Are healthcare REITs still in the pink of health?

Expect more acquisitions in 2016.

Healthcare REITs are expected to continue posting a strong performance in 2016, thanks to robust and defensive demand for healthcare and elderly care services, despite slower economic growth in the Asia Pacific region.

According to Fitch, healthcare REITs are protected by their exceptionally strong lease structures. Healthcare have, for example, an average lease tenor of close to 10 years for most of their portfolio.

Furthermore, over 80% of the sector's debt at the end of the third quarter was at fixed rates.

"The combination of these factors reduces earnings volatility significantly," said Fitch.

"We expect [healthcare] SREITs to remain acquisitive in 2016, capitalising on their strong performance, strong access to equity-markets relative to most other SREIT-sectors and relatively lower leverage," says Fitch.