Senior Housing: How It Fits in Your Impact Investing Portfolio

Updated on March 18, 2019

When we think of investing in longevity, we often think of HealthTech and other innovations that could someday help seniors living longer, healthier lives. But investments in senior housing and healthcare realty can also help our seniors in myriad ways—today, when it counts the most. By helping to fund quality communities with social gathering places, loving providers, and affinity groups and activities, investors prevent loneliness and isolation—one of the most common, and most serious problems to plague the senior community.

Senior isolation has been shown to increase mortality rates in adults 52 and older. It’s also been linked to an increased risk of dementia, long-term illness, depression, and high blood pressure. In terms of creating an impact in longevity, quality senior care is one of the most tangible investments you can make. Below, I share two of the easiest ways to make an investment in senior housing, and why senior housing is a great choice for your impact investing portfolio.

It’s flexible.

If you’re looking to make a passive investment in longevity, senior housing is an incredibly flexible way to do it, either through private equity funds or healthcare REITs.

A private equity fund, such as, pools investor dollars into a large sum of capital and invests it in multiple projects. Projects may vary by size, location, and type. Fund managers determine the specific projects in which to invest based on overall market and demographic factors. For this reason, private equity funds require little knowledge of the senior housing industry. Even better, they offer consistently strong returns—senior housing continues to outperform other asset classes, with returns of 16.1%, 17,0% and 15.3% over a one, three and five-year period, according to CBRE’s mid-year 2016 update on senior housing. (Returns for multifamily were just 12.0%, 10.9% and 11.9% respectively.)

Most REITs, such as Sabra Healthcare REIT, Inc., typically invest in (or lend to) existing real estate properties with the intent to operate them long term as part of their investment portfolio. Unlike private equity funds, public REITs are traded on public exchanges, meaning you can get in and out of them relatively quickly, just like other publicly traded investments (stocks, etc.). In that sense, they are a relatively simple way for investors with limited knowledge of the industry to get involved at nearly any price-point. Many include a mix of healthcare and senior housing investments.

It’s diversified.

Most private equity funds and REITs are naturally diverse, in that they invest in a number of different communities of different types (assisted living, memory care, skilled nursing) in different markets (primary, secondary, tertiary) throughout the country. That diversification helps lower the overall risk one might incur by directly investing in a single senior housing property.

It’s an alternative investment

Just like venture capital investments in longevity, senior housing is an alternative investment, offering potentially higher returns than traditional investments. Alternative investments like real estate and private equity funds are on the rise in today’s low-yield market. The Yale Endowment has credited alternative investments for making it one of the top-performing university endowments in the United States.

It’s making a difference.

As noted above, an investment in senior housing is a truly impactful investment in longevity for our senior community. According to A Place for Mom, quality communities provide ongoing access to social and physical activities, a safe living environment, healthy food, intellectual stimulation, transportation, and independence. They also help make life much less stressful for seniors’ families.

There are so many wonderful opportunities to invest in longevity, far beyond technology, healthcare, and pharmaceuticals. An investment in senior housing increases longevity when and where it counts most—here and now.

Jess Stonefield is passionate about senior longevity and the concept of equitable equity—spreading the wealth among those who need it most.