U.S. Healthcare REITs Find Opportunity Overseas

By Jeff Walraven, Assurance Partner, BDO USA L.L.P.: For REITs, securing seniors housing and other healthcare asset property types abroad can offer increased portfolio diversity, international presence and exposure to new, emerging markets.

Recently, some U.S. healthcare REITs have been looking for opportunities in foreign territories to acquire prime assets. For REITs, securing seniors housing and other healthcare asset property types abroad can offer increased portfolio diversity, international presence and exposure to new, emerging markets.

Some U.S. healthcare REITs are looking for investment opportunities in Canada and the United Kingdom. These countries’ high-quality properties, well-established operating partners, prosperous areas and surging seniors’ populations make them very attractive markets. Recently, Griffin-American Healthcare REIT II, Inc. acquired a 44-facility seniors housing portfolio in the United Kingdom, valued at $472.2 million.

Other European countries, such as Germany, are attracting investment interest as well. Medical Properties Trust, Inc. recently purchased 11 rehabilitation hospital facilities in Germany, a transaction valued at $244.7 million. Both the private and public sectors in Germany have heavily invested in their healthcare industry, and the country guarantees its citizens health insurance coverage. The importance and quality of German healthcare assets creates an appealing landscape for U.S. healthcare REITs looking to generate returns for their investors.

Targeting BRICS nations for potential acquisitions may also be a rising trend for U.S.-based healthcare REITs. With the rapid economic and societal shifts taking place in these countries, there may be opportunity for U.S. healthcare REITs to invest. For example, China is experiencing an initial surge of seniors housing and healthcare development, as the aging population grows and multi-generational homes become less of a cultural norm. As more Chinese developers look for capital, U.S. healthcare REITs may consider working with them to diversify their portfolios.

U.S. healthcare REITs are increasingly looking for new opportunities to diversify, grow and better position their portfolios, and many are already benefiting from exploring foreign markets. However, while opportunities in other countries may appear favorable, it is important that REITs tread carefully upon entering any new market, as there is often a higher degree of risk in the unknown and uncharted.

Material discussed is meant to provide general information and should not be acted on without professional advice tailored to your firm’s individual needs.