Tags: healthcare | REITs | return | interest

Healthcare REITs Rebound From 2013 Declines

By    |   Thursday, 10 Apr 2014 02:11 PM

Healthcare real estate investment trusts (REITs) are bouncing back strongly from last year's drop amid a favorable interest-rate environment.

The sector as a whole has enjoyed a total return of 10 percent from the beginning of the year through early April, according to the Dow Jones Equity All REIT Total Return Index, The Wall Street Journal reports.

Healthcare REITs suffered the worst of any real estate sector last year, plunging 19 percent in nine months, according to the paper. That fall stemmed from concern about the higher interest rates that resulted from the Federal Reserve's plan to taper its bond purchases.

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Rising rates can hurt healthcare REITs more than many other REITs, because they generally derive their revenues from long-term leases, sometimes 10 years long, The Journal explains.

When interest rates appreciate, REITs can't boost their rents soon enough to compensate for their increased borrowing costs.

But the 10-year Treasury yield has slid to 2.64 percent early Friday from 3.03 percent Dec. 31. And many analysts don't expect the Fed to raise short-term interest rates until at least mid-2015.

Many analysts like healthcare REITs. The Motley Fool writer Bob Ciura recommends HCP and Health Care REIT. They're "both involved in acquiring and leasing healthcare-related properties, such as senior housing, medical facilities and hospitals," he notes.

"It goes without saying that the aging population in the United States will serve them well."

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Healthcare real estate investment trusts (REITs) are bouncing back strongly from last year's drop amid a favorable interest-rate environment.
healthcare, REITs, return, interest
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2014-11-10
Thursday, 10 Apr 2014 02:11 PM
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