Health Care REIT Inc. (HCN), a real estate investment trust (REIT) that operates senior housing and healthcare real estate, has recently announced that it has completed fiscal 2010 second quarter investments worth $292.9 million compared to $177.7 million in the year-earlier quarter.
The year-over-year increase in gross investments in healthcare facilities show positive signs of market stabilization. Health Care REIT has continually invested in assisted and independent living facilities as demand for these facilities is set to increase with an aging Baby Boomer generation.
During second quarter 2010, the company sold assets worth $14.6 million resulting in net new investments of $278.3 million, compared to $78.7 million of asset sales in the year-ago quarter generating net new investments of $98.9 million. For the first six months of the current fiscal, Health Care REIT completed gross investments valued at $877.6 million, partially offset by $47.5 million of asset sales and loan payoffs resulting in $830.1 million of net new investments. This has increased significantly from $351.4 million worth of gross investments during the first half of fiscal 2009, partially offset by $123.0 million of property sales and loan payoffs, which resulted in $228.4 million of net new investments.
Health Care REIT invests across the full spectrum of senior housing and healthcare real estate properties. Headquartered in Toledo, Ohio, the company also provides an extensive array of property management and development services. Founded in 1970, the company was the first REIT to invest exclusively in healthcare facilities. Health Care REIT provides senior housing operators and healthcare systems with a single source for facility planning, design and turn-key development, property management, and monetization or expansion of existing real estate.
However, deep cuts in Medicare have been proposed over the next five years by reducing or freezing payments to skilled nursing facilities, hospitals, and other healthcare providers. With a large portion of revenues being determined by government payout rates, forces beyond the company’s control could negatively affect revenue and operator coverage ratios. Consequently, we maintain our Neutral rating on Health Care REIT with a Zacks #4 Rank, which translates to a short-term ‘Sell’ recommendation.
Read the full analyst report on “HCN”
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