August 2, 2007

HealthCare Realty Trust

Healthcare Realty's price has suffered through a rough year so far. "The whole healthcare REIT group has taken a beating," Ziehl said. "It got hot at the end of last year and really shot too high. It was the new, big asset class."
He added: "They really got overbought, but not on fundamentals. So they were due for a pullback."
That correction as compared to other types of REITs, Ziehl estimates, is near a bottom. And Healthcare Realty has been improving and refocusing its business model, he adds.
"They're basically going back to their roots, operating and developing medical office building," Ziehl said. "In most cases, it's a very localized business. Doctors want to be around the hospitals and research facilities where they've got privileges."
Knowing where to own properties and developing relationships with regional and local hospital systems is key to growing in such a specialized niche, Ziehl says.
"Healthcare Realty is well-known for its ability to not just develop but also operate these facilities in a very user-friendly fashion," he added. "HR has years of experience doing it and has long-term relationships that serves as barrier to entry against larger competitors."
The sector of REITs is also a steady business, Ziehl added. "It's not prone to the cycles of residential or more broadly based commercial real estate markets such as conventional office or apartments," he said.

No comments: