A walk through Strawberry Fields

Real estate investment trusts, or REITs, have been a tricky field to navigate ever since 2020.

Their share prices fell hard during the shutdowns, bounced back phenomenally in 2021… then largely languished as the Federal Reserve hiked interest rates and kept them high.

Last year specifically, equity REITs delivered total returns of just 3.3%. And thanks to today’s inflationary factors, there’s still a lot of confusion about them so far in 2026.

On the one hand, everyone knows the data center sector is doing very well overall. In fact, it’s expanding left and right under artificial intelligence (AI)-driven demand, delivering remarkable returns of 33.1% year-to-date.

On the other hand, far too many investors are overlooking potential gains to be made in other REITs.

To be sure, numerous sectors continue trading below their net asset value. And this is putting a damper on some growth opportunities.

But that’s not the case for healthcare landlords. They’re actually outperforming so far this year, with senior housing REITs generating returns of 13.9%. And their medical office compatriots are up 17.5%.

This isn’t a technical blip. It’s a trend considering how the senior housing sector delivered a whopping 43.1% in share-price appreciation in 2025. The four REITs that led the pack were:

This makes perfect sense considering the clientele these facilities serve. The aging baby boomer bracket is one of the market’s most powerful – and expanding – demographic tailwinds, with the number of people aged 65 and over in this country likely topping 72 million by 2030.

This trend might not be as showy as the nation’s data center build-up. But it’s nonetheless one that should drive strong profits toward healthcare REITs for years to come.

Today’s senior housing situation shows growing occupancy yet limited supply thanks to inflation and financing challenges. That makes it quite the opportunity for current operators to profit.

The same goes for their shareholders, with top-performing senior housing REITs including:

The fact that these three are seeing such gains all over again this year should show how powerful this secular trend really is.

We’ve got a similar story over on the medical office side of the healthcare REIT sector. Leading companies here include Diversified Healthcare (DHC), up 72.9% so far in 2026; Sila (SILA), up 33.2%; and Healthcare REIT (HR), up 22.7%.

Much of that is backed by impressive recurring cash flows, as shown in the last round of earnings reports.

Most healthcare REITs, it turns out, exceeded their Q1-26 expectations. Several – including Healthpeak Properties (DOC), American Healthcare REIT (AHR), and CareTrust – went on to raise their full-year, per-share funds from operations (FFO) guidance.

Similarly, the newly listed Janus Living (JAN) issued initial guidance above Wall Street’s analysis. There was already a lot of optimism surrounding its senior housing-heavy platform. So this news was welcome but hardly shocking.

We also look forward to seeing what its fellow newcomer, National Healthcare Properties (NHP), will do going forward. The very fact that we’ve seen two healthcare REIT IPOs so far this year is, in and of itself, very promising.

It’s yet another indication of a sector that’s benefiting from one of the strongest operating environments it’s seen in years.

One notable – though understandable – outlier in the quarter’s “happy news club” was National Health Investors (NHI). Management did lower guidance on the back of its decision to sell 35 properties for $560 million.

National Health will use that money to pay down debt, a move that should ultimately strengthen its balance sheet. But it does create some near-term dilution in the meantime, and shares are showing it today.

Overall, however, healthcare REITs continue to prove fairly attractive as 2026 continues.

I expect healthcare REITs to see further share appreciation this year. But Strawberry Fields REIT stands out most in my current analysis.

Though not as new as Janus and National Healthcare, the company only went public in 2022. Today, its portfolio includes 149 facilities across several Sunbelt states as well as Illinois, Indiana, Ohio, and Missouri.

It operates:

Most of these are leased out under long-term, triple-net contracts, where healthcare tenants pay taxes, insurance, and maintenance. And they include average rent escalations of about 2.8%.

Strawberry markets itself as a pure-play SNF operator, and we’ll grant it that considering how 92% of its properties fall into that category. We’ll also acknowledge that this puts it in an extremely attractive position to benefit from the baby boomer trend.

Now, it is true that Strawberry Fields is smaller than most of its peers. However, it makes up for that size with an admirable amount of balance sheet discipline.

Most of its debt is fixed-rate, including long-term, guaranteed loans through the U.S. Department of Housing and Urban Development (HUD), with around 20-year maturities and a 3.91% weighted average interest rate.

Its rent coverage – in the form of trailing 12-month earnings before interest, taxes, depreciation, amortization, rent, and management fees (EBITDARM) – is 2.1x. And its net debt to adjusted EBITDA (AEBITDA) is 5.6x.

Strawberry has also generated a sector-leading earnings compound annual growth rate (CAGR) of 10.7% since 2021 based on adjusted FFO (AFFO) per share… all while maintaining a 47.3% payout ratio, the lowest in its peer group.

It is important to recognize that Strawberry doesn’t have the most diversified list of tenants yet.

It was spun off by private operators as a property company (propco) with 33 facilities. So, naturally, a decent chunk of its properties are leased to that originating firm and its affiliates.

But I expect Strawberry’s concentration risk to fall as it continues to scale its business.

As it is, that fact is probably part of the reason why this REIT isn’t trading at “nosebleed” valuations. CareTrust, for instance, sits at 22x earnings. Omega Healthcare (OHI) trades at 15.7x, and Sabra Healthcare (SBRA) comes in at 13.6x.

Strawberry, however, carries a current valuation of 9.7x… with a 5% dividend yield.

Analysts expect AFFO-per-share growth of 7% this year, 6% in 2027, and 10% in 2028. All put together, I reckon STRW could generate 15% returns over the next 12 months.

My only real complaint with this new but growing healthcare REIT is that I wish it paid monthly dividends. (See my recent article on that topic here.) However, I plan on taking that gripe up with management sometime soon.

Until I do, there’s still a whole lot to like about Strawberry Fields – especially as the baby boomer generation continues to make an imprint on healthcare.

Happy SWAN Investing!

Brad Thomas
Editor, The Wide Moat Daily

There are so many ways to lose money in the markets – even when you’re committed to purchasing dividend-paying assets.

People think of income stocks as safe portfolio purchases. And they’re right… in theory. But in practice, there are still dangers you need to be aware of.

In last week’s Wide Moat Show, Nick Ward and I discussed one of the biggest dividend-stock pitfalls you need to know about, including five real-time examples to avoid.

Catch the full episode right here.