Healthcare REITs own and manage healthcare-related properties. They lease the properties to tenants and collect rent payments.
This REIT category attracts investors because of its long-term growth potential and perceived recession resistance. The senior population is growing and living longer, creating demand for healthcare services. Also, medical spending is rising. Consequently, healthcare REITs may offer a decent regular dividend and capital appreciation.
This article discusses healthcare REITs and provides a list with financial data and a dividend calendar.
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What Are Healthcare REITs?
Healthcare REITs are a subset of the REIT industry, focusing on medical-related and specialized care commercial real estate.
They develop, own, and manage a portfolio of healthcare properties like senior living facilities, hospitals, medical office buildings, outpatient care facilities, surgical centers, drug treatment centers, and skilled nursing facilities.
The REITs rent the properties or space to tenants, typically in multi-year leases. Because of the specialized nature of the buildings, the leases are usually expensive, with built-in escalators. Furthermore, only a single or few tenants may occupy a building.
This type of REIT may be publicly traded or privately held. The large healthcare REITs have a market capitalization of tens of billions of dollars and own hundreds to thousands of buildings with millions of square feet.
For instance, Alexandria Real Estate Equities (ARE) manages approximately 42.2 million square feet of life science buildings for ~800 tenants in Greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland, and the Research Triangle. It has a market capitalization of roughly $20.74 billion.
Our list includes 15 publicly traded healthcare REITs.
Types of Healthcare REITs
Because of the vast array of tenants, the building types are diverse. Hence, some healthcare REITs focus on specific property types, resulting in sub-categories, like hospital, senior care, medical, and nursing home REITs.
Hospital REITs
This type of REIT develops and manages hospitals, a capital-intensive endeavor. Medical Property Trust (MPW) is an example of a hospital REIT.
Senior Care REITs
Several REITs focus on senior living communities and assisted living facilities. The first type is for people aged 55 and over who are self-sufficient. Assisted living facilities have a full-time medical staff, including doctors, nurses, and medical assistants who care for older adults who cannot live alone. Ventas (VTR) is a prominent player in this market.
Medical REITs
Medical REITs develop, own, and manage office buildings for doctors, labs, outpatient centers, and life science companies. Most healthcare companies want to avoid spending capital on expensive real estate and infrastructure, allowing this sub-category to thrive with reasonably high occupancy rates.
Nursing Home REITs
Nursing home REITs own facilities that permit acute and custodial care to be provided to older people.
What is a REIT?
A real estate investment trust (REIT) is a corporation that develops, purchases, owns, and operates commercial real estate properties. A REIT is a company that owns, operates, or finances income-generating commercial real estate.
To qualify as a REIT, a corporation must own real estate that generates income distributed to shareholders. Specifically, according to Investopedia, a REIT must
- Invest at least 75% of total assets in real estate, cash, or U.S. Treasuries
- Derive at least 75% of gross income from rents, interest on mortgages that finance a real property, or real estate sales
- Pay a minimum of 90% of taxable income in the form of shareholder dividends each year
- Be an entity that’s taxable as a corporation
- Be managed by a board of directors or trustees
- Have at least 100 shareholders after its first year of existence
- Have no more than 50% of its shares held by five or fewer individuals
Some REITs are privately held, and others are publicly traded on a stock exchange. As a result, retail investors can easily invest in the commercial real estate market by buying and selling a REIT’s stock. The advantage is that investors require significantly less capital.
Investors like REITs because they can pay higher dividend yields and diversify portfolios. However, a risk is the dividend may be cut during recessions. For instance, during the Great Recession and the COVID-19 pandemic, black swan event REITs suffered disproportionately, and many cut or suspended dividends. Another negative is REITs do not pay qualified dividends, instead, they pay unqualified or ordinary dividends.
Pros of Healthcare REITs
Publicly traded healthcare REITs have several advantages for investors.
No Minimum Investment – The minimum is the cost of one share.
Liquidity – Publicly traded REITs can be traded whenever the stock market is open.
Dividends – REITs must pay dividends, permitting investors to generate a passive income stream. Some REITs are dividend growth stocks, too. For example, Universal Health Realty (UHT) has increased its dividend for 38 years, making it a Dividend Champion.
Diversification – Investing in publicly traded REITs provides diversification to a portfolio.
Recession Resistant – Healthcare tends to be recession-resistant because people will spend on their well-being even if the economy is poor. Also, the leases are typically long-term with built-in escalators.
Healthcare Real Estate without the Expense – Healthcare REITs offer exposure to a commercial real estate market specialty segment without buying expensive properties. Moreover, the triple net lease structure of many properties reduces risk.
