Appropriate Disclosure of Risk Factors associated with Investments in Healthcare Properties

Abstract

Compared with investments in residential and office buildings, investments in healthcare properties in Japan represent a small share of the commercial real estate market. Nevertheless, the need for such healthcare facilities is increasing with Japan's rapidly aging society so increased investment in this subclass of real estate assets is desirable. This paper aims to identify risk factors that are unique to healthcare properties, and which should be considered in making investment decisions. The appropriate disclosure of such risk factors is explored by applying and customizing established measures currently used to evaluate hotel properties. The impact of such disclosure on the market prices of healthcare J-REITs is also examined.