BMO Capital negative on senior living REITs


The team downgrades both Ventas (VTR) and Health Care REIT (HCN) to Sell. At least in Ventas' case, BMO notes the rising level of senior housing development costs and the higher cost of capital relative to growth.

Duke Realty (DRE) - also a REIT, but involved in office and industrial properties and property management - is upgraded to Buy.

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Comments (5)
  • OldFigBBJ2
    , contributor
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    As a holder of Health Care REIT (HCN) stock since 1996, I wish more detail had been provided in regard to BMO Capital's rationale for the downgrade of HCN, as opposed to Ventas. Is HCN at least a LONG-term hold? I still like the favorable impacts of the demographics (aging boomer population) on HCN's business, and I still like the yield.

     

    If BMO Capital is using the same rationale ("rising level of senior housing development costs") for HCN as it does for Ventas, I feel compelled to ask what is meant by "development". Does "development" mean "build"? HCN doesn't build senior housing; HCN has been buying up smaller REIT's which operate existing senior housing.
    2 Jan 2014, 09:20 AM Reply Like
  • Joeythed
    , contributor
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    I would to be a seller too. Obamacare will be cutting reimbursements for hospitals, MDs, nursing homes etc. Demand will be there from baby boomers but the providers will not profit due to severe reimbursement cuts under crazy new law.
    2 Jan 2014, 11:37 AM Reply Like
  • OldFigBBJ2
    , contributor
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    HCN is private pay, does not depend on governmental benificence.
    2 Jan 2014, 06:46 PM Reply Like
  • Ruben12345
    , contributor
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    Has no bearing on these 2 top reits
    2 Jan 2014, 11:47 AM Reply Like
  • Ruben12345
    , contributor
    Comments (906) | Send Message
     
    wouldn't care too much about downgrades... as if upgrades help that much. $VTR is a common sense play. Look at biggger trends and then its a no brainer
    3 Jan 2014, 06:05 AM Reply Like
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