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Health Care Trust of America Is Good Medicine for Your Portfolio

NEW YORK ( TheStreet) -- Health care trends in the U.S. have created hot demand for medical-office space, and this bodes well for Healthcare Trust of America (HTA - Get Report).

Because of shifting consumer preferences and limited hospital space, more and more health care procedures that traditionally have been performed in hospitals -- such as surgery -- are now being done at outpatient facilities.

What's more demand for medical-office space is only likely to accelerate in coming years.

In a recent report, Randall Sakamoto, director of research at Rosen Consulting Group, wrote:
"The healthcare industry has been growing at a strong pace for decades. Looking forward, this trend is expected to accelerate as baby boomers reach retirement age and echo boomers begin to establish their own facilities. As demand for medical services increases, this will further increase the need for physicians, lab technicians, and other medical support staff, driving demand for the high-quality medical office buildings (or MOBs) that house them."

Healthcare Trust of America Is a Best-in-Class Health Care REIT

Last June, I recommended the shares in the nontraded REIT conversion of Healthcare Trust of America in an article for TheStreet.

At the time, HTA was unlocking around 229.5 million shares in an effort to create liquidity for about 25% of HTA investors. By utilizing a "Dutch auction" tender offer, HTA was entering the public markets and releasing 25% of its shares every six months. Essentially that means that HTA is controlling the demand for the shares while also attempting to lower the volatility within the initial $2.5 billion portfolio.

Now HTA is in the second round of unlocking shares, and the third round of shares (B-2 shares) hits the market in June. HTA plans to unlock all of its shares (the remaining 25%) in December.

Today HTA is trading at an all-time high of $12.85 a share with a market capitalization of around $2.8 billion. The Scottsdale, Ariz.-based REIT has been moving up rapidly, especially when compared with the other health care REITs that own MOBs.

HTA is a dominant player in the MOB space with about 90% of its portfolio leased out as MOB-occupied space. The other MOB peers include Healthcare REIT (HR), Senior Housing Properties Trust (SNH), Health Care REIT (HCN), Ventas (VTR), HCP (HCP).

Clearly HTA has built a its dominating health care platform on strategic MOB assets:

As a REIT gets bigger and is added to an index, investors must increase their investment in these companies. Interestingly, many advisers are measured against these indices and view a company's inclusion as a signal to pay attention to them.
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