Case study: Shares of skilled-nursing REIT omega HEALTHCARE Investors

(OHI) provide an example from 2018 of how Thomas puts investment theory into practice. Omega had successfully navigated several business cycles since the 1990s, but in late 2017, the company had run into rent-collection trouble with some of its larger tenants. The stock took a beating, but Omega replaced the deadbeats with new tenants and managed to deliver on its growth targets. From depressed levels in early 2018, the stock eventually produced a 40% total return for the year. “more recently, Omega announced a merger with medEquities, which demonstrates that the company is on solid financial footing and enhancing diversification by investing in hospitals,” says Thomas, who notes that a growing number of seniors use skilled nursing for post-acute care and physical therapy and will continue to do so over the next two decades. rEITs can be sensitive to interest rates, but Thomas says they can thrive if rising rates occur within the context of a growing economy. “During an expansion, most rEITs generate adequate rent and net operating-income growth fueled by higher occupancy rates and greater demand,” he says. Find out how you can profit from real estate without the headache of managing properties at forbesmagazine.com/reit