80+ POPULATION GROWTH MATERIALLY EXCEEDS INVENTORY GROWTH

Senior Housing Returns to a Favorable Balance between Resident Growth and Inventory Growth

Senior housing fundamentals largely depend on the relationship between the 80+ population and the supply of senior housing stock. For most of the past decade, supply growth (senior housing inventory) exceeded demand growth (80+ population), leading to gradually declining occupancy rates.

However, beginning in 2022, this relationship inverted, with the 80+ population exceeding inventory growth. By 2023, 80+ population growth began to materially outpace supply. As a result, there is a growing gap between supply and demand growth, which will continue over the coming years unless senior housing development rapidly increases. In the meantime, the growing gap will likely materially lift senior housing occupancies, as inventory growth lags well behind demand growth.

Brookdale defines target market for senior living facilities as 75+ with $50,000+ income within the United States

42% forecast increase from 2021 to 2026

1 million new seniors will enter target market age cohort every year through 2030(3)

• 66% of residents diagnosed with at least two chronic conditions
• 27% of those age 65+ live alone according to a survey conducted by Administration for Community Living(4) – Social isolation among older adults has been associated with a 50% increased risk of dementia, stroke (+32%), heart disease (+29%) associated with social isolation(

• 61% of residents needed assistance with three or more activities of daily living (ADLs) and 27% needed assistance with one or two ADLs

• Residents needed assistance the most with bathing, walking and dressing (all services provided by Northstar communities)

DESPITE THE TEMPORARY DISTRESS, SENIOR DEMOGRAPHICS ARE FAVORABLE

Assisted living and Alzheimer’s care is need-driven as seniors age and need both housing and care services.

Industry demographics and demand trends are extremely favorable. Business has two components: real estate and operations:

• Each of these pieces, standing alone, has proven to be profitable and recession-resistant;
• Together, they create a winning combination for investors and the residents. Seniors housing resiliency was evident during the recent recession when seniors housing and care properties outperformed other commercial real estate property type in terms of investment return, rent growth, and loan performance.

Much of the strength of the investment performance of seniors housing properties can be attributed to relatively steady leasing trends when compared to other real estate property types, especially during the recent recessionary period.

According to the Alzheimer’s Association, by 2030, the segment of the U.S. population age 65 and older will increase substantially, and the projected 74 million older Americans will make up over 20 percent of the total population (up from 16 percent in 2019).

Millions of Americans have Alzheimer’s disease and other dementias. As the size and proportion of the U.S. population age 65 and older continue to increase, the number of Americans with Alzheimer’s disease and other dementias will grow. This number will escalate rapidly in coming years, as the baby boom generation has begun to reach age 65 and beyond, the age range of greatest risk of Alzheimer’s. In fact, the first members of the baby boom generation turned 70 in 2016.

An estimated 5.8 million Americans of all ages have Alzheimer’s disease in 2019. This number includes an estimated 5.6 million people age 65 and older and approximately 200,000 individuals under age 65 who have younger-onset Alzheimer’s.

One in nine people age 65 and older (11 percent) has Alzheimer’s disease.

About one-third of people age 85 and older (32 percent) have Alzheimer’s disease.

Eighty-one percent of people who have Alzheimer’s disease are age 75 or older.

By 2025, the number of people age 65 and older with Alzheimer’s dementia is projected to reach 7.1 million — almost a 27 percent increase from the 5.6 million age 65 and older affected in 2019.