Healthy Gains In Medical Properties

Investing in the healthcare medical buildings sector is a great way to generate income in both good and bad times. Perhaps one of the best spaces to find great tenants is the medical field. Healthcare Trust of America (HTA) and Physicians Realty Trust (DOC) have both created very successful businesses centered around medical office buildings thanks to the high-quality tenants in the sector.

Doctors are reliable and have a high cash flow business that's in strong and growing demand. Let's face it, most people don't go to the doctor for fun; they go because they have some issue that they really want resolved.

It's one thing to have a theory about how reliable a tenant is, but 2020 gave us a real-world, extreme stress test. Many REITs experienced difficulties collecting all of their rent through the COVID-19 shutdowns. DOC and HTA didn't. Here is a look at DOC's monthly rent collections:

chart

HTA experienced similar results, reporting 99% rent collections in Q4 while also collecting $7.3 million out of the $11.1 million they deferred in 2020. There's no doubt about it, medical office tenants are reliable. So next time you get a bill for a co-pay, don't get mad — just look at your HTA and DOC dividends.

Doctors also are very attached to their locations — their customer base usually comes from people who are local and moving a practice any distance risks losing them. For the landlords, this means a high retention rate. In other words, after an initial five- to ten-year rental term, over 80% of tenants renew their lease. Here's a look at HTA's retention:

chart

This high level of retention provides HTA and DOC with a lot of stability.

Medical demand is only going to continue to grow as the Baby Boomer generation ages. Today, there are roughly 56 million people in the US over 65 years old. By 2030, that number will increase by 30% and will account for approximately 20% of the US population.

1 2
View single page >> |

Disclaimer: © 2021 MoneyShow.com, LLC. All Rights Reserved. 

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.