Investing in Hospitals – REIT in Healthcare Facilities

The healthcare sector offers a number of investing opportunities.  One of these is investing in hospitals, specifically hospital and medical facilities.  The easiest way to break in to investing in healthcare facilities is through real estate investment trusts (REITs) in the healthcare facilities sector.  Real estate investment trusts are tax structures for a corporation that uses stockholder capital investments to invest in income real estate.  REITs are most often specialized into a type of real estate, so you can invest in a hotel REIT or an office complex REIT.  You can even invest in real estate investment trusts that specialize in hospital development.

REITs are traded on the stock market like the shares of any corporation.  However, the tax structure of an REIT requires that ninety percent of taxable profits be distributed to the shareholders in dividends.  This provides a real estate investment trust corporation with tax free privileges.  This form of investing in real estate and healthcare provides a way to invest without the hands on duties of real estate ownership.  Investing in hospitals through a real estate investment trust is a fabulous way to get your feet wet in healthcare investing without the need for massive amounts of capital.

This is a tax structure that is available in numerous countries around the world.  In fact, you can invest in real estate investment trusts in Canada, France, Nigeria, Japan, Brazil, Finland, and many more, in addition to the United States.  The real estate investment trust healthcare facilities sector in the United States is enormously lucrative, outperforming all other sectors of REIT investment vehicles.  Even as the healthcare industry is under fire in the United States, people still need medical care and hospitals.  Hospital and other medical facilities are bought, built, and leased on a regular basis.

The regulations governing the real estate investment trust healthcare facilities sector state that the company cannot operate the healthcare facilities it owns.  Therefore, the REIT usually hires a third party management company to run the healthcare facilities in its portfolio.  Investors can also invest in specific hospitals or hospital management companies.  However, investing in hospitals this way can require extensive research on the company involved because there are a number of risk factors in the healthcare industry.  As always, investors should check the ratings of a potential investment security at Moodys, Standard and Poors, and Fitch.  Beyond that, hedging exposure to risk by diversifying beyond just investing in hospitals or the healthcare industry is a good idea.