Final Thoughts
Healthcare REITs are a category of the REIT industry. Investors are attracted to these REITs because of the growing market and recession resistance. About one-third of healthcare spending is for people aged 65 and over. This demographic group is one of the fastest growing ones in the country, creating demand. In addition, several healthcare REITs are dividend growth stocks.
List of Healthcare REITs
Stock Rover* and Portfolio Insight* were used to create this table.
| Ticker | Company | No. Years | Dividend Yield | EPS 5-Year Avg (%) | Payout Ratio | Price / Earnings | Cap ($M USD) |
|---|---|---|---|---|---|---|---|
| ARE | Alexandria Real Estate | 14 | 4.30% | -30.40% | 918.50% | 219.1 | $20,904 |
| CHCT | Community Healthcare | 9 | 7.10% | 4.60% | 902.50% | 129.5 | $718 |
| CTRE | CareTrust REIT | 10 | 4.90% | -6.80% | 224.00% | 47.8 | $3,225 |
| DHC | Diversified Healthcare | 0 | 1.70% | – | – | – | $579 |
| DOC | Healthpeak Properties | 0 | 6.50% | -24.50% | 214.30% | 33 | $13,091 |
| GMRE | Global Medical REIT | 3 | 10.30% | -8.00% | 365.20% | 35.7 | $536 |
| HR | Healthcare Realty Trust | 0 | 8.60% | – | – | – | $5,485 |
| LTC | LTC Properties | 0 | 7.10% | -11.10% | 105.60% | 14.9 | $1,394 |
| MPW | Medical Properties Trust | 0 | 16.00% | – | – | – | $2,877 |
| NHI | National Health Investors | 0 | 5.70% | -2.60% | 115.00% | 20.1 | $2,724 |
| OHI | Omega Healthcare Invts | 0 | 8.70% | -5.40% | 265.40% | 30.7 | $7,527 |
| SBRA | Sabra Health Care REIT | 0 | 8.70% | -39.30% | 2000.00% | 229.3 | $3,188 |
| UHT | Universal Health Realty | 39 | 8.60% | -4.10% | 257.10% | 30.6 | $477 |
| VTR | Ventas | 0 | 4.10% | – | – | – | $17,599 |
| WELL | Welltower | 0 | 2.60% | -16.80% | 369.70% | 135.3 | $54,925 |
Dividend Calendar for Healthcare REITs
Stock Rover* was used for creating this table.
| Ticker | Company | Ex-Dividend Date | Dividend Record Date | Dividend Payment Date | Dividend Frequency | Next Dividend Payment Per Share | Dividend Per Share |
|---|---|---|---|---|---|---|---|
| ARE | Alexandria Real Estate | 3/27/24 | 3/28/24 | 4/15/24 | 4 | $1.27 | $5.08 |
| CHCT | Community Healthcare | 2/16/24 | 2/20/24 | 3/1/24 | 4 | $0.46 | $1.83 |
| CTRE | CareTrust REIT | 3/27/24 | 3/28/24 | 4/15/24 | 4 | $0.29 | $1.16 |
| DHC | Diversified Healthcare | 1/19/24 | 1/22/24 | 2/15/24 | 4 | $0.01 | $0.04 |
| DOC | Healthpeak Properties | 2/13/24 | 2/14/24 | 2/26/24 | 4 | $0.30 | $1.20 |
| GMRE | Global Medical REIT | 3/21/24 | 3/22/24 | 4/9/24 | 4 | $0.21 | $0.84 |
| HR | Healthcare Realty Trust | 2/23/24 | 2/26/24 | 3/14/24 | 4 | $0.31 | $1.24 |
| LTC | LTC Properties | 5/22/24 | 5/23/24 | 5/31/24 | 12 | $0.19 | $2.28 |
| MPW | Medical Properties Trust | 4/19/24 | 4/22/24 | 5/1/24 | 4 | $0.15 | $0.74 |
| NHI | National Health Investors | 3/27/24 | 3/28/24 | 5/3/24 | 4 | $0.90 | $3.60 |
| OHI | Omega Healthcare Invts | 4/29/24 | 4/30/24 | 5/15/24 | 4 | $0.67 | $2.68 |
| SBRA | Sabra Health Care REIT | 2/12/24 | 2/13/24 | 2/29/24 | 4 | $0.30 | $1.20 |
| UHT | Universal Health Realty | 3/15/24 | 3/18/24 | 3/29/24 | 4 | $0.73 | $2.90 |
| VTR | Ventas | 3/28/24 | 4/1/24 | 4/18/24 | 4 | $0.45 | $1.80 |
| WELL | Welltower | 2/22/24 | 2/23/24 | 3/7/24 | 4 | $0.61 | $2.44 |
Other REIT Lists
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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.
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