Healthcare REITs: Navigating Regulatory Challenges and Minimizing Liability Risk

Description

Healthcare real estate investment trusts (REITs) own and operate hospitals, senior housing facilities, skilled nursing facilities, and medical office buildings. The REITs invested heavily in this sector in 2014, and that trend has continued into 2015.

A very few examples of the staggering dollars involved and huge number of healthcare acquisitions by REITs include in Jan. 2015 alone: Griffin-American Healthcare REIT III’s acquisition of $340 million+ in healthcare property. Health Care REIT acquired assisted living facilities in New England for $360 million, and Intercontinental purchased the portfolio in 2005 for about $152 million. And, the acquisitions continue rolling out to now. Brookdale Senior Living and REIT HCP Inc. acquired private-pay Chartwell Retirement Residences and healthcare services for $849 million in on June 30, 2015.

The REIT Industry Diversification and Empowerment Act (RIDEA) changed the landscape by permitting healthcare REITs to lease facilities to a taxable REIT subsidiary, which then captures the operational income from these facilities on an after-tax basis. REITs have seen strong growth, but they have absorbed additional risk with RIDEA-structured acquisitions, including exposure to personal injury claims. The long-term care industry has seen a significant jump in litigation, including an increase against facilities operators.

Counsel must understand the regulatory and operational requirements as well as the benefits and risks of healthcare REITs.

Listen as our authoritative panel of healthcare attorneys examines the regulatory issues associated with the corporate, business and tax issues involved with healthcare REITs and offer best practices to address regulatory issues.