Iron Mountain (IRM) and Welltower (WELL), two REITs with relatively economically insensitive businesses, have both been fine given difficult market conditions, suggests Scott Chan, contributing editor to The Complete Investor.

Iron Mountain specializes in document and records storage. Once customers move items into Iron Mountain’s facilities, they tend to stay there for years, no matter how the economy is performing.

The company says that it serves many of the world’s largest companies, including 95% of Fortune 1000 companies (largest American companies as ranked by Fortune). The high quality of its customers means that Iron Mountain doesn’t have to worry about customers going out of business or being unable to afford monthly storage fees.

Not the most exciting business, it nevertheless generates recurring cash flow that doesn’t fluctuate much with the economic cycle. Much like regulated utilities, this is the type of business that provides downside protection when uncertainties abound.

Welltower specializes in senior housing and nursing centers. At the Covid-19 outbreak, such facilities were hit hard. However, once it became clear that professional health care facilities that follow strict Covid protocols were actually safer than most other places, residents returned.

Even through the Delta and Omicron variant outbreaks, occupancy rates have trended in the right direction for Welltower. Same-store net operating income in the latest reported quarter grew roughly 18% for Welltower’s self-operated senior housing portfolio.

And over a 12-month period through March 2022, the occupancy rate increased month-to-month in all but two months. In one of those months, there was no change and in the other, the decrease was a mere 1/10th of a percentage point.

What’s more, Covid-related expenses are falling as the worst of the pandemic seems to be behind us, likely pointing to future margin expansion ahead.

For a while, health care REITs that catered to seniors faced competition from a growing supply of facilities as industry tailwinds attracted new operators. In recent years, however, the number of new-construction starts has fallen. Meanwhile, the demographic trends continue to look favorable.

The U.S. population of seniors age 80 and older is expected to rise from about 13 million today to 19 million by 2030. Indeed, no matter the state of the economy, people don’t stop aging.

And as they become older, more and more seniors will want or need to live in facilities catering to their needs. Thus, Welltower looks well positioned to enjoy consistent modest growth in the years ahead. The Covid-19 pandemic proved the REIT’s resilience.

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