The rapidly aging population is a big opportunity for healthcare REITs. Most of them are unfortunately quite expensive. But some opportunities remain. I highlight my top pick.
The REIT sector took a beating in December with an average total return of -6.85% but still finished in the black for full year 2024 (+3.70%). Small cap (-5.98%) and mid cap REITs (-6.62%) outperformed large caps (-7.43%) and micro caps (-8.63%) in December. Only 9.68% of REIT securities had a positive total return in December. 55.63% had a positive total return for all of 2024.
Healthcare REIT stocks are expected to benefit from an aging population, rising healthcare expenditure and technological advancements as they head into 2025.
The typical U.S. REIT returned 9% this year, or 13% with dividends.
American Healthcare REIT (AHR) might move higher on growing optimism about its earnings prospects, which is reflected by its upgrade to a Zacks Rank #1 (Strong Buy).
The Zacks REIT and Equity Trust - Other industry players such as WELL, AHR and HIW are likely to benefit from healthy fundamentals and improving demand.
This article initiates coverage of American Healthcare REIT with a hold rating, as its high property expenses are impacting earnings. The macro forecast for demand growth in senior living and outpatient care should drive future growth for this REIT. The firm's improving debt position and low debt/equity makes it a lower debt risk than some peers.
Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%.
REITs are poised for growth with stabilizing interest rates, low new supply, and robust balance sheets supporting higher rents and long-term asset growth. Healthcare REITs benefit from strong senior housing demand and limited new supply, despite valuation debates and management changes at Healthcare Realty. Multifamily and single-family rental sectors show regional variability, but long-term growth driven by demographic trends.
VIK, AHR and ONB made it to the Zacks Rank #1 (Strong Buy) momentum stocks list on December 3, 2024.
U.S. equity markets posted their worst week in two months as benchmark interest rates jumped to four-month highs after a critical slate of inflation data showed modestly firming price pressures. Fueling bets that the Federal Reserve may have to slow the pace of policy easing, the Consumer Price Index and Producer Price Index each posted fractional upside surprises in October. After surging nearly 5% last week en route to fresh record highs, the S&P 500 dipped 2.1% on the week, with healthcare and technology stocks under particularly sharp pressure.
American Healthcare REIT, Inc. (NYSE:AHR ) Q3 2024 Results Conference Call November 13, 2024 12:00 PM ET Company Participants Alan Peterson - Vice President of Investor Relations & Finance Danny Prosky - President & Chief Executive Officer Gabe Willhite - Chief Operating Officer Stefan Oh - Chief Investment Officer Brian Peay - Chief Financial Officer Conference Call Participants Joshua Dennerlein - Bank of America Austin Wurschmidt - KeyBanc Capital Markets Michael Carroll - RBC Capital Markets Ronald Kamdem - Morgan Stanley Michael Griffin - Citigroup Operator Thank you for standing by. My name is Briana, and I will be your conference operator today.