Some 'Value' Rotation in 2Q; 'Growth' Stories Remain Firm; Investment Themes End

Research evidence excerpt

Some 'Value' Rotation in 2Q; 'Growth' Stories Remain Firm; Investment Themes End

two far right columns present the ‘batting averages’ for each company- i.e.

the % of calendar years that a given stock outperformed the healthcare REIT index and/or the broader FNERTR.

Valuations vs Historical Averages

The healthcare sector recently traded (6/29/26) at a notable 66% premium (mkt cap weighted) to consensus NAV, on

average, exceeding the 3 and 5-year average premiums of 36% and 24%, respectively. However, DOC and ARE, as

examples, trade well below their respective long-term averages reflecting concerns over lab/life science market

fundamentals. CHCT’s valuation remains compressed, hindering the viability of external growth as a contributor to

overall AFFO per share growth. In contrast, WELL and VTR trade at notable NAV premiums driven by well above

REIT industry average organic growth potential (SHOP dominated) complemented by accretive external growth

volumes. We believe DCF and self-funding are increasingly informative valuation metrics for VTR and WELL.

On a cap weighted consensus AFFO multiple basis, the healthcare sector trades above the 3 and 5-year historical

averages. Again, WELL and VTR are trading above historical averages, a reflection of strong organic growth from the

SHOP segment for both companies, accretive external growth investment opportunity and retained cash flow.

Conversely, the forward AFFO multiples for ARE and DOC remain depressed owing to challenging lab/life science

market fundamentals and related implications on near to intermediate term investment yields and associated earnings

growth/contributions, by extension. Alexandria remains focused on asset sales to fund its

development/redevelopment pipeline.