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Top 3 Healthcare REITs after 2Q17: A Comparative Analysis

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Top 3 Healthcare REITs after 2Q17: A Comparative Analysis PART 1 OF 9

Top 3 Healthcare REITs after 2Q17: A Comparative Analysis

The sector as a whole

Healthcare REITs that own senior care facilities, hospitals, and nursing homes are currently experiencing decent growth. Healthcare costs have also been on the rise for the past few months.

Top 3 Healthcare REITs after 2Q17: A Comparative Analysis

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With the aging population rising in the United States, the need for critical healthcare facilities is also increasing. Medical offices for these healthcare facilities are also on the rise, thus boosting revenue for healthcare REITs.

In this series, we’ll look at the 2Q17 results for the top three healthcare REITs—Welltower (HCN), Healthcare Trust of America (HTA), and Ventas (VTR).

Stock price movement

Welltower reported a significant 16.0% rise in its stock in the first six months of 2017, backed by robust top-line and bottom-line results during the first half of fiscal 2017. The strategic locations of the company’s properties have been a winning strategy for HCN. Strong first-half results prompted management during the 2Q17 earnings call to raise its fiscal 2017 outlook.

Healthcare Trust of America (HTA) stock rose almost 14.0% in the first half of 2017, driven by higher-than-expected top-line and bottom-line results. Investors were encouraged as the company increased its quarterly dividend by 1.7% after the 2Q17 results.

Ventas reported a rise in its stock of 11.8% in the first half of fiscal 2017. A modest increase in funds from operations and revenue made investors bullish on the stock. The company’s strategic disposition of non-performing assets led to a stock price rally in the past few months.

These three REITs, along with Public Storage (PSA), make up 26.0% of the iShares Residential Real Estate Capped (REZ). The ETF has a 98.8% exposure to REITs. With a beta score of 0.40x, it has less volatility and provides a cushion to investors.

In the next part, let’s look at the top-line and bottom-line performances of these three REITs.

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