Investors Riding Wave of Interest in Senior Housing, REITs Driving M&A

In the wake of Sunrise Senior Living (NYSE:SRZ) agreeing to be bought by Health Care REIT (NYSE:HCN), senior living investors are riding a wave of interest in the industry as boosted stock prices reflect favorable occupancy trends and payment rates along with other factors, according to the

The senior living industry—including independent living, assisted living, and memory care communities—is primarily private-pay and not subject to fluctuating federal reimbursement rates, offering investors more stability.

Among the beneficiaries has been Brentwood-based Brookdale Senior Living, whose stock is up about 32 percent this month through Tuesday. That’s despite the senior living chain saying three weeks ago that Chief Executive Bill Sheriff had decided to retire after 28 years.


Earlier this month, the positive sentiments were driven by a report that showed occupancy of assisted- and independent-living centers reached a four-year high of nearly 89 percent for the second quarter with annual rent growth still around 2 percent.

Those numbers helped dispel the notion that the senior living market is linked solely to the economy, or broader housing trends, which had stalled, said Robert Mains, an analyst with Stifel Nicolaus.

“There was a perception from some investors that senior housing is like apartments for old people, so if the economy or housing market is weak, seniors aren’t going to move into assisted- and independent-living facilities,” he said. “Senior housing operators always said, ‘Ours is needs-based business. You move mom in because she can’t live independently anymore, not because you can sell her house.’”


After a building boom in the late ’90s through early 2000s that caused an over-supply of beds, there’s been limited new construction of assisted- and independent-living centers. That former excess supply has been absorbed, and too few facilities have been added to meet projected demand over the next several years.

REITs are taking advantage of the low interest rate environment and continue to drive most of the mergers and acquisitions in senior housing, the article continues, citing Justin Hutchens, the CEO of health care REIT National Health Investors. 

Read the full piece at the

Written by Alyssa Gerace 

Companies featured in this article:

, , ,