Senior Housing Properties: A 7% Yielder Backed by the Graying of America

In an ideal investment, you’ll have several overlapping investment themes come together. And that’s what I see today in Senior Housing Properties Trust (SNH), one of the biggest players in the senior housing segment with 372 properties spread across 38 states and Washington DC. Let me start with biggest and most obvious theme — the graying of America. The Baby Boomers, the largest generation in U.S. history, is entering retirement en masse, and as things stand now America lacks the senior housing inventory to accommodate them. Ten thousand Baby Boomers turn 65 every day, and over the next 15 years, the number of Americans over the age of 50 will swell to 132 million.

This means unprecedented demand for everything from active retirement communities with golf and tennis lessons to assisted living with full-time nurses. This massive shift in our demographics is fantastic news for landlords of senior housing developments such as SNH. Despite its name, Senior Housing is not a pure play on the senior housing market. 29% of SNH’s portfolio is invested in independent living facilities with another 21% in assisted living. Nursing homes and wellness centers make up about 3% of the portfolio each. And importantly, 97% of Senior Housing’s net operating income comes from private-pay properties; exposure to Medicare is minimal.

Source: InvestorPlace

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