Why Investors Are Flocking to Senior Housing

Written by: Amy Baxter | Senior Housing News

Senior housing has really been able to stand on its own two feet as a significant real estate class as of late, with more investors from outside the industry hopping on board.

Seniors housing was the most attractive asset class for the second year in a row when compared to other commercial real estate sectors, including apartments, industrial, hotels, office and retail, investors said in a recent survey. The survey, conducted by the National Investment Center for Seniors Housing & Care (NIC) and National Real Estate Investor (NREI), collected 200 responses in June 2016.

Here are the top reasons seniors housing has become the hottest property type, as identified Thursday by an expert from NIC in a webinar on the senior housing outlook:

1. It’s Becoming a Core Food Group

The basic characteristics of seniors housing assets make them attractive to own, and they are increasingly being recognized within real estate portfolios as a means to diversify across core property types.

“Some of the characteristics of a core real estate group are steady returns, strong income returns, steady cash flow, very strong tenant base,” said Beth Burnham Mace, chief economist for NIC.

In terms of diversification, senior housing may be becoming recognized because it does not subscribe to many of the same economic cycles of other property types, said Mace.

2. The Sector has Substantial Growth

The sector has hit a market value of $372 billion, including skilled nursing values, and will continue to experience significant growth. Major health care real estate investment trusts (REITs) have gotten into the space over the years, and have helped the sector grow as capital providers. In return, health care REITs have been among the top-performing REIT sector over the years.

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