Back to top

Analyst Blog

Health Care REIT, Inc. (HCN - Analyst Report) recently announced that it has priced its underwritten public offering of 18 million shares at $53.50 per share with the total amount estimated at $963 million. In a bid to cover over-allotments, the company will provide a 30-day option to the underwriters for purchasing an additional 2.7 million shares.

HCN intends to utilize the proceeds generated from the transaction to repayadvances under its unsecured lines of credit, to repay other outstanding debts and for other general corporate purposes, including investing in health care and seniors housing properties.

This public offering will enable the company to attain financial flexibility and seize investment opportunities and acquisitions, which go a long way in enhancing top-line growth. As of December 31, 2011, HCN’s cash position stood at $163.5 million.

Health Care REIT reported fourth quarter 2011 FFO (funds from operations) of $154.4 million or 83 cents per share, compared with $85.1 million or 61 cents in the year-earlier quarter. Funds from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

HCN is a real estate investment trust (REIT) that invests across the full spectrum of senior housing and health care real estate properties. Headquartered in Toledo, Ohio, Health Care REIT also provides an extensive array of property management and development services.

Health Care usually has long-term triple-net leases in senior housing and healthcare real estate properties that insulates it from market volatility and provides a steady source of revenue despite a challenging macroeconomic environment.

Health Care currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, HCP Inc. (HCP - Analyst Report), currently has a Zacks #3 Rank, which translates into a short-term Hold rating.

Please login to Zacks.com or register to post a comment.