All You Need To Know About HealthCare REITs
Updated on 24 Feb 2020
Among various REITs, one of the more popular investment choices is the healthcare-related REITs. Learn more about this investment strategy here.
What are healthcare REITs?
Before we delve into the world of Healthcare Real Estate Investment Trusts (REITs), it is important to understand what exactly REITs are. REITs are investment trusts that own properties in varies sectors such as movie theatres, health care industry, residential complexes, office buildings, hotels and many more. A REIT can be involved in either one or multiple industries.
Healthcare REITs manage and own an assortment of health care estates and establishments, mainly hospitals, senior living facilities, skilled nursing facilities and medical office buildings, including research centres. For investors that want to invest in an industry that has a safety net with a steady cash flow, healthcare REITs are a great bet. It is projected that between 2020 to 2030, there is an annual growth of 4-5% in the 75+ age group, which ensures a high demand in the healthcare industry and this is what makes healthcare REITs a great investment.
How are healthcare REITs different from all the other REITs?
The difference between healthcare REITs and other sector REITs is simple – demand. Come what may, the demand for health care is only increasing.
In fact, U.S. Census Bureau says that the population of senior citizens will grow by more than 144% by 2050, 6 times faster than the rest. As the demand for health care increases, so will the demand for doctors, nurses, infrastructure and other personnel. In domino effect, this means that the demand for hospitals and labs will increase. Therefore, investing in healthcare REITs has a stability not every sector has, which is what makes healthcare REITs more reliable compared to the others. In addition, healthcare REITs produce approximately 4.87% higher dividends than any other sector.
Why should you invest in healthcare REITs?
As an investor or landlord (in case of healthcare REITs), you should consider investing in healthcare REITs because of the following reasons –
- They offer stable cash flows – rent.
- A diverse portfolio is a guaranteed as the investor has one foot in the healthcare industry and the other in the real estate (hospital, labs, and elder care facilities).
- They yield high dividends.
- They are easy to sell and buy.
- Healthcare REITs offers a higher level of transparency.
How to invest in healthcare REITs?
Investment options for healthcare REITs are the same for any other REIT sector – Healthcare REITs ETFs and mutual funds. Healthcare REITs returns directly depend upon the demand of healthcare, which will only increase. However, there are risks involved in every investment. The best way to control risk is to look for healthcare REITs with a diversified set of properties, with a well-balanced sheet.
However, picking the right healthcare REIT is not an easy decision, which is why you need to rely on financial advisors and experts, just like our team at Kristal AI. Our team of experts coupled with latest AI technology can help you find the best healthcare REIT to invest your money in, from all the 33 globally available REITs.
Reasons to invest in healthcare REITS
Compared to any other REITs, healthcare REITs offer stable and long-term income, even in times of recession. As an investor, it is important to know about the risks time can have on your investment. While every other REIT sector suffered during the Great Recession of 2008; it was only the healthcare sector that did not cut their dividends.
In fact, for 28 years HCP, Inc., one of the biggest healthcare REITs in US, has paid increasing dividends. The same goes for Universal Health Realty (UHR), which has a track record for 27 years and National Health Investors & Omega Health Investors with 11 consecutive years under their belt.
All these statistics point towards the fact that this is the perfect time to invest in healthcare REITs. Contact our financial advisors to know in depth about the best time to invest in REITs, especially in the healthcare sector.
Other facts about healthcare REITs
If you are interested in investing in a healthcare REIT, here are some facts about the industry that you should know before tying up your money –
- Healthcare is every economy’s biggest sector, accounting for Netherland’s 10% expenditure and 17% of the total US GDP.
- Healthcare REITs industry exceeds $127 billion, globally.
- There are 33 healthcare REITs globally, with the 15 alone in America. WELL, VTR AND HPC are the biggest names with a combined market capitalisation of $57 billion and a portfolio of more than 4000 properties.
- While the healthcare real estate industry has been down for 2-3 now, it is finally stabilizing, especially senior housing fundamentals.
- As the ‘aging boomer’ is just on the horizon, occupancy rate and rent are bound to escalate, which makes it the perfect time to invest in healthcare REITs.
The materials and data contained herein are for information only and shall in no event be construed as an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities in any jurisdiction. Kristal Advisors does not make any representation, undertaking, warranty or guarantee as to the update, completeness, correctness, reliability or accuracy of the materials and data herein. All opinions, forecasts or estimation expressed herein are subject to change without prior notice. Kristal Advisors and its affiliates accept no liability or responsibility whatsoever for any direct or consequential loss and/or damages arising out of or in relation to any use of opinions, forecasts, materials and data contained herein or otherwise arising in connection therewith.