Looking for Yield in Health Care REITs
Even with the threat of rising interest rates, there are long-term benefits to investing in health care REITs. Last week, there was some noise from the Federal Reserve that they may start increasing interest rates a little sooner than most people expected. Well, that sent most health care REIT stocks tumbling, many by 4% to 5% that day. Yes, REITs have been riding high for a while, but where else can you find dependable yields in the 4.5% to 7.0% range? Is now a good time to invest in health care REITs? For a short-term investor, I would say no, because the interest rate risk is reasonably high for the remainder of the year. For long-term investors? The yield on your cost basis is only... Read More »Seniors Housing Bubble or Not?
Webinar attendees voted by nearly 3 to 1 that we are approaching a valuation bubble. More than 125 people joined us live last week for our webinar on the Seniors Housing Market: Bubble or No Bubble. Acquisition values across the spectrum all hit new records in 2014, and as you can guess, cap rates across the spectrum all declined, but not to record lows….yet. If we are approaching a bubble, most of the panelists believed that trouble would not begin until 2016 at the earliest and 2018 at the latest. And they also believed that it was more likely that an outside event would be the cause of a market decline, such as a big jump in interest rates or some economic calamity, rather than an... Read More »Genesis Healthcare Makes First Earnings Report
News of higher operating costs sends the shares of newly merged Genesis Healthcare and Skilled Healthcare down more than 20%. Welcome back to the world of public investors. I say this to George Hager and his team at Genesis Healthcare, which closed on the reverse merger with Skilled Healthcare on February 2. Just three weeks later, they reported fourth quarter operating results for both companies, and while the skilled patient day mix at Genesis increased by 60 basis points and occupancy increased 30 basis points from the year ago quarter, Skilled Healthcare’s occupancy declined 110 basis points from the fourth quarter in 2013, to just 81.1%. Sounds a little too similar to the... Read More »Brookdale and Monetizing Real Estate Value
Pressure is mounting on Brookdale Senior Living to monetize the value of its owned real estate, but at what cost? The pressure is increasing on Brookdale Senior Living “to do something” to monetize the hidden value in its owned real estate. This has all come up as a result of a weak fourth quarter from the recent Emeritus purchase. We have a big problem with all this. Yes, management always has to look to increase shareholder value. But everything that is being talked about is a short-term fix taking advantage of the current capital markets environment. As you know, we never liked the Emeritus acquisition for Brookdale. But now, by selling off the owned real estate of the combined company,... Read More »Pressure on Brookdale To Pump Up Value
A dissident shareholder has emerged trying to pressure Brookdale Senior Living to monetize its real estate assets. With Brookdale Senior Living’s weak fourth quarter earnings announcement came the dissident shareholder response from Sandell Asset Management. They want Brookdale to monetize the value of the real estate owned to boost the share price by nearly 35%, taking advantage of higher REIT valuations. Sorry, but it just isn’t that easy. Sandell’s proposal is to spin out the real estate, most likely in a new REIT in a tax-free distribution to shareholders. Well, that’s fine, but if it sale/leasebacks on 35,000 units, what about those rent escalators on such a large portfolio? Would it... Read More »Schedule a demo
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