Seniors housing attracts new capital as demand surges worldwide
LOS ANGELES: Seniors housing is entering a new era defined by digital transformation in care, increased appetite for longevity investments, and industry-wide decarbonization. With asset values now below their peak and supply pipelines drying up while demand grows steadily, this segment is suddenly attracting serious attention from investors. According to panelists at the NIC Conference in Austin this week, new capital is flowing in and reshaping how deals are made and how the market measures success.
“Yields in seniors housing are superior to others, such as student or multifamily,” said Daniel K. Hayes, senior director and head of Midwest Region originations at New York Life RE Investors, adding, “so this is a good entry point. Foreign investors like niche industries, so seniors housing fits that category.” Hayes’s comments came during the session, “New Money, New Models: The Next Decade of Capital Formation,” which drew a crowd interested in tracking new trends and strategies.
Lynn Jerath, founder and president of Citrine Investment Group, argued that family office investors still prefer longer—though more flexible—timeline horizons. These investors chase high cash flow and value-add opportunities, and she noted that “the seniors housing industry offers tax benefits and higher yields, which make it a doubly attractive opportunity.” For them, the sponsor’s quality outweighs structure, Jerath said.
The search for longer hold periods is becoming more common as well. Phil Kayden, chief investment officer at Health Wave Partners, explained that his firm’s closed fund is structured around a seven-year horizon, but some investors want even longer timelines.
For veteran industry participants, the arrival of new capital signals a major shift. Kevin Maddron, chief strategy officer of Allegro Living, reflected that, “This has been the first push of new capital in a long time.” Echoing the general sentiment, Maddron said, “The development window is finally opening after such a long time. But it will take a long time for us to catch up.” He also pointed out that more industry service providers are getting involved in capital formation—a new dynamic for seniors housing. As demand surges, Maddron sees operators needing more capital for tech upgrades, data management, and accounting systems. Solutions range from tapping family and friends to mergers, acquisitions, or alliances.
For investors, community performance and operator quality remain top priorities. Kayden stressed the importance of vetting the operator with tools like his firm’s 100-point checklist. “You have to keep your eye on risk in case a particular building is making negative headlines,” he warned, while Jerath said reputational risk is magnified in seniors housing since “everybody knows who the operator is.” On-site leadership is critical as well, according to Hayes: “Do they address their staff and residents by name? That’s a good sign of how well the community is run. You have to understand the age and demographics of the residents who are coming in.”
Many investors have never set foot in a senior community, Jerath said. “When you decide to get into the seniors housing space, you have to be able to understand the vocabulary so you feel more comfortable.” Panelists agreed that successful investing requires evaluating both operational strategy and hard performance data. Maddron shared that his investors want daily rent roll visibility, adding, “Being transparent with your information is a way of showing confidence in how you are operating your property.” Maddron’s company now employs a specialist focused on artificial intelligence and data. Jerath endorsed the creation of a comp set of aggregated property data, similar to what exists in hotels: “We wouldn’t have to show information for an individual property, but aggregation would help us measure performance.”