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2 Ways to Invest in Life Science Real Estate Through Stocks

Life science facilities are perhaps the hottest real estate subsector right now, and there are some great ways for investors to get a piece of the action. In this Fool Live video clip, recorded on Sept. 3, Millionacres senior real estate analyst Matt Frankel, CFP, discusses two excellent stocks with large portfolios of life science properties.

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Matt Frankel: Would you speak to ARE, which is Alexandria Real Estate Equities (NYSE: ARE)? They're an interesting company. They're an office REIT that specializes in life science properties, offices for life science companies. They are a nice combination between healthcare and office. Life science real estate is a big, big growth area right now.

Innovation in the healthcare and life science space and pharmaceuticals has never been more active than it is right now. I'm not just talking about the COVID vaccines and things like that. There has been an exponentially growing need for facilities for these companies that make medical devices, that make therapeutics, that make pharmaceutical products. A lot of this is concentrated in the San Francisco area. The Boston area is a big one, where I believe Alexandria has a big presence. It's a stock that we like a lot. If there's one downside, it would be valuation.

Life science properties, I don't want to say they're in a bubble, but the valuations have gone up tremendously over the past few years as demand has. So I'm a fan of it. I don't own the stock myself, but it's a really great business model. If you want some exposure to life science properties without solely relying on them, I would look at a company called Healthpeak Properties (NYSE: PEAK). Ticker symbol is PEAK. They're a healthcare REIT, but they invest in primarily life science properties and medical offices. They also have a small presence in what are called continuing care retirement communities. But life science and medical offices, which are medical offices like the safety net, I guess you would call with life science. Life science is the growth area of that business, and medical offices are the stable, make money no matter what type of properties. Medical offices, for example, are probably the best-performing type of real estate during the shutdown months in 2020 because there aren't any businesses more essential than having a doctor's office to go to, and they actually benefited when hospitals stopped doing elective procedures. A lot of those were moved to outpatient.

Matthew Frankel, CFP owns shares of Healthpeak Properties, Inc. The Motley Fool recommends Alexandria Real Estate Equities and Healthpeak Properties, Inc. The Motley Fool has a disclosure policy.


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