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Risks
1. Interest Rate Risk: Interest rates can have a major impact on the value of U.S. health care REITs. Changes in prevailing short-term interest rates can influence the cost of capital and the cash flows from the REITs.
2. Regulatory Risk: Federal and state laws and regulations govern the operation and financing of the health care industry and U.S. health care REITs must stay current with these regulatory changes. These changes directly affect the cost of capital, operating expenses, loan defaults, and other factors that affect the cash flows of the REITs.
3. Competition Risk: U.S. health care REITs must compete with other sources of capital and financing, such as banks, private equity, and venture capital firms. As competition increases, the cost of capital and other financing terms may become less favorable for U.S. health care REITs.
4. Tenant Risk: U.S. health care REITs depend on tenants to generate cash flows for the REITs, and tenants may default on their rental obligations. Also, declines in the creditworthiness of tenants can impact the ability of U.S. health care REITs to finance their holdings.
5. Market Risk: U.S. health care REITs are subject to cyclical movements in the stock and bond markets. Fluctuations in the financial markets, or a lack of liquidity, may affect the ability of U.S. health care REITs to access adequate sources of capital or to obtain attractive financing terms.