“The doctor will see you now.” Pandemic or no pandemic, that familiar refrain is repeated over and over. And as long as there are doctors, the need for medical real estate will continue. That’s a good thing for real estate investment trusts (REITs) focused on health-care facilities, which in addition to doctors’ offices include diagnostic imaging facilities, ambulatory surgical centers and more. 

Growing demand for medical space is in sharp contrast to weakened demand for various other types of REIT-owned facilities, such as regular office space, malls and nursing homes, all of which have been shunned during the pandemic and are expected to continue to lose tenants. 

Reflecting that trend, REITs overall plunged16% in 2020 as of December 11, compared with a return of 1.7% for medical-office-building REITS. Although a sharp drop in non-coronavirus medical visits drained medical facilities of patients temporarily, landlords have continued to be able to collect rents at nearly 100% of pre-COVID-19 levels.

Patient volume rebounded in the third quarter because of pent-up demand for primary-care checkups and specialist visits. Longer term, telemedicine isn’t likely to slow demand for in-person medical care. And rents will remain high because there’s a limited supply of specialized medical office buildings with desirable features such as high-tech air- and water-filtration systems and prime locations near hospitals. 

Attractive medical-office-building REITs that have avoided dividend cuts and have strong growth prospects and healthy balance sheets…

Community Healthcare Trust (CHCT) is a fast-growing company with 131 properties in cities including Tempe, Arizona, and Alamo, Texas. It has raised its dividend every quarter since its 2015 launch. Recent yield: 3.6%.

Healthcare Realty Trust(HR) has 211 properties, many adjacent to large hospitals in major cities including Dallas, Los Angeles and Seattle. Recent yield: 4.06%.

Physicians Realty Trust (DOC) is one of the largest medical-office REITs, with 268 properties in 36 states. Recent yield: 5.1%. 

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