With Wall Street increasing its expectations for a recession in 2023, investors should look for sectors that are expected to either thrive or at least hold their own during the worst of times.
One such sector is healthcare. People get sick or injured whether the economy is in a boom or bust cycle.
It’s not surprising that one of the best-performing real estate investment trust (REIT) sectors in recent weeks has been healthcare, with several stocks rising in price. Take a look at the three best-performing healthcare REITs over the past four weeks:
Community Healthcare Trust Inc. CHCT is a Franklin, Tennessee-based healthcare REIT that owns 161 properties across 34 states. Its diverse portfolio includes medical office buildings, specialty centers, behavioral facilities and inpatient rehabilitation centers.
Community Healthcare Trust has a total of 205 tenants, and its most recent occupancy rate was 90.8%. Unlike some other healthcare REITs, such as Medical Properties Trust Inc. MPW, Community Healthcare Trust’s largest tenant accounts for less than 11% of its portfolio, reducing its overall risk of rent default.
Community Healthcare Trust has an impressive record of growing its dividend for 29 consecutive quarters and now pays $0.445 or $1.88 annually. The present yield is 4.67% on its most recent closing price of $38.05.
Community Healthcare Trust recently announced positive third-quarter operating results that beat its third-quarter 2021 numbers on three different measures: Revenue of $24.8 million was up 6.7%, net income of $5.67 million was up 20%, and funds from operations (FFO) of $0.57 was 3.6% higher.
Over the past four weeks, Community Healthcare Trust has risen 8.53%, making it the best-performing healthcare REIT during that time, and the fifth-best REIT overall.
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Healthpeak Properties Inc. PEAK is a Denver-based REIT that owns and operates private-pay facilities such as life science centers, medical offices and senior housing. The company was added to the S&P 500 in 2008.
Healthpeak Properties owns more than $20 billion in healthcare real estate in 464 properties in Colorado, Tennessee and California. Many of Healthpeak Properties’ life science tenants are large, well-known pharmaceuticals, such as Amgen Inc, Pfizer Inc and Bristol Myers Squibb Co.
On Jan. 3, Jefferies analyst Jonathan Petersen upgraded Healthpeak Properties from Hold to Buy, while raising the price target from $23 to $29. Its most recent closing price was $26.74.
Healthpeak Properties pays an annual dividend of $1.20 per share, yielding 4.8%. Its FFO payout ratio is 69%.
Third-quarter FFO of $0.40 was 11.1% above the $0.36 FFO achieved in the third quarter of 2021. Revenue of $520.4 million was up 8.1% from the third quarter of 2021.
Over the past four weeks, Healthpeak Properties has risen 5.48%, which makes it the second-best-performing healthcare REIT.
Healthcare Realty Trust Inc. HR is a Nashville, Tennessee-based REIT that owns and develops outpatient medical facilities across the U.S. It was formed by a merger between Healthcare Realty and Healthcare Trust of America in July 2022. The merger created a company that now has 728 properties across 35 states, 85% of which are established in larger cities.
Healthcare Realty Trust pays an annual dividend of $1.24, yielding 5.97% on its most recent closing price of $20.76.
Third-quarter revenue of $306.35 million exceeded consensus and was well above $136.63 million in the third quarter of 2021. But FFO of $0.39 was $0.04 below the third quarter of 2021 and missed Wall Street estimates. In addition, its tenant retention of 79.1% is troubling.
Yet, over the past four weeks, Healthcare Realty Trust has rallied 5.43%, making it the third-best-performing healthcare REIT in a sector that has been quite strong.
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