Geary Britton-Simmons, founder

As published in Scotsman Guide's Commercial Edition, August 2007.

Common sense would dictate that an aging population spells good things for senior housing.

For investors and brokers, however, a few other factors could make it one of the most-promising property types in coming years.

Factor No. 1: History. A surge in senior-facility development -- and failed development -- in the 1990s led to investor uncertainty. Lenders furrowed their brows at senior housing, considering the inherent risks in some properties. They sought experience in operators. They got it, and they set a precedent for quality.

Factor No. 2: Supply and demand. Because of the aforementioned scrutiny on loans for senior-housing and senior-care facilities, fewer have been built -- 30,000 units annually, to be exact, down from 65,000 in 1999, according to the American Seniors Housing Association. With the baby boomer generation reaching retirement age, however, more potential occupants could be seeking such amenities.

Factor No. 3: Simple math. Fewer facilities, more potential occupants and an emphasis on quality have driven up sales tags for many properties, according to reports. Research group Irving Levin Associates estimates that cap rates for today's senior-housing properties usually are at or below 8 percent -- which the company says could be their floor.

It's a solid foundation for growth, as American Seniors Housing Association President David Schless tells us in this month's Q&A. And for brokers looking to dabble into this specialty property type, it could spell interesting things for business in the next few years.

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