Healthcare Facilities REITs

Healthcare REITs develop and operate healthcare facilities and properties in related industries. The properties owned by these REITs can include hospitals, clinics, medical offices, research buildings, senior living communities, skilled nursing facilities and more.

Because many of the tenants of these properties are long term, specialized customers, healthcare REITs utilize triple net leases similar to large retail REITs. This requires tenants to cover the base rent in addition to maintenance, real estate taxes and building insurance, adding extra cash flow and decreased risk to the REITs owning the land.

The large advantage of healthcare REITs is the already massive and quickly growing US medical industry. In 2019, healthcare spending peaked at $3.8 trillion and is on track to pass $6 trillion in annual spending by the end of 2028. This increased spending on healthcare means increased need for infrastructure, in everything from hospital spaces to larger senior housing communities for the aging baby boomer generation.

The major US stock exchanges currently house 14 healthcare REITs. Large health care REITs include Welltower, Inc. (NYSE: WELL), Healthpeak Properties, Inc. (NYSE: PEAK) and Omega Healthcare Investors, Inc. (NYSE: OHI).

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