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Health Care REIT (HCN) Rating Outlook Raised by Moody's - Analyst Blog

Zacks Equity Research

Ushering in good news for shareholders of Health Care REIT Inc. HCN, Moody's Investors Service has affirmed the company’s Baa2 senior unsecured rating and revised the outlook to positive from stable.

Steady improvement in the company’s diversified real estate portfolio, accompanied with leverage reduction, largely drove the upward revision in rating outlook by the rating agency.

The positive outlook is, in fact, backed by the rating agency’s expectation that Health Care REIT will continue to ride on the growth curve with its focus on high quality, private-pay assets as well as its efforts to strengthen major financial metrics such as leverage and fixed charge coverage.

A positive rating is encouraging as it enhances a company’s credibility in the market and boosts investors’ appetite for the stock. Increase in creditworthiness also allows the company to enjoy lower cost on its borrowing.

In fact, we believe strategic portfolio investments and focus on private pay assets would serve as growth drivers for Health Care REIT in the future. The company’s diversified portfolio includes a wide variety of assets, ranging from senior housing operating and senior housing triple-net leased assets to medical office buildings, post-acute/long-term care facilities and hospitals. With such a varied portfolio, the company is well poised to grow amid a rise in senior citizen population and increased spending for healthcare reasons.

Health Care REIT currently carries a Zacks Rank #3 (Hold). Investors interested in the REIT industry may consider stocks like Hersha Hospitality Trust HT, Hospitality Properties Trust HPT and Liberty Property Trust LPT. All these stocks hold a Zacks Rank #2 (Buy).

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