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Heath Care REITS...looking for investment suggestions

beebee
edited July 2014 in Fund Discussions
According to M* Fair Value Chart HC Facilities REITS are under valued by about 15%. One of the few sectors that appears under valued right now. Most of the stocks pay a nice dividend (5%-ish) and along with its 15% under valued price seems like a nice time to consider taking a position. I own VNQ and so I get some exposure to these REITS, but I was looking for something a little more focused.

Anyone an owner of this sector through funds or individual stocks?

M* Fair Value Chart:
image

Comments

  • scott
    Ventas (VTR) would be the one I'd consider if buying today. I've owned it before at times. HCP and HCN are also popular choices. I think there still seems to be a lot of regulatory uncertainty around the group.
  • Alex
    I own MPW Medical Properties Trust which is heavily into the rapidly growing senior citizen market with retirement communities plus other related medical properties. Pays a nice dividend too.
  • rjb112
    edited July 2014
    If M* has assessed these stocks as being 16% undervalued in aggregate, what was the sample size? How many healthcare REITS does Morningstar analyze? I'm guessing that M* determines a price to fair value for each healthcare REIT it analyzes, and then takes the average.

    What are healthcare REIT analysts not affiliated with Morningstar saying about the sector, and about some of the specific names that M* has assessed as significantly undervalued?

    I would also want to know if the best actively managed diversified REIT mutual funds are overweighting healthcare REITs right now. And if they are talking about this issue in their shareholder reports and communications.

    And I'd want to know what M* knows that the market doesn't........could the market be valuing them appropriately, for a good reason?

    I'd want to know these things before making an investment......part of the due diligence process
  • rjb112
    According to M*, Healthcare facilities REITS are undervalued by 16%, and the market has made a mistake.

    According to the market, Healthcare facilities REITS are valued correctly, and M* has made a mistake in its valuation assessment.

    Who will be proven correct?
  • scott
    rjb112 said:

    According to M*, Healthcare facilities REITS are undervalued by 16%, and the market has made a mistake.

    According to the market, Healthcare facilities REITS are valued correctly, and M* has made a mistake in its valuation assessment.

    Who will be proven correct?

    Could be a little bit of both. As I noted above, I think regulatory uncertainty continues to surround this sub-sector. I do think that, given demographics and other factors, these are fine long-term holds. Given that they are more "need based", they have shown to be somewhat less volatile than most REITs.
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