Biotechnology and Pharmaceutical Real Estate: A Low Risk High Return Sweet Spot For Professional Investors

• On 1:20 pm EDT, Tuesday September 29, 2009

67 WALL STREET, New York - September 28, 2009 - The Wall Street Transcript has just published its Medical Real Estate: Healthcare REITs, Long-Term Care Facilities and Hospitals Report offering a timely review of the sector to serious investors and industry executives. This 45 page feature contains expert industry commentary through 10 in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Investor Perception of Medical Facilities Publicly Traded Securities -- Shift from Inpatient to Outpatient Care -- Economic Implications of Health Care Reform -- Medical REITs Growth -- Public Markets Reaction to Obamacare Proposals -- Sustainability of Dividend Yields In Different Health Care Legislation Scenarios -- Ability to Access Debt Capital -- Implication of Aging Population -- Profits of Outpatient Versus Inpatient Care -- Health Care Delivery Costs -- Leaseback Arrangements -- Skilled Nursing Costs -- Growth of Seniors Housing -- Geographical Analysis for Profits in Medical Real Estate -- Advantages to Investing in Licensed Hospitals -- Access to Equity Underwriting -- Economics of a Fragmented Industry -- Consolidation Opportunities -- Debt Refinancing Strategies -- Mergers and Acquisitions in the Medical Facilities Industry

Companies include: LifePoint Hospitals (LPNT); Community Health Systems (CYH); Psychiatric Solutions (PSYS) and Tenet (THC); Medical Properties Trust (MPW); Healthcare Realty Trust (HR); LTC Properties (LTC); Health Care REIT (HCN); National Health Investors (NHI); HCP Inc. (HCP); Alexandria (ARE); BioMed (BMR); Senior Housing Properties Trust (SNH); Omega Healthcare Investors (OHI); Ventas (VTR); Emeritus (ESC); Brookdale (BKO); Fannie Mae (FNM); US Physical Therapy (USPH); AmSurg (AMSG)

In the following brief excerpt from just one of the 10 interviews in the 45 page report, Stifel Nicolaus Industry Expert Jerry Doctrow discusses the outlook for the sector and for investors.

Jerry L. Doctrow is a Managing Director of Stifel, Nicolaus & Co., and he leads the firm's six-person health care services and health care real estate research team. He has been recognized six times by The Wall Street Journal and twice by Forbes/Starmine as one of the best health care or real estate analysts in the U.S. Mr. Doctrow and his team follow 45 publicly traded companies, including 11 health care REITs. Mr. Doctrow has over 30 years' experience in equity research, consulting, public policy, finance and market analysis. He spent 18 years at Legg Mason, where he led the health care services research team and served as President of the firm's real estate consulting unit, advising not-for-profit and corporate clients on the development of senior housing and health care facilities. Stifel Nicolaus acquired Legg Mason's capital markets division in December 2005. Mr. Doctrow served on the board of a not-for-profit agency that developed several hundred units of senior housing and, together with members of his family, has selected and monitored assisted living and nursing facilities for his own parents. He spent his early career in the public sector as an urban planner and housing finance program administrator. Mr. Doctrow has a B.A. in social and behavioral science from Johns Hopkins University, and a master's in public administration from George Washington University. He is an Associate on the faculty of the Department of Health Policy and Management at the Johns Hopkins University Bloomberg School of Public Health; he has also advised researchers at the World Bank on using private investment to improve health care delivery in developing countries. Mr. Doctrow is a frequent speaker at industry conferences. He leads an annual conference on senior housing and health care real estate that features CEOs from all of the public senior housing providers and health care REITs, and co-chairs the Stifel Nicolaus/Johns Hopkins annual health policy symposium, which this year focused on "The Tangible Impacts of Healthcare Reform." His recent publications include Healthcare REITs - Antidote for an Economic Downturn?, published in the winter of 2008.

TWST: Would you include biotech or life sciences properties in the broad "health care" label?

Mr. Doctrow: Yes, the largest health care REIT, HCP (HCP), has a significant life science portfolio. And there's two dedicated life science REITs, Alexandria (ARE), that we do not cover, and a company called BioMed (BMR), that one of my colleagues covers. I used to cover it actually. What we found is that for whatever reason, investors tend to group life science REITs with office and industrial companies. So John Guinee, our office analyst, covers BioMed for us. I can give you a couple thoughts in general about what's going on with life science. I think if you went back even just a few years, you would have seen a very attractive real estate class. Biotech was obviously a significant industry; it was growing rapidly. It's concentrated in a relatively small number of markets in the U.S. - on the West Coast, San Francisco, San Diego, Seattle; on the East Coast, Boston, number one, D.C. and then a belt of life science real estate in New York/central New Jersey, the traditional center of the pharma industry. Almost all life science assets-people invest in are in one of those six markets. And it's very specialized real estate, so if you have expertise in it, you really have an established niche. It is not like somebody that does apartments is going to start building life science or even someone that builds general office; there are a lot of special aspects to it. I think, over the last year or so, because life science is very dependent on the equity capital markets, debt markets, private equity markets, there's been more uncertainty as to where the capital is coming from for that industry. So uncertainty in the capital markets has raised more questions in peoples' minds. What seems to be happening from a global standpoint is Big Pharma, to some extent, is stepping in and being another source of capital to sustain that industry, the best example being Roche buying Genentech. So I think people, after being a little nervous, are feeling somewhat better about it but still keeping an eye on where the capital markets, where the economy are going to settle out. And some life science real estate REITs have been involved in a lot of development, which is, just in general, an area that creates a little bit more uncertainty for investors today. I think it's an interesting asset class. HCP is a way to invest in life science real estate as well as other health care real estate. And it's probably the best stock to play kind of a cross-section of all health care sectors because it's the most diversified, while the other two players in life science are really specialized just in that space, and other health care REITs are more focused on only one or two other health care real estate sectors.

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 45 page special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online .

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.

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