Health Care REIT, Inc. HCN announced the closing of a $750-million offering of senior unsecured notes. With this move, the Toledo, OH-based health care real estate investment trust’s (“REIT”) financials are expected to enjoy greater flexibility.
The notes, bearing a rate of 4%, are due on Jun 1, 2025. Health Care REIT plans to use the net proceeds from the offering to repay advances under the primary unsecured credit facility as well as for funding general corporate needs. The latter include investment in health care and seniors housing properties. Residual proceeds may be utilized for short-term, investment grade, interest-bearing securities, certificates of deposit, or to meet indirect or guaranteed obligations of the U.S.
Health Care REIT invests in seniors housing and health care real estate. As of Mar 31, 2015, the company’s portfolio consisted of 1,384 properties, spreading across 46 states in the U.S., the UK and Canada.
Notably, Health Care REIT reported first-quarter 2015 normalized funds from operations (“FFO”) of $1.04 per share, in line with the Zacks Consensus Estimate and up 4 cents year over year. The year-over-year increase was primarily driven by a rise in equity as well as robust growth in same store net operating income (“NOI”).
Health Care REIT enjoys a healthy balance sheet position and the latest offering indicates the REIT’s consistent access to low-cost capital. Further, it marks the largest single piece of offering in the history of Health Care REIT. Importantly, this offering will enhance the company’s financial flexibility and liquidity position, going forward.
Health Care REIT currently has a Zacks Rank #3 (Hold).
Investors interested in the REIT industry may consider stocks like Hudson Pacific Properties, Inc. HPP, Strategic Hotels & Resorts, Inc. BEE and Arbor Realty Trust Inc. ABR. All these stocks sport a Zacks Rank #1 (Strong Buy).
Note: FFO, a widely accepted and reported measure of the performance of REITs, is derived by adding depreciation, amortization and other non-cash expenses to net income.
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