Healthcare REITs have been among the top-performing REIT sectors throughout the past several years—and that trend continued through the first quarter of 2013 as the segment produced the highest returns in the Global REIT index, revealed a recent S&P Down Jones Global Real Estate Report on Thursday.
The Healthcare segment of the S&P Global REIT index gained nearly 14.4% for the quarter, outpacing the 7.9% return of the broader S&P Global REIT, says Michael Orzano, Associate Director of Global Equity Indices at S&P Dow Jones Indices.
Other indices Healthcare was measured against include Office Space (12.5%), Hotel/Resort/Leisure (14.3%), and Industrial (10.9%).
Credit: S&P Dow Jones Global Real Estate Report: First Quarter 2013
Not only has the Healthcare sector outperformed the other eight indices on a quarterly basis, it has also produced higher returns on a year-over-year basis.
“Over the past 12 months, the Healthcare segment is up more than 34%, while the S&P Global REIT has gained 20.3%,” Orzano said. “The investment community seems to be confident that the demand for healthcare facilities will continue to increase.”
However, the healthcare REIT sector is “heavily concentrated,” he noted, as three U.S. companies—HCP, Inc. (NYSE:HCP), Ventas, Inc. (NYSE:VTR) and Health Care REIT (NYSE:HCN)—represent about three-quarters of the S&P Global REIT– Healthcare Index.
“Overall sector performance is highly sensitive to the performance of these three companies,” Orzano says.
One should also bear in mind that the healthcare REIT sector is heavily concentrated. Three U.S. companies: HCP, Ventas and Health Care REIT, represent about three quarters of the S&P Global REIT, so overall sector performance is highly sensitive to the performance of these three companies.
The S&P Global REIT Indices are subsets of the S&P Global Property including only REIT and REIT-like securities.
Written by Alyssa Gerace