There are some excellent long-term trends in the healthcare industry, and one interesting way to invest is through healthcare real estate investment trusts or REITs. In this Fool Live video clip, recorded on Jan. 14, Fool.com contributors Matt Frankel and Jason Hall discuss their top healthcare REITs for 2022 and beyond.
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Jason Hall: It's CareTrust REIT (CTRE -0.21%), ticker, CTRE. Here's a snapshot of the business. Owns 224 properties. They're in 27 states. No, sorry. They've actually grown since then. Two hundred and twenty-three properties in 28 states. That was the Q2 one, this is the Q3 one. What I really like about this particular REIT is the long-term trajectory. We went through with senior housing, and skilled nursing, where there was a little bit of an oversupply and a slowdown in the number of people that were transitioning into retirement and turning 75 and turning 80. But that trend just started to reverse.
In the next couple of decades, we're going to see the number of 80 plus Americans just absolutely go through the roof. Between 2010 and 2030 it's going to double. There's going to be more than 40 million Americans who are 80 and older at the beginning of 2030.
As a really small player with a very strong balance sheet, I really like CareTrust in this industry. I know Matt, this one that you don't like because you don't like the specific space very much. But if you look at the financial performance of this business since it went public, and then over the past three and the past five years, it has consistently been one of the top two or three returning REITs in total returns. I think they're going to continue to deliver that kind of returns, even though last year it was basically flat.
Matt Frankel: I agree in skilled nursing, they're probably best-in-breed. When it comes to senior housing, I like what's called continuing care retirement communities. These tend to be a little more stable. Unlike skilled nursing facilities where the tenant is there for just a little while or the patient, I guess you would say. Continuing care are the ones you have to buy into. They have multiple levels of care. There's one right near me where you essentially get a house at first with some in-home health visits.
Hall: As tenants, it's pretty sticky. With the residents, it's a stickier business model.
Frankel: It's sticky. There's a big buy-in required. It's private pay as opposed to being reliant on Medicare and things like that, which is nice. Also in healthcare, I want exposure to life science, which is a red-hot space right now. That's why my pick is Healthpeak Properties (PEAK -1.39%) ticker symbol PEAK. They are laser-focused on life science right now, but they also have medical offices and continuing care retirement communities.
Just to give you an idea of how hot the life science space is right now. These are the projects they have in the works right now, look at these pre-leasing numbers: $1.6 billion worth of development, that's already 87% pre-leased before it's even built. So that's pretty impressive. This is a red-hot space. They cannot build these kinds of properties fast enough. I love that Healthpeak has a lot of exposure to it and quite frankly not a lot to skilled nursing, which I'm not the biggest fan of in terms of healthcare right now.
Hall: I think the trends are just so much in the industry's favor if you are a good operator.
Frankel: They are. It's what's the best of five great sub-types of properties.
