Why US senior housing appeals to institutional investors

^{Brian Landrum and Trent Johnson, Co-Heads of HMC’s US Seniors Housing team}

Senior housing has evolved from a niche sub-sector within real estate to a rapidly growing high-demand asset class globally, driven by strong demographic tailwinds and a significant supply-demand imbalance.

Harbert Management Corporation (HMC), founded in Birmingham, Alabama as an early entrant to the real estate private equity space, established a specialist US senior housing investment team in 2015.

Brian Landrum and Trent Johnson, Co-Heads of HMC’s US Seniors Housing team, spoke with Jayda Etienne, Deputy Editor of Preqin First Close, about how the fundraising environment has changed since their debut a decade ago, and the importance of partnering with trusted operators to effectively capitalize on the fundamentals of the senior housing market.

What are your roles at HMC?

Brian: Trent and I are co-fund managers of Harbert’s Seniors Housing strategy – a platform we helped launch in 2015. We lead the senior housing investment team across the full lifecycle of the portfolio, including deal sourcing, underwriting, financial analysis, asset management, the capital market, and dispositions.

Why the focus on senior housing as a separate part of HMC’s wider real estate investment strategy?

Brian: HMC has long believed in the fundamentals of senior housing and taken a bullish position on the sector, raising $800mn for our platform. Historically, we’ve invested in senior housing within value-add real estate funds. But because of operational complexities, senior leadership wanted a dedicated, sector-specialist team. Our longstanding relationships with more than 15 local and regional operators give us a meaningful competitive advantage.

Also, the demographic tailwinds are extraordinary. The 80-plus population – our core customer base – will double from roughly 14 million today to about 28 million over the next 15 years. This increase in demand is colliding with a significant shortage of purpose-built supply and a surge in occupancies, making senior housing an attractive option compared with other asset classes.

Are there particular geographic ‘hot spots’ where these tailwinds are most evident?

Trent: Rather than focusing on broad regions, we analyze supply-demand dynamics at the micro-market level, often within a three-to-seven-mile radius. Over the last decade, we’ve built proprietary tools that help us identify pockets of opportunity within markets, and those insights guide where we deploy capital.

You mentioned operational complexities. What does that look like in practice?

Brian: Senior housing blends aspects of residential living, healthcare, and hospitality. Residents expect healthcare support, dining, transportation, social programming, and other services all within a residential environment. Unlike industrial or multifamily properties, a senior housing community might have 40–70 employees on site, including caregivers, nurses, and dining staff. These roles are overseen by an Executive Director, whose responsibilities resemble those of a hotel general manager, but with greater involvement in healthcare delivery and interaction with residents’ families.

Have customer expectations for senior housing changed with the baby boomer generation?

Trent: Expectations have changed dramatically. Baby boomers are more knowledgeable about senior housing. They want more space, more amenities, and more hospitality-driven experiences. Today’s communities are larger and include multiple dining venues, wellness amenities, robust activities programming, and outdoor features such as pickleball courts and dog parks. The lifestyle feels much closer to class A multifamily, but with services tailored to seniors.

You take a value-add approach to your investment strategy. What does that involve?

Trent: Senior housing offers diversification within a single asset class because we can invest across independent living, assisted living, and memory care. Our approach is focused on single-asset investing, and we pursue four main types of transactions.

First, we recapitalize stabilized assets that are already high-quality and do not require capital improvements. With these, we aim to transact quietly and optimize operations for consistent cash flow. Second, we target lease-up or repositioning opportunities – well-located assets that need interior or exterior upgrades to compete with newer supply. Third, we undertake management turnarounds by replacing underperforming operators, including ‘mom and pop’ groups, with our established operating partners to improve reputation, operational performance, and lease-up velocity.

Finally, we selectively pursue development opportunities. We’re not a development-only strategy but given the lack of new supply and the evolving preferences of the baby boomer generation, these projects can be particularly compelling.

How has the fundraising environment evolved since raising your debut fund?

Brian: In 2016, raising Fund I required substantial investor education because many LPs didn’t yet understand senior housing as an asset class. Early commitments came mostly from high-net-worth-individuals and smaller institutions. By the time we raised Fund II, which closed in 2020, the conversation had shifted toward HMC’s competitive edge. Investor sophistication had increased, demand had grown, and the LP base became more institutional, including major domestic and international investors – a shift that continues as our platform grows and matures. Senior housing is now a mainstream asset class globally, and we receive inbound RFPs –something that simply did not happen in 2016.

Why does senior housing now appeal to large institutional LPs?

Brian: The sector is experiencing a surge in occupancies, with 19 consecutive quarters of positive net absorption, and an 85% decline in new supply from peak levels just as demand accelerates. Few real estate sectors offer that combination. For instance, student housing faces demographic headwinds, and multifamily valuations remain stretched. Senior housing continues to offer attractive going-in yields and unmatched demographic support.

Have investor concerns changed as the market has matured?

Trent: They have. The pandemic created serious challenges for the sector, and some investors remained cautious in the aftermath. But senior housing has proven resilient through multiple cycles, and the fundamentals are winning. We’re seeing more capital flowing into the space and a compression of cap-rates. 

Brian: Investors do face broader portfolio challenges – for example, exposure to office – but concerns specifically about private-pay senior housing have eased significantly. Independent research and data continue to indicate strong performance for senior housing relative to other US real estate sectors.

Do you have transactions in the pipeline?

Trent: Our pipeline is deep and spans each of the strategies we’ve mentioned. Many of our opportunities come through our operator relationships, including some of our largest transactions in Fund II. We also have early-stage development opportunities that could align well with our current strategies. Given the slowdown in development activity nationally, these opportunities are particularly compelling. We’re still able to acquire assets below replacement cost – something that’s increasingly rare outside of the office sector. Overall, we’re very optimistic about the opportunity set for the next five to ten years.

What is HMC’s edge in this sector?

Brian: There are few specialist senior housing teams today. Our advantages include multicycle investing experience and a deep and longstanding operator network that enables quiet transactions. We can quickly diagnose operational inefficiencies, and our relationships help us transact in ways that minimize disruption to residents and staff. 

Trent: We also strive to be genuinely value-add partners. We share best practices across our operator network, provide benefits of scale such as insurance purchasing, and operate as a cohesive team that has been together since 2012. That continuity builds trust and opens doors to opportunities others may not access.

Jayda Etienne is Deputy Editor of Preqin First Close. It’s quick, easy, and free to subscribe here.

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_{The views expressed are the opinions of Harbert Management Corporation as of February 2026. They do not constitute an endorsement, recommendation, or any other advice, and are subject to change. The content does not necessarily express the views of BlackRock, Preqin, or any of their affiliates. Harbert Management Corporation is not affiliated with Preqin.}