Let’s Talk Assisted Living Investments

Terrydale Capital

18 November, 2021 · 5 min read

As American baby boomers age into retirement, senior living housing inventory should see a projected increase. This is mainly since the aging population is faced with the challenge of finding suitable accommodation as they progress in age.

Notably, senior living communities were virtually unheard of before the 19th century. However, coming into the late ’90s, there was a greater outcry for choice, dignity, and independence as it pertains to assisted living for the aging population.

For the past two decades, the sector has rapidly expanded as access to capital market funding became more formidable. The demand for these facilities is driven by the present-day senior who is more empowered, committed to staying active, and selective as it pertains to the lifestyle that best suits them.

Why Invest in Senior Living Investment Assets

It is estimated that by 2035, the U.S will be home to over 78 million citizens above the age of 65 years. What’s more, the percentage of those above the age of 85 is set to grow at an even steeper rate.

This surge in demand provides an attractive investment opportunity to invest in both independent living and Continuing Care Retirement Communities (CCRCs).

You wouldn’t be a savvy investor if you did not consider the historical investment performance for the asset class. For starters, it has proven to be recession resilient. What’s more, it has growing demand drivers, which has created a supply-demand imbalance.

Overall, the investor sentiment is that senior living assets are on a bullish trend. What this means is that you will be joining other investors already yearning to buy more within this category.

Granted, the operating costs are significantly strong. Still, investor appetite in senior housing assets remains high, which should act as an additional incentive.

Overall, you want to invest in senior living assets due to the sheer number of seniors in the market for housing facilities that cater to their specific requirements. What’s more, more of these seniors are looking to live within communities that either consist entirely of other baby boomers like themselves or those with amenities they believe will make their prime years significantly comfortable.

Pros of Investing in Senior Living Assets

The current outlook is that the senior housing market will most likely to move from being simply a niche market to a significant specialized market. Despite the senior housing asset class being a relatively young industry, there are significant pros to putting your money into the industry.


The mid -1990s were rife with Real Estate Investment Trusts (REITs). Additionally, this period saw the emergence of private commercial mortgage-backed securities (CMBS). These saw access to capital available to developers. The result was that these developers ended up building properties at a rate that exceeded the demand.

At the beginning of the decade, stock prices took a dip which would see a limited supply of new equity financing. Still, the valuations for acquisition targets remained competitive, which would prompt the surge of mergers and acquisitions (M&A).

The industry has slowly evolved from the low occupancy rates and inability to meet investor expectations. Specifically, we are seeing an influx in occupancy and improved operating margins. The industry has shown healthy year-over-year revenue and NOI growth, which is attractive to financiers.

Lenders have started to open up more competitive financing options on independent living units that typically resemble traditional apartment units. The increased competitive lending options has created stronger and stronger valuations as margins continue to improve. Terrydale Capital has continued to increase their focus on lenders that have a appetite for these opportunities. Funding is now available through agency, CMBS, bank, and LifeCo. lenders.

Cons of Investing in Senior Living Assets

Business Risk

The industry is relatively young, which translates to a short track record, especially as it pertains to assessing investment risk. This presents the investment opportunity as being relatively volatile.

During the COVID-19 pandemic, this was particularly concerning for lenders. At this time, it was also apparent that the industry had a long way to go as it pertains to aligning said properties with epidemiologists. Altogether, it was apparent that there is more to be done to transition the niche market into a more mainstream asset class.


While the case for investment is particularly compelling, you need to consider the fundamentals of affordability. Specifically, the ability of the seniors to spend on the senior living facilities depends on the income they get from the pensions and investments. As an investor, you must toe the line as it pertains to providing competitive amenities while keeping the prices low enough to attract your target market.

A significant setback in investing in senior living assets is the unpredictable supply chain. The latter has created an ecosystem that moves at a significantly slower pace.

Senior living asset classes have favorable demographic fundamentals and provide the opportunity for higher yields than the conventional apartment. As you consider investing in senior housing assets, you want to partner with the right operator. This is particularly since while there are favorable financing options, there still is a restrained supply pipeline. Still, you can be assured of solid revenue growth and higher profit margins.

As an investor, note that at present, senior living assets have increased investor interest and improved operations. What’s more, the cap rates have fallen to single digits. Finally, you want to get on this bandwagon as the senior housing market is driven solely by the surging aging population and is not subject to external economic factors.

When you are ready for the most competitive financing structure in the market for your senior living property, we invite you to get in contact with Terrydale Capital. We are committed to bringing you both accurate and up-to-date capital market knowledge that should help you along with senior living asset financing.

As we have hundreds of deals passing by our desk every day, you can be sure that we will promptly bring to your attention the best deals. We go beyond just providing you with financing options. Our consultants are dedicated to building a lasting relationship with you to ensure you end up getting the best returns on your investment.

Do not risk pushing bad deals or your money. If you want confidence in your next senior living asset investment, contact us today and let our knowledgeable and professional team take every step with you.

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