Health Care REITs: The “Silver Tsunami” is Driving Demand

Health care REITs own a variety of types of health care-related real estate and collect rent from tenants. Property types owned in REIT portfolios include medical office buildings, senior living facilities, skilled nursing facilities, and life science buildings. Driven by the aging population, in particular the over-80 cohort, or the “silver tsunami,” demographic trends are expected to continue to be a strong tailwind for sector demand.

Health care REITs accounted for 13.8% of equity market capitalization of the FTSE Nareit All Equity Index as of Feb. 28; this was more than quadruple the sector’s weight in 2000. It was the third-best performing sector of 2024, posting a total return of 24.2%. Health care has continued to see strong returns into 2025. The sector was the third-best performing sector in February and the second-best performing sector year-to-date, with total returns of 9.4% and 14.0%, respectively.

Nareit’s Actively Managed Real Estate Fund Tracker tracks quarterly investment holdings for the 26 largest actively managed real estate investment funds focused on REITs. As of the third quarter of 2024 (the latest data available), health care accounted for 13.9% of aggregate assets under management. The sector was overweight by 115% of its share of the FTSE Nareit All Equity Index, which stood at 12.1%. This overweight position highlights active REIT managers’ bullishness on health care; the sector’s allocation increased 1.5% year-over-year.

According to the U.S. Census Bureau, all baby boomers will be older than 65 by 2030 and 2034 will mark the first time in U.S. history when people 65 years of age and older are projected to outnumber the under-18 population. These factors are anticipated to drive demand for senior housing. Given that baby boomers are the wealthiest generation to have ever lived, Green Street has estimated that more than 40% of seniors could afford to pay for senior housing without having to dip into their savings.

Data from the Nareit Total REIT Industry Tracker Series (T-Tracker^®) for the third quarter of 2024 (the latest data available) show that health care REITs have maintained solid operational performance and well-structured balance sheets. Net operating income (NOI) posted a year-over-year gain of 8.0%; same-store NOI grew by 7.9%. The sector’s weighted average term to maturity on total debt was seven years with a weighted average interest rate of 4.2%. The sector also had 93.1% of its total debt at a fixed rate and 90.5% of total debt was unsecured.

2: Green Street indicated that the average length of stay at an assisted living facility is approximately two years; the average resident age is 85 years.

70%: According to the American Health Care Association and the National Center for Assisted Living, 70% of the assisted living population are women.

8,392: Nareit’s REITs Across America reported that health care REITs owned 8,392 properties in the United States as of year-end 2023 (the latest data available).

Below is a list of Nareit member companies from the mREIT sector.