Universal Health Realty Income (UHT) UHT specializes in healthcare and human service-related facilities. The portfolio is comprised primarily of medical office (74%) and acute care hospitals (17%), but also includes ambulatory care, sub-acute care, rehab hospitals and child care centers. The portfolio includes 69 facilities in 20 states. (UHT, 2019) In terms of market cap UHT is a fraction of the size of other healthcare REITs at $1B. UHT consistently outperforms peers. Over the last 5 years UHT has had a total return of 17.14%, and a total increase in share price of 77% over the same period. (Yahoo Finance, 2019)
Medical Properties Trust (MPW) MPW specializes in acute care, community and rehab hospitals, and leases to operators on a long term NNN basis. The REIT owns 276 assets in the US and Europe and has a market cap of $6.6B. 84.4% of assets are acute care hospitals. MPW is consistently a top performer among peers on a total return basis and pays a dividend yield in line with peers at 5.5%. (MPW, 2019)
Physician’s Realty Trust (DOC) DOC REIT owns 252 assets, primarily medical office but also outpatient care clinics, specialty hospitals, rehab hospitals and select long term acute care hospitals. DOC REIT was founded by a former Welltower leadership team and a team of healthcare professionals. The REIT is well connected to the healthcare community and focuses on cultivating relationships with leading care providers as a value proposition to shareholders. (Physician’s Realty Trust, 2019). DOC consistently produces a divided yield in line with peers but has outperformed in total return at 12% over the last 5 years.
National Health Investors (NHI) NHI has a market cap of $3.3B and owns 252 assets. 65% of NHI’s portfolio is comprised of senior’s housing, and 32% is skilled nursing facilities. NHI’s portfolio includes independent living, assisted living and memory care facilities. NHI partners with 35 operators and has generated a 10-year total return of 390%. NHI’s significant exposure to both senior’s housing and skilled nursing facilities may have an impact on returns in the short term. (NHI, 2019)
Healthcare Realty Trust (HR) Healthcare Realty Trust invests almost exclusively in medical office buildings and outpatient facilities. The REIT has a market cap of $5.4b and owns 199 assets in 27 states. HR’s strategy is to invest in assets that are largely on or adjacent to acute hospital campuses, and to develop strong alignments with leading health systems. The REIT is well positioned for continued growth, as medical office buildings tend to be less volatile than other types of healthcare real estate with limited regulatory exposure and predominantly NNN lease structures. (HR, 2019)
5 Largest Healthcare REITs by Market Cap
Welltower (WELL) Welltower is the largest public healthcare REIT with a market cap of $27,642. The REIT owns 1,621 healthcare assets, including 1,403 senior’s housing and skilled nursing facilities in the US and Canada, and 287 medical office buildings. The REIT aligns with leading operators and aims to facilitate space needs across the healthcare continuum of care. WELL is managing rising expenses by leveraging scale to negotiate service and supply contracts with national vendors. WELL generates a dividend yield of 4.68%, which is less than the healthcare REIT sector average of 6.13%. Total return trends in line with peers. (Welltower, 2019)
Ventas (VTR) Ventas is the second largest healthcare REIT with a market cap of $22,359. The REIT owns 1,199 assets, 80% of which are senior and skilled nursing facilities and 20% outpatient medical office facilities. VTRs dividend yield is currently below the subsector’s average, and trends below peers in total returns, but generates a higher dividend yield than WELL, it’s closest peer in terms of size and portfolio composition. (Ventas, 2019)
HCP(HCP) The next largest healthcare REIT is HCP. HCP is quite a bit smaller than the first two with a market cap of $14.5B. The REIT owns 744 assets, split evenly between MOB, senior’s housing and life science facilities. HCP has been publicly traded and was the first healthcare REIT included in the S&P 500. The REIT has undergone a number of organizational and management changes over the last 3 years. The changes have proven to be effective and combined with other favorable factors HCP is expected to continue its positive growth trajectory. (HCP, 2019)
Omega Healthcare Investors (OHI) Omega invests exclusively in skilled nursing and assisted living facilities, on a predominantly NNN basis. OHIs standard rent escalation is 2.5%. While higher exposure to regulatory risk through its skilled nursing portfolio, the NNN nature of most OHI leases places the vast majority of operating and capital costs on tenants. The REIT invests in more than 900 properties in 42 states, 792 of which are SNFs. OHI generates a first-year yield of 9.5% on SNF assets, and a dividend yield of 7.35%. (OHI, 2019)
Medical Properties Trust (MPW) MPW, as mentioned earlier, has the second highest total return among healthcare REITs over the last 5 years. The REIT specializes in acute care, community and rehab hospitals, and leases to operators on a long term NNN basis. The REIT owns 276 assets in the US and Europe and has a market cap of $6.6B. MPW is consistently a top performer among peers on a total return basis and pays a dividend yield in line with peers at 5.5%. (MPW, 2019)
