MEDIA RELEASE: Demand for senior housing and accommodation is set to accelerate over the next three to four years, creating an outstanding opportunity for investors, according to Quay Global Investors’ principal and portfolio manager, Chris Bedingfield.

Bedingfield says the growing need for senior housing is one of the highest conviction ideas in its portfolio.

“We call it a silver tsunami of people coming through who are going to need this type of accommodation, be it assisted or unassisted living.

“With the first of the baby boomers turning 80 in 2025, this generation is about to be responsible for one of the biggest opportunities in property markets,” says Bedingfield.

The ageing population is a societal issue facing governments around the world, including the Australian government. Bedingfield says that the impact is inevitably unavoidable, and that COVID has placed pressure on the supply side.

“The good news about this sector is that it's very economically insensitive. People are getting old no matter what happens to interest rates or no matter what happens to the economy. Every year, they're getting older so there is strong ongoing demand.

“The supply story is equally compelling because this is a sector that got beaten up during COVID.

“We have a perfect storm of a great demographic tailwind and very limited supply.”

One of those high conviction stocks that Quay Global Investors holds in its portfolio is Ventas (NASDAQ: VTR), a senior housing company in the United States.

“Ventas is the second largest healthcare real estate owner in the United States, and senior housing makes up half of the portfolio.

“Based on our estimates, we are buying the underlying real estate housing portfolio at 20 to 30 per cent discount to the cost of build,” says Bedingfield.

Despite recovering to some level of normal post-pandemic, the cost of build is going up very quickly.

“The company’s still going through a post-COVID recovery, so it's probably going to have the strongest earnings growth profile of most global REITs over the next three to four years.

“Today you are buying it today at around 15 to 16 times earnings, which is not particularly demanding.”

In addition to being in a sector that Bedingfield thinks has a great thematic, the company’s track record and excellent management also adds to its high conviction.