"We believe the value of UHT's properties is significantly greater than the value of the leases," Tsoupros said. "This is particularly true for those properties operated by Universal Health Services."
Tsoupros upgraded UHT because he viewed the recent buyout offer as an important "value-creating event." For starters, he noted, the offer has already led to a 10% increase in the company's dividend. And he said further dividend hikes could follow.
Alternatively, of course, UHT could wind up with an independent owner that might seek higher lease rates in the future. So far, the company has yet to disclose who made the first offer. But some investors believe that Ventas (VTR - Get Report) -- a much larger health care REIT -- could have been the one and, while shunned, may be unwilling to give up just yet. If so, Ventas CEO Debra Cafaro's background in real estate law could come in handy when renegotiating the Universal leases. Ventas declined to comment for this story.
Whatever happens, some -- including Tsoupros -- believe that UHT could ultimately become worth more."We believe the emergence of an unsolicited bid for the company could lead to value being created for shareholders," Tsoupros wrote, "either if a deal for the company is done or if UHT management chooses to unlock some of the significant value embedded in the REIT's portfolio."