Capital raised by healthcare real estate investment trusts (HCREITs) continues to outpace other REIT categories, due primarily to investor interest in medical office buildings and senior housing, according to data released recently by financial and professional services firm Jones Lang LaSalle.
Based on data compiled by the Healthcare Capital Markets group at Jones Lang LaSalle, the capital raised by HCREITs through mid-year 2012 set a record at more than $7.5 billion, outdoing previous strong record years. This total is more than 65 percent of the $11.3 billion in capital raised by HCREITs in all of 2011 and 80 percent of the $9.2 billion in capital HCREITs raised in all of 2010. Additionally, HCREITs continue to outpace capital raised by REITs in other property classes.
“Investment in healthcare real estate is attractive because of the stability of income compared to property classes that suffered from 2008 to 2010 like commercial office and retail,” said Mindy Berman, managing director of the Healthcare Capital Markets group at Jones Lang LaSalle. “Physicians stay in their office space with little turnover and hospitals maintain their facilities and operations regardless of the economy. Occupancy in needs-based properties like assisted living, memory care and skilled nursing remains high regardless of economic cycles.”
The nation's growing and aging population will continue to fuel demand for increased healthcare services, which will in turn strengthen HCREITs, said Berman.
“While the delivery of healthcare is becoming more efficient and there will be tremendous pressure in the next decade to rein in the cost of healthcare, real estate will always be essential to the delivery model and will remain a staple for real estate investors seeking a reliable source of income,” said Berman.
Healthcare real estate is a “recession-resistant” sector that is showing no signs of slowing down, said Berman.
“The returns to investors plus the superior current dividend yield relative to other asset classes keep proving healthcare to be a terrific investment and not a fad,” she said.