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CapitalSource Inc. Message Board

  • lookoutgrady lookoutgrady Jan 12, 2010 7:13 PM Flag

    Barrons on HCP Part II

    A Health-Care REIT With a Heavenly Dividend

    Shares of HCP have a 6.2% yield, along with capital appreciation potential.

    Part II

    And James Flaherty, HCP's chairman and chief executive, who himself hailed from Wall Street, having come out of Merrill Lynch, is regarded as a deal maker.

    ''As the credit market opens, I think he'll be on the lookout to create value,'' Anderson says of Flaherty. ''I think this could be an exciting year for HCP.''

    Which isn't to say there aren't risks associated with HCP and its operations. Just this week, the company said it would record a $48 million non-cash charge in the fourth quarter of 2009, as three direct financing leases it held went bust when Erickson Retirement Communities filed for bankruptcy.

    Meanwhile, HCP's 2009 third-quarter results, reported in November, showed that its funds from operations -- a more-important metric for REITs than conventional earnings -- missed analysts' targets, coming in at 52 cents versus 53 cents a share.

    Part of the shortfall owed to impairments to HCP stemming from the $101 million in damages stemming from a suit that Ventas (VTR) brought against HCP, charging that HCP made a rogue bid in the takeover of a company named Sunrise Senior Living REIT that drove up Ventas' purchase price for the operation. HCP has said it plans to appeal the decision.

    But given the essential characteristics -- the reliability of the dividend, the sector-high yield and the growth prospects in a more-normalized operating environment, analysts say they remain upbeat about HCP's outlook.

    ''I think this is one of the bellwethers of this sector,'' Anderson concludes.

    At a Glance
    HCP Inc. (ticker: HCP)
    Stock Price: $30.23
    52-Wk High: $33.45
    52-Wk Low: $14.93
    Market Cap: $ 8.9 billion
    Est. 2010 EPS: $2.18
    2010 P/E: 14.4
    Est. Long-Term EPS Growth*: 4%
    Est. ('10/'09) EPS: 3%
    Revenue (trailing 12 months): $1 billion
    Dividend Yield: 6.2%
    Chairman & Chief Executive: James Flaherty
    Headquarters: Long Beach, Calif.

    * Based on analyst estimates looking ahead three to five years.

    Sources:, Thomson Reuters.

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