09/06/2023 | by Edward F. Pierzak
Doctors Outside Medical Facility

Health care REITs own and manage a variety of health care related real estate and collect rent from tenants. Health care REITs’ property types include senior living communities, hospitals, medical office buildings, and skilled nursing facilities. The aging of the U.S. population is expected to provide strong demand tailwinds for health care properties.

The U.S. Census Bureau projects that one in five residents will be age 65 or older by 2030; the same age cohort included 1 in 6 residents in 2020. By 2034, people with an age of 65 years and older are estimated to outnumber those under the age of 18. This marks the first time in U.S. history that older individuals are expected to outnumber children.

Health care is a “modern economy” sector. It is the sixth largest of 13 sectors in the FTSE Nareit All Equity REIT Index. Health care REITs accounted for 8.0% of equity market capitalization as of August 31, 2023. Health care has captured a larger share of the index than office; its stake stood at 4.5%.

Data from the Nareit Total REIT Industry Tracker Series (T-Tracker®) for the second quarter of 2023, the latest data available, show that health care REITs delivered solid operational performance that kept pace with inflation. On average, funds from operations and same-store net operating income experienced 20.3% and 8.1% year-over-year gains, respectively.

Public equity REITs have been relatively well-insulated from the current mortgage market turmoil. Access to unsecured debt has provided REITs with a competitive advantage over their private real estate counterparts. For health care REITs, T-Tracker data show that unsecured debt accounted for 89.7% of total debt in the second quarter of 2023.

  • 5: The National Center for Health Statistics indicated that individuals with an age of 65 or older tended to visit the doctor five times per year; more than 2.5 times their 18 to 44 year old counterparts.
  • 80%: According to Green Street, approximately 80% of demand for senior housing comes from individuals who are 75 years of age or older.
  • 80+: The average senior housing move-in age and the average ages for independent living, assisted living, and memory care residents tends to be in the early to mid-80s.

Below is a list of Nareit member companies from the heath care sector.