Morgan Stanley predicts growth potential for senior housing stocks as aging U.S. population increases

As the American population continues to age, the demand for senior housing is on the rise. This demographic shift is not only changing the landscape of real estate investment, but is also presenting a unique opportunity for investors to capitalize on the growing need for housing options tailored to older adults.

According to a recent analysis by Morgan Stanley, senior housing properties are expected to see a significant increase in demand over the coming years. With approximately 18% of the U.S. population currently over the age of 65, this number is projected to grow to over 23% by 2060. As a result, the firm predicts that there will be 2.1 million residents in independent living, assisted living, and skilled nursing housing by 2030.

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Two real estate investment trusts (REITs) that are particularly well-positioned to benefit from this trend are Welltower and American Healthcare REIT. Welltower, with a 2.7% dividend yield, has been actively acquiring active adult communities to meet the growing demand for higher quality of life and services among seniors. American Healthcare REIT, which went public in February and yields 7.1%, is expected to see significant operating upside from its senior housing facilities.

Morgan Stanley’s analysts are optimistic about the future growth of both REITs, projecting a 10% increase in funds from operation by 2025/2026. This stands in stark contrast to the average growth rate of 2% to 4% for other REITs in the market.

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With the senior housing market poised for significant growth in the coming years, investors have a unique opportunity to take advantage of this trend by investing in REITs like Welltower and American Healthcare REIT. As the American population continues to age, these investments could potentially offer a lucrative return for investors looking to capitalize on the growing need for senior housing options.

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