Biomed Realty Trust Inc (BMR), a REIT that invests in laboratory and office space for the life science industry, is currently trading at a discount to net asset value, as the company continues to lease up its assets and is growing FFO/FAD up to 7% a year, says Daniel Bernstein, Analyst at Stifel, Nicolaus & Co., Inc.
“[Biomed] is primarily a company that invests in life science assets, biotech lab space. It has improved its balance sheet dramatically; it’s sub-40% leverage. It continues to lease up its assets. It has diversified its tenant base, and it’s growing FFO/FAD 6% to 7% a year,” Bernstein said.
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Bernstein believes that the BMR is currently trading at a discount and has the potential to be an acquisition target for a large-cap health care REIT, therefore it is one of his top picks. He points to both internal and external growth opportunities as reasons for investors to continue looking at health care REITs.
“Longer term, the health care REITs are going to continue to grow their dividends. They have good external growth opportunities from acquisitions and average to above-average internal growth opportunities, particularly for seniors housing and medical office. So I think if I’m an investor, I’m looking for an opportunity to buy health care REITs on pullbacks, especially if I’m looking at the longer-term picture for income growth and income needs,” Bernstein said.
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