By Matt Valley
AUSTIN, Texas — Jonathan Schatz, president of investment firm Coastwood Senior Housing Partners, believes the seniors housing industry has arrived “at an existential moment.”
“Make no mistake, we are facing a potential shortage of thousands of seniors housing units,” Schatz stated during a panel discussion titled “New Money, New Models: The Next Decade of Capital Formation,” which he moderated at the 2025 NIC Fall Conference on Sept. 9. Nearly 3,200 industry professionals gathered at the JW Marriott Austin for the three-day event.
At the current rate of development, the U.S. seniors housing industry will add 191,000 units by 2030, well short of the 560,000 needed to keep up with demand, according to NIC MAP, which tracks the industry. This leaves a gap of nearly 370,000 units.
“New money is going to be essential for our ability to invest in existing communities, to reposition communities to suit the demands of the next generation of seniors, to build and develop new seniors housing, and to invest and build world-class seniors housing operators who will care for our seniors,” emphasized Schatz.
“So, if we miss this opportunity we’ll regret it. But more importantly, we’ll fail our seniors who want to live and age together with us. If we cannot provide them with the communities that they seek, they will find alternatives and go away,” he added.
Coastwood is a major investor in Bonita Springs, Florida-based Discovery Senior Living, the third-largest U.S. seniors housing operator, with a portfolio of 39,236 units spread across 362 properties as of June 1, according to the American Seniors Housing Association.
Joining Schatz on stage to discuss the infusion of new capital into the sector were Daniel Hayes, senior director and head of Midwest mortgage originations at New York Life Real Estate Investors (NYLREI); Lynn Jerath, founder and president of Citrine Investment Group; Phil Kayden, chief investment officer, Health Wave Partners; and Kevin Maddron, chief strategy officer at Allegro Living.
Capital Provider Steps on Accelerator
NYLREI is a wholly owned subsidiary of New York Life Insurance Company, which had approximately $785 billion of assets under management as of June 30, 2025. That figure includes about $70 billion in real estate assets under management, of which $45 billion is comprised of mortgages.
Hayes and his team are responsible for deploying debt financing capital across five field offices nationally. Not only is NYLREI growing its business within traditional asset classes such as industrial, multifamily and retail, but it is also moving into alternative asset classes including student housing, seniors housing and medical office, said Hayes.
At the beginning of the year, NYLREI had “zero exposure” to seniors housing on the debt financing side of the business, noted Hayes. “Right now, we’re at $1.3 billion in terms of debt that’s being deployed, and we’re looking to do more in the industry.”
Hayes explained there are three reasons NYLREI has a keen interest in seniors housing today. For starters, there are more limited opportunities for the life insurance company to finance office properties today than in the past, due to a structural shift to hybrid and remote work. The national office vacancy rate stood at 20.7 percent in the second quarter of 2025, according to Moody’s Analytics.
“Now we’re looking to kind of fill that void not only with other alternatives, but really particularly with seniors housing,” said Hayes.
Second, NYLREI is looking to grow its mortgage portfolio. “Right now, the mortgage portfolio represents about 6 percent of the overall assets under management of not only our general account, but our third-party business, so we’re just looking to grow that [portfolio].”
The third reason is that the yields generated by seniors housing stack up well against other alternative real estate classes such as student housing and multifamily, said Hayes.
According to the Expanded NCREIF Property Index (NPI), seniors housing posted a total return of 2.08 percent in the second quarter, outperforming the overall NPI by 85 basis points. Year-to-date through the second quarter, total returns in the seniors housing sector were 4 percent.
Family Office Perspective
Chicago-based Citrine Investment Group serves both private and institutional real estate investors. Jerath cautioned against making broad generalizations about the investment strategies of family offices. There is no one-size-fits-all strategic approach, she pointed out. For that reason, her firm makes it a point to develop a strong understanding of the individual investment strategies of family offices.
“You could have a family office that’s 100 percent invested in one stock — to take an extreme — and you could have another one that functions more like an endowment where it’s very well diversified,” said Jerath.
Citrine focuses on value-add and opportunistic seniors housing investments in the Mid-Atlantic, Midwest and Southeast regions. The capital comes from family offices, high-net-worth individuals, and occasionally from funds and other institutional partners.
The textbook definition of a family office in commercial real estate is a private company or entity created by a wealthy family to manage and grow its assets. Family offices typically take a long-term, patient approach to building generational wealth. Their strategies are tailored to the family’s specific values, goals and risk tolerance.
“What I see with family offices right now is a lot of them want value-add, opportunistic-type returns, or they want high cash flow, or they actually want both high yields and they want a high IRR [internal rate of return].”
Seniors housing has piqued the interest of family offices for a few different reasons, noted Jerath. Like other types of commercial real estate, seniors housing assets offer certain tax benefits for investors (such as property tax deductions for various expenses associated with owning and managing real estate).
“On top of that, you’ve got the potential of higher yields [due to strong real estate fundamentals], which makes it a doubly attractive sector. And then the potential for value appreciation makes it a triple, if not a home run,” she said.
While institutional investors and private offices alike regard the sponsor as all-important in any real estate transaction, the institutional investors also concentrate heavily on the terms and structure of the deal, said Jerath.
Family offices, in contrast, may be more inclined to accept no cash flow in the short term if a turnaround strategy results in a healthy cash flow two years down the road. Family offices may also be more inclined to invest in properties in tertiary markets versus major metros, she said.
Foreign Capital Ramps Up
Launched by Macquarie Asset Management in late June, Health Wave Partners is a boutique Chicago-based firm that invests in high-quality seniors housing properties in regions with strong demographic and economic fundamentals to deliver attractive risk-adjusted returns.
The website for Health Wave Partners says that it seeks to partner with premier regional operators who have experienced leadership, established systems and strong organizational structures that foster operational excellence.
The investment platform plans to deploy between $300 million and $500 million in its first year. Macquarie Asset Management is a division of Macquarie Group, an Australian financial services giant.
Schatz, who pointed out that there is growing interest among foreign investors in U.S. real estate to capitalize on the demographic wave, asked Kayden if there are any special considerations for foreign investors.
“Tax efficiency is probably the number one aim for a lot of these foreign investors,” said Kayden of Health Wave Partners, explaining that this is particularly true when it comes to exiting funds. Macquarie Asset Management, which offers a variety of real estate funds, is adept as structuring the ownership of the real estate and investors’ interest in funds in a tax-efficient way, Kayden pointed out.
Operator’s Perspective
Seniors housing is an operationally intensive business that traditionally has attracted investors with a real estate background, Schatz noted. He asked Maddron how operators can best position themselves to receive the financing they need to be successful.
“This is my 25th NIC [conference]. This is the first real push of new capital into the space in quite some time,” said Maddron of Orlando, Florida-based Allegro Living, which operates 54 communities totaling more than 4,500 units in 14 states. (Spring Arbor Management and Allegro Management merged in May of this year to form Allegro Living.)
Given the growth in consumer demand and the shortage of supply, the industry is going to need an increasing base of operators over time to address the need that’s in front of it, asserted Maddron.
“The first thing you have to ask is what is the need for capital at the operator level? And there are a lot of drivers behind that. It’s scale, it’s diversification, it’s capital required to meet accounting reporting demands that some of the capital providers are asking of us now,” explained Maddron.
In short, it takes plenty of capital to grow an operating business, and there are many different ways to capitalize operating platforms.
“You can do it through mergers and acquisitions, like we’ve grown during the last three or four years. You can do it via alliances. I’ve seen operators come together and form alliances to get greater scale and access to those kinds of resources,” said Maddron.
“And then there’s just acquisitions of other platforms. It’s also an easy way to grow, particularly as you’re looking to expand into geographies that are probably hard to get to [or to be successful in otherwise],” added Maddron.
Whereas a merger involves two companies joining forces to form a single new entity, acquiring a platform involves one company purchasing a specific brand or portfolio.
Lessons Learned
There are two types of investors in seniors housing, Schatz observed. “There’s the type who had great experiences, and they’re still here. They’ve been here the whole time. And then there are some folks [for whom] it didn’t work out so well. It was messy operationally. They didn’t understand how the product was different from what they traditionally invested in, and they’ve gone away. Maybe they’re on the sidelines, maybe they’re tiptoeing back [into the sector].”
Schatz asked the panelists to share the lessons learned to help seniors housing investors new to the sector avoid the mistakes of the past and ensure they remain in the industry for the long haul.
Operators need to be fully transparent with owners about issues at the property level, said Maddron of Allegro Living. “You want to retain those relationships, and so it comes to down communicating as early and as often as you can.” Nobody likes unpleasant surprises, he emphasized.
Schatz then asked if any other panelists wanted to provide insights on mistakes from the past that should not be repeated. Jerath didn’t mince words. “Don’t overbuild.”
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