This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Medical Office REITs Should Outperform in 2013

Stocks in this article: HR HTA

Additionally, changing consumer preferences and increasing reliance on specialists and preventative and alternative care providers (such as cosmetic surgery, nutritionists, acupuncture) have been driving health care employment in these areas, leading to accelerating demand for medical office facilities. This decentralization of health care systems has allowed for an expanded range of patient services, as well as opportunities for medical office development and acquisition by private sector real estate owners and operators.

Two Focused Medical Office REITs to Consider in 2013

In 2011, publicly traded REITs held only 15.5% of all privately owned medical office space and a much smaller percentage of all health care-related real estate, according to Rosen Consulting Group. Additionally, private and public medical office owners, including hospital systems, may struggle with liquidity in the near term as the lending environment remains stringent and state and local governments trim their budgets. Divestiture of real estate is one way these institutions may choose to raise funds, providing acquisition opportunities for specialized real estate owners and operators.

Publicly traded REITs continue to be active buyers of medical office properties. Strong demand for properties, an increasing pool of capital and competition for assets should drive up the price of medical office properties and allow for increased liquidity for long-term holders of medical office real estate.

Today there are just two "pure play" medical office REITs, and both are considered defensive companies. Healthcare Realty Trust (HR), based in Nashville, Tenn., has a market cap of around $2.08 billion and currently pays a dividend yield of 5.03%. Healthcare Trust of America (HTA), based in Scottsdale, Ariz., has a market cap of around $2.31 billion with a current dividend yield of 5.34%.

In an interview on CNBC's "Mad Money" with Jim Cramer, Healthcare Trust of America's CEO Scott Peters explained:

"With 30 to 40 million more insured coming up, you want to find the most affordable locations to offer those (health care) services. Those are medical office buildings, they're on campus, and I think over the next 10 to 20 years they will be core critical real estate."

In 2013, core defensive health care REITs should also be considered as these REITs have historically recorded more positive and stable returns, likely a result of the stability and attractiveness of the medical office sector. Additionally, the advantageous tax structure and capital-raising abilities of REITs in the current environment should contribute to strong returns, as compared with private investments.

HTA listed its shares earlier this year (June 6) and the company's shares have risen more than 17% over the least 90 days. HR has returned 35.3% year to date.

At the time of publication, Thomas had no positions in securities mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs