CNBC Property Play: Aging boomers could mean big business for senior living

Market Trends & Industry Dynamics - Senior living is on the edge of a boom due to the aging baby boomer population, with over 4 million boomers expected to reach 80 in the next five years [1][2][3] - The over 80 population is expected to grow by 28% in the next five years, significantly outpacing the overall US population growth of about 1% [3] - Annual inventory growth in senior living has dropped below 1% for the first time since 2006, indicating constrained supply [1] - Demand-supply dynamics strongly favor owners of senior living assets due to decade-long tailwinds and historically low supply growth [5] - The senior living sector is becoming increasingly consumer-driven, with residents paying out-of-pocket for care and amenities [25][26] - The great investment opportunities always go back to where is the demand, senior living is such a great investment opportunity is that the demand is in this longevity economy [32][34] Investment Opportunities & Financial Performance - Ventas is investing billions of dollars annually in senior living, seeing returns in the 7% range going in, with unlevered IRR in the low to mid teens, and acquiring assets below replacement costs [1][3] - Baby boomers, who are now turning 80, control $78 trillion, which is half the assets in the US, with the average net worth of over 75 household is 1 million plus [12] - Ventas benefits from higher development costs because it has an installed base and is acquiring assets below replacement cost [14] - Ventas has wildly outperformed the S&P 500 during the CEO's tenure [31] Risks & Challenges - Potential risks include macroeconomic factors like stagflation or recession, and ensuring sufficient caregivers and labor [21][22] - Scarcity of construction labor and tariffs will keep construction costs relatively elevated [23]