‘Welcome to the Game’: Carlyle Group, Other Pioneers Ready for Active Adult Boom

Active adult has been hot for several years, but the sector appears to be on the cusp of a major boom.

Aided by a recent milestone NIC research report defining the product type, investors and capital partners are increasingly seeing active adult as a good senior housing bet. The topic was on the lips of many attendees at the most recent NIC conference in Washington D.C., with an entire panel devoted to the “rational exuberance” of investing in it.

With expected higher margins, a younger resident base and lower resident turnover than senior living communities, the product type can seem like a buoy in otherwise choppy waters. And to that end, there are multiple companies looking to grow rapidly in the space in the coming years in the hopes of carving out a new niche and diversifying their portfolios.


There is also a whole crop of companies that have invested in or managed active adult communities for years, see a growing opportunity to do so in the future, and now have data to inform their strategies and support the continued flow of capital into projects.

Take private equity giant The Carlyle Group. Carlyle made a concerted push into the space about eight years ago. Today, it’s among the space’s biggest players, having invested in around 20,000 units of active adult and sold approximately $1.2 billion in properties to a host of institutional investors from REITs, core funds and sovereign wealth funds.

Carlyle’s operating partners include Buffalo, New York-based Clover Management, an active adult operator catering to the middle market; and Greystar, which is forging ahead in the space with multiple brands including Overture, Album and Everleigh.


For operators like Clover and Greystar, the product type’s recent meteoric rise is validation of their growth strategies and assurance of future success. It is also a sign that the space is going to get a lot more crowded in the months and years ahead. To that, Clover Founder and President Michael Joseph says, “Welcome to the game — the more, the merrier.”

“The more people who want to own this stuff, the more people who want to invest in it, that is better for people like me,” he said. “It’s making it easier for me to do my next deal.”

Inside the data

Backing Carlyle’s investment thesis in active adult senior living is data from the wider market showing how these communities stack up against multifamily and independent living communities.

Data from the active adult market shows the product type has higher average occupancy than both multifamily properties and independent living communities, with an effective annual rate growth of 6%.

Residents in active adult typically pay about 28% of their income on rent; which is lower than multifamily at 30% and independent living at 54%.

Active adult communities also carry resident retention rates of 80%. For comparison, independent living communities carried resident retention rates of 60%, while multifamily properties sat at 50%.

But perhaps the biggest difference in the product type is in margins. Active adult communities can carry average margins of 64% — a percentage that is just shy of multifamily and more than double pre-pandemic margins for independent living.

“The tenant profile is sticky with retention rates of approximately 80%, which contributed to the sector’s resilience during the Covid-19 pandemic with nearly 100% rent collections, stable occupancies and positive rent growth,” said Zachary Crowe, a managing director at Carlyle focused on U.S. real estate opportunities. “The by-product of this is a sector with strong prospective growth and recession resilient qualities.”

And Carlyle is not the only major firm focused on the product type in the future. Active adult is also a focus of growth for PGIM Real Estate and Livingston Street Capital.

PGIM, in particular, is interested in the demographics of the incoming baby boomer generation and the fact that active adult communities are thought to be more resilient in the face of economic downturns.

The company has in the past invested billions of dollars in alternative sectors that started small but grew over time. Looking ahead, PGIM Managing Director Todd Goldberg sees active adult as likely fitting into that story. In fact, he believes it may even carry less risk than multifamily projects in some ways.

“The perspective of having less risk than multifamily, less risk than senior housing in terms of where operating expense margins can be — that’s really why we got into the space,” Goldberg said during a panel discussion at this year’s NIC conference in Washington, D.C. “Whether that’s development, core or lease-up … we need to be in this sector.”

‘World is just waking up’

Though its rise to prominence in the senior living industry is relatively new, there are companies that have operated in the space for years, sometimes even before it was known under the moniker active adult.

Clover, for instance, first ventured into its middle-market active adult platform about 25 years ago. Today, the company’s footprint in the space includes 50 open communities and a development pipeline of seven more.

The typical Clover community is about 120 units and located in places where older adults already live and want to stay, such as Buffalo, Cincinnati, Cleveland or Pittsburgh.

In addition to Carlyle, Clover also works with real estate investment trust Welltower (NYSE: WELL), which bought a 32-property Clover portfolio in 2019 in a $343 million deal.

For Joseph, the recent NIC report was not a surprise. He can point to 25 years of experience showing why the product type is a good investment, from maintaining high occupancy and rent collection in a recession to strong annual rate growth during the pandemic.

With interest rates ticking up and new development and construction trending downward, Joseph sees a very favorable supply-demand dynamic on the horizon for active adult communities. And his company is preparing accordingly.

“I think the world is just waking up to the understanding that it’s also where supply is so short of demand, and only going to stay shorter,” Joseph said. “Next year, I want to get as many in the ground as I can.”

In the next decade, Joseph believes the active adult sector will stratify into different offerings based on quality and price, much in the same way the hotel industry does today. And he still sees the sector in its early stages, with much more ground left to cover.

“I think active adult will end up being a major part of the senior continuum,” Joseph said. “We’re just at the beginning now.”

Another company going big on active adult is Greystar, which also works with The Carlyle Group. The Charleston, South Carolina-based company first entered the space in 2017. Since then, the company has grown to be among the largest operators of active adult senior living communities, with 95 communities in 23 states.

The company’s plans hinge on diversification of services and rent, with the Album brand for middle-market communities and the Overture and Everleigh brands for more high-end projects. The company’s average occupancy rate for stabilized active adult communities hovers around 97%, with a retention rate around 80%.

Like Joseph, Greystar Managing Director of Real Estate in Active Adult Michael Levine has seen an industry waking up and warming to a product type that it scoffed at just a few years ago. Today, the company’s phone is ringing off the hook.

“People wanting to be in the space, they see the vision” Levine told SHN. “A couple of years ago, people were laughing at us.”

Levine described Greystar’s preferred growth in the space as “smart,” with expansions planned in existing areas and in new regions. Last year alone, the company entered 15 new markets in six new states.

“At this point, we’re getting calls every day … sometimes multiple times a day,” he said. “But we’re trying to find people with like-minded ideology in terms of what they see for active adult and their vision.”

Given all of that new interest, he believes the sector is poised to see a big expansion in the next 24 to 36 months. And he is seeing rapidly growing interest from multifamily companies and senior living groups.

“You’re going to see a sizable change in this marketplace in terms of people coming into the space from all different realms,” Levine said. “We’re on the cusp, and I think it’s a little further out from a full explosion around the country.”

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