Unsubscribe

Confirm you would like to unsubscribe from this list

You have unsaved changes on the page. Would you like to save them?

Remove strategy

Confirm you would like to remove this strategy from your list

Welcome to Thornburg

Please select your location and role to help personalize the site.
Please review our Terms & Conditions

For Institutional / Wholesale / Professional Clients

The content on this website is intended for institutional and professional investors in the United States only and is not suitable for individual investors or non-U.S. entities. Institutional and professional investors include pension funds, investment companies registered under the Investment Company Act of 1940, financial intermediaries, consultants, endowments and foundations, and investment advisors registered under the Investment Advisors Act of 1940.

TERMS AND CONDITIONS OF USE

Please read the information below. By accessing this web site of Thornburg Investment Management, Inc. ("Thornburg" or "we"), you acknowledge that you understand and accept the following terms and conditions of use.

Disclaimers

Products or services mentioned on this site are subject to legal and regulatory requirements in applicable jurisdictions and may not be licensed or available in all jurisdictions and there may be restrictions or limitations to whom this information may be made available. Unless otherwise indicated, no regulator or government authority has reviewed the information or the merits of the products and services referenced herein. Past performance is not a reliable indicator of future performance. Investments carry risks, including possible loss of principal.

Reference to a fund or security anywhere on this website is not a recommendation to buy, sell or hold that or any other security. The information is not a complete analysis of every material fact concerning any market, industry, or investment, nor is it intended to predict the performance of any investment or market.

All opinions and estimates included on this website constitute judgements of Thornburg as at the date of this website and are subject to change without notice.

All information and contents of this website are furnished "as is." Data has been obtained from sources considered reliable, but Thornburg makes no representation as to the completeness or accuracy of such information and has no obligation to provide updates or changes. Thornburg disclaims, to the fullest extent of the law, any implied or express warranty of any kind, including without limitation the implied warranties of merchantability, fitness for a particular purpose and non-infringement.

If you live in a state that does not allow disclaimers of implied warranties, our disclaimer may not apply to you.

Although Thornburg intends the information contained in this website to be accurate and reliable, errors sometimes occur. Thornburg does not warrant that the information to be free of errors, that the functions contained in the site will be uninterrupted, that defects will be corrected or that the site and servers are free from viruses or other harmful components. You agree that you are responsible for the means you use to access this website and understand that your hardware, software, the Internet, your Internet service provider, and other third parties involved in connecting you to our website may not perform as intended or desired. We also disclaim responsibility for damages third parties may cause to you through the use of this website, whether intentional or unintentional. For example, you understand that hackers could breach our security procedures, and that we will not be responsible for any related damages.

Thornburg Investment Management, Inc. is regulated by the U.S. Securities and Exchange under U.S. laws which may differ materially from laws in other jurisdictions.

Online Privacy and Cookie Policy

Please review our Online Privacy and Cookie Policy, which is hereby incorporated by reference as part of these terms and conditions.

Third Party Content

Certain website's content has been obtained from sources that Thornburg believes to be reliable as of the date presented but Thornburg cannot guarantee the accuracy, timeliness, completeness, or suitability for use of such content. The content does not take into account individual investor's circumstances, objectives or needs. The content is not intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or any investment management services, nor does it constitute investment advice and should not be used as the basis for any investment decision.

Suitability

No determination has been made regarding the suitability of any securities, financial instruments or strategies for any investor. The website's content is provided on the basis and subject to the explanations, caveats and warnings set out in this notice and elsewhere herein. The website's content does not purport to provide any legal, tax or accounting advice. Any discussion of risk management is intended to describe Thornburg's efforts to monitor and manage risk but does not imply low risk.

