Senior Care Market In Confused State
Stocks are gyrating wildly, sometimes for good reason and other times not so much. Okay, I have to admit that I am confused now. When Brookdale came out with poor second quarter results, its stock tanked, as it should have. But then Capital Senior Living came out with a very upbeat quarter, and its stock jumped 10%, as it should have, but then dropped by 15% over the next several days, for little reason, other than perhaps in sympathy with Brookdale shareholders. Genesis Health announced a good quarter, and its stock jumped by 10%, as it should have, and kept on rising to a 26% gain in a week when the market as a whole tanked. Hell, it didn’t even budge when China devalued its currency. ... Read More »More Troubles For HCP
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... Read More »HCP funds future growth
Looking to fund its future growth, HCP recently priced $750 million of senior unsecured notes with a fixed rate of 4.00% for 10 years. The price to investors was 99.126% of the principal amount, representing a yield-to-maturity of 4.107%, and a spread over Treasuries of about 195 basis points. After expenses, the net proceeds of the offering are approximately $736.5 million, which HCP plans to allocate to pay off a portion of the debt used for its recent $849 million acquisition of 35 private pay seniors housing communities from Chartwell and its $161 million acquisition of a medical office building in Philadelphia, Pennsylvania. This offering follows HCP’s amending of its master lease... Read More »How HCP Will Deal With Its Largest Tenant
HCP plans to sell up to 50 HCR ManorCare SNFs, but will it really work? The REIT HCP announced in February that it will try to sell up to 50 of its HCR ManorCare skilled nursing facilities to try to improve on the property level lease coverage ratio that is below 1.0x. The way it is going to work is that HCP will credit the annual lease payments in an amount equal to 7.75% of the sales proceeds. Using an example of a current 0.80x lease coverage on a facility to be sold, if it sold at a market cap rate of 12% to 12.5%, there would be no improvement in lease coverage. In fact, the coverage would decline slightly, so HCP would really not be any better off. One equity analyst did the math and... Read More »Schedule a demo
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