Direct Answer
110 SEC filers are classified under the Standard Industrial Classification code that describes the medical office reits industry, and their latest annual reports show $180.6 billion of combined revenue and a median operating margin of 20.0%. Investors should still evaluate its revenue model, industry-specific KPIs, valuation framework and the risks that can change the group's economics.
Industry Overview
Medical office REITs own buildings near hospitals and clinics that physicians and health systems lease. Tenants are sticky because of equipment and patient relationships, so occupancy and rent growth are steady. The first numbers to compare across companies here are occupancy and tenant retention, same-store net operating income and leasing spreads.
Key Industry Metrics
- Occupancy and tenant retention: The leased share of space and the proportion of tenants who renew. High retention is typical since doctors rely on location, so declines are worth attention.
- Same-store net operating income: Rent less operating costs on buildings owned in both periods. It excludes acquisitions to show steady underlying performance.
- Leasing spreads: The change in rent on new and renewed leases against prior rent. Positive spreads show rent growth as leases roll.
- Health system tenant concentration: The share of rent from a few hospital systems. Concentration ties income to the finances of those systems.
- Funds from operations per share: Net income with depreciation added back and sale gains removed, divided by shares. It is the main REIT earnings measure, read against the dividend.
Primary Macro Drivers
- Outpatient care trends: As procedures and visits move from hospitals to outpatient clinics, more physician space is needed near campuses, which supports occupancy and leasing spreads.
- Hospital affiliations: Buildings on or near a health system campus draw steady tenants through referral ties, so a strong system affiliation shows in tenant retention and occupancy.
- Aging demographics: Older patients use more visits, tests and procedures, which supports long-run demand for clinic space and shows in occupancy and same-store NOI growth.
- Interest rates: Higher rates raise borrowing costs and the yields buyers require, which pulls down property values and narrows the spread on acquisitions and development.
Major Risks
- Health system finances: Health systems anchor many leases, so a weak balance sheet there can delay renewals or cut rent, visible in tenant concentration and tenant retention.
- Reimbursement changes: Lower payments to physicians and hospitals squeeze tenant margins and their ability to expand or pay rent, so watch policy changes against rent collection and retention.
- Interest rates: Rate rises lift interest expense on refinanced debt and push down values, so compare the debt maturity schedule with funds from operations per share.
- Competition from developer-owned sites: Health systems or developers may build their own offices nearby, giving tenants alternatives, which would show in weaker leasing spreads and tenant retention.
Industry Characteristics
| Characteristic | Profile |
|---|---|
| Cyclicality | Defensive |
| Capital Intensity | High |
| Regulatory Intensity | Medium |
| Industry Maturity | Mature |
| Geographic Importance | U.S. |
Medical Office REITs Filers in the SEC Record
110 companies with annual reports in the dataset are classified by the SEC in the Standard Industrial Classification code 6798. Their latest fiscal years end between 2022 and 2026, and together they reported $180.6 billion of revenue. Median revenue growth over the prior year was 2.9%. Median operating margin was 20.0% and median net margin 10.0%. Median total liabilities were 54% of total assets, and 77 of 110 reported a profit in their latest year.
| Company | Revenue | Growth | Operating margin | Net margin | Year |
|---|---|---|---|---|---|
| Welltower Inc. | $10.8 billion | 35.6% | n/a | 8.6% | FY 2025 |
| American Tower Corp | $10.6 billion | 5.1% | 45.5% | 24.7% | FY 2025 |
| Equinix Inc | $9.2 billion | 5.4% | 20.0% | 14.6% | FY 2025 |
| Prologis, Inc. | $8.8 billion | 7.2% | 49.6% | 37.9% | FY 2025 |
| Weyerhaeuser Co | $6.9 billion | -3.1% | 10.6% | 4.7% | FY 2025 |
| Iron Mountain Inc | $6.9 billion | 12.2% | 16.9% | 2.2% | FY 2025 |
| Simon Property Group Inc. | $6.4 billion | 6.7% | 49.9% | 84.3% | FY 2025 |
| Host Hotels & Resorts, Inc. | $6.1 billion | 7.6% | 14.0% | 12.5% | FY 2025 |
The 8 largest of 110 by revenue. Source: each company's own annual report as filed with the SEC (XBRL data), figures in U.S. dollars. A company's SIC code reflects its main business as the SEC records it, so it can differ from how an index provider or analyst classifies the company, and a diversified group appears under only one code.
Where to Go Next
The Medical Office REITs guide describes how the industry earns money, what to measure and what can go wrong. To see how it compares, read the neighbouring industries in the same sector, then apply the same checks to a specific company.
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Frequently Asked Questions
What are the main KPIs for the Medical Office REITs industry?
Key performance indicators for the Medical Office REITs industry include: Occupancy and tenant retention, Same-store net operating income, Leasing spreads, Health system tenant concentration, Funds from operations per share. Which matter most depends on the company's model, so compare them across several companies rather than relying on one.
How cyclical is the Medical Office REITs industry?
The Medical Office REITs industry is generally defensive, meaning demand tends to remain relatively stable regardless of the economic cycle. Companies in this space can provide portfolio stability during recessions, though growth may lag in strong expansions.
What are the biggest risks in the Medical Office REITs industry?
The primary risks for Medical Office REITs companies include: Health system finances, Reimbursement changes, Interest rates, Competition from developer-owned sites. Investors should assess each company's exposure to these factors and its track record of navigating them.