Limited License and Restrictions on Use

Except as otherwise stated in these terms of use or as expressly authorized by Thornburg in writing, you may not:

  • Modify, copy, distribute, transmit, post, display, perform, reproduce, publish, broadcast, license, create derivative works from, transfer, sell, or exploit any reports, data, information, content, software, RSS and podcast feeds, products, services, or other materials (collectively, "Materials") on, generated by or obtained from this website, whether through links or otherwise;
  • Redeliver any page, text, image or Materials on this website using "framing" or other technology;
  • Engage in any conduct that could damage, disable, or overburden (i) this website, (ii) any Materials or services provided through this website, or (iii) any systems, networks, servers, or accounts related to this website, including without limitation, using devices or software that provide repeated automated access to this website, other than those made generally available by Thornburg;
  • Probe, scan, or test the vulnerability of any Materials, services, systems, networks, servers, or accounts related to this website or attempt to gain unauthorized access to Materials, services, systems, networks, servers, or accounts connected or associated with this website through hacking, password or data mining, or any other means of circumventing any access-limiting, user authentication or security device of any Materials, services, systems, networks, servers, or accounts related to this website; or
  • Modify, copy, obscure, remove or display the Thornburg name, logo, trademarks, notices or images without Thornburg's express written permission. To obtain such permission, you may e-mail us at info@thornburg.com.

Severability, Governing Law

Failure by Thornburg to enforce any provision(s) of these terms and conditions shall not be construed as a waiver of any provision or right. This website is controlled and operated by Thornburg from its offices in Santa Fe, New Mexico. The laws of the State of New Mexico govern these terms and conditions. If you take legal action relating to these terms and conditions, you agree to file such action only in state or federal court in New Mexico and you consent and submit to the personal jurisdiction of those courts for the purposes of litigating any such action.

Termination

You acknowledge and agree that Thornburg may restrict, suspend or terminate these terms and conditions or your access to, and use, of the all or any part this website, including any links to third-party sites, at any time, with or without cause, including but not limited to any breach of these terms and conditions, in Thornburg's absolute discretion and without prior notice or liability.

Decline
Give Us a Call

Fund Operations
800.847.0200

FIND ANOTHER CONTACT
An aging population and longer life expectancies are boosting demand for senior living facilities
Municipal Bonds

Silver Linings — Muni Bond Opportunities in an Aging Population

Craig Mauermann, ChFC
Associate Portfolio Manager
11 Mar 2024
5 min read

An aging population and longer life expectancies are boosting demand for senior living facilities — and driving municipal bond investment opportunities.

Introduction

Our research shows that demand for senior living communities will continue accelerating rapidly over the coming decades due to the aging of America’s population and longer life expectancies. In this article, we explore key reasons driving the increase in senior living facility expansions and our perspective on selecting municipal bonds in this space that can provide solid and stable revenues to minimize the risk of default.

America Is Graying and Needs Care

The U.S. population is aging. The massive baby boomer generation started to turn 65 in 2011, and according to the U.S Census Bureau, 2030 will mark a demographic inflection point: by 2030, all baby boomers, or people born from 1946 to 1964, will be over 65. By 2040, nearly 81 million people will be of retirement age in the U.S., representing 22% of the population, as seen in the table below — and amid this generational wave, senior living facility spaces are set to take center stage as a means of addressing the growing demand for enhanced health and housing services.

An Aging America

In 35 Years, Nearly One in Four Americans Will Be Older than 65
Source: U.S. Census Bureau, 2017 National Population Projections

As background, senior living facilities typically encompass four types of occupancy arrangements: independent living, assisted living, skilled nursing and memory care. Independent living facilities offer communities for active seniors and are designed for those still able to manage their personal hygiene, health care, food prep, finances and safety. These seniors are typically those looking for communities where they can build their social networks and enrich their lives through recreational activities provided by the facility via amenities like pools, gardens, on-site restaurants, group entertainment and trips.

The other three types of arrangements serve seniors who require increasingly substantial care. Assisted living occupants typically need help with one or more personal care activities, which may include bathing, dressing, meal prep and medical management, but they do not require nursing assistance. Meanwhile, skilled nursing facilities offer 24-hour care by a professional to manage physical therapy, feeding tubes, surgery care, medication and pain management. On the far end of the spectrum are memory care occupants who typically suffer from mental impairment and require highly trained staff to keep them secure and safe.

Senior Housing Boom

Due to the rising population and the growing number of retirement-age Americans, investments in the senior living industry are expected to increase in the coming years. While “aging in place” has gained momentum, increasing numbers of older people are also changing their attitudes about senior living communities and are favoring moving into senior homes flush with services, activities and conveniences. This has sparked a notable trend toward high occupancy rates in independent living facilities, contributing to a surge in municipal bond issuance to finance the building and expansion of these types of projects. Through our research, we’ve discovered that there are a myriad of factors driving this expansion.

