Healthcare REITs Nowhere Near Done Growing, More M&A On the Way

Despite a huge year for REIT deals in the senior housing space, REITs may be gearing up for even more growth, according to REIT publication

Based on input from panelists are this year’s REITWorld annual convention, reports that these trusts are still in the “sweet spot” for health care mergers and acquisitions. The aging baby boomer is the driving force behind such an outlook, the executives said. reports: 


The health care industry is poised to take advantage of increasing opportunities to grow, according to panelists at a Nov. 13 session during REITWorld 2012: NAREIT’s Annual Convention at the Manchester Grand Hyatt in San Diego.

Ross Nussbaum, managing director with UBS, moderated the session. Panelists included Debra Cafaro, chairman, president and CEO of Ventas Inc. (NYSE: VTR); George Chapman, chairman, president and CEO of Health Care REIT Inc. (NYSE: HCN); and James Flaherty, chairman and CEO of HCP Inc. (NYSE: HCP). They agreed that mergers and acquisitions within the health care industry will continue due to the need for low-cost, efficient health care solutions combined with an aging baby boomer demographic.

“Real estate and REITs are in a sweet spot generally and are able to do win-win transactions for sellers, but I think our opportunities are greater in health care. Assets will flow to the most efficient owners,” said Cafaro, adding that prospects for both internal and external growth are significant.
Chapman said the opportunities to grow his company’s portfolio have been unprecedented. With the health care industry’s overall need to improve, he pointed out that there will be a lot of operators that have to consolidate.


“That kind of pressure is going to drive continued change, enhance quality and grow consolidation,” he said. “It’s a great confluence of factors coming together.”

The health care industry is in the “third inning of nine-inning baseball game” in terms of growth, according to Flaherty. Market pressure for more efficient health care will create more mergers and acquisition transactions that he said should benefit health care REITs.

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Written by Elizabeth Ecker

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