What Is The Future Prospect For Real Estate And Healthcare Trust of America Inc (NYSE:HTA)?

Healthcare Trust of America Inc (NYSE:HTA), a US$5.41B mid-cap, operates in the real estate industry which remains the single largest sector globally, and has continued to play a key role in investor portfolios as an asset class. A real estate investment trust (REIT) is a collective vehicle for investing in real estate that originated in the US and has since been taken on board globally. Real estate analysts are forecasting for the entire industry, negative growth in the upcoming year . Is the real estate industry an attractive sector-play right now? Below, I will examine the sector growth prospects, as well as evaluate whether Healthcare Trust of America is lagging or leading its competitors in the industry. See our latest analysis for Healthcare Trust of America

What’s the catalyst for Healthcare Trust of America's sector growth?

Concerns surrounding rate increases and treasury yield movements have made investors dubious around investing in REIT stocks. This is because REITs tend to be dependent on debt funding. They are also considered as bond investment alternatives due to their high and stable dividend payments. In the previous year, the industry saw growth of 3.95%, though still underperforming the wider US stock market. Healthcare Trust of America lags the pack with its negative growth rate of -23.22% over the past year, which indicates the company will be growing at a slower pace than its REIT peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 43.43% in the upcoming year. This future growth may make Healthcare Trust of America a more expensive stock relative to its peers.

Is Healthcare Trust of America and the sector relatively cheap?

REIT companies are typically trading at a PE of 21.4x, relatively similar to the rest of the US stock market PE of 18.95x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a lower 7.46% compared to the market’s 10.50%, potentially indicative of past headwinds. On the stock-level, Healthcare Trust of America is trading at a higher PE ratio of 112x, making it more expensive than the average REIT stock. In terms of returns, Healthcare Trust of America generated 1.20% in the past year, which is 6.26% below the REIT sector.

Next Steps:

Healthcare Trust of America’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this higher growth prospect is also reflected in the company’s price, suggested by its higher PE ratio relative to its peers. If Healthcare Trust of America has been on your watchlist for a while, now may not be the best time to enter into the stock since it is trading at a higher valuation compared to other REIT companies. However, before you make a decision on the stock, I suggest you look at Healthcare Trust of America's fundamentals in order to build a holistic investment thesis.

• 1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
• 2. Historical Track Record: What has HTA's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
• 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Healthcare Trust of America? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.