In the majority of bond issuance deals to build new senior living facilities or expand existing campuses, we see a trend of the largest and most expensive independent living units in new buildings selected by residents first, before the smaller living units.  Many senior residents today seek more square footage than what was demanded in the past.  An innovative way that some facilities are adapting to these newer preferences, we’ve observed, is by merging two existing living units and undertaking renovations to create a larger and more appealing unit. Another way facilities are enhancing their desirability is by modernizing and adding alluring amenities such as pools, gyms, hair salons or better-designed communal spaces.

Facilities may also invest in expanding their parking lots to enhance their overall appeal in a competitive senior living market and to meet regional demands. When a facility experiences high growth in its occupancy rates, additional parking is critical not only for serving residents with vehicles but also for better visitor accessibility, accommodation for a more extensive staff, and the ability to host events and provide transportation for resident outings.

All of these upgrades and enhancements help these facilities remain competitive in the marketplace, and they support senior facility expansion. That demand translated into increased Muni bond issuance through 2021, as seen in the chart below. Although the COVID pandemic and its aftermath sharply curtailed new issuance in the last two years, we believe new supply is poised to recover quickly as the number of older Americans grows much more rapidly than other cohorts going forward.

We Expect Senior Living Center Issuance Will Recover Sharply Following the COVID-Inspired Drop

Senior Living Bond Issuance ($ billions 2001-2023)
Source: Bloomberg

Credit Selection Matters

The senior living industry is still a sector with notable risks in the U.S. Muni bond market. While the wave of COVID-related defaults is slowing down after the 2020-to-2022 surge, facilities with operational sensitivities will likely continue to face financial challenges and, in some cases, bankruptcies. That is why it is critical to understand the intricacies of each senior living facility’s operating environment, financial health and management team when examining its municipal debt. In other words, active management may work in the investor’s favor.

Our research aims to uncover any idiosyncratic risks and opportunities associated with a particular Muni bond deal. We actively assess the senior living facility’s specific competitive landscape, demand or occupancy fluctuations for its region, demographic composition and operational complexities, and the management team’s decision-making track record. In particular, when a facility is trying to raise more capital (or issue bonds) for expansion projects, we strive for a clear understanding of the magnitude of the expansion and whether management has a realistic and well-thought-out business plan in place to recoup the costs of capital and retain the ability to service its debt over the long term. All of these factors play a role as to whether a senior facility can remain consistently profitable and whether its credit will be a good investment for investors.

We believe our meticulous credit-by-credit research process is critical in handpicking high-quality senior living municipal bonds in the best position to capitalize on macro trends related to the aging U.S. population and increased acceptance of senior living facilities as a part of the American retirement journey. We are excited about the current opportunities in the senior living sector and over the decades to come.

Discover more about:

Stay Connected

Subscribe now to stay up-to-date with Thornburg’s news and insights.
Subscribe

More Insights

Nursing senior people
Advising Clients

The Power of “May I Ask You…?”

By asking permission first to discuss personal topics, advisors can foster trust, enhance relationships, and give better financial advice.
A family works to secure legacy planning.
Advising Clients

Family Legacy Planning: Passing on More Than Just Wealth

Foster financial stability and deepen family bonds with Family Legacy Planning to ensure the transmission of values across generations.
Light bulb representing the world's best investment ideas
Advising Clients

The World’s Best Investment Advice

Use classic strategies, key principles, and some caution to lead to long-term investment success.
A group of family members sits with their financial advisor discussing fears of uncertainty in financial markets.
Advising Clients

Transform Customers into Life-Long, Referral-Generating Clients

Discover how to create a superior client experience to foster loyalty and encourage referrals.
ABC letters atop a stack of books
Advising Clients

The ABCs of Personal Finance

Unpack building wealth into budgeting, investing behaviors, and the power of compounding to help achieve financial goals and wealth accumulation.
Press Release from Thornburg with a branded megaphone image.

Thornburg Income Builder Opportunities Trust Announces Distribution

Thornburg Income Builder Opportunities Trust (NASDAQ: TBLD) announced its monthly distribution.

Our insights. Your inbox.

Sign up to receive timely market commentary and perspectives from our financial experts delivered to your inbox weekly.