has been increasing. Plus, users today have higher expectations and want more amenities than earlier generations, so older existing product doesnt appeal to them.
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