1 healthcare stock that I plan to own forever

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Properties of Healthpeak ( PEAK -1.06% ) is a real estate investment trust, or REIT, that focuses on healthcare properties, specifically life sciences, doctor’s offices, and senior housing. In this fool live Video clip, recorded on November 15Fool.com contributor Matt Frankel explains why Healthpeak is one of his biggest investments and he doesn’t plan to sell anytime soon.

Matt Frankel: Healthpeak Properties is a real estate investment trust. This is one of two healthcare real estate investment trusts that you will hear about today. Popular category among this group. But it is certainly the bigger of the two. It is the more diverse of the two. About a company with a market cap of $ 18 billion. They specialize in three different types of health care properties. They have senior housing they specialize in a type of property called continuing care retirement communities. These are, if you ever see a community of retirees near the year in which they have assisted living, they have independent homes that are right on the property. A few different Levels of Care designed to be a place for people 55 and over to move independently, and then gradually scale up care as needed.

It’s their smallest type of property, and then they have medical office buildings that are slow and steady, anyway, I can’t think of a much more essential type of property than doctor’s offices. Next, # 3, last but not least, they specialize in life science properties. I wanted to share something that hopefully would change some of your minds. It actually helps support Jason’s stock that he’s going to talk about. This is why they are very fond of the life sciences. They focus almost all of their development budget on life science properties.

These are facilities that are occupied by companies like Pfizer and Johnson and Johnson, places where they develop drugs. The graph on the left certainly helps Jason’s thesis on the aging of the senior population, the 65 and over age group from 2010 to 2026 will be 60% larger. Sixty-five million seniors in the United States in 2026, there were only about 40 million in 2010. That’s a big leap. As we know, as you get older, the chances of you taking more prescription drugs are greater.

Look at the next one. Global drug demand has increased 90% over that 16-year period, which we’ve come just over halfway, about two-thirds of the way, in fact. The regulatory environment has gotten a lot easier, not easier, but it has gotten faster to get drugs through trials. Think how quickly the COVID vaccines were able to go through trials that were definitely certain they had regulatory help on this issue. But a generally favorable regulatory environment and a lot of money is spent on developing drugs.

If you look at that last graph to the right, that’s where the money is. The amount of money spent on prescription drugs. Now it’s not 2026, it’s 2021. Annual spending on prescription drugs has quadrupled since 2010. They need facilities to grow them. They are clustered in very expensive real estate markets like San Francisco and Boston. That’s what Healthpeak does, they’re all about the life sciences, that’s really why I’m pushing this so hard. I think the life sciences are just beginning in terms of really building their physical infrastructure.

There’s going to be a lot of, I mean, medical advancements have never been faster than they are today. Medical progress needs a physical space and a modern, state-of-the-art space to operate. Pfizer, is it going to move to a facility that was built in the 1950s, they want a modern facility and that’s why companies like Healthpeak are really all-in the life sciences.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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