Activist REIT Investor Bets Big On Senior Housing
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Important Note
Earlier this week, we mentioned in our Portfolio Review that we were doing research on National Health Investors (NHI) at the moment. It is a senior housing REIT that popped on our radar after we noticed that a famous activist investor had built a large position in it.
We are still not done with our research and will likely wait for Q2 results before making an investment decision. Here is our preliminary research. Stay tuned for more.
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Activist REIT Investor Bets Big On Senior Housing
Senior living and care facilities are an interesting sector of real estate.
For most of the 2010s, the narrative of a coming demographic wave of senior citizens -- a "silver tsunami" -- would soon create massive demand for senior housing. However, the bulk of this demand remained in the future, while a swell of new supply of senior housing properties steadily entered the market.
Developers weren't waiting for the silver tsunami to arrive.
Today, though, as the memory of COVID-19's devastating effect on senior housing facilities fades, demand is returning while construction has collapsed.
New construction starts are over 50% below their historical average at about 1.5% of existing inventory. Given high interest rates and construction costs as well as occupancy still recovering, new senior housing starts are unlikely to make another resurgence anytime soon.
Meanwhile, resident demand is in the midst of a sustained tailwind as the population of 85+ year-olds in the US is projected to increase by 4.5% annually through 2030.
While there was very little growth in the over-85 population from 2010 to 2020, this segment of the population is expected to nearly double over the next few decades.
That's where National Heath Investors (NHI) comes in.
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