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Analyst Blog

Recently, Health Care REIT, Inc. (HCN - Analyst Report) announced the closure of its public offering of common stock. This real estate investment trust (REIT) priced the equity offering of 23 million common shares at $73.50 per share, including 3 million shares sold to underwriters to cover the over-allotments.

Health Care REIT generated gross proceeds of approximately $1.7 billion from the offering. The company, in particular, plans to utilize this sum to pay off its outstanding debts and advances under the unsecured lines of credit. It also intends to employ it for other corporate purposes such as investing in healthcare real estate and seniors housing assets.

A consortium of banking giants – including Wells Fargo Securities of Wells Fargo & Company (WFC - Analyst Report), Deutsche Bank Securities, UBS Investment Bank of UBS AG (UBS - Analyst Report), Barclays, RBC Capital Markets, Citigroup, Inc. (C - Analyst Report) and J.P. Morgan – acted as joint book-running managers for the public offering.

Though this public offering will result in share dilution for Health Care REIT, the payment of debt is encouraging as it would reduce interest expenses. Moreover, strategic investments will help the company to enhance its portfolio quality, which in turn will be accretive to its earnings going forward.

Earlier this month, Health Care REIT reported first-quarter 2013 normalized FFO of 91 cents per share, a cent ahead of the Zacks Consensus Estimate and up 4 cents year over year. The increase in year-over-year FFO per share was primarily attributable to better-than-expected revenue growth. As of Mar 31, 2013, Health Care REIT had cash and cash equivalents of $269.8 million, down from $469.2 million in the prior-year quarter end.

Health Care REIT currently holds a Zacks Rank #3 (Hold).

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