7 Retirement-Housing REITs to Buy as Boomers Age โ˜˜ Hoey Team โ˜˜ eXp Realty

Dated: August 5 2019

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Senior housing quite possibly could be the biggest and both growth opportunity in real estate as the baby boomer generation continues to age.

With the population of those 65 and over set to nearly double in the next 30 years, Barron’s explains that there is opportunity for savvy investors, but also risk for those who are hasty to sink cash into the senior-housing industry.

Barron’s explained that most publicly traded players, including Welltower (WELL), HCP (HCP), and Ventas (VTR), are real estate investment trusts, or REITs. “All sport dividend yields higher than 4% and debt loads that look manageable,” Barron’s said.

“The stocks are not quite pure plays on senior housing. All three own a mix of properties, including medical offices, so they trade based on health-care trends as much as real estate ones. That diversification arguably makes them safer, but it also leaves them vulnerable when investors fret about health care,” Barron’s said.

Barron’s suggested seven real estate investment trusts, or REITS, to consider:

  • CareTrust REIT (CTRE)
  • HCP (HCP)
  • LTC Properties (LTC)
  • Sabra Health Care REIT (SBRA)
  • Senior Housing Properties Trust (SNH)
  • Ventas (VTR)
  • Welltower (WELL)

To be sure, the Social Security Administration paid out $85.3 billion in March to more than 63.3 million people, according to the Social Security Administration. About 70% of the payments went to retirees and the remainder was for survivor benefits and disability insurance. On average, a retired worker collects $1,467.17 per month which is $17,606 annualized, Bloomberg reported.

The number of recipients has increased as the baby boomer generation reaches retirement age. Last year, retirees receiving payments grew 3% percent versus 1.9% percent growth in the U.S. workforce, according to estimates from the U.S. Census Bureau and the Bureau of Labor Statistics.

Retirees, widows, disabled workers and some children who qualify receive a monthly stipend through SSA programs. The money comes mainly from payroll taxes but also from reserves the SSA set aside known as the trust funds. Because of changing demographics -- a historically low birth rate, increasing number of retirees and the fact that the average new retiree will live to age 85 -- these reserves are projected to run dry by 2035, according to recent estimates.

Social Security will start relying entirely on taxpayers’ money when the trust funds reach zero. The data show that on a cash-flow basis, the system already is paying out more than it takes in. Last year, the negative cash flow was $80 billion. That meant the Treasury had to borrow $80 billion so it could redeem Social Security trust fund securities to keep benefit checks flowing.

Article content from SRES Magazine; Barry is an SRES; Senior Real Estate Specialist, we have more resources here.


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