The Big Four Healthcare REITs: How To Invest in Them

By 2030, the United States population aged 65 and older will double from 2010 levels, surpassing 74 million. This demographic surge drives unprecedented demand for healthcare services and the specialized commercial real estate (CRE) needed to deliver them. 

For investors, this creates a unique opportunity in medical office buildings — a sector underpinned by consistent demand and long-term leases with high-quality tenants. Healthcare providers, tethered to population hubs, are a “captive audience” for landlords, making healthcare real estate a resilient and stable investment option.

For those seeking exposure to this booming market, investing in the Big Four healthcare real estate investment trusts (REITs) offers an accessible, expertly managed path. These REITs provide diversification, consistent cash flow, and the ability to capitalize on a fast-growing, recession-resistant sector. As we explore how to invest in these industry leaders, you’ll see how their scale and expertise enable them to thrive in this dynamic market — positioning your portfolio for reliable, long-term growth.

Related: Fixed-Income Bonds vs. Real Estate Investment

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Understanding Healthcare REITs

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Healthcare REITs play a vital role in the CRE market by owning, operating, acquiring, and developing healthcare-focused properties. These assets include senior living communities, hospitals, medical offices, outpatient facilities, life sciences research centers, and skilled nursing facilities. By providing the real estate infrastructure that supports healthcare services, these REITs cater to an essential and growing sector.

Most REITs generate income by leasing their properties to healthcare systems and providers, often under triple net lease agreements. This lease model shifts responsibilities for maintenance, property taxes, and insurance to tenants, offering REITs a stable and predictable revenue stream — an appealing feature, especially in times of economic uncertainty. Some healthcare REITs also manage their facilities, such as senior living communities, partnering with third-party operators to handle daily operations. Here, income is tied to patient housing and services, with earnings influenced by occupancy levels and market rates. These dynamics make healthcare REITs a resilient and strategic choice for recession-resistant investments.

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Why Investors Are Capitalizing on REITs

‍For several reasons, even high-net individuals would prefer to own a healthcare REIT rather than a single healthcare facility:

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1. Consistent Long-Term Performance
REITs have a proven track record of delivering strong, long-term returns. According to the National Association of Real Estate Investment Trusts (Nareit), REITs have provided an average annual compounded return of 9.6% over the last 30 years. This performance surpasses many traditional asset classes while offering a balance of stability and growth. REITs also exhibit lower volatility than the broader stock market, making them an attractive option for risk-conscious investors seeking consistent returns​​.

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2. Attractive Yields
Healthcare REITs, in particular, offer compelling dividend yields. As of 2022, the 16 healthcare REITs tracked by Nareit provided an average dividend yield of 4.1%, more than double that of 10-year U.S. Treasury bonds. Notably, healthcare REITs demonstrated resilience during the pandemic, achieving a total return of 16.3% in 2021. Unlike fixed-yield instruments like bonds, REITs have the potential to increase dividends over time, offering investors growing income streams​.

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3. Liquidity Advantage
One of the critical challenges of direct real estate ownership is illiquidity. Selling a property can take months and incur high transaction costs. In contrast, publicly traded REITs, like stocks, can be bought and sold instantly, providing unparalleled liquidity. This accessibility makes REITs ideal for investors who want exposure to real estate without locking up capital for extended periods.‍

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4. Unnmatched Transparency
Publicly listed REITs must disclose their financial performance, assets, and liabilities. Their operations are frequently reviewed by credit rating agencies, offering investors a high level of transparency. This openness builds trust and enables informed decision-making, which is not always possible with private real estate investments.‍

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5. Built-in Portfolio Diversification
REITs inherently reduce risk by spreading investments across multiple properties. Diversification extends even further for healthcare REITs, with options to invest across various sectors like senior living facilities, medical offices, and outpatient centers. Selecting REITs based on geography, management strategies, or leverage levels allows investors to build portfolios tailored to their financial goals​​.

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Four Healthcare REITs for Your Portfolio

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1. Welltower

This REIT trades at a market capitalization of $36.1 billion, owns nearly 1,800 properties, offers a dividend yield of 2.94%, and is among the largest healthcare trusts globally. The company invests in senior facilities, post-acute care hubs, and outpatient medical buildings. All sectors are considered high-growth as the U.S. population ages and the industry continuously moves to outpatient care. Like other operators, the REIT faces rising labor costs and COVID-19 challenges. In late 2021 Welltower debt was rated Baa1 and the outlook “stable,” by Moody’s, an investment grade.

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The outlook for Welltower will likely improve when the COVID-19 pandemic passes and labor markets loosen up. Although the dividend has been cut recently, it is well-covered by earnings. Investors could see rising dividends and appreciation by buying Welltower on relative weakness.

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2. National Health Investors

This REIT specializes in sale-leaseback, joint venture, mortgage, and mezzanine financing of need-driven and discretionary senior housing and skilled nursing facilities. It has more than 220 properties in its portfolio.

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Like most mortgage REITS, National Health Investors offer a solid yield, north of 6.6%, although the dividend has been trimmed in recent years and is below 2017 levels. The stock traded below levels of five years ago.

