Investment Approach

Investment
Approach

Why Senior Housing?

Significant and growing demand. According to the U.S. Census Bureau, the number of Americans aged 65 and older will increase from approximately 47.8 million in 2015 to approximately 79.2 million by 2035, which is a growth rate that is four times the rate of the overall U.S. population. We expect that demand for senior housing will accelerate over the next several years as a greater percentage of the American population ages and this aging population lives longer and requires an increasing variety of services and level of support provided by senior housing facilities.


Elderly-Population-Growth

   Source: U.S. Census Bureau, 2014 National Population Projections,



Lack of new construction.
While the elderly population is growing, the rate of senior housing new construction decreased during the recent recession. According to the National Investment Center for the Seniors Housing Care Industry, units under construction began a significant decline starting in 2008 and continued at a slower pace through 2012. While construction has recently regained momentum, we believe demand for senior housing facilities will remain above what the current and near-term senior supply can accommodate.


 Construction and Inventory Yellow

Source: NIC MAPĀ® Data and Analysis Service, Construction Trends Reports, All Markets-Senior Housing, 2Q2015.



Increased national healthcare expenditures.
U.S. healthcare costs are projected to reach $5.2 trillion by 2023, comprising 19% of GDP. There is an opportunity to reduce costs for both individuals and the government by shifting patients from higher cost settings such as hospitals to lower cost settings such as needs-driven senior housing. This potential transition may further increase demand for senior housing facilities.


Healthcare Expenditures Yellow

Source: Centers for Medicare and Medicaid Services, Offices of the Actuary, June 2014; all amounts are estimated



Strong performance.
The senior housing sector has experienced strong operating fundamentals despite the recent recession. Unlike other real estate sectors' recent trends, senior housing rents did not experience negative growth rates despite the recent recession.

Rent Growth

Source: NIC MAPĀ® Data & Analysis Service-Primary Markets; MBAA; REIS; STR, 2013.



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