Health Care Fundamentals Remain Strong, Baby Boomers Drive Sector Demand

Health care REITs own and manage a variety of health care-related real estate and collect rent from tenants. Health care real estate segments can include senior housing operating portfolios, senior housing triple net leases, medical office buildings, skilled nursing facilities, life science assets, and hospitals.

The health care sector is now the largest property sector in the FTSE Nareit All Equity Index, comprising 19% of the index’s market capitalization, which represents over $300 billion. In 2025, health care finished the year with the largest total return of any property sector at 28.5%. In 2026, health care performance through the end of August remained strong, with a double-digit gain of 23.1%.

Structurally, the strong performance of the health care sector can largely be attributed to demographic trends. As the youngest baby boomers have now turned 60, the generation is driving senior housing demand. According to Green Street, senior housing operating portfolios currently make up more than half of the health care REITs’ asset value. The National Investment Center for Seniors Housing & Care reported that occupancy for senior housing rose to 89.9% in the second quarter of 2026, up 1.8 percentage points year over year.

Dave Rodgers, managing director at Raymond James Equity Research, noted that “we're in one of the largest and wealthiest demographics for that older generation today.” In addition to the care component of senior housing, these older individuals are more interested in lifestyle amenities than ever before.

Data from the Nareit REIT Industry Tracker show that health care REITs have strong balance sheets characterized by well-structured debt. As of the second quarter of 2026, 86% of their debt was unsecured, and 85% was at a fixed rate. The weighted average interest rate on the total debt stood at 4.5%, and the weighted average term to maturity on debt was 6.6 years. Nareit’s REIT Industry Tracker also revealed a solid quarter of operational performance for the sector. Funds from operations (FFO) increased by 26.3% year over year, while net operating income (NOI) rose by 15.2%. Additionally, health care same store NOI (SS NOI) grew by 6.6%, the largest gain of any property sector.

Active dedicated REIT investors have recognized this strong operational performance in their investment holdings. The Nareit Actively Managed Real Estate Fund Tracker records quarterly investment holdings for the largest actively managed real estate investment funds focusing on REIT investment. As of the first quarter of 2026 (the latest data available), health care maintained the top sector allocation at 19.4% of assets under management, which represented 109% of its share in the FTSE Nareit All Equity Index. The allocation increased 3.4 percentage points year over year. Health care’s overweight position demonstrates active REIT managers’ bullishness on the sector’s future performance.

83%

As of the second quarter, 83% of health care REITs reported increased year-over-year FFO according to data from Nareit’s REIT Industry Tracker.

$966 million

Janus Living, Inc., a senior housing health care REIT, raised $966 million during its initial public offering in February.

2050

According to the National Investment Center for Seniors Housing & Care (NIC) MAP, the population aged 80 and older will more than double by 2050, reaching over 30 million.