Health Care REIT Inc.
), a real estate investment trust (REIT) that operates senior
housing and health care real estate, has recently updated its
recurring FFO (funds from operations) and FAD (funds available for
distribution) guidance for fiscal 2012 to better reflect the effect
of the just-concluded secondary offering and acquisitions closed
till date in the first quarter.
Funds from operations, 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. Funds
available for distribution represents FFO adjusted for non-real
estate depreciation and the effect of straight-line rent, less
capital investments in property.
The company has revised its recurring FFO guidance for fiscal
2012 from the earlier range of $3.68 - $3.78 per share to $3.53 -
$3.63. Health Care REIT also updated its recurring FAD guidance
from $3.26 - $3.36 per share to $3.11 - $3.21.
The changes in FFO and FAD guidance were effected after taking
into consideration the following factors: $508 million worth of
acquisitions were closed till date during the current quarter; $269
million worth of assumed and newly arranged debt; $1.1 billion
worth of equity offering (20.7 million shares); $287.5 million
worth of cumulative redeemable preferred stock offering already
closed; and another $275 million worth of redemptions of cumulative
redeemable preferred stock expected to close in second quarter
Headquartered in Toledo, Ohio, Health Care REIT invests across
the full spectrum of senior housing and health care real estate
properties. Founded in 1970, the company was the first REIT to
invest exclusively in healthcare facilities.
Health Care REIT usually has long-term 'triple-net' leases in
senior housing and healthcare real estate properties that insulates
it from market volatility and provides a steady source of revenue
despite a challenging macroeconomic environment. Under 'triple-net'
leases, the tenant pays all taxes, insurance, and maintenance for
the properties, in addition to rent.
The healthcare sector is one of the more recession-proof real
estate sectors and has continually fared comparatively better than
other sectors during the commercial real estate downturn. In
addition, an aging Baby Boomer generation's demand for assisted and
independent living facilities should increase in the coming
With a significant presence in these property types, Health Care
REIT is poised to maintain its growth curves and simultaneously
benefit the shareholders with steadily rising dividends.
We presently have a Neutral recommendation on Health Care REIT
Inc., which currently has a Zacks #3 Rank that translates into a
short-term Hold rating. We also have a Neutral recommendation and a
Zacks #3 Rank for
), one of the competitors of Health Care REIT Inc.
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