AI’s Role in Senior Housing Sector Growth
The senior housing industry is currently making strides with the integration of artificial intelligence, and some companies are emerging as frontrunners, according to Jeffries. The combination of productivity boosts and cost efficiencies from AI is coinciding with favorable trends tied to an aging population. People are living longer, notably with the first baby boomers reaching 80 this year, while birth rates are declining.
“Advanced analytics has enhanced our sales performance and pricing strategies across our senior housing operations, positively impacting same-store net operating income,” he noted. Platforms such as Ventas OI and Welltower Business Systems play a crucial role by gathering extensive proprietary data to guide unit pricing, marketing expenditures, and leasing rates.
Additionally, these AI advancements are refining how real estate investment trusts allocate resources at individual properties. Welltower appears to have a significant edge, as noted by Petersen, who has given the stock a buy rating. The company, which includes over 2,500 senior housing and wellness communities, introduced an internal AI system in 2023 by incorporating OpenAI. This initiative is expected to cost the company hundreds of millions as they develop their data science platform. Recently, they announced a deal to license a tailored version of this platform to public storage.
“Real estate, being the largest asset class globally, has traditionally been viewed as the least scalable, relying heavily on local intuition,” Mitra remarked in a press release about the partnership. “While some firms are trying to grow through a service model, we believe true scalability can only be achieved through this approach.” Welltower’s stock has seen an increase of over 12% since the start of the year.
Petersen is also optimistic about American Healthcare REIT, which he thinks could gain from AI advancements as well. Following its public debut in 2024, the company offers a dividend of 1.9%. In December, he highlighted it as a strong candidate to address the needs of the aging population by 2026, especially given its low cost of equity and expanding investment opportunities. So far this year, stock prices have similarly risen by about 12%.
