John McRoberts, chairman and CEO of MedEquities Realty Trust (NYSE: MRT), joined REIT.com for a CEO Spotlight video interview at REITWorld 2016: NAREIT’s Annual Convention for All Things REIT at the JW Marriott Phoenix Desert Ridge.
MedEquities provides capital primarily to the acute and post-acute services industry by making investments in health care facilities.
The company completed an approximately $245 million initial public offering (IPO) in October 2016. McRoberts said the IPO allows MedEquities to delever the company and pursue an active pipeline of new investment opportunities.
As for possible changes to the Affordable Care Act, McRoberts said he hopes to see “a system in place that takes the best of what was there and fixes what was not working so well. If that happens, it will be very good for our industry.”
Meanwhile, McRoberts said the third quarter signing of Baylor Scott & White Health to a new 15-year lease at Lakeway Hospital in Lakeway, Texas, was an “extremely transformative transaction.”
“We’ve taken that single-asset company and replaced that tenant with a major health care provider. With the credit metrics that Baylor brings to the table, we’ve created a lot of cap rate compression and value for our shareholders,” McRoberts said.
McRoberts also noted that demand for health care services will continue to grow with the aging of the population. He predicted that many facilities will likely see shorter-term stays, which could absorb some of that capacity. Development of new product will largely replace older assets that can’t be reconfigured to compete in today’s environment, he added.