HCN Guides Q2 Acquisitions; Offers Shares - Analyst Blog

In order to strengthen its focus on high-barriers-to-entry affluent markets around the world, Health Care REIT Inc. HCN stated its projected acquisition pipeline of around $414 million of seniors housing and medical office assets for second-quarter 2014. This is based on the acquisition completions and deals inked so far.

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, we believe that such strategic investments in high-quality properties will help the company enhance its portfolio quality and consequently prove accretive to its earnings.

In a separate announcement, Health Care REIT also disclosed its 12 million common shares offering and granted underwriters an option of 30 days to buy up to 1.8 million of additional common shares. The company expects to use the generated proceeds from this offering to pay off advances under its main unsecured credit facility as well as meet investments needs in health care and seniors housing assets.

JPMorgan Chase & Co. JPM, The Goldman Sachs Group, Inc. GS, BofA Merrill Lynch and Morgan Stanley MS will assist Health Care REIT in this equity offering as joint book-running managers. Notably, this real estate investment trust (REIT) exited the first quarter with cash and cash equivalents of $185.9 million, up from $158.8 million as of Dec 31, 2013. While this public offering will result in share dilution for Health Care REIT, the payment of debt is encouraging as it would reduce interest expenses.

Health Care REIT currently carries a Zacks Rank #3 (Hold).

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