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Health Care REIT Update 9/19/19

|Includes: Community Healthcare Trust Incorporated (CHCT), CTRE, DOC, HCP, HR, HTA, LTC, MPW, NHI, OHI, SBRA, SNH, SNR, UHT, VTR, WELL

While my non-cap weighted sector average YTD total return of 29.16% is clearly beating the sector average return of 21.99% for the RWR - that average is skewed by returns of 55.48% for CHCT and 67.48% for SNR. SNR and UHT are both benefiting from major dead cat bounces for bad performances in 2018. CHCT appears to benefit from a run away (from logic) valuation. The forward FFO projections imply strong earnings growth is about to begin. Put in different words - the valuation could only be justified by using FFO projections that are too high to believe.

Yields are calculated on Q3-19 dividends. The Dividend/FFO ratio uses the 2019 FFO projection. The percent change columns measures the changes since the beginning of the year. LTM (last twelve month) dividend growth uses Q3-19 minus Q3-18 dividend/share divided by Q3-18 dividend. LTM FFO growth uses Q3-19 minus Q3-18 normalized FFO/share divided by Q2-18 normalized FFO. LTM FAD growth does not use quarterly numbers - but the 2019 midpoint of the yearly guidance compared to the 2018 actual. VTR had a downward adjustment to its dividend and operating metrics when it spun of CCP. MedEquities Realty Trust (MRT) with a $364 million market cap and 2 projections and Global Medical REIT (GMRE) is smaller ($186 million), but does have 3 analyst projections - are too new and too small to be currently included in my coverage. UHT with over a billion in market cap still lacks analyst projections.


Share Price Div/ Div/ Percent Change LTM Growth Last Three Years
Company_name_and_ticker 1-01 09-19 Yield FFO FAD Price Pr+Div 19 FFO Target Div FFO FAD Div FFO FAD

Community Healthcare Trust (CHCT) 28.83 43.59 3.78 99.28 84.08 51.20 55.48 -11.23 19.05 2.23% 15.6% 16.0% 2.62 3.07 9.65
CareTrust REIT (CTRE) 18.46 23.30 3.86 65.69 63.38 26.22 29.88 0.00 22.28 9.76% 3.7% 6.8% 10.78 8.18 7.12
Physicians Realty Trust (DOC) 16.03 17.40 5.29 92.00 95.83 8.55 12.85 -9.09 3.75 0.00% 9.1% 1.1% 0.74 -0.33 2.62
Welltower Inc. (WELL) 69.41 89.30 3.90 83.45 87.88 28.66 32.42 -1.65 12.75 0.00% -7.8% 6.7% 0.39 -2.72 -0.33
Health Care Properties (HCP) 27.93 35.09 4.22 84.57 93.08 25.64 29.61 -1.13 11.26 0.00% -52.7% 0.0% -11.88 -11.89 -12.95
Healthcare Realty Trust Incorporated (HR) 28.44 33.30 3.60 75.47 91.60 17.09 20.25 -2.45 4.31 0.00% -7.1% 5.6% 0.00 -1.79 -6.04
Healthcare Trust of America, Inc. (HTA) 25.31 28.76 4.38 76.83 84.00 13.63 17.36 -5.20 1.82 1.61% -2.5% 4.9% 1.67 0.62 1.63
LTC Properties Inc. (LTC) 41.68 50.19 4.54 74.75 76.00 20.42 24.06 -0.97 -0.90 0.00% -7.8% 7.5% 1.85 0.00 3.57
Medical Properties Trust Inc. (MPW) 16.08 18.95 5.49 79.39 82.54 17.85 22.70 -7.75 16.41 4.00% 0.0% 5.9% 4.35 1.05 3.51
National Health Investors (NHI) 75.54 82.90 5.07 76.64 82.68 9.74 13.91 -2.14 0.81 5.00% 8.2% 6.3% 5.56 4.18 4.63
Omega Healthcare Investors Inc. (OHI) 35.15 41.18 6.41 86.56 93.95 17.16 22.79 -0.33 6.85 0.00% 1.1% 3.7% 3.33 -2.62 -2.82
Sabra Health Care REIT, Inc. (SBRA) 16.48 22.46 8.01 96.26 77.25 36.29 44.48 -9.66 -3.41 0.00% -9.8% 1.3% 2.38 -5.99 1.34
Senior Housing Properties Trust (SNH) 11.72 8.69 6.90 45.45 37.50 -25.85 -22.01 -20.96 -33.13 -61.54% -6.4% 8.1% -20.51 -9.80 -4.03
New Senior Investment Group (SNR) 4.12 6.51 7.99 101.96 104.00 58.01 67.48 -15.00 22.60 0.00% -12.1% -5.7% -16.67 -19.73 -17.46
Universal Health Realty Income Trust (UHT) 61.37 100.97 2.69 82.42 80.47 64.53 67.85 -2.37 0.00 1.49% -1.3% 3.0% 1.54 2.38 3.61
Ventas, Inc. (VTR) 58.59 72.27 4.39 82.39 87.62 23.35 27.41 -1.53 15.28 0.38% 1.9% -1.4% 2.88 -2.26 -1.07

