HCP

[hendi_alex]

I've been trying to dump HCP for a while. Last attempt was in selling June $40 calls for about $1.90. Finally decided to close the calls last week for 15 cents and then sold HCP straight out for $$38.38. Sure am glad that I didn't wait on expiration, as shares are trading today for near $37.

I'm bullish on REITs long term, but think that they will see a bottom far down from current levels, with the blue chips like SPG yielding closer to 5% versus its current 3%+ yield. I'm currently accumulating my two REIT funds KBWY and ROOF, but very slowly and in very small increments. Probably won't add more shares until after at least a 5% drop from current levels. Would love to add some exposure via VNQ which holds mostly higher quality larger cap REITs. Won't add that until the yield is north of 4.5%-5.0%. I'm confident that day is coming, just need to be very patient and keep the cash available to buy when the opportunity comes. Instead of buying VNQ, may instead construct a motif and buy a basket of favorites. With the motif there are no management fees, there are low trading costs, and the basket approach offers easy, inexpensive diversification within the sector.

[earthtodan]

It's been tough chasing down REITs. VTR is almost at the 5% yield marker and I'm interested in adding, but anything could happen. REITs could continue downhill in anticipation of an interest rate rise, and then keep going down when it actually happens. Or, the market could get tired of waiting and start bidding up yield again tomorrow, and we never see these levels again.

Personally, this quandary is resolved by the fact that I have no cash in my Roth IRA, where I hold REITs. But if VTR gets down to the $60 level I might actually buy it in my taxable account, and then just learn to deal with the resulting paperwork.

[Kerim]

I'm getting pretty itchy to pick up more shares of HCP at these prices. The yield is a bit over 6 percent at the moment. I wouldn't make a huge buy, but rather just start accumulating. If the price continues down, keep lowering my average cost bit by bit. Between the general market / interest rate fears and the Manor Care problems, this could be one of those great opportunities to get in at a nice price / yield that does not come around too often for a well-run operation in a great space like HCP.

Of course, it could go sour as well. But good opportunities are often bundled with a whole bunch of uncertainty.

[hendi_alex]

Lots of specific issues can affect one REIT or another depending up the area of specialization. I'm much more comfortable blanketing the space via ETF or motif. IMO the diversification is well worth the small management fee. Thus far my selections have focused on the smaller cap REITs. Am looking forward to putting together a custom motif in the next few months.

[Roadmap2Retire]

I just finished my valuation of HCP (article can be found here) - and I agree. There are some serious issues in the HCR Manor problems, esp since they are the largest tenant (about 25% of revs come from HCR Manor). In addition, HCP owns a 10% stake in HCR Manor.

But like Kerim said, in difficult times like these - good opportunities present themselves. Some great opportunities to good forward though. The management has indicated with some strong signals to expansion in Europe - $1B invested in their international expansion with new office in London and potential new investments in mainland Europe.