Healthcare REITs are real estate investment trusts that finance, develop and invest in healthcare properties like hospitals, medical offices, long-term care facilities, skilled nursing facilities, senior housing, etc.

Healthcare REITs are considered relatively recession-proof because their properties are not affected by boom and bust cycles. However, they do carry large amounts of debt which makes them vulnerable to interest rate fluctuations and tightening credit. As such, they have not been immune to the recent turmoil in the markets as credit has been harder to obtain. This can cause some REITs to have to sell properties in order to help pay down debt.

The long-term demographics for healthcare REITS are considered favorable since the aging baby boomers present a huge growth potential for the type of properties in which these REITs invest. This sector is vulnerable to legislative risk, though, analysts expect the in-coming administration to increase government spending on health care, which should also benefit their investments.

The three largest Healthcare REITS according to market cap are:

  • Health Care Property Investors, Inc. (HCP) based in Long Beach, CA
  • Ventas, Inc. (VTR) based in Chicago, IL
  • Health Care REIT, Inc. (HCN) based in Toledo, OH