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Friday File: REITs, First Mining and Gold

In which your Gumshoe checks in on Healthcare REITs, First Mining Finance and gold, and Solves a

By Travis Johnson, Stock Gumshoe, July 15, 2016

Today I’m breaking up our Friday File into two segments, which many of you have noted that you prefer — one part is a teaser pitch solution, the other is an update on a few stocks that I own and/or have suggested to the Irregulars. The teaser pitch is a look into Cabot’s “Stock of the Next Decade” and you can find that here, and the updates are… well, right below this paragraph.

Our hospital REIT Medical Properties Trust (MPW) has now finished more than what they said they would do in terms of “fixing” the balance sheet — they’ve now effectively refinanced $1 billion of debt this year at an average rate well below 6% ($500 million in February, when things were much dicier, at 6.375%, and another $500 million just this week at 5.25%). That, combined with the $500 million+ net from their asset sales earlier in the year gets rid of any near-term risk from being overly levered. The cost of capital is still fairly high for MPW, and they do still need to grow and they have some small exposure to European currencies, so as the price recovered to near old highs I sold a bit of my MPW to rebalance among healthcare REITs last month, and could do so again at some point if other REITs look relatively appealing (most likely those healthcare REITs I already own, OHI, VTR and DOC). That’s mostly because my MPW holdings are still almost twice as large as my holdings in other healthcare REITs, which exaggerates my preference for the shares.

I think MPW is a significantly safer bet today than it was six or nine months ago and I continue to like their performance and the solid 6% yield (which they raised last quarter), but now that they’ve recovered to a solid valuation this is really a sector play for me more than a specific company that I want to dramatically overweight versus its peers.

Omega Healthcare (OHI), by the way, also just raised their dividend… but they do that every quarter, so it’s only news if they stop — that’s arguably the riskiest of the bunch since it’s focused on the skilled nursing sector where reimbursements are critical and some operators have had trouble… and also, appropriately, the one with the highest and fastest-growing yield.

It’s hard to focus much on a specific performer in ...

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