Occupancy and Rental Rates Driving Revenue of Seniors Housing; Supply/Demand Calls for New Inventory: Expert Analyst Dana Hambly Shares His Positive Outlook on the Senior Housing Segment

Wall Street Transcript

67 WALL STREET, New York - July 26, 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: Brookdale Senior Living Inc. (BKD), Capital Senior Living Corp. (CSU), Emeritus Corp. (ESC), The Ensign Group, Inc. (ENSG), Skilled Healthcare Group, Inc. (SKH), Hanger Orthopedic Group Inc. (HGR), Health Care REIT Inc. (HCN), National Health Investors Inc. (NHI) 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 top stock recommendations?

Mr. Hambly: In that group, I'm pretty favorable on all of those five names. I still really like CSU at these levels. Even though it's the most expensive of the three, I think they have much more growth; like I mentioned, 20% type cash flow growth. They have almost no reimbursement risk, as opposed to Brookdale and Emeritus, both of which own some home health and some therapy that is more exposed to Medicare reimbursement. So that one is probably my favorite there.

I do like both Ensign and Skilled Healthcare Group. Skilled Healthcare Group I think has some operational challenges that they've been working through, but they are in the process of completely restructuring their balance sheet, and they're going to basically turn most of their $450 million in corporate credit debt into HUD-insured debt, which should save them pretty substantially in interest expense.

But more importantly, I think, once they get all of that done, it allows them to start growing the company again, which we haven't seen in a few years now. And Ensign, too, but Skilled Healthcare owns 77% of their facilities, which I think gives them a lot of options with what they could do with that company. They have talked about it in the past; in April 2011 they announced that they were exploring strategic alternatives, and specifically whether they may somehow monetize their real estate or sell the entire company.

I think as they get their balance sheet in order and can start demonstrating some growth again, there is optionality in that they may try to pursue strategic alternatives at some point in the future.

TWST: Are there any names you're particularly cautious about?

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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