NEW YORK ( TheStreet) -- Who says REITs that aren't publicly traded can't make it to the big leagues?
In light of the recent negative publicity associated with the non-listed REIT sector,
Healthcare Trust of America
(HTA - Get Report)
has been a beacon for investors wanting to achieve portfolio diversification without stock market volatility. In general, the evolution of the non-traded fixed-income alternative has gained broader acceptance as a durable REIT class that is differentiated by its defensive stability, low volatility and sustainable income.
On June 6, Healthcare Trust of America tapped the public markets by listing its shares on the New York Stock Exchange. The REIT's current investors will be able to access targeted full-cycle liquidity while also achieving full investor confidence in an industry that is perceived to be less mainstream. This is a significant milestone for the company as well as the REIT industry as bad news has plagued several non-traded REIT sponsors like
Healthcare Trust of America, based in Scottsdale, Ariz., is a fully integrated, self-administered health-care REIT that focuses on acquiring, owning and operating high-quality medical-office buildings that are located on the campuses of nationally recognized health-care systems. The company has invested about $2.5 billion to create an enterprise with operations in 27 states comprising over 12.4 million square feet. Fifty-seven percent of HTA's tenants are credit-rated, with 39% having investment-grade ratings. Most of the portfolio was acquired during the economic downturn, when most of the other buyers were on the sidelines.
Healthcare Trust of America is well-positioned to take advantage of the considerable tailwinds expected to grow from the defensive sector. The medical-office sector will benefit from several macro-economic trends, including the recently confirmed Patient Protection and Affordable Care Act, aging U.S. population and the increasing pace of health-care expenditures.
In 2010, HTA's shareholders approved a phased-in liquidity program that allows a quarter of the existing shares to become eligible to trade every six months. This program allows for a measured, patient and structured entry into the public markets. It also gives the company time to introduce itself to new investors.
Healthcare Trust of America is focused almost exclusively on the medical-office building sector. Within the sector, medical office is considered to have the lowest risk profile. It has the lowest exposure to government reimbursement. It also is driven by traditional real estate fundamentals and is not dependent upon the success or failures of a single operating company. Additionally, it allows the company to concentrate all of its efforts on maintaining and building relationships with health systems and developers in this sector, relationships that are key to long-term success.
Healthcare Trust of America has a very diverse portfolio, consisting of buildings in 27 states and tenanted by a large number of health systems and medical practices. The Greenville Hospital System (South Carolina) is the largest tenant, with just under 6% of the annual base rent.
Healthcare Trust of America is an investment-rated company, receiving investment-grade ratings from the leading rating agencies in the summer of 2011. The company earned those by retaining very low leverage throughout the economic downturn and investing in a very stable, defensive asset class. As of June 30, HTA's debt-to-enterprise-value was only 27.4%. These ratings have enabled the company to access the lower-cost, unsecured debt markets and lower overall borrowing costs. As a publicly traded company, HTA intends to maintain a low-to-moderate capital structure and access the public debt markets in the future.
Healthcare Trust of America offers a compelling opportunity to investors. The company is an investment-grade company in a defensive asset class with 91% occupancy, which offers a dividend yield of 6.12%. This compares favorably to health-care REIT peers, most of whom are offering dividends below 5%. HTA has a market value of $2.015 billion and its current stock price is $9.40 per share.