Seniors Housing Weekly Update - Health Care REITs Continue To Gain

December 10, 2014

December 9, 2014. 60 Seconds with Steve Monroe. REITs are hitting 52-week highs, and may have room to move...

Health Care REITs Continue To Gain

So what’s it going to be? Is a rise in interest rates going to slow this bull market? Forecasts for an increase in rates have now been pushed out to mid-2015, if not later. But looking at health care REIT stock prices, which usually move in the opposite direction of interest rates, investors do not appear to be looking for anything to hurt REIT values. The Big Three, HCP, Health Care REIT and Ventas, have all been hitting 52-week highs, but investors should not be misled by this. All three are still below their all-time highs in May 2013, ranging from 7% to almost 20% below. With yields that range between 4% and 5% for the Big Three, an argument could be made that there is still room for prices to move up, despite year-to-date gains in excess of 20%. When you add in interest rates still trending down with the plunge in oil prices, investors should still favor health care REITs. But the party does have to end sometime, and while some analysts talk of the lost decade, like Japan in the 1990s, we still may be in a bull for several years to come, despite my words of caution for a year now.

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