Help me to understand this logic:
HCP and HCN are at the doorstep of one of the greatest trends towards aging care in our history as baby boomers flood the medical offices, hospitals, assisted living, and nursing homes and yet Morgan Keegan downgrades both stocks because REIT investors will now be moving to other more favorable (and undervalued) REIT's like in office buildings.
I am not impressed. Not all REIT investors are that myopic. Not all REIT investors are traders bouncing around the REIT categories.
I own office REIT's (DRE, CLI, & HRP) and medical REIT's (HCP & HCN) ... and I cannot even imagine selling out the medical REIT's to move to other REIT for the next 10 years. They are long term core holdings... poised to grow.
There's really no logic to Wall Street firms in their recommendations. They usually recommend buying after the stock has had a huge move, and always recommend selling at the bottom, when they're told to by the investment committee. All they're looking for is a 5-10% move in a year, coupled with dividends. Once they get it, out they go. The long-term fundamentals with the health care REIT's is very solid. I've owned them for years, have doubled my money and probably doubled my dividend income over the last 6 to 7 years.
"HCP and HCN are at the doorstep of one of the greatest trends towards aging care in our history as baby boomers flood the medical offices, hospitals, assisted living, and nursing homes and yet Morgan Keegan downgrades both stocks because REIT investors will now be moving to other more favorable (and undervalued) REIT's like in office buildings."
I've held HCP for more than ten years, and cut my position by half yesterday. I hadn't seen the Morgan Keegan report, so that didn't influence me. My observation is that HCP gets too high on a relative basis on occasion, and that's a good time to take profits.
You should also understand that HCP doesn't provide "aging care"-- it provides real estate assets and services to the folks who do. The disastrous state of the real estate markets does have some impact on HCP. Even more than that, the financial health of their tenants, and their access to capital is a big issue. . . and some of their tenants are not the strongest (though HCP management have done a good job in trying to spread the risk around)
HCP at %5 yield is fully valued historically speaking
You are right on. I have held this stock for over ten years and it fits right in very nicely with our retirement. Are we speculators always for a quick profit? We should be investing our hard earned money for the future without SS etc. if that happens. We can whether the storm and make it till the end if we invest wisely now and in the future. Lot's of people will be requiring assisted living etc. Morgan Keegan wants the commissions
I recently bought some HRP because it looked like a nice entry point. So while I agree that medical REITs should have a good future, I don't like the entry points right now. Thanks for reading.
I work in acquisitions for a healthcare REIT and I couldn't agree more. The CMS statistics are proof-positive of the aging demographics of this country. It doesn't take a rocket scientist to figure our what effect the bulge of baby-boomers moving into retirement will have on the demand for healthcare real estate. Barring any major long-term hit to a healthcare REIT's FFO, traders, both amateur and professional, only show there short-sightedness when they start shorting HCP, NHP, VTR, etc...
But Morgan Keegan s there to help : )
By taking the trader mentality they will provide the downward price action....together with today's news on the share offering...to enable reinvestment at better prices. It's always worked that way.
But it WAS a great post!
How old are you? The baby boomers are not 65 only starting to be 62. They may use more medical services with medicare at 65. There can be dips or falls in the next 10 years. The internet boomed and went bust in less than 10 years.
I too, cannot agree with Morgan Keegan's "logic". Why go into Office building REITs? We are hearing about more and more layoffs in large companies. Won't those empty offices hurt office rental rates? Now about HCP. Good yeild, good coverage, good financial structure. Why is this stock going down?