Building a case for healthcare REIT’s

Previously I have outlined risks involved with REIT’s in general and I shall re-post that analysis at some point.

However, medical REIT’s are an area that potentially are an interesting longer term investment based on some trends.

This trend is positive for medical specialist REIT’s as an increasingly ageing population provide an increased supply and demand dynamic for the medical REIT’s.

Hospital spending is the strongest within this sector. Medical care and Specialist spending are lower, thus are less likely on current data to move into oversupply. Thus in our search for a potential candidate, this should be a factor taken into account.

Different data set, but essentially confirming the previous data set without differentiating where the spending is occurring.

The candidates;

National Health Investors, Inc. (NHI) is a real estate investment trust that invests in healthcare properties primarily in the long-term care industry. As of December 31, 2006, NHI had ownership interests in real estate, mortgage and notes receivable investments. These investments include long-term care facilities, acute care hospitals, medical office buildings, retirement centers and assisted living facilities. As of December 31, 2006, the Company had investments in 139 healthcare facilities located in 18 states consisting of 97 long-term care facilities, one acute care hospital, four medical office buildings, 14 assisted living facilities, six retirement centers and 17 residential projects for the developmentally disabled. Of these 139 facilities, 41 are leased to National HealthCare Corporation (NHC). These 41 facilities include four centers subleased to and operated by other companies, the lease payments to NHI being guaranteed by NHC

HCP, Inc. (HCP), formerly Health Care Property Investors, Inc., is a real estate investment trust (REIT) focusing primarily on properties serving the healthcare industry. HCP is a self-administered REIT that invests directly or through joint ventures in healthcare facilities. As of June 30, 2007, HCP’s portfolio of properties, excluding assets held for sale but, including investments through joint ventures and mortgage loans, included 675 properties and consisted of 323 senior housing facilities, 216 medical office buildings, 41 hospitals, 66 skilled nursing facilities and 29 other healthcare facilities. HCP acquires healthcare-related real estate in selected markets throughout the United States. HCP leases its senior housing properties, hospitals and nursing facilities to experienced operators on a long-term basis. It leases its medical office and lab buildings to tenants requiring these types of specialty office space. In August 2007, the Company acquired Slough Estates USA Inc.