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Fitch Ratings affirmed a “BBB—" investment-grade rating on National Health Investors in late 2021, with a stable outlook. Like other healthcare REITs, National Health Investors has been undercut by labor issues and COVID-19.

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National Health Investors may be the right choice for investors who like yield and favor buying shares down from peak prices.

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3. Medical Properties Trust

‍Medical Properties Trust One of the largest owners of hospitals and other medical facilities, Medical Properties Trust has 438 properties in its portfolio, primarily in the U.S. and the United Kingdom. It rents the properties out through “triple net leases,” in which the tenant pays property taxes, insurance, and maintenance.

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The REIT pays a 5.5% dividend, and shares have roughly traded sideways on Wall Street for the last two years.

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Add Healthcare REITS to your portfolio the easy way. Contact Alliance today.

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Moody’s gave Medical Properties Trust a “Ba1” Rating in 2021, considered one notch below investment grade but with a “positive” outlook. The REIT has large exposure to a single tenant, Steward Health Care System LLC and, medical facilities in general, have been challenged by the pandemic. Over the years, the REIT has borrowed heavily to make acquisitions and consistently raised dividends.

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Medical Properties Trust is a possible play for investors looking for dividends in the post-pandemic outlook.

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4. Omega Healthcare Investors

Omega Healthcare Investors Omega Healthcare Investors owns more than 900 senior-living facilities in the U.S. and the United Kingdom, rented to operators under triple-net leases.

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The first thing investors note about Omega Healthcare Investors is that the REIT pays a 9.5% dividend and has regularly raised dividends in recent years. Despite the attractive dividend, the REIT’s shares have undulated sideways on Wall Street for five years.

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Related: Technology Is Accelerating Big Real Estate Trends

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REITs vs. Private Equity Real Estate Syndications

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As stated above, owning REITs offers many advantages, including total performance or return, dividend yields, transparency (regarding track records and public filings), liquidity, and diversification.

While public REITs offer accessibility and liquidity, they come with notable drawbacks. Despite efforts to align management incentives with shareholder interests, conflicts persist as executive compensation is often tied to salaries and bonuses rather than stock performance. 

Additionally, while socially valuable, “environmental, social, and governance” (ESG) initiatives can increase costs and detract from shareholder-focused profitability. Public REITs also lack operational transparency, as their vast property portfolios make it challenging for investors to assess individual assets or identify high-performing opportunities. 

Lastly, REITs typically deliver market-average returns, offering stability but limiting the potential for significant capital appreciation in more targeted real estate investments.

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In contrast, private equity real estate syndications — like those offered by Alliance CGC — eliminate many of the constraints of REITs, delivering advantages uniquely suited to investors looking for higher returns and greater control.

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1. Close Alignment of Management, Sponsor, and Shareholder Interests.

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While real estate syndication investors must read the offering memorandum closely to determine fees and profit splits between shareholders and sponsors, syndication managers generally hit pay dirt at the same time as ordinary investors — when a project is sold, usually three to seven years after fundraising. Real estate syndication managers want a successful exit strategy on the target date indicated in the memorandum. In this way, they are unlike public REIT managers, who may plan to hold onto their executive positions for decades.

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2. Better Prospects for Appreciation

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While most REITs are well-managed, the large portfolios managed can only appreciate slowly, and then only if the more giant property market forebears. In contrast, many real estate syndications target a single property, or a small portfolio, to develop, re-develop, or otherwise reposition to obtain larger returns. There is the real possibility of a large capital gain on the syndicated investment, along with dividends.

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3. Operational Transparency.

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As stated, deciphering a public REIT’s operations is beyond the ken of most investors and even that of many industry analysts. Granular operational details are not released publicly. In contrast, a real estate syndication with a single asset or small portfolio can be understood practically by most investors willing to do due diligence.

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4. Low Correlation To the Stock Market And Other Investments.

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An investment in a typical real estate syndication will often reflect the management skill, business plan, and regional property market involved, all of which will likely vary from national property and stock markets. Investing in a real estate syndication adds diversity and ballast to the typical investor portfolio.

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Invest Smarter With Alliance CGC

Navigating today’s dynamic investment landscape requires more than just knowledge — it demands access, strategy, and a trusted partner. At Alliance CGC, we specialize in empowering investors to achieve financial growth through recession-resistant healthcare real estate investments:

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• Exclusive opportunities: Leverage Alliance's industry-leading network to gain access to off-market medical and veterinary properties unavailable to the public.
• Expert management: With over 30 years of expertise and a historical 28% IRR, we manage billions in assets precisely, enhancing returns and minimizing risk.
• Strategic diversification: Balance your portfolio with multifamily, industrial, retail, and high-demand healthcare properties, ensuring steady cash flow and long-term stability.

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Whether your goals are stable cash flow, capital appreciation, or impactful investments, Alliance CGC’s $1 billion-plus portfolio offers the expertise and exclusive opportunities to help you thrive.

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Are you ready to unlock your portfolio’s potential? Contact Alliance CGC today to explore healthcare real estate investments tailored to your goals.

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Start growing your portfolio today. Contact Alliance CGC to explore healthcare real estate investments tailored to your financial goals.

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