Healthcare real estate investment trust (REIT)
) has inked a deal with
Tenet Healthcare Corp.
) to adjust and extend leases for three acute care hospitals. The
transaction is part of HCP's efforts to strengthen its long
standing ties with Tenet Healthcare, and consequently enhance its
Tenet Healthcare owns and operates general hospitals and
related healthcare facilities for urban and rural communities in
numerous states and has offices in California and Florida. The
three acute care hospitals are North Fulton Hospital in Roswell,
Georgia, Palm Beach Gardens Medical Center in Florida and Frye
Regional Medical Center in Hickory, North Carolina.
Notably, the lease for the properties, which encompass 656
licensed beds, is extended at current rent levels. They contain
Consumer Price Index (CPI)-based escalators, on an annual basis,
from 3 to 8 years with purchase options that can be exercised for
a fixed price at the end of each term.
We view this deal with Tenet Healthcare - one of the largest
investor-owned health care delivery systems in the nation - as a
strategic fit for HCP. The company mainly aims at establishing
business relationships with a number of experienced healthcare
management firms, which lease these properties on a long-term
basis. This insulates HCP from short-term market swings and
drives steady top-line growth.
Last month, HCP reported third-quarter 2013 adjusted FFO per
share of 79 cents, 2 cents ahead of the Zacks Consensus Estimate
and 10 cents above the prior-year quarter figure. This was aided
by substantial growth in revenues.
HCP currently carries a Zacks Rank #3 (Hold). However, some
better-ranked healthcare REITs include
Sabra Health Care REIT, Inc.
). Sabra Health Care carries a Zacks Rank #1 (Strong Buy), while
Ventas holds a Zacks Rank #2 (Buy).
HCP INC (HCP): Free Stock Analysis Report
SABRA HEALTHCR (SBRA): Free Stock Analysis
TENET HEALTH (THC): Free Stock Analysis
VENTAS INC (VTR): Free Stock Analysis Report
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