Average 5.03 81.45 82.62 24.53 29.16 -5.72 6.23 -2.32% -4.2% 4.4%

The cap weighted Dow Jones REIT ETF RWR has a price change of 21.36% year to date - with dividends its total return is 21.99%.
The cap weighted Vanguard ETF VNQ has a price change of 25.32% year to date - with dividends its total return is 26.14%.
The Cohen & Steers 'Realty Majors' ETF ICF has a price change of 16.84% year to date - with dividends its total return is 17.55%.

Historical sector average yields:

Mar 2005: 6.99% June: 6.09% Sept: 6.22% Dec: 6.73%
Mar 2006: 6.18% June: 6.79% Sept: 5.85% Dec: 5.28%
Mar 2007: 5.33% June: 6.24% Sept: 5.90% Dec: 5.77%
Mar 2008: 5.84% June: 6.33% Sept: 5.25% Dec: 6.89%
Mar 2009: 9.11% June: 7.88% Sept: 6.67% Dec: 6.31%
Mar 2010: 6.67% June: 6.09% Sept: 5.62% Dec: 5.75%
Mar 2011: 5.48% June: 5.64% Sept: 6.02% Dec: 5.34%
Mar 2012: 5.16% June: 4.84% Sept: 4.89% Dec: 4.69%
Mar 2013: 4.66% June: 5.09% Sept: 5.49% Dec: 6.02%
Mar 2014: 5.63% June: 5.37% Sept: 5.77% Dec: 4.99%
Mar 2015: 4.86% June: 5.84% Sept: 6.05% Dec: 6.02%
Mar 2016: 5.92% June: 5.51% Sept: 5.46% Dec: 5.99%
Mar 2017: 5.92% June: 5.51% Sept: 5.46% Dec: 6.27%
Mar 2018: 7.06% June: 6.42% Sept: 5.94% Dec: 6.65%
Mar 2019: 6.43% June: 5.36% Sept: Dec:

Health Care Price/FFO Ratios 09-19 The UHT projected 2019 FFO stat is slightly under four times Q1-19 FFO.

