2 Healthcare REITs better than medical property trusts


Rising interest rates make it more difficult for healthcare real estate investment trusts (REITs) to do business because the spread between the interest REITs pay on loans to buy properties and the rent they charge tenants shrinks. . It also increases the cost of growing your business.

Healthcare REITs are more stable than other REITs because their tenants’ businesses are less susceptible to economic downturns. In general, healthcare is something that people need, and consumers can only afford to give up. If you’re looking to invest in real estate, or just looking for high-yielding dividend stocks, Healthcare REIT has become a safer bet than his other REITs, such as office building REITs and cannabis REITs these days. increase.

Among the top healthcare REITs, Physicians Realty Trust (NYSE: DOC) and Healthpeak property (NYSE: Peak) Seems like a better investment than it is now medical property trust (New York Stock Exchange: MPW)Although the former two haven’t had the type of dividend growth that the Medical Properties Trust has shown.

1. Physicians Realty Trust Case

Physicians Realty Trust owns 290 real estate leases to physician groups, hospitals and healthcare delivery systems. As of December 31, 94.9% of the building is rented.

Physicians Realty Trust shares are down more than 2% so far this year. The company’s quarterly dividend per share, unchanged from 2017, is $0.23, offering a yield of approximately 6.23% and a normalized funds under management (NFFO) payout rate of 88.4%. That’s not particularly high for a REIT expected to return at least 90% of its taxable income to its investors.

The company reported fourth-quarter and full-year 2022 earnings on February 22.

The company reported NFFO of $0.26 per share for the quarter and NFFO of $1.04 per share for the full year. Both were the same as last year at the same time. What I love about Physicians is that from 2021 he has carefully paid off his net debt of just $1.85 million, down 4.5%.

2. For Health Peak

Healthpeak Properties owns and develops healthcare properties for life sciences companies, medical office buildings, and Continuing Care Retirement Communities (CCRCs).

Healthpeak’s stock is down more than 16% so far this year, hitting a 52-week low on March 15. The company’s quarterly dividend per share has been hovering at $0.30 since 2021, yielding about 5.76%, with an adjusted funds from operations (AFFO) payout rate of 83.3% and a REIT safety within the scope of the profile.

The company reported fourth-quarter and year-end earnings on February 7. Quarterly revenue was $524.5 million, up 8.5% year-over-year, and annual revenue was $2.06 billion, up 8.7%.

FFO per share for the quarter was $0.44, up from $0.41 a year ago. AFFO per share was $0.36, up from $0.32 in Q4 2021. AFFO per share for the full year was $1.45, up from $1.35 a year earlier.

The company’s guidance is expected to be AFFO per share of $1.70 to $1.76, indicating continued growth.

As of December 31, Healthpeak’s net debt was $6.4 million, down from $6.02 at the end of 2021.

Healthpeak has gone through a lot of restructuring and cut its dividend in 2021, but I still like the stock because of the versatility it has to look for growth in several areas that are trending upwards.

For example, the company’s Life Sciences Holding is a campus designed for the expansion of biotech companies in the growth markets of San Diego, Boston and San Francisco. During this one-year period, the company saw a 5.1% increase in cash from the same store (facility), and the building was 99% occupied. Their medical office buildings tended to be on campuses associated with the number one or number two hospitals in a particular area where doctors wanted to be located, and same-store cash growth in that segment was 4%. The company’s CCRC holdings are designed to capitalize on the growing tendency of older people to be able to stay in the same community as they age, but receive different levels of care. I’m here. The facility is seeing occupancy rates return to pre-pandemic levels. In January, the company said his daily average census for CCRC facilities was 82.6% of him, up 30 basis points from the previous month.

PEAK Financial Debt to Equity (Quarterly) Graph.

PEAK Financial Debt to Equity (quarterly) data from YCharts.

Medical Properties Trust Could Be a Dividend Trap

Medical Properties Trust owns 444 hospital facilities in 10 countries, including 202 general acute care hospitals. The company’s stock is down more than 29% this year and more than 61% over the past 12 months.

The company has raised its quarterly dividend for eight years in a row, up 3.5% last year to $0.29 per share, yielding 14.73%. AFFO has a decent payout rate of 85.2%, but what worries me is that the company’s numbers are dropping.

The company’s AFFO per share in the fourth quarter was $0.34, down from $0.36 a year ago, and revenue was $380.4 million, down 7% year-over-year. Full-year revenues decreased to $1,542 million from $1,544 million a year ago.

Another concern is the company’s debt. It’s down from last year, but still $10.3 billion. But the biggest short-term concern is that one of his biggest tenants, Prospect Health, is struggling to pay rent and other expenses.

Which Healthcare REIT Should You Choose?

Physicians Realty Trust and Healthpeak Holdings are better investment strategies at the moment because their businesses are stronger.

They each have less debt than the Medical Properties Trust, with a debt-to-equity ratio about one-third that of the Medical Properties Trust, as well as higher FFO growth over the past year.

10 stocks I like better than Physicians Realty Trust
If our award-winning team of analysts has stock tips, it’s worth listening to. After all, the newsletter they’ve been running for over a decade is Motley Fool Equity Advisor, tripled the market. *

They revealed what they believe are the 10 best stocks for investors to buy right now…and Physicians Realty Trust wasn’t one of them! They think these 10 stocks are better buys.

See 10 stocks

* Stock advisor returns from March 8, 2023

Jim Halley is a member of the Medical Properties Trust and Physicians Realty Trust. The Motley Fool recommends Healthpeak Properties and Physicians Realty Trust. The Motley Fool’s U.S. headquarters has a disclosure policy.

The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *