Health Care REIT Closes Revera deal - Analyst Blog


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As part of its efforts to acquire premium assets, Health Care REIT Inc. ( HCN ) has partnered with Revera Inc. to own 47 high-quality seniors housing and care communities with around 5,000 units that are positioned in key metropolitan markets in Canada.

Following the deal closure, Health Care REIT now has a 75% interest in the $1.35 billion portfolio while the rest of the interest is owned by Revera. The communities will now be managed by Revera under an incentive-based management contract. Health Care REIT's share of the purchase price is $1.01 billion.

The deal is a strategic fit as it is projected to result in a first-year unlevered net operating income (NOI) yield of 7.0%. Moreover, it is expected to grow in excess of 5.0% over the near-term and 4.0% - 5.0% over the longer-term.

Moreover, we believe that for Health Care REIT, better-than-expected first-quarter 2013 results - including an earnings surprise of 1.11% and consistent overall portfolio performance - as well as successful completion of the Sunrise Senior Living facility acquisition are the key growth drivers.

However, a large portion of its revenues originates from a few tenants, which exposes it to concentration risks, and partly undermines its growth potential.

Health Care REIT currently holds a Zacks Rank #3 (Hold). However, other REIT stocks that are performing better and deserve a look are CubeSmart ( CUBE ), DCT Industrial Trust Inc. ( DCT ) and Host Hotels & Resorts Inc. ( HST ), all carrying a Zacks Rank #2 (Buy).

CUBESMART (CUBE): Free Stock Analysis Report

DCT INDUSTRIAL (DCT): Free Stock Analysis Report

HEALTH CR REIT (HCN): Free Stock Analysis Report

HOST HOTEL&RSRT (HST): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
More Headlines for: CUBE , DCT , HCN , HST

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