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Physicians Realty- Investment-Grade Check-Up

·2 min read

Physicians Realty Trust (DOC) may be one indicator of the irrational market in recent weeks; its share price dropped 47% from its all time high price of $20.78 in February to a March low of $11.01, observes Doug Gerlach, editor of SmallCap Informer.

More from Doug Gerlach: CarMax: Used Cars and Superstores

The REIT is an owner of a real estate portfolio focusing on medical tenants that are critical to the delivery of essential outpatient care and that are occupied by the world’s largest investment grade and credit-worthy health systems.

Certainly, some of Physician Realty’s tenants are involved with elective surgery and treatments that are deferred during a pandemic, but the company’s relationships with large medical centers are not likely to see the company’s rents threatened.

Its average annual lease length is over seven years, and 83% of the space added in 2019 was occupied by investment-grade-rated health systems.

The company reported results for its fourth quarter and fiscal year ended December 31, 2019. In the quarter, revenues were $107.4 million, an increase of 4.2% over the prior year period.

Funds from operations per share was flat at $0.27. Same-store growth was 2.5%. For the full year, revenues were $404.4 million, down 1.6%, and FFO/S was $1.01, down 8.2%. Same-store growth was 3.1% for the year, and tenant retention was 80%.

See also: Coca-Cola: A Pop in Turbulent Times?

The company’s development and acquisition program is likely to be curtailed in 2020, as the company will likely find capital markets not as interested in equity issuance for the next few months.

On March 19, 2020, management withdrew its guidance about its 2020 acquisition plans given current market conditions. Physicians Realty Trust is a buy up to $14. Its current yield is 7.2%.