Are US medical REITS a good buy w/ AHCA Looming
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Thread: Are US medical REITS a good buy w/ AHCA Looming

  1. #1
    Senior Member
    Join Date
    Jan 2012
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    126

    Are US medical REITS a good buy w/ AHCA Looming

    A while ago I bought a bunch of US medical REITS (OHI, HCP etc.). Thought I was being smart as I like the industry and thought that the long term trends were in their favour. Unfortuantely they have been the worst performers in my portfolio. I'm assuming due to the uncertainty around Obamacare being repealed.

    I have a a chunk of change from Milestones Apt REIT going private and I'm tempted to put it into these REITS but if their performance is related to the ACA being replaced by Trumpcare then they're likely to fall further?

    Thoughts?


  2. #2
    Senior Member
    Join Date
    Oct 2016
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    I don't see why healthcare demand would be any less in the future, than it is in the present. The difference is that, with healthcare reform, excess costs will be squeezed out of the system.

    So you have to ask yourself, is the REIT receiving premium rent merely because it operates a "healthcare" facility, or is it receiving returns on assets (ie: cap rates) that are consistent with the sort of investment required in building facilities that are used for healthcare? Given enough time and a competitive environment, cap rates of healthcare facilities should normalize to that of average cap rates, and 'healthcare' REITs will have returns similar to other REITs. I'd look at the income statements, insert cap rates that are more typical of commercial and residential property, and then decide if I still want to own such REITs.

    Of course, overall exposure to RE is an issue if you already own RE on your own. All real estate has significant correlation. With the typical Canadian investor owning a house at $400k or so (ie: average Canadian house), its probably not reasonable to even be looking at having *any* REITs in a portfolio until you're at a million dollars or more of net worth. And even then, allocations should be minimal.

  3. #3
    Senior Member
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    Mar 2013
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    Mississauaga Canada
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    I hold NWH.UN in my stable of reits in my rrsp , and have held it for about 2 years. Yes, some slide in value, but it still spits good dividends, so |I am not set to drop it.

    I also hold DR in my non registered account, as a more active way to get US health care exposure, but with canadian dividends. It is doing ok.


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