Rogue Real Estate Investing Report: March 2004

Issue #6 • March 24, 2004

Dear Rogue Investors,

As a first order of business, I want to give you the download link for the March 2004 version of the Rogue Real Estate Investor Collection. For the past two months, the entire Rogue Investor staff has been working extremely hard to completely revise and update this book. The revised version includes up-to-date county information, 100 new pages, and lots of great, new information. We hope you like this update. Click on the following link to download the electronic version:

[Customers may contact us at realestate@rogueinvestor.com for the link and password.]

Second, I want to give you a new investing idea.

Often, the best investing choice is something no one is talking about. Health Care REITs definitely fall into this category. Compared to most stocks, Real Estate Investment Trusts (or REITs as they are commonly called) receive limited press coverage.

Health Care REITS are an investing alternative that will give you a current yield of 5 to 7 percent, potentially grow their earnings and dividend yield at 10 to 15 percent per year, and fluctuate in value a lot less than the stock market. Few people talk about this type of investing, but Health Care REITs could be the single best investing choice for the next several decades for investors seeking a stable investment that pays dividends and earns a high rate of return.

What are Health Care REITs?

Health Care REITs, or HCRs as I like to call them, are companies that own health care facilities such as hospitals, extended living centers, outpatient centers, rest homes and just about any facility that performs a health care function. HCRs can also own the mortgages of health care facilities. At their base level, HCRs are essentially the landlords of the health care industry.

Unlike other health care investing alternatives, HCRs enjoy the tax free status afforded any REIT. This means that HCRs do not have to pay taxes if they pay out 95 percent of their profits to shareholders. Rather than hording or mismanaging profits, HCRs (like all REITs) must give you, the shareholder, 95 percent of what they make every quarter.

In addition, because of the investing requirements of REITS, the managers of HCRs cannot speculate, something that has become all too common with many publicly traded companies.

When you combine all the factors -- dividends, dividend growth, potential capital appreciation, and low investment risk -- HCRs are a very compelling investment choice.

To my knowledge, though, no one is talking about the coming investing boom in HCRs. This

makes HCRs even more compelling. When you survey the number of HCRs, the market is surprisingly small. Only 11 HCRs are currently traded on the main U.S. stock exchanges.

Here are some HCRs that look interesting to me:

Universal Health Realty (UHT)
UHT owns or has investments in approximately 45 health care facilities located in 15 states, including acute care hospitals, medical office buildings, rehabilitation hospitals, behavioral
healthcare facilities, sub-acute care facilities, surgery centers and childcare centers. Property locations include Louisiana, California, Arkansas, Florida, Illinois, Indiana, Texas, Pennsylvania, Georgia, Arizona, Kentucky, Nevada, New Mexico, Connecticut and Michigan.

Overall, this company is probably one of the best of the HRC bunch. Low debt, modest market cap, relatively high dividend yield and a low P/E (price-to-earnings) ratio make a winning combination.

National Health Reality (NHR)
NHR owns 16 licensed, skilled nursing facilities; six assisted-living facilities; and one independent living center (the Health Care Facilities) through its subsidiary NHR/OP. The company additionally owns first mortgages on other health care companies.

This company is an interesting play because it has a big brother, "National HealthCare Corporation," which helps it along. NHR is a relatively small company, has a total market cap around $200 million, and insiders own a huge stake in the company (about 40 percent). Added bonuses include a good dividend yield and strong dividend growth.

Windrose Medical Properties (WRS)
WRS is more of a speculative HCR, but it has promise. The company is very small, has a total

market cap of approximately $70 million, and has only been in business about two years. However, WRS looks poised for growth. In addition, insiders own a substantial percentage of the company (over 17 percent) and recently have been buying more shares. This is not for conservative investors, but if you can stand some risk it is a possible investment choice.

Happy Investing,

Bryan Rundell

Disclaimer: There are no guarantees in investing. I make no assurances regarding
the investment information presented in the Rogue Real Estate Investing Report.

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