Baird bullish on skilled nursing REITs, expects performance to improve

Sabra Health Care REIT

08/10/2021 14:08

** Baird initiates skilled nursing REIT coverage at
"outperform", citing favorable risk/reward and expected improved
performance as investors receive greater clarity on extent of
tenant credit issues
    ** While cash flow constraints related to depressed
occupancy and staffing challenges likely to persist in near
term, supply/demand outlook favorable longer term due to demand
tailwinds including improving demographics and skilled nursing
facilities (SNFs) status as lowest cost provider of post-acute
care, Baird analyst Amanda Sweitzer says in note
    ** Labor shortage attracting more attention nationally,
which may result in additional resources provided to SNFs and/or
potential workers, including through a few bills recently
introduced in U.S. Congress, Sweitzer says
    ** Sweitzer starts Sabra Health Care REIT  SBRA.O  at
"outperform" ($18 PT). Names co "top pick", on expected rising
occupancy following recent decline in COVID-19 cases, expected
relief funds and "robust" private transaction market to provide
support
    ** She starts CareTrust REIT  CTRE.O  ($23 PT) and Omega
Healthcare Investors  OHI.N  ($36 PT) at "outperform"
    ** SBRA has current market cap of ~$3.2 bln, while CTRE and
OHI have market caps of ~$2 bln and ~$7 bln, respectively, per
Refinitiv data
    ** YTD, SBRA shares down 16%, CTRE shares off ~9%, OHI
shares down 18%

 (Lance Tupper is a Reuters market analyst. The views expressed
are his own)
 ((lance.tupper@thomsonreuters.com
lance.tupper@tr.com 1-332-219-1430))