Morgan Stanley published a report telling clients to buy healthcare REITs because the population keeps aging. Revolutionary stuff. Next they'll figure out that water makes things wet.
The thesis runs like this: Boomers get old, Boomers need medical buildings, medical buildings pay rent, rent becomes dividends, you get rich. Except you won't get rich because Morgan Stanley told you about it after their institutional clients already bought six months ago. You're getting the sloppy seconds of an investment idea that peaked when someone's grandfather fell in a Walgreens parking lot.
Healthcare REITs own the actual buildings where people go to die slowly. Dialysis centers. Outpatient surgery facilities. Medical office complexes with names like "Sunrise Professional Plaza" where the sunrise is a metaphor for the last thing you'll see. These properties generate cash because insurance companies keep paying and old people keep showing up. It's a beautiful business model if you ignore the part where human suffering is the underlying asset.
The dividend angle is my favorite part. Morgan Stanley wants you excited about a 4% yield while their private equity arm is making 20% buying the same assets directly. They're throwing you a bone while they eat the steak. The bone has dividends on it. You're supposed to say thank you.
Five reasons to stay bullish, they said. Five. They needed to stretch to five because three reasons sounded lazy and ten would've exposed that they were just rewriting the same point about demographic trends. Reason four was probably "People continue to age" written in a slightly different font.
The aging population thesis has been a boon to exactly one group: analysts who get paid to write reports about how the aging population is a boon.
Photo by Sven Piper on Unsplash
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