May 28, 2008

Critical care for the boomer portfolio

Real estate and health care - could there be two more volatile topics at the moment? Try combining them. The November issue of Boomer Market Advisor features a revealing interview with Debra Cafaro, chairman, president and chief executive officer of Ventas Inc., a Chicago-based health care REIT. While politicians and pundits bemoan the current stare of the REIT market (especially in light of the sub-prime mess), consider this: boomers are getting older, need healthcare and wellness programs, and there are now not enough to service them all. More healthcare facilities will need to be built to meet coming demand.

"The demographics support owning health care real estate," Cafaro says. "Boomers are big users of hospitals, and I don't mean when they get sick, but more for wellness programs, testing and ongoing monitoring of their health. For this reason, we actually see medical office space demand being driven by boomers, rather than the over-age-85 crowd. And this demand is exceeding supply. We expect this trend to continue as boomers age. And, the quality of the underlying investment is solid. The properties that are held are institutional quality health care properties."

For a cure to what's ailing the REIT space, consider the healthcare sector at your client's next checkup.

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