U.S. REITs "Healthcare REIT Primer: What Really Matters?" Goldsmith

Research evidence excerpt

U.S. REITs "Healthcare REIT Primer: What Really Matters?" Goldsmith

External growth should remain robust despite increased competition. A

key question surrounding SHOP- and SNF-focused REITs is whether elevated

investment volumes are sustainable. Our conversations with Healthcare REITs

make us increasingly confident that transaction activity can remain elevated,

supported in part by strong pricing that continues to draw sellers to market. We

view public REITs as the natural consolidators of both senior housing and skilled

nursing assets given their cost of capital, operating platforms, and specialized

teams dedicated to onboarding, overseeing, and improving these operationally

intensive properties. As a result, we expect continued consolidation among the

leading Healthcare REITs, supporting AFFO growth, upward estimate revisions, and

further market share gains.

Among the fastest-growing REIT subsectors with meaningful estimate

revision potential. On a market-cap weighted basis, consensus forecasts expect

Healthcare REITs to generate the fastest FFO growth among major REIT sectors in

2026 and 2027 at 12.7% and 11.1%, respectively. Notably, this outpaces Data

Centers at 11.6% and 9.5%, respectively. Importantly, we believe consensus

estimates remain conservative. Many Healthcare REITs, including WELL, AHR,

CTRE, and OHI, exclude future acquisitions from guidance and have historically

taken a cautious approach to organic growth expectations. As evidence, every

Healthcare REIT in our coverage universe except SBRA raised its 2026 outlook

following 1Q'26 results. At the midpoint, Healthcare REITs now forecast 2026

Core FFO growth of 8.1% (mean of UBS coverage), up from 6.6% previously.

Moreover, expected total cash SSNOI growth increased from 7.2% to 7.7%.