Health Care REIT Inc.
) is strengthening its focus on high-barrier-to-entry affluent
markets around the world, through strategic investments. Also, the
aging population and rise in senior citizen spending for healthcare
reasons bode well for the growth of this healthcare real estate
investment trust (REIT) going forward.
In May, the company stated its projected acquisition pipeline of
around $414 million of seniors housing and medical office assets
for second-quarter 2014. Specifically, this would include medical
office (worth $162 million), seniors housing triple-net lease
assets ($199 million), post-acute care properties ($30 million) and
Canadian seniors housing operating properties ($23 million). Going
forward, such strategic investments in premium properties will help
the company enhance its portfolio quality and consequently prove
accretive to its earnings.
Moreover, the company has a strong balance sheet position with
limited near-term maturities. Last month, Health Care REIT garnered
around $1.0 billion in proceeds from an equity offering.
Additionally, Health Care REIT had $250 million of proposed
divestitures during the rest of 2014. We expect these measures to
help reap decent capital that would provide the wherewithal to
invest in its growth needs.
However, intense competition and continuous acquisitions on the
company's part are expected to raise upfront operating expenses.
Also, dependency on fewer tenants for revenue generation and
determination of the company's income by government reimbursement
rates remain concerns.
For detailed insight into Health Care REIT, you can refer to our
updated research report, which was issued on Jul 9, 2014.
Over the last 30 days, the Zacks Consensus Estimate for FFO per
share remained flat at $4.07 per share for 2014. For 2015, it moved
up by a penny to $4.28. The stock currently has a Zacks Rank #3
Stocks That Warrant a Look
Investors interested in healthcare REITs may consider stocks
Healthcare Trust of America, Inc.
Omega Healthcare Investors Inc.
National Health Investors Inc.
). All three stocks have a Zacks Rank #2 (Buy).
FFO, a widely used metric to gauge the performance of REITs,
are obtained after adding depreciation, amortization and other
non-cash expenses to net income.
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