Pounding Pulse in Healthcare Sector
- Mar 02, 2011
It’s been a captivating few days in the healthcare real estate industry. First, Ventas Inc. signed on to signed on to acquire Nationwide Health Properties Inc. in a $7.4 billion, stock-for-stock merger agreement that will create the nation’s largest REIT. On the heels of that announcement came news that JER Partners and Formation Capital plan to sell Genesis HealthCare, a successful post-acute and skilled nursing care facility provider which brings to the table a portfolio of 147 properties in 11 states, for $2.4 billion.
With an estimated asset value in excess of $700 billion, healthcare is a sector that can’t be ignored. It’s not only large – it’s growing. Several demand streams fuel this fire, according to iStockAnalyst: the nearly 80 million Baby Boomers turning 65 this year, the over-85 population, which is growing at three times the rate of the general populace, and the 32 million uninsured individuals who will gain access to the healthcare system beginning in 2014.
With the sector expected to reach 20 percent of U.S. GDP later this decade and less than 10 percent of the market collectively owned by healthcare REITs, investors are seizing opportunities for capital markets growth. Particular REITs that are most in demand include diversified REITs as well as those specializing in residential, retail, office and industrial properties.
iStockAnalyst asserts that of the more than 235 REITs in the market, the stocks to watch include Nationwide Health Properties, Omega Healthcare Investors Inc., Universal Health Realty Income Trust, Health Care REIT Inc., Healthcare Realty Trust and Medical Properties Trust Inc. It is well worth remembering, however, that not all REITs are profitable, even in the reddest-hot of sectors. While healthcare may be ripe for the picking, the savvy investor will keep in mind to select prudently amongst the low-hanging fruit.