The senior housing sector is poised for significant growth as the American population continues to age. As baby boomers, born between 1946 and 1964, reach retirement age, the demand for senior housing is expected to increase. Bank of America analyst Joshua Dennerlein believes that the industry is on track for a recovery, with senior housing stocks set to take off in the coming years.
Despite the challenges faced during the COVID-19 pandemic, the senior housing industry is showing signs of improvement. Occupancy rates are on the rise, and demand for senior housing is increasing. At the same time, new construction has slowed down, creating an opportunity for existing players in the market to capitalize on this growing demand.
One of the key players in the senior housing sector is Ventas, a real estate investment trust that specializes in senior housing communities, medical office buildings, and other healthcare facilities. Dennerlein has reiterated his buy rating on Ventas stock, citing a potential upside of 25.8% from the current price. With a dividend yield of 3.4%, Ventas offers investors an opportunity to generate income while benefiting from the growth in the senior housing market.
Ventas’ leases with Brookdale Senior Living, a leading provider of senior care services, present additional growth opportunities for the company. Dennerlein believes that Brookdale’s lease renewal in 2025 could lead to an increase in cash rent of up to 10%. Furthermore, the conversion of Brookdale properties to Ventas’ senior housing operating portfolio could provide an additional boost to net operating income. This potential for growth highlights the strong position that Ventas holds in the senior housing market.
While Ventas presents a promising investment opportunity, it is not the only senior housing REIT that Bank of America favors. Welltower and American Healthcare REIT are also on the bank’s buy list, offering investors alternative options in the senior housing market. With dividend yields of 2.3% and over 6% respectively, Welltower and American Healthcare REIT provide investors with a range of choices for exposure to the growing senior housing sector.
The future of senior housing stocks in America appears bright, with increasing demand driven by demographic trends and market dynamics. Investors looking to capitalize on this growth opportunity may consider Ventas, Welltower, or American Healthcare REIT as potential investment options in the senior housing sector. With the potential for income generation and capital appreciation, senior housing stocks offer a compelling investment thesis for the long term.