Room for Health Care REITs to Increase Their Percentage of a $700 Billion Market for Institutional-Grade Health Care Real Estate

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's your overall sentiment on the space today?

Mr. Bernstein: It's really separate between the seniors housing and skilled nursing operators and the REITs. They have different drivers in some ways, and some similarities in others. On the health care REITs, you have some significant impact in the last couple of weeks from rising interest rates. It is a little bit of an unknown how it'll ultimately play out, but rising interest rates could impact cap rates, certainly impact cost of capital, and may give some pause for the REITs in terms of whether they will close some marginal deals.

It may force some sellers of real estate to speed up their transactions, thinking that they've missed the peak of prices, and certainly anybody who is looking at a large transaction today may have to come to the realization that their portfolio is going to be repriced at a lower valuation. So we expect a little bit of a pause in transaction volume until the spread between what buyers and sellers are willing to pay and sell for closes.

Otherwise, nothing fundamentally has changed for the health care REITs. They continue to grow their underlying property NOI, probably in the 2% to 3%, maybe in some cases 4% range. There will be ample opportunities to consolidate real estate across different health care real estate sectors over the next few years.

Health care REITs currently own a little bit over 20% of what we estimate is a $700 billion market for institutional-grade health care real estate, so there's certainly room for them to increase their percentage. I don't think an increasing cost of capital changes that; it may just put a pause on the acquisition strategy. The underlying factors are very good, other than the interest rates are going to affect the acquisitions, and they are also going to affect the stock prices of the health care REITs that are very much...

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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