Health Care REITs May React Bond-Like to Changes in Interest Rates, While Fundamentals Remain Stable: Expert Analyst Daniel Bernstein Shares His Views on the Sector with The Wall Street Transcript

Wall Street Transcript

67 WALL STREET, New York - July 25, 2013 - The Wall Street Transcript has just published its Medical Real Estate Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: REIT Access to Capital - Affordable Care Act and Reimbursements - Hospitals, Senior Housing, Skilled Nursing and Acute Care - Medicare and Medicaid Reimbursements - Consolidation Activity - Health Care REITs

Companies include: Health Care REIT Inc. (HCN), BioMed Realty Trust Inc. (BMR), Capital Senior Living Corp. (CSU), Brookdale Senior Living Inc. (BKD), Emeritus Corp. (ESC) and many more.

In the following excerpt from the Medical Real Estate Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What are your stock recommendations right now?

Mr. Bernstein: Our top pick today is Health Care REIT (HCN) in the REIT sector. It's an $18 billion market cap health care REIT. Post their acquisition of Revera Properties in Canada, they're getting about 38% of their NOI from seniors housing operating assets, so we think the portfolio will benefit from rising interest rates, and again, the good underlying fundamentals in seniors housing.

We also like the company's relationship-driven acquisition model. Although they've done a number of large acquisitions in the past couple of years, they don't rely on those large acquisitions for growth. They get a significant amount of acquisitions from their existing relationships at better-than-market prices, and so we continue to see them be attractive with 5% better FFO and FAD growth, similar dividend growth and a potential for them to continue to improve their valuation versus peers.

TWST: And in the other subsectors?

Mr. Bernstein: The other pick that we have, and this is a company that I cover without Rob, is BioMed (BMR). It is primarily a company that invests in life science assets, biotech lab space. It has improved its balance sheet dramatically; it's sub-40% leverage. It continues to lease up its assets. It has diversified its tenant base, and it's growing FFO/FAD 6% to 7% a year. We think the company is trading at a discount to net asset value, and may even be a potential acquisition target for a large-cap health care REIT, so we like them as well.

In the other sectors, our favorite seniors housing pick is Capital Senior Living (CSU). It's a little bit more growth than value. Capital Senior is a small-cap company; market cap is roughly $675 million, but it is a top-20 operator of seniors housing assets...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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