Financial problems at the UK’s largest care provider results in a write-down by HCP.
HCP just can’t get a break. While the problems with its major tenant HCR ManorCare have been in the spotlight for a while, in late June the REIT announced that it will be taking another write-down. This time it relates to a $215 million investment made three years ago in senior notes issued by Four Seasons Health Care, the largest elderly care provider in the UK with about 470 care homes. Well, it looks like Four Seasons is having financial difficulties from increased labor and corporate costs, lower occupancy from above-average winter death rates and an increase in care home embargoes. The non-cash write-off this time? A mere $42 million, which even though it will hardly put a dent in HCP’s financial condition, it leaves investors wondering what else may be lurking in that $21 billion balance sheet. And the timing, just the week before, of the departure of HCP’s chief investment officer, also a holdover from the Jay Flaherty period, raised some eyebrows. HCP’s stock hit a new 52-week low in late June, with some people seeing it as a screaming buy with a 6.0% yield. Maybe.
