FBR Capital Starts MedEquities Realty Trust (MRT) at Outperform
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FBR Capital initiates coverage on MedEquities Realty Trust (NYSE: MRT) with a Outperform rating and a price target of $14.00.
Analyst Bryan Maher commented, "We are initiating coverage of MedEquities Realty Trust, Inc. (MRT) with an Outperform rating following its recently completed IPO. MedEquities is a selfmanaged REIT that invests in a diversified mix of healthcare facilities with an emphasis on acute care and post–acute care facilities. It currently owns 24 facilities (2,345 licensed beds) located predominantly in Texas, California, and Nevada. Senior management has over 30 years of experience and a successful track record investing in healthcare properties and, we expect, will utilize its significant industry relationships to source non-marketed facilities to acquire. In fact, the current identified pipeline for acquisitions is ~$600 million; we are modeling for the REIT to close on $400 million in properties in 2017–2018. Compared with its current $500 million portfolio, this is significant relative growth. Management believes the opportunity for higher risk-adjusted returns lies in the acute and post-acute (SNF) sectors with targeted cap rate yields at or above 8.75%. We believe management's track record in its first two years of operation (since July 2014) gives credibility to its growth plan, and, as such, we initiate at Outperform with a $14 price target."
Shares of MedEquities Realty Trust closed at $11.72 yesterday.
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