Health Care REITs

Health Care REITs own and manage health care-related real estate. Health care real estate is a broad term that includes multiple types of properties such as hospitals, medical offices, senior living facilities, life science offices and wellness centers.

It is important to note that some health care REITs do not use the classic landlord-tenant model with every property. It is common for senior housing, assisted living and skilled nursing facilities to be operated as partnerships. In this case, the REIT and the facility’s operator both get a share of the business’s operating profits.

Health care REITs can be a smart investment because the sector is resilient against recessions. Health care is non-negotiable; people need health care even when the economy is suffering.

Plus, health care is an especially good investment now because of demographic trends in the United States. The 65+ age group is growing quickly, and this population uses health care facilities far more than other age groups. The demand for health care real estate is increasing in correlation with the rising need for health care as the older population ages further.

Health care REITs have had a tough year due to the pandemic, and certain health care properties performed more weakly than others. Nursing homes and assisted living facilities are facing record-low occupancy rates, and therefore those properties have struggled. However, REITs that hold medical office buildings and hospitals have fared better. The widespread adoption of telemedicine also can be expected to have an impact on health care real estate in the coming years.

Large health care REITs include Welltower, Inc. (NYSE: WELL), Healthpeak Properties, Inc. (NYSE: PEAK) and Omega Healthcare Investors, Inc. (NYSE: OHI).