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HCP Closes Sale of 64 Brookdale Communities for $1.1 Billion
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HCP Inc. (HCP - Free Report) recently completed the sale of a portfolio of 64 Brookdale Communities to affiliates of Blackstone Real Estate Partners VIII L.P, for $1.125 billion. The company expects to gain around $165 million from this transaction, and plans to utilize the proceeds in repaying debt and meeting other corporate needs.
Particularly, the 64 assets sold off to Blackstone were triple-net leased to Brookdale Senior Living. HCP announced its plan to sell these assets in Nov 2016 and had revealed that the portfolio comprises 5,967 units. Further, the occupancy for the portfolio was 85.2% during third-quarter 2016.
Notably, this move is in sync with HCP’s strategic efforts to lower the concentration of Brookdale assets in its portfolio. In addition, the sell-off improves the company’s lease coverage, fortifies its balance sheet as well as credit profile.
Moreover, over the past three months, shares of HCP outperformed the Zacks categorized REIT and Equity Trust – Other industry. In fact, HCP’s shares logged in a return of 4.3% over this time frame against 2.0% growth recorded by the industry.
HCP is anticipated to benefit from a diversified portfolio, rising healthcare spending and aging population. Strategic investments, tie-ups and opportunistic investments are also likely to drive decent cash flows. However, rise in interest rate and cut-throat competition in the industry remain concerns for the company. Also, dilutive impact on earnings from sale of assets cannot by bypassed.
CoreSite Realty currently has a long-term growth rate of 19.1%.
Piedmont Office Realty’s estimates for 2017 moved north by nearly 0.6% to $1.73, over the past 60 days.
Sabra Health Care’s 2017 estimates also climbed 1.3% to $2.33, over the past 60 days.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, 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.
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HCP Closes Sale of 64 Brookdale Communities for $1.1 Billion
HCP Inc. (HCP - Free Report) recently completed the sale of a portfolio of 64 Brookdale Communities to affiliates of Blackstone Real Estate Partners VIII L.P, for $1.125 billion. The company expects to gain around $165 million from this transaction, and plans to utilize the proceeds in repaying debt and meeting other corporate needs.
Particularly, the 64 assets sold off to Blackstone were triple-net leased to Brookdale Senior Living. HCP announced its plan to sell these assets in Nov 2016 and had revealed that the portfolio comprises 5,967 units. Further, the occupancy for the portfolio was 85.2% during third-quarter 2016.
Notably, this move is in sync with HCP’s strategic efforts to lower the concentration of Brookdale assets in its portfolio. In addition, the sell-off improves the company’s lease coverage, fortifies its balance sheet as well as credit profile.
Moreover, over the past three months, shares of HCP outperformed the Zacks categorized REIT and Equity Trust – Other industry. In fact, HCP’s shares logged in a return of 4.3% over this time frame against 2.0% growth recorded by the industry.
HCP is anticipated to benefit from a diversified portfolio, rising healthcare spending and aging population. Strategic investments, tie-ups and opportunistic investments are also likely to drive decent cash flows. However, rise in interest rate and cut-throat competition in the industry remain concerns for the company. Also, dilutive impact on earnings from sale of assets cannot by bypassed.
Currently, HCP has a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in the REIT space include CoreSite Realty Corporation (COR - Free Report) , Piedmont Office Realty Trust, Inc. (PDM - Free Report) and Sabra Health Care REIT, Inc. (SBRA - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CoreSite Realty currently has a long-term growth rate of 19.1%.
Piedmont Office Realty’s estimates for 2017 moved north by nearly 0.6% to $1.73, over the past 60 days.
Sabra Health Care’s 2017 estimates also climbed 1.3% to $2.33, over the past 60 days.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, 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.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>