Healthcare real estate investment trusts (REITs) have a well-earned reputation as stable relatively invincible investable assets. However, due to the pandemic and its many collateral consequences, the long-term outlook for the space has become more interesting, with a decentralization theme beginning to gain increasing traction.
The ultimate driver is demographics and cost structures. But the pandemic provided a catalyst for accelerated change, and the upshot is a potentially more interesting landscape for stock-pickers within the healthcare REIT space.
One of the primary conceptual shifts is a move toward decentralization. It’s obvious how this might have been catalyzed by the pandemic, with people consuming healthcare services through increasing telehealth and remote participation.
However, it extends to ideas like peripheral medical offices substituting for full hospitals even for significant healthcare applications.
As a result, investors may benefit from a closer look at the space, and stocks like Community Healthcare Trust Inc (NYSE:CHCT), Ventas, Inc. (NYSE:VTR), Physicians Realty Trust (NYSE:DOC), Supurva Healthcare Group Inc (OTCMKTS:SPRV), Welltower Inc (NYSE:WELL), and Global Medical REIT Inc (NYSE:GMRE). We take an in-depth look at several of them below.
Physicians Realty Trust (NYSE:DOC) frames itself as a self-managed health care real estate company organized to acquire, selectively develop, own and manage health care properties that are leased to physicians, hospitals and health care delivery systems.
The Company invests in real estate that is integral to providing high quality health care. The Company conducts its business through an UPREIT structure in which its properties are owned by Physicians Realty L.P., a Delaware limited partnership (the “operating partnership”), directly or through limited partnerships, limited liability companies or other subsidiaries. The Company is the sole general partner of the operating partnership and, as of December 31, 2020, owned approximately 97.3% of OP Units.
Physicians Realty Trust (NYSE:DOC) most recently announced results for the fourth quarter ended December 31, 2020, including total revenue for the fourth quarter ended December 31, 2020 at $111.4 million, an increase of 3.7% from the fourth quarter 2019. In addition, according to the company’s release, as of December 31, 2020, the portfolio was 96% leased.
John T. Thomas, President and Chief Executive Officer of the Trust, commented, “Our success in 2020 resulted from attention to our core values summarized by C.A.R.E. We Collaborate & communicate, Act with integrity, Respect the relationship, and Execute consistently. In 2020 we remained disciplined, operationally and financially, to deliver safer health care facilities for our providers and their patients, as well as safer results for our shareholders. From the onset of the pandemic through December 31, 2020 we collected cash equal to over 99% of all rent and other charges due from our tenants, culminating in the collection of 99.6% of rent due in the fourth quarter. We ended 2020 with the lowest outstanding accounts receivable balance we have ever had as a percentage of revenue and an occupancy rate of 96%, the highest of all public owners of medical office facilities. While the equity market was volatile, we ended the year with the best total shareholder return of any public REIT with a significant medical office portfolio. We believe the quality of our health care service providers, clinically and financially, was the primary reason for our solid financial results.
It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things.
Physicians Realty Trust (NYSE:DOC) pulled in sales of $112.4M in its last reported quarterly financials, representing top line growth of 3%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($2.5M against $0).
Supurva Healthcare Group Inc (OTCMKTS:SPRV) recently announced that it hired a new management team to embark on a new direction centered on acquiring and managing medical properties. According to the release, effective February 1, 2021, John D. Murphy Jr. has been formally hired as President and Chief Executive Officer of Supurva Healthcare Group, Inc.
According to the release, Mr. Murphy brings over thirty years’ experience in the design, development, construction, leasing, management, and acquisition of medical office properties.
Supurva Healthcare Group Inc (OTCMKTS:SPRV) also recently announced its intent to confidentially file a draft Registration Statement on Form S-11 with the SEC relating to a proposed public offering of its common stock.
According to the release, the number of shares to be offered and the price range for the proposed offering have not yet been determined. The public offering is expected to take place after the SEC completes its review process, subject to market and other conditions.
Note, an S-11 filing is a filing with the SEC that is used to register securities for real estate investment trusts (REITs). The business of REITs is to acquire, hold, and often manage real estate for the purpose of investment income and capital appreciation.
Supurva Healthcare Group Inc (OTCMKTS:SPRV) is a more speculative name in the space, but one that seems to be focused on an interesting niche in the medical REIT space, which is rapidly evolving and sits at the heart of the multi-trillion-dollar global healthcare industry.
Welltower Inc (NYSE:WELL) trumpets itself as an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The Company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience.
Welltower, a real estate investment trust (REIT), owns interests in properties concentrated in major, high growth markets in the United States, Canada and the United Kingdom, consisting of seniors housing, post-acute communities and outpatient medical properties.
Welltower Inc (NYSE:WELL) recently announced the completion of two recently developed medical office buildings in Charlotte, NC, totaling over 280,000 square feet. The properties were delivered in March 2021 and master leased to Atrium Health (Moody’s: Aa3; S&P: AA-) under a 15-year triple-net lease.
According to the release, located in Midtown Charlotte, minutes from Atrium’s Main Campus, the projects were developed by Charlotte-based Pappas Properties, LLC, who will remain strategic partners with Welltower on the planned 9-acre health care anchored, mixed-use campus and future developments.
Even with that news, the action hasn’t really heated up in the stock, with shares moving net sideways over the past week.
Welltower Inc (NYSE:WELL) pulled in sales of $1.1B in its last reported quarterly financials, representing top line growth of -11.1%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($2B against $0).