Between now and 2050, the United States will see a significant increase in its older population segment. This should come as no surprise, as the baby boomer generation hits retirement age and life expectancy ticks up due to advances in healthcare and quality of life.
According to the U.S. Census Bureau, “The aging of the population will have wide-ranging implications for the country … it will also affect families, businesses and health care providers.”
The Census Bureau projects that the percentage of population over the age of 65 will go from 13.7% in 2012 to 21% in 2050. This represents an estimated increase of 30 million people.
The situation in Europe is similar. The Economic Policy Committee and the European Commission estimated that the elderly population in Europe will increase by 58 million between the years 2005 and 2050. According to the Brookings Institution, the European median age is expected to rise from 37.7 to 52.3 over the same time period.
With expectations of such a meaningful upheaval in the demographics of the developed world, certainly many sectors and individual companies would be affected. Not surprising, the majority of companies currently discussing the trend and impact on their business are in the healthcare sector.
Real Estate Investment Trust (REIT)
- Healthcare Trust of America ($HTA) – Company Investor Presentation, July 29, 2015
“Medical Ofﬁce is beneﬁting from tremendous macro-economic tailwinds that make it an attractive real estate sector in which to invest. On top of that, MOBs are one of the few asset classes that are utilized by every individual throughout their lifetime, with each person making approximately 3.7 trips to a physician’s ofﬁce on an annual basis. This is a key driver for the high levels of tenant retention in the space.”
HTA is a medical office building REIT with 15.4 million square feet in gross leasable area, and $3.6 billion in investments in medical office buildings.
- American Equity Investment Life ($AEL) – 10K, February 27,2015
“By 2030, this sector of the population is expected to increase to 20% of the total population. Our fixed index and fixed rate annuity products are particularly attractive to this group due to their principal protection, competitive rates of credited interest, tax-deferred growth, guaranteed lifetime income and alternative payout options.”
AEL provides fixed indexed annuity products to older individuals who are seeking a guaranteed lifetime income. Their business model is focused upon the needs of an aging population’s retirement savings and income, and that longevity risk (the risk of outliving your savings) favors the lifetime guarantee.
- Five Star Quality Care ($FVE) – Conference Call Transcript, June 1, 2015
“Supply / demand from the standpoint of the aging of America definitely is in favor of our industry, and we look for growth opportunities of expanding various buildings that are at higher levels of occupancy, as well as acquisition.”
Five Star is one of the largest publicly traded operators of senior housing in the U.S. The company operates 272 senior living communities, with nearly 32,000 units across the country.
I identified these companies and others by conducting a quick search on AlphaSense for “aging population,” and organizing the results by sector and relevance.