The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.
Omega Healthcare Investors OHI is a health care REIT that owns a portfolio of skilled nursing and senior housing facilities that are triple-net leased to third-party operators. Omega could also have one of the greatest opportunities in the health care real estate sector right now.
Omega's Discounted Price
Omega Healthcare Investors is currently priced at a P/FFO Multiple of 13.05x, which is a 28.45% discount compared to the average of the top 10 health care REITs. This is an even more significant discount when compared to the average P/FFO of 24.05x for the largest three: Welltower Inc WELL, Ventas Inc VTR and Healthpeak Properties PEAK.
Omega's Profit Growth
Omega has grown consistently over the years in terms of its portfolio, revenue and profit. According to its most recent investor presentation, the company has had a compound annual growth rate of 18% in terms of AFFO.
Over the same period, Omega increased its gross investments by over 140% and its core operating revenue by over 133%.
Omega Healthcare Investors is one of the highest yielding REITs available, with its dividend at 7.1%. The company has increased its dividend for the last 17 consecutive years while also maintaining a consistent payout ratio.
With the company’s FFO per share expected to continue increasing throughout the year, another dividend increase in 2021 is likely.
Omega's Healthy Balance Sheet
As the long-term care industry continues to feel the effects of the COVID-19 pandemic, further consolidation in the industry will continue as other health care real estate owners will be forced to liquidate assets.
Since Omega has a healthy debt/EBITDA ratio of only 5.12x, a well-staggered debt maturity schedule and $1.4 billion of available liquidity, it's in a strong position to be able to take advantage of opportunistic acquisitions.
Omega's Strong Outlook For Real Estate Portfolio
The REIT’s portfolio is primarily made up of skilled nursing facilities that have a strong outlook over the next several years as the population of adults aged 65 and older continues to increase.
The long-term care market is expected to grow at a rate of 6.8% per year through 2027. With regulatory restrictions keeping the barriers to entry into the market high, the risk of oversupply is limited.
See also: How to Invest in REITs
Omega Healthcare investors proved their strength and durability throughout 2020 and continued to grow despite the challenges they faced throughout the pandemic. With a strong real estate portfolio and financial position, Omega is a solid play in the health care REIT market.
The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.
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