Active Adults: Senior Housing' s Hottest Growth Sector

Senior living owners, operators and developers eagerly are awaiting a silver tsunami of Baby Boomers who will begin entering the average age range for assisted living nationwide&mdash the early 80s&mdash in four years.

But the 70 million Boomers born between 1946 and 1964&mdash with ages now ranging from 58 to 76&mdash already are doing the wave: they&rsquo re lifting the fortunes of an emerging rental property type that rapidly is becoming the hottest growth sector in senior housing.

Active adult rental properties are aiming for Boomers in their early 70s (68-74 is the average range), a demographic that skews younger than independent living and attracts people who are more active and have much lower acuity needs than the current residents of independent living facilities.

According to a new report from NIC, active adult communities generally have higher rents than multifamily, lower expenses than independent living&mdash requiring fewer employees and no nurses or medical certification&mdash and long lengths of stay (the average turnover is 20%, compared to 50% for multifamily) that yield healthy margins in a stabilized asset.

From a valuation standpoint, active adult rental properties are being pegged between traditional independent living and conventional multifamily, with cap rates trending toward multifamily&mdash below 5%, with some below 4% in recent trades.

Rent rates at active adult properties typically are 10% to 30% higher than comparable multifamily, and 20% to 50% lower than independent living properties in the same area, according to NIC.

Underwriters are noting that active adult communities have less risk than traditional senior housing. By design, active adult assets can avoid the labor shortages that have been shrinking the margins of senior living facilities serving residents that have high acuity needs.

The demographics and economics make active adult a fast-growing market segment that has been compared to the growth of the assisted living market of the mid- to late 1990s, NIC report said.

We seeing the active adult sector getting much of the attention today, Doug Prickett, a senior managing director at Transwestern, told GlobeSt.

There is a significant population among the Baby Boomer generation who are seeking an active lifestyle and who don&rsquo t require the services for daily needs and care. This cohort is driving considerable demand for active adult properties, he said.

Ryan Companies, one of the largest national developers of senior living facilities, is pursuing several active adult projects, Julie Ferguson, executive VP, senior living at Ryan, told GlobeSt. Active adult is a new product type for us. We believe it is a good fit for our company with our experience in senior living as well as multifamily, she said.

NIC initial survey of active adult rental properties in the US revealed about 230 first-generation assets, most built between 2010 and 2018&mdash properties that are just starting to trade. NIC believes this is a huge undercount that will dramatically increase in the next survey because an industry consensus is still forming around a precise definition and dataset for the active adult sector.

NIC defines active adult rental properties as age-eligible (meaning age restricted), market-rate, multifamily properties that are lifestyle focused, but do not offer meals, transportation, laundry, activities of daily life (ADL) or medical services.

Unlike assisted living, memory care or skilled nursing facilities, active adult communities dont provide ADL services including medication management or assistance with bathing, dressing and mobility. They also dont offer specialized memory care or the short-term post-acute care available at skilled nursing facilities.

Active adult rental properties appeal to a younger, healthier cohort seeking an option for living in a secure, maintenance-free setting with amenities and opportunities that foster socialization and shared activity [with their peers], NIC said.

According to the report, the average tenure of active adult rental residents is 6-9 years, with 80% retention in stabilized properties. The average tenure at other senior living facilities ranges from 2.9 years in memory care, 4.3 years at independent living communities and 9.2 years at entrance fee continuing care retirement communities.

Active adult communities generally have 140-180 units ranging from 650 SF to 1,800 SF (with luxury units of 2,200+ SF). They usually come with well-appointed kitchens, oversized closets and offer access to parks and walking trails. Most have fitness centers and gyms, and many have a bar or pub on the premises.

NIC estimates that 70% of active adult residents have downsized from a long lived-in home within a 10-mile radius of the rental property. They typically have $50K in annual income with about $150K of non-housing related assets.

They want an active lifestyle that lets them socialize with their peers, and&mdash this may be the most important distinction with traditional senior living&mdash they&rsquo re making the choice themselves, while they still can.

Overall, the active adult resident cohort is older, has downsized and is making a long-term decision to move to a community that offers an authentic experience of connectivity, independence and choice, NIC&rsquo s report said.


A good read about the market potential of UG new biz.. Cheers!!
 

Global markets have been rocked by high inflation and interest rates this year and sentiment remains cautious heading into 2023, with fears of potential recessions in major economies.
The Companies & Markets team at  The Business Times  has come up with the following list of stocks we think will make interesting moves next year &ndash both in terms of their market prices and their operations.

By: Anita Gabriel, Ben Paul, Jude Chan, Kenneth Lim, Raphael Lim, Tan Nai Lun, Tay Peck Gek, Uma Devi & Yong Jun Yuan UG Healthcare
Regional glovemakers are mourning a slate of challenges &ndash oversupply, weaker demand and falling selling prices &ndash as the world recovers from the pandemic.

UG Healthcare, like many of its peers, has seen its revenues and earnings tumble.

The group had in October announced it was looking to diversify into non-glove healthcare businesses, which would give it strategic opportunities for growth in the long term.

To start, UG Healthcare proposed the acquisition of Indigo Teguh. The deal will allow UG Healthcare to get into the development, management and operation of active retirement homes, as well as healthcare and wellness businesses. The company said the rising ageing population in Asia-Pacific is likely to spur demand for good quality retirement facilities.

The diversification could help buffer UG Healthcare earnings from any sharp corrections in the glove market, and offer some protection for shareholders.