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Feature Story: REITs shaking off pandemic pain

Senior housing has suffered, but rent collections generally remain strong

By John B. Mugford

The six-story, 91,959 square foot Frost Street Medical Center at 8010 Frost St. was one of three off-campus San Diego MOBs that Healthpeak sold to Sharp Healthcare during Q2 for about $106 million, or $575 PSF. The capitalization rate was 6 percent. (Photo courtesy of CBRE)

As the country continues to grapple with the COVID-19 pandemic, the eyes of observers involved in the healthcare real estate (HRE) sector are intently focused on the financial health and investment proclivity of the publicly traded real estate investment trusts (REITs).

The REITs have long been a prominent source of capital in the HRE sector, and when they are actively pursuing medical office building (MOB) deals, along with private equity sources and investment fund managers, the sector is much stronger.

However, the country’s REITs are typically not as active when their stock prices have taken a hit, as their cost of capital and net asset value (NAV) are not as strong – and there are certainly other factors at play as well.

And, for the most part, the stock prices of the country’s healthcare REITs have suffered since the onset of the pandemic. And even though most of them have recovered, they have not, for the most part, reached pre-COVID levels. It should be noted that the stock prices of REITs focused almost entirely on MOBs, or “pure play” MOB REITs, have rebounded and held somewhat steady since the initial drops.

And yet,

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