REIT Report: Pay attention to a REIT’s payor mix

A differing blend of MOBs, post-acute and senior living assets affects valuations 

By Murray W. Wolf

With the aging of the U.S. population, many investors have jumped on the healthcare real estate investment trust (REIT) bandwagon during the past decade, and more have piled on since the passage of the Patient Protection and Affordable care Act (PPACA). Billions of dollars have poured into the coffers of public and private healthcare REITs in recent years, as everyone from individual investors to big institutions wanted to get a piece of the action.

Those huge capital inflows have had a profound effect on the healthcare real estate (HRE) sector in recent years, as well-capitalized REITs have dominated the market for acquisitions. That has driven up asset prices, compressed capitalization rates , and created a supply and demand imbalance that has made the hunt for investment grade properties much more competitive.

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