Senior Housing Properties Proves Recession Resistant

1/13/2011 | By Matthew Bechard

Demographics in the United States are trending toward an older population and one that is increasingly looking for the services that a senior housing or assisted living facilities operator can provide.

Dave Hegarty, president and chief operating officer of Senior Housing Properties Trust (NYSE: SNH), sat down with during REITWorld 2010: NAREIT's Annual Convention for All Things REIT in New York City in November to discuss how his company is meeting the increase in demand and what have been some of the biggest changes he has witnessed in the senior housing market.

Outside of the aging population, Hegarty said the U.S. is in a period now where the housing market is affecting the senior housing industry; the unemployment rate and the economy in general are also factors.

"As those pieces continue to improve, we end up with a more confident demographic with the resources available to afford the senior housing and medical office that we are in," Hegarty said.

Over the course of the decade that Senior Housing Properties Trust has been in operation, Hegarty said he has witnessed several fundamental changes to the business. The capital sources and developer waves are now trying to catch the favorable demographic wave driving up interest significantly in the space, he said.

"This last two years has been an interesting time given that people were not sure how deeply the recession would affect our particular type of consumer," Hegarty said. "I think the buzz word is recession resistant as opposed to recession proof. But the providers of these services have weathered the storm pretty well and most are now looking to grow and increase their services."

A key component of Senior Housing Properties Trust's growth strategy has been targeted acquisition opportunities, which supplements the company's internal growth and pushes the needle forward, Hegarty said.

"External growth really drives our funds from operations (FFO) which allow us to raise our dividend," Hegarty said. "I envision us to be pretty aggressive in making new acquisitions in the medical office and senior housing space. I think it should be a good year for us."