Sila Realty Trust Inc. (THEY) officially listed on the New York Stock Exchange on Thursday. With its shares rising on its inaugural trading day, CEO Michael Seton joins Market Domination to shed light on the company's business model and strategic positioning within the healthcare real estate sector.
Seton explains that Sila Realty Trust's unique approach revolves around leasing properties to long-term healthcare operators, with a special focus on properties that offer "long-lasting, predictable income streams." This strategy ensures long-lasting partnerships and a stable income stream for shareholders, says the CEO.
When it comes to navigating the competitive landscape, Seton tells Yahoo Finance, "Sila is incredibly well positioned because we have low leverage and we have a very strong portfolio." He adds: "Honestly, there is much less competition today. It is a tremendous opportunity for us to acquire very high quality real estate with less competition in this market."
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This post was written by Angel Smith
Video transcript
Cla Realty Trust shares rose on their first day of trading and re-listed on the New York Stock Exchange through direct listing.
Joining us now is a real estate trust, CEO Michael Seaton.
Thank you so much for coming to talk to us, Julie Josh, thank you for having me.
So you're a medical property owner, but that's all you do.
You simply own them, you don't operate them.
Tell me a little bit about the business model here.
We are a real estate investment trust.
We are passive real estate owners, we rent properties to healthcare operators, we rent them long term.
So we really look for properties to own that have long-lasting, predictable income streams that ultimately benefit our shareholders because our shareholders get the benefit of that current income, but also the predictability of that income.
I'm also interested, Michael, how you are coping and navigating this higher rate environment.
We've actually done a fantastic job and it's a real testament to the people in the company, including the CFO. We have managed it primarily by hedging all of our debt.
So our debt today is 100% covered.
Uh, also in regards to keeping a fairly low leverage profile compared to rod space.
So overall, our leverage on a like-for-like basis is about 20%.
Normally, you see reeds between 40 and 50%.
And that certainly helps in a rising interest rate environment.
So obviously leverage works very well going up, not very well going down.
We've never had that problem and we've simply positioned the company extremely well.
We've been seeing a lot of growth in outpatient settings, not in hospitals, but in adjacent hospital services, sort of intermediate services.
What does that mean for your business?
Has there been a big demand?
And that's an area where you guys really feel like, as you mentioned, we've definitely seen the customer, which is the patient, go more to outpatient settings because they're less expensive, they're less expensive for the government. their programs, less expensive for insurers.
What it has really created is an opportunity to own more such buildings.
So we have certainly seen in the last 10 to 20 years more development in those areas, but those areas have also become more robust in terms of the volumes that they see, for example, in terms of patients. In addition to the fact that doctors generally like to practice in those types of environments, they tend to be newer, they tend to be less busy, and patients like to come to them for those same reasons.
I'm Michael, what is the competitive landscape like for everyone, for all of you and how it has also been evolving.
Josh, that's a great question.
Oh, three years ago.
You know, before, essentially, we saw an increase in interest rates.
It was a very competitive market.
We were probably a little less active because we are very disciplined with our capital and very conscious of capital allocation in recent years, in particular, we have seen a tremendous opportunity to acquire real estate.
And the reason is that there are so many competitors and companies that are rating themselves with respect to the performance of their portfolio, with respect to their balance sheet, that they could be overleveraged.
Cla is incredibly well positioned because we have little leverage.
We have a very solid portfolio.
Honestly, there is a lot less competition nowadays.
So it's a tremendous opportunity for us to acquire very high quality real estate with less competition in this market.
Alright, Michael, thanks for joining us and congratulations again to you and the big signing day.
Thank you very much for inviting me.
