Physicians Realty Trust
This higher yielding REIT makes sense for frustrated income investors. Physicians Realty Trust (NYSE: DOC) is a small-cap, internally managed health care REIT that looks to acquire, develop, own and manage health care properties leased to physicians, hospitals and health care delivery systems. Its portfolio consists of medical office buildings, specialty hospitals and long-term acute care hospitals.
The company operates as an umbrella partnership REIT in which its properties are owned by the operating partnership, directly or through limited partnerships, limited liability companies or other subsidiaries.
The analysts pointed to solid rent collections as a huge plus:
Collections exceeded expectations as the off-campus thesis plays out. Management thesis that care will shift away from hospitals to convenient outpatient facilities playing out. Collection rates have been the highest among off-campus, affiliated tenants. Benefit from accelerating trend toward outpatient care and patient preference for off-campus facilities.
Physicians Realty Trust stock investors receive a 5.15% distribution. Baird has a $20 price target, while the consensus target is $19.41. Wednesday’s last trade was reported at $17.91.
Global Medical REIT
Income investors also should take a long look at Global Medical REIT Inc. (NASDAQ: GMRE), which engages in the acquisition of purpose-built health care facilities and leasing of those properties to strong health care systems and physician groups.
Baird likes the story and noted this:
Global Medical REIT is a levered play on strong MOB fundamentals with capital allocation upside. The company acquires off-campus healthcare facilities at 7.0%-8.5% cap rates, funded with a low- to mid-6% cost of equity and draws on its credit facility (low-2% current cost of debt). Collections have outperformed expectations during the pandemic (>95% of second quarter rents collected). Cost of capital is tied to benefits of diversification and external growth potential.
Investors receive a 5.93% distribution. The $14 Baird price objective compares to the $14.46 consensus figure and the Global Medical REIT stock close at $13.50.
These companies should do very well going forward and may provide income investors, and those looking for total return, with some outstanding potential for 2021. They make good sense now for investors concerned about the potential for market disruptions.
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