Senior Housing Properties Trust Says Senior Living Oversupply Concerns Exaggerated

David Hegarty, president and COO of Senior Housing Properties Trust (NYSE: SNH), joined REIT.com for a video interview at REITWeek 2016: NAREIT’s Investor Forum at the Waldorf Astoria New York.

About 55 percent of the REIT’s portfolio is comprised of senior housing assets, with medical office buildings (MOBs) accounting for the remaining 45 percent.

Hegarty said concerns about oversupply in the senior living sector have been exaggerated: “It’s a local business at the end of the day, so it depends on particular markets.” Conditions in the medical office segment, meanwhile, are “very good,” he added.

“Our focus is really trying to capture that baby boomer generation that’s turning 65 at this time…that’s the great wave coming on and we’ll capture them on the back-end when they turn 80, 85 and fill up our senior living communities,” Hegarty observed.

Turning to internal growth opportunities, Hegarty pointed out that the firm’s REIT Investment Diversification and Empowerment Act (RIDEA) assets have a 3 percent to 5 percent growth potential. Rents at MOBs are set to rise around 2 percent, and about 1 percent to 2 percent at the company’s triple net senior living assets, according to Hegarty.

Hegarty also commented on the outlook for acquisitions and dispositions for the remainder of the year.

“This is going to be a very modest year. Pricing is very expensive right now; there’s a significant amount of private equity capital chasing the product, so we’re best to remain on the sidelines and look for internal opportunities,” he said.

Dispositions will also be modest, Hegarty added.