The volatility of the market over the last year has raised concerns for many investors. Naturally, they are questioning their investment options and reviewing their portfolios. Now is a good time to review healthcare real estate investment trusts (REITs) and to note which ones to watch in 2021.
Understanding REITs
Some commercial real estate (CRE) entities create REITs. These investment opportunities allow others to invest in CRE without purchasing an entire commercial facility on their own. Over time, the properties generate income, and the investors can see a return on their investment.
When investing specifically in Healthcare REITs, one source suggests reviewing the types of properties included in the investment. They also advise investors to consider what kinds of medical services take place within those facilities. And investors should note the history of the REIT.
The Benefit of Healthcare REITs
Healthcare REITs can include different types of medical properties, such as hospitals, senior housing, medical office buildings, etc. Because of the nature and necessity of the medical industry, healthcare REITs are less volatile. They offer a long-term growth opportunity for investors.
Promising Healthcare REITs in 2021
There are varying opinions about which healthcare REIT is worth the investment. And as the market shifts some, those opinions can change. But there are a few that currently seem to stand out among the rest.
Omega Healthcare Investors (OHI)
According to Forbes, investors should keep an eye on Omega Healthcare Investors (OHI). This is a dividend stock and offers high value to its investors. OHI has over 900 properties, which fall in the skilled nursing category. They carry triple net leases, set rent payments, and also have annual rent increases. Because Medicare and Medicaid handle payments for a large majority of their residents, they have a promising payment future in front of them. The Forbes article also notes that OHI has a history of dropping once per year, which may open an opportunity for investors to pick it up.
Medical Properties Trust (MPW)
The next REIT to watch is Medical Properties Trust. This REIT is currently paying 5.1%, and, like OHI, it also has a history of an annual dip. Medical Properties Trust focuses on hospitals in the United States, as well as other parts of the world. In 2020, this REIT made more than $3 billion in acquisitions. They have consistently increased dividend payouts for several years, and with these acquisitions, investors in Medical Properties Trust may continue to see a positive trend.
Sabra Healthcare REIT
The Sabra Healthcare REIT has over 400 properties in the senior living sector. Many of these properties are under a triple net lease agreement. Sabra is also connected with a joint venture that has over 150 properties. While the author of the above-mentioned Forbes article isn’t thrilled by the recent pandemic-induced dividend cut, another source seems to lean on the company’s strong history and is looking for an increase in the future.
Healthcare REITs and Medical Real Estate
The three REITs listed above are not the only ones to watch in 2021. For example, Investopedia lists several other types, including Healthpeak Properties Inc., as some of the top options for March 2021. The market changes, and investors should review each promising investment option before making their decision to invest.
The 2021 outlook of healthcare real estate is promising. In the years leading up to the pandemic, growing demand for healthcare real estate paralleled the elongated expansion phase. The pandemic certainly impacted many healthcare practices. It also proved the necessity of healthcare real estate. There’s a unique, e-commerce-resistant quality about this sector that can draw investors.
As a healthcare real estate practice, HBRE monitors a variety of trends that impact healthcare real estate. Our team of real estate advisors is constantly reviewing markets and data to ensure our clients can get the most out of their medical real estate deals. Medical practices who are interested in learning more about market data or trends for their specific area can contact HBRE directly: [email protected].
If you are interested in learning more about investing in commercial real estate, or if you have questions about buying, selling, or leasing a commercial property, please contact an HBRE advisor. Our team of experienced CRE professionals have the skills and insight to assist with all property transactions. To reach out to us directly, email [email protected] or call 615-564-4133.
