Health Care REIT Inc. (HCN) is strengthening its focus on high-barrier-to-entry affluent markets around the world, through strategic investments. Also, the aging population and rise in senior citizen spending for healthcare reasons bode well for the growth of this healthcare real estate investment trust (:REIT) going forward.
In May, the company stated its projected acquisition pipeline of around $414 million of seniors housing and medical office assets for second-quarter 2014. Specifically, this would include medical office (worth $162 million), seniors housing triple-net lease assets ($199 million), post-acute care properties ($30 million) and Canadian seniors housing operating properties ($23 million). Going forward, such strategic investments in premium properties will help the company enhance its portfolio quality and consequently prove accretive to its earnings.
Moreover, the company has a strong balance sheet position with limited near-term maturities. Last month, Health Care REIT garnered around $1.0 billion in proceeds from an equity offering. Additionally, Health Care REIT had $250 million of proposed divestitures during the rest of 2014. We expect these measures to help reap decent capital that would provide the wherewithal to invest in its growth needs.
However, intense competition and continuous acquisitions on the company’s part are expected to raise upfront operating expenses. Also, dependency on fewer tenants for revenue generation and determination of the company’s income by government reimbursement rates remain concerns.
For detailed insight into Health Care REIT, you can refer to our updated research report, which was issued on Jul 9, 2014.
Over the last 30 days, the Zacks Consensus Estimate for FFO per share remained flat at $4.07 per share for 2014. For 2015, it moved up by a penny to $4.28. The stock currently has a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Investors interested in healthcare REITs may consider stocks like Healthcare Trust of America, Inc. (HTA), Omega Healthcare Investors Inc. (OHI) and National Health Investors Inc. (NHI). All three stocks have a Zacks Rank #2 (Buy).
Note: FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation, amortization and other non-cash expenses to net income.