HCP In Hot Water Again
We are sure that management at HCP, Inc. is happy that they spun out the HCR ManorCare assets to a new REIT, since they have not had to deal with the continuing rent shortfall, which started when HCP still owned the assets. But leveraged investments of any kind seem to be taking their toll across the board. From July 2012 through May 2015, HCP funded a total of $257 million under a collateralized mezzanine loan facility with Tandem Health Care. This loan matures in nine months and has a weighted average interest rate of 11.5% (ouch). In tandem with this loan, there is a $257 million syndicated senior loan that matures in six months. Through sales of various SNFs, most of the net proceeds... Read More »
Senior Care Stocks Swoon….Again
The 2017 Trump rally has left senior care and healthcare REIT stocks behind. It looks like the so-called Trump stock market rally is continuing into 2018. Weirdly, several senior care stocks shot up in the first day of trading yesterday. Where were investors last year? Unfortunately, 2017 was about as bad as it gets for our sector. Only one company posted an increase in price, and that was Kindred Healthcare, which is actually exiting our sector with its last sales of its SNFs. So, everyone else declined, and almost all of them by double digits, in a year when the rest of the market posted extraordinary returns. The NASDAQ Composite was up 28.2%, the Dow was up 25.1% and the S&P 500... Read More »
Kindred Healthcare Sold and Dismembered
The Carlyle Group, TPG and Humana are buying Kindred Healthcare and splitting the company apart. I know I am supposed to be full of holiday cheer this time of year, but yesterday’s official announcement that Kindred Healthcare will be sold to Humana, TPG and The Carlyle Group, and dismembered for just $9 per share, well, that has just made me a little down. Why? Because I was an early believer in Kindred’s goal to be the post-acute provider of choice, with its home health and hospice, skilled nursing, LTAC and rehab businesses, all in about 17 concentrated locations. There was no other company quite like it, anywhere, and they were way ahead of the curve. Perhaps too far ahead, and that... Read More »
Big Is Not Always Better, But Capital Structure Counts
Two looming hospital system mergers will create the largest health systems in the country. I assume most of you have heard about the two potential not-for-profit hospital system mergers that will create the largest systems in the country, larger than even HCA, the biggest for-profit hospital company. In one way, this bothers me because with one of them, the combined entity will have 191 hospitals, plus all the ancillary businesses. I just don’t understand how that can be run efficiently. The for-profit chains did their own large mergers, and a few of them are suffering the results and shedding hospitals to pay down debt. But there is one big difference with not-for-profit mergers, and that... Read More »
Investing In The Seniors Housing Sector
There are a lot of reasons to invest in seniors housing, but now some people are making up numbers to bolster the case. I realize there is a lot of general excitement about investing in the seniors housing sector. And there should be, despite the current headwinds. The population is aging, the quality of the properties is at its highest, the choices for consumers are wider than ever before. But what really gets me is when people start exploiting the situation and simply fabricate numbers to make their investment case. Take the case of a relatively new retail investment fund investing in seniors housing development and acquisitions. In one of their promotional pieces, they stated that the... Read More »Schedule a demo
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