On Jun 2, 2014, we issued an updated research report on the
healthcare real estate investment trust (REIT) -
Early this month, aided by growth in revenues, HCP reported
first-quarter 2014 adjusted FFO (funds from operations) per share
of 75 cents, a penny ahead of both the Zacks Consensus Estimate as
well as the year-ago quarter figure.
Improving fundamentals in the healthcare REIT market, a
well-balanced, diversified portfolio, decent balance sheet,
opportunistic acquisitions and strategic tie ups place HCP on the
Brookdale Senior Living Inc.
) and HCP extended their ties through the creation of a $1.2
billion continuing care retirement communities (CCRC) Joint
Venture. HCP and Brookdale will own 49% and 51%, respectively, of
Moreover, the companies have decided to amend leases on 202
HCP-owned senior housing communities. These communities are
presently operated by
). The closures of the deals are subject to accomplishment of the
pending merger between Brookdale and Emeritus. We believe that this
CCRC partnership with Brookdale offers HCP a solid platform for
However, cut-throat competition and dependency on governmental
healthcare programs for a number of its tenants and operators
remain headwinds. This is because in the recent years governmental
payors have reduced payments to healthcare providers due to
Over the last 30 days, the Zacks Consensus Estimate for full-year
2014 moved down a cent to $3.01 per share, while the same for 2015
climbed up by a cent to $3.13. HCP currently carries a Zacks Rank
Stocks That Warrant a Look
Investors interested in the REIT sector may also consider
Terreno Realty Corp.
) that sports a Zacks Rank #1 (Strong Buy).
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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