FFO / Share % FFO Growth Price/FFO 19 FFO Range
Co. 2016 2017 2018 2019 2020 2021 17-16 18-19 19-20 2018 2019 2020 High Low Range
CHCT 1.52 1.48 1.60 1.66 1.99 2.31 8.11 3.75 19.88 27.24 26.26 21.90 167 163 2.41%
CTRE 1.10 1.16 1.28 1.37 1.50 1.57 10.34 7.03 9.49 18.20 17.01 15.53 139 135 2.92%
DOC 1.01 1.05 1.09 1.00 1.09 1.08 3.81 -8.26 9.00 15.96 17.40 15.96 105 97 8.00%
WELL 4.54 4.24 4.05 4.17 4.33 4.61 -4.48 2.96 3.84 22.05 21.41 20.62 420 413 1.68%
HCP 2.72 1.94 1.82 1.75 1.82 1.88 -6.19 -3.85 4.00 19.28 20.05 19.28 177 173 2.29%
HR 1.68 1.56 1.58 1.59 1.65 1.71 1.28 0.63 3.77 21.08 20.94 20.18 161 156 3.14%
HTA 1.61 1.65 1.67 1.64 1.70 1.74 1.21 -1.80 3.66 17.22 17.54 16.92 165 163 1.22%
LTC 3.05 3.08 3.04 3.05 3.09 0.00 -1.30 0.33 1.31 16.51 16.46 16.24 311 302 2.95%
MPW 1.27 1.32 1.37 1.31 1.58 1.61 3.79 -4.38 20.61 13.83 14.47 11.99 132 129 2.29%
NHI 4.87 5.26 5.51 5.48 5.68 5.85 4.75 -0.54 3.65 15.05 15.13 14.60 550 546 0.73%
OHI 3.31 3.21 2.98 3.05 3.23 3.27 -7.17 2.35 5.90 13.82 13.50 12.75 307 304 0.98%
SBRA 2.28 2.47 2.30 1.87 1.90 1.89 -6.88 -18.70 1.60 9.77 12.01 11.82 188 185 1.60%
SNH 1.87 1.78 1.54 1.32 1.19 1.66 -13.48 -14.29 -9.85 5.64 6.58 7.30 141 134 5.30%
SNR 1.25 1.12 0.60 0.51 0.67 0.00 -46.43 -15.00 31.37 10.85 12.76 9.72 54 48 11.76%
UHT 3.08 3.11 3.28 3.30 3.48 3.58 5.47 0.61 5.45 30.78 30.60 29.01 338 338 0.00%
VTR 4.13 4.15 4.06 3.85 3.94 4.09 -2.17 -5.17 2.34 17.80 18.77 18.34 395 380 3.90%
Average -3.08 -3.39 7.25 17.19 17.56 16.39

Historical Price/FFO ratios for the sector:

Mar 2007: 15.23 June: 13.19 Sept: 14.18 Dec: 14.55
Mar 2008: 14.17 June: 13.27 Sept: 15.95 Dec: 12.38
Mar 2009: 9.42 June: 10.84 Sept: 12.61 Dec: 13.90
Mar 2010: 12.61 June: 14.10 Sept: 15.45 Dec: 15.41
Mar 2011: 15.07 June: 14.62 Sept: 12.91 Dec: 14.95
Mar 2012: 14.21 June: 15.25 Sept: 15.05 Dec: 15.82
Mar 2013: 17.18 June: 15.84 Sept: 15.21 Dec: 16.67
Mar 2014: 13.92 June: 14.73 Sept: 14.10 Dec: 16.66
Mar 2015: 17.56 June: 13.40 Sept: 13.26 Dec: 13.73
Mar 2016: 13.68 June: 15.04 Sept: 15.53 Dec: 13.66
Mar 2017: 14.14 June: 14.89 Sept: 14.95 Dec: 14.32
Mar 2018: 12.24 June: 14.06 Sept: 14.37 Dec: 13.66
Mar 2019: 15.64 June: 17.51 Sept: Dec:

The new additions AVIV and DOC skewed the sector average higher in 2013. For example - without those two, the December ending average would have been 14.07. The deletion of SNF or low valuation CCP took the sector average Price/FFO ratio from 14.73 to 15.16. The addition of high MOB or high valuation CHCT took the sector average Price/FFO ratio from 15.16 to 15.28. At the end of Q4-18 SNR's ratio was 5.87 At the end of Q2-19 SNR's ratio was 29.87. At the end of Q4-18 CHCT's ratio was 18.02 At the end of Q2-19 CHCT's ratio was 23.18.

Disclosure: I am/we are long SBRA, OHI, VTR.