Two real estate investment trusts in the health and senior
housing space are benefiting from upward revisions in funds from
operations estimates for this year and 2014.
Omega Healthcare (
) is a REIT that focuses on skilled nursing facilities in the
United States. As of June, the company had 477 facilities and
specialty hospitals in 33 states.
Recently the company announced a dividend increase of a penny
a share to 48 cents. The dividend will be paid Nov. 15 to
shareholders of record Oct. 31. The annualized yield is 5.8%.
Early this month, Omega announced and priced an offering of
2.5 million shares at $30 a share. The company will use the
proceeds for general corporate purposes.
The Street expects funds from operations to grow 15% this
year, which would be the fourth straight year of 15% to 18%
growth. Sales grew 31%, 13% and 20% in the past three years; 8%
sales growth is expected this year.
However, analysts expect FFO growth to slow to 6% in 2014 on a
10% revenue pop.
The REIT is working on a double-bottom base. The pattern is
second stage, according to
Health Care REIT (
) focuses on senior housing, medical office buildings, hospitals
and life science facilities. As of June, the company had 1,183
properties in 46 states, the United Kingdom and Canada.
The company last declared a dividend increase in January,
bumping the quarterly payout from 74 cents a share to 76.5 cents.
The annualized yield is 4.7%.
FFO growth of 7% is seen this year and next year on revenue
growth of 55% and 11%, respectively. The REIT wrapped up the
acquisition of Sunrise Senior Living in July.
The REIT is working on a stage-two consolidation.
One risk for health-related REITs is government. Rules and
reimbursements under Medicare, Medicaid and the Affordable Care
Act can and do change. Because of that, some investors will limit
their exposure to these type of investments.