FAQs

Industry FAQs

To access up to date information on the various sectors that comprise the seniors housing and healthcare real estate industry, please visit the following websites:

  • For REITs, visit the National Association of Real Estate Investment Trusts’ (NAREIT) website at www.reit.com
  • For seniors housing & care industry, visit the National Investment Center for the Seniors Housing & Care Industry website at www.nic.org
  • For seniors housing advocacy & political action, visit the American Seniors Housing Association website at www.seniorshousing.org

 


Why invest in a publicly-traded REIT?

Publicly-traded REITs are owned by a variety of investors, including individuals, pension funds, endowment funds, insurance companies, bank trust departments and mutual funds. Publicly-traded REITs historically offer investors:

  • Income & Long-term Growth. REITs provide competitive long-term rates of return that complement the returns from other stocks and from bonds.
  • High Dividend Yield. Significantly higher on average than other equities, the industry’s dividend yields historically have produced a steady stream of income through a variety of market conditions.
  • Liquidity. Shares of publicly traded REITs are readily converted into cash because they are traded on the major stock exchanges.
  • Oversight. Independent directors of the REIT, independent analysts, independent auditors and the business and financial media monitor a publicly traded REIT’s financial reporting on a regular basis. This scrutiny provides investors with a measure of protection and more than one barometer of the REIT’s financial condition.
  • Transparency. REITs whose securities are registered with the SEC are required to make regular disclosures, including quarterly and yearly financial reports.

 

Portfolio definitions FAQ

 
 
 
 

Medical Office Buildings

Seniors Housing

Skilled Nursing Facilities |
Post-Acute Care

Long Term Acute Care
Hospitals | Independent
Rehabilitation Facilities

Medical Office Buildings


Asset Type Description

Medical Office Buildings (MOBs) do not provide inpatient long-term care and seniors housing. Rather, they are typically multi-story buildings on or near an acute hospital campus. They usually house several different unrelated medical practices, although they can be associated with a large single-specialty or multi-specialty group. MOB tenants include physicians, dentists, psychologists, therapists, and other healthcare providers, with space devoted to patient examination and treatment, diagnostic imaging, outpatient surgery, and other outpatient services.

Attributes

  • Cash Flow Stability. Unlike the office building industry but just like the long term care and seniors housing industry, the continuous need for healthcare tends to make MOBs relatively immune to economic and other cycles.

  • Shifting to Outpatient Services. Outpatient services can be provided at a lower cost in a medical office building than in the hospitals because MOBs can be constructed at lower costs and do not have to conform to stringent building code requirements for hospitals. Patient demands for “one stop” shopping of health services have also generated greater demand for medical offices.

  • Lower Vacancy Rates. Occupancy rates have been approximately 90% for MOBs and vacancy rates have historically been lower than general office buildings.

Seniors Housing


Asset Type Description

Seniors housing communities are primarily for elderly people who can no longer live independently but do not require round-the-clock nursing care. Assisted Living Facilities (ALFs) focus on assistance with activities of daily living (e.g. feeding, dressing, bathing, etc). Independent Living Facilities (ILFs) are age-restricted multifamily rental properties with central dining facilities that provide residents with meals and assistance with instrumental activities of daily living, including housekeeping, laundry and transportation. Communities typically provide social and recreational activities. ILFs can be large high-rises or small multi-unit residences.

Attributes

  • Private Pay. Unlike skilled nursing, operators' revenues are not subject to government reimbursement, and they need not provide services to residents who can't pay.

  • Modest Regulation. Also unlike skilled nursing, assisted living is mostly outside the realm of state Certificate of Need (CON) laws, minimizing regulatory expenses and enabling operators to react to demand as it grows. Seniors housing also has historically faced less litigation than skilled nursing facilities.

  • Supply/Demand Equilibrium. As the supply/demand equilibrium in many markets is approached, operators are able to pass through significant rate increases.

  • Limited Market Penetration. Like skilled nursing, demographics bode well for this asset type, but even more so in that the market penetration to date has been limited to less than 5% of age and income qualified potential residents.

Skilled Nursing Facilities | Post-Acute Care


Asset Type Description

Skilled Nursing Facilities (SNFs) serve individuals requiring 24-hour nursing or medical care. Historically, SNFs have the look, feel and functionality of an institutional health care property rather than the residential feel of senior housing. Today, however, many skilled nursing operators are remaking themselves, trending toward more of a hospitality, private suite model, to capture more short-stay rehabilitation business.

Attributes

  • Demographics. Americans are living longer and longer. As their health deteriorates, they will increasingly require skilled nursing, post-acute care services.

  • Regulated Supply. Most states have Certificate of Need (CON) laws that restrict the development of new healthcare facilities. Existing skilled nursing, post-acute care operators have been largely successful at using the CON process to avoid competitive incursions.

  • No Alternative. Elderly individuals that require 24-hour nursing or medical care often have no readily available housing alternative to skilled nursing facilities.

Long-term Acute Care Hospitals | Independent Rehabilitation Facilities


Asset Type Description

Long-term acute care hospitals are hospitals that have a Medicare average length of stay greater than 25 days that serve medically complex, chronically ill patients who require a high level of monitoring and specialized care, but whose conditions do not necessitate the continued services of an intensive care unit.

Attributes

  • Demographics. Americans are living longer and longer. As their health deteriorates, they will increasingly require long-term acute care hospitals.

  • Regulated Supply. Most states have Certificate of Need (CON) laws that restrict the development of new healthcare facilities. Existing long-term acute care hospitals have been largely successful at using the CON process to avoid competitive incursions.