Investment Research Analyst Marc Roberts saw many opportunities a year ago for Physicians Realty Trust (DOC) to parlay capital into the small and midsize medical office market. Roberts says Physicians Realty has delivered, and grown its asset base along with its net operating income.
“What they focus on are small to midsize transactions in medical office buildings, so they are owners of the real estate. This is an asset class where you have pretty long-term leases,” Roberts said. “The management team worked at other health care realty companies before, so they were experienced and in the process of raising more capital. We saw that there were many opportunities a year ago for them to put this money to work in these smaller and midsize medical office buildings at what we thought were pretty attractive rates of return.”
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Roberts says his team also saw that the management team was appropriately conservative, and that after a year his thesis played out well. However, the stock is now trading at a premium so Roberts is currently trimming shares.
“REITs are not cheap right now. Physicians Realty Trust, when we first purchased their stock, was trading at a discount to net asset value, but since then, it has performed very well,” Roberts said. “I expect that, at some point, we will have to sell the holding simply because it has done so well that it’s trading at too expensive of a price.”
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