High End Senior Housing Sees Acceleration in Occupancy and Rent Gains, While Medical Office Building Continues to be Steady: Managing Director Omotayo Okusanya Discusses Medical Real Estate Fundamentals with TWST

Wall Street Transcript

67 WALL STREET, New York - July 30, 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: Healthcare Realty Trust Inc. (HR), Brookdale Senior Living Inc. (BKD), Emeritus Corp. (ESC), Ventas Inc. (VTR), Health Care REIT Inc. (HCN), Senior Housing Properties Trus (SNH) 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: How are the fundamentals of the market from a supply and demand perspective? How much does it differ whether we are talking about skilled nursing versus senior housing versus medical office?

Mr. Okusanya: Definitely, fundamentals across each of the different property types vary somewhat. Let's start with senior housing, because that's what most people pay a meaningful amount of attention to. In second quarter you saw the recent NIC data come out about operating trends in senior housing; that seems to suggest that fundamentals were beginning to soften across the entire industry. The rate of rental growth looks like it's slowing, the rate of occupancy gains looks like it's slowing, and I think to an extent that's a source of concern.

But what you tend to find is that the high end of the senior housing market - that is, senior housing assets that are going for $4,000 to $5,000 a month rentwise - that end of the market is still doing very well, still seeing acceleration in occupancy gain and acceleration in rent gains. So the high end of the market, which is where a majority of the REITs operate, feels pretty good, but the overall sector definitely has started to soften somewhat.

Medical office building is very steady. You are seeing a lot more hospitals getting involved in taking more medical office building space as Obamacare is close to implementation in 2014.

I think for medical-office-focused REITs that have a meaningful amount of space to lease, companies like Healthcare Realty (HR), like Healthcare Trust of America (HTA), those two companies I do think are in a pretty good spot at this point from the perspective of leasing velocity for medical office building space. That said, while there is pretty good demand, you are not seeing a lot of rental rate increases, so I think these names will get good leasing velocity, but you probably won't see a lot of improvements in...

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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