At the recently concluded National Investment Conference for Seniors Housing and Care in Chicago, the CEOs of some of the largest real estate investment trusts got together to discuss the current state of senior housing and what the future might hold.
The Current State of Senior Housing
The attendees of the conference included Debra Cafaro, the CEO and Chairman of Ventas, Inc.; Mercedes Kerr, the senior vice president of marketing for Health Care REIT; Lauralee Martin, the President and CEO of HCP, Inc.; and Wendy Simpson, the CEO, Chairman and President of LTC Properties. Together, their REITs are responsible for more than $7 billion in transactions so far this year. They also own more than 4,000 healthcare properties in the U.S., Canada and Britain, and their total enterprise value is quickly approaching $90 billion.
With respect to the current state of senior housing, the leaders of these REITs see the senior housing sector as increasingly undergoing consolidation at both the REIT and operator levels. This trend is increasing the level of sophistication in the industry as less experienced senior housing participants are exiting the space following an acquisition or merger.
They also noted that the sector has evolved from a time when senior housing properties were thought of as similar to apartments to where they are now viewed as part of a more complex healthcare system that delivers important care to seniors. Views on senior housing has changed over time, and today it is no longer considered the niche market it once was. Instead, it is now a readily accepted asset class among investors. As early as 2002, healthcare REITs were not included in the REIT index, but today there are roughly 13 of them.
What the Future Holds
Going forward, the leaders of these large REITs feel that advances in technology will create a big impact on the sector, and they also expect to see additional investments in underserved property types. When discussing technology, they pointed out that whatever advances take place in this area do not necessarily need to be groundbreaking. This is because small advances can also generate a lot of energy and lead to improvements for senior housing communities and their residents. And when discussing underserved property types, they stated that they expect to see additional investments in psychological health care services and the communities that cater to seniors who need help in this area.
While interest rates remain low and senior housing services continue to increase thanks to the aging of the population, investors seeking capital to follow the same path of these REITs and invest in additional senior housing assets should continue to look to the Chicago-based financing firm Cambridge Realty Capital for assistance in financing acquisitions and other senior housing transactions.