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Health Care REIT, Inc. (HCN), Ventas, Inc. (VTR), Brookdale Senior Living, Inc. (BKD): How to Play the Baby Boom

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Health Care REIT, Inc. (NYSE:HCN)With the number of baby boomers growing by 10,000 per day, there has to be money to be made somewhere, right? Baby boomers include individuals born between 1946 and 1964, and according to the U.S. Census Bureau, baby boomers make up over 25% of the U.S. population, or an estimated 78 million people.

Currently, only 13% of Americans are 65 or older, but by 2030, at least 18% of the population will be 65 or older. The aging out of the U.S. population will change the dynamic of the U.S. housing market in the coming years. Essentially, these people will need somewhere to live, leading to a rise in senior-living communities and skilled nursing facilities. Let’s look at some of the best ways to play this industry.

Health Care REIT, Inc. (NYSE:HCN) was pushed down some 7% last week after announcing plans to offer 20 million shares. The offering will go toward funding a $1 billion investment in a joint venture with Revera to own 47 Canadian senior- housing communities. This will help the company expand its geographical footprint.

The Health Care REIT, Inc. (NYSE:HCN) also pays an impressive 4.7% dividend yield. The nice thing about Health Care REIT, Inc. (NYSE:HCN) is that it has an impressively diverse portfolio of properties that expose it to a number of healthcare sectors. The REIT has a portfolio that includes senior-housing communities, skilled nursing/post-acute facilities, medical office buildings, inpatient and outpatient medical centers and life-science facilities.

Revenue is expected to rise some 40% in 2013 due to acquisitions, with the Health Care REIT, Inc. (NYSE:HCN) having closed some $1.7 billion in new investments. The company also gets around 80% of its revenue from private pay sources, helping minimize the impact from government cuts in reimbursement rates.

Ventas, Inc. (NYSE:VTR) is another leading healthcare REIT engaged in senior-housing facilities and healthcare properties in U.S. and Canada. It operates three segments: triple-net leased properties, senior living, and medical office building operations.

Ventas, Inc. (NYSE:VTR) has a portfolio of some 678 senior-housing communities, 396 skilled nursing facilities, 47 hospitals, 249 medical office buildings, and eight personal- care facilities. The REIT also pays a 4.1% dividend yield.

The REIT should see impressive revenue growth growing forward thanks to the monetization of a number of 2012 acquisitions. All in all, the company added 112 medical office buildings for some $2.7 billion to its portfolio during 2012.

But the real drawback for Ventas, Inc. (NYSE:VTR) is that a large portion of income is derived from government reimbursement rates. This means that if the government decides to cut reimbursement rates through Medicare or Medicaid, revenue will be pressured. The other downside is that a large portion of revenue comes from a few tenants, including some 10.5% from Kindred and 6.4% from Brookdale Senior Living, Inc. (NYSE:BKD).

Non-REIT bet

Brookdale Senior Living, Inc. (NYSE:BKD) is a real estate operating company that owns and operates senior-living communities in the U.S. Unlike the healthcare REITs which mostly lease out their properties, Brookdale Senior Living, Inc. (NYSE:BKD) is an owner, operator, and manager.

The company operates retirement centers, assisted living, continuing care retirement communities and management services, and is the largest provider of senior-living facilities in the U.S. based on total resident capacity.

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