Amid the ongoing economic volatility from US President Donald Trump’s tariff policy, Gupta suggests advisors and investors are in a favourable position to enter the REIT market, which he says is currently discounted by almost 20 per cent to the NAV. He adds that any resolutions to the US tariff situation would increase the long-term prospects of the REIT sector.
“The yield looks good and the leverage is much better positioned as well,” he said. “And any positive news around tariffs will help the overall REIT sector perform well in the coming years.”
One of senior housing’s most attractive aspects in an economic downturn is its demographic-based demand, according to Gupta. Canada has an aging population, with the 85-year-old plus population potentially tripling over the next 25 years, according to StatCan. Gupta says that these demographic figures combined with the resilient nature of senior housing is providing a healthy outlook for the sector.
“In the last three or four recessions, healthcare REITs and senior housing REITs have actually outperformed because of their defensive business model,” he said. “If you’re an 85-year-old senior, you don’t check what the GDP growth outlook is going to be in the next 12 months before you sign up into a retirement home … it’s very rare combination of growth and defence as well.”
COVID heavily impacted the senior housing sector, with occupancy rates dropping from over 90 per cent in during the pandemic to just under 80 per cent after COVID. Gupta says that the supply for senior housing has remained relatively flat in recent years, and he predicts the supply side will only catch up with demand in 2029 or 2030. With this in mind, Gupta says senior housing could see a “golden set up” as increasing demand piles pressure onto a limited supply.
