Hospitals

Healthcare real estate investment market heating up on superior returns

Medical properties such as hospitals, outpatient offices and senior housing are becoming increasingly attractive to real estate investors as return on investment exceeds that of other types of property. Healthcare real estate investment trusts (REITs) are the top income-producing property type among REITs, with current average dividend yields of 5.3 percent, according to a statement […]

Medical properties such as hospitals, outpatient offices and senior housing are becoming increasingly attractive to real estate investors as return on investment exceeds that of other types of property.

Healthcare real estate investment trusts (REITs) are the top income-producing property type among REITs, with current average dividend yields of 5.3 percent, according to a statement from Chicago-based Jones Lang Lasalle (JLL).

That beats returns from industrial (3.8 percent), office (3.1 percent) and apartment (3.1 percent) REITS.

Healthcare real estate “has proven recession-resistant, and we expect this asset class will continue to outpace all other product types as the strongest real estate sector, if the economic malaise continues to plague the United States,” said Mindy Berman, managing director of capital markets in JLL’s healthcare group.

Healthcare trusts make up about 12 percent of all REITs, but they have raised about 25 percent of total recent REIT investment in the U.S., Berman told GlobeSt.com.

Healthcare REITs raised about $22.5 billion in equity and debt capital in the 18 months ended on June 30. That sounds like a lot, but JLL didn’t provide a comparable figure for the prior 18-month period. A JLL representative was unable to provide more data.

Berman said she expects healthcare real estate investment to remain a hot sector as demand for healthcare services continue to rise in the coming years. That demand will be fueled largely by an aging U.S. population and about 32 million additional Americans with health insurance, thanks to last year’s controversial federal health overhaul package.

The most active recent property buyers among healthcare REITs include: Grubb & Ellis Healthcare REIT II, Healthcare Trust of America and American Realty Capital Healthcare Trust.

Topics