Sila Realty CEO talks NYSE debut, business model

Sila Realty Trust Inc. (SILA) has officially listed on the New York Stock Exchange on Thursday. With its shares soaring 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 healthcare operators on a long-term basis, with a keen focus on properties that offer "durable and predictable income streams." This strategy ensures long-lasting partnerships and a stable revenue stream for shareholders, the CEO says.

When it comes to navigating the competitive landscape, Seton tells Yahoo Finance, "Sila is incredibly well-positioned because we are low leveraged, and we have a very strong portfolio." He further adds, "So candidly, much less competition today. It's a tremendous opportunity for us to acquire very high-quality real estate with less competition in this marketplace."

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Angel Smith

Video transcript

Shares of Cla realty trust rising in their very first day of trading, the re listing on the New York Stock Exchange via direct listing.

Joining us now see a realty trust, Ceo Michael Seaton.

Thank you so much for coming in to talk to us, Julie Josh, thank you for having me.

So cla an owner of medical properties, but that's all you do.

You just own them, you don't operate them.

So talk to me a little bit about the business model here.

We're a real estate investment trust.

We're a passive owner of real estate, we lease properties to health care operators, we lease them on a long term basis.

So we really look for properties to own which have durable and predictable income streams, ultimately, that benefits our stockholders because our stockholders get the benefit of that current income, but also the predictability of that income.

I'm also interested, Michael, just how you kind of all manage and and navigated this higher rate environment.

We've actually done a fantastic job and it's a real testament to folks at the company, including the CFO we've managed it predominantly through uh hedging all of our debt.

So our debt today is 100% hedged.

Uh Also with respect to keeping a pretty low leverage profile on a comparable basis to the reed space.

So overall, our leverage on an equivalent basis is about 20%.

Typically, you see reeds between 40 to 50%.

And that helps certainly in a rising rate environment.

So obviously, leverage works very well, going up, not great coming down.

So we've never had that issue and we've just positioned the company extremely well.

We have been seeing big growth in outpatient settings, right, not hospitals but hospital adjacent type services, sort of in between type services.

What does that mean for your business?

Has there been a big demand?

And is that an area where you, you guys really sit, as you mentioned, we've definitely seen uh the customer which is the patient go more to outpatient settings because they're less costly, they're less costly for the government under their programs, less costly for insurers.

What it's really created is an opportunity to own more of those types of buildings.

So we've seen certainly over the last really 10 to 20 years, more development in those arenas, but those arenas have also become and those asset types have become more robust in terms of the volumes they see, for instance, in terms of patients, in addition to that physicians generally like to uh practice in those types of settings, they tend to be newer, they tend to be uh less busy uh and patients like to go to them because of those same reasons.

I'm Michael, just how, what the competitive landscape is like for all, for you all and just how it also has been evolving.

Josh, that's a great question.

Uh Three years ago.

Uh you know, before essentially, we saw a rise in interest rates.

It was a very competitive market.

We were probably slightly less active because we're very disciplined with our capital and very conscious of capital allocation over the last really couple of years, particularly, we've seen a tremendous opportunity to acquire real estate.

And the reason is because there's so many competitors out there and companies who are sort of triaging themselves, triaging themselves with respect to the performance of their portfolio, with respect to their balance sheet, they might be over leveraged.

Cla is incredibly well positioned because we are low leverage.

We have a very strong portfolio.

So candidly much less competition today.

So it's a, it's a tremendous opportunity for us to acquire very high quality real estate with less competition in this marketplace.

All right, Michael, thanks for joining us and congrats again to you and the firm big day.

Thank you very much for having me.