05-07-2015, 05:24 PM
(05-07-2015, 02:09 PM)Kerim Wrote: In the "What Did You Buy Today" thread I saw that Forward Dividends just picked up some more HCP, and Alex is playing with it too. I've been looking at it myself again lately, so I though I'd dust off this here thread and see if people would share more detailed thoughts about it.
I want to increase my exposure to both healthcare and REITs. I'm mostly looking at the "big 3" -- VTR, HCN, and HCP. I'm sure many of the others are great, and may be able to grow a lot faster, but I'm not in a speculating mood and take comfort in the larger capitalization.
Of the big 3, I am mostly attracted to HCP given its 30-year streak of dividend increases and higher starting yield. Its dividend is growing much more slowly than VTR's has in recent years, but HCP's starting yield is more than 2 percent higher. A bird in the hand!
There has been a lot of concern about troubles with HCP's biggest (by far) tenant HCR ManorCare. I just quickly read through the Q1 earnings call transcript, where management fielded a lot of questions on the subject. It seems like a real issue, and HCP took a hit restructuring leases for HCR, but they insist that they got value out of the deal. Of course they'd be inclined to put on a calm front, but I did come away reassured. Seems like they understand the problems and are managing around it.
Anyway, so I'm inclined to pick up a bit more HCP. But I'd love to hear more pros and cons, or arguments for either VTR or HCN instead (or yes, even OHI).
Thanks!
Kerim,
The dividend streak and the valuation is what attracted us to HCP. The company has not seen the gains the other healthcare REIT's have enjoyed over the last 4-6 years due to the issues that have plagued the company. However, the recent renegotiation of the HCR ManorCare leases is what tells us that management is more concerned with the end game here and is ready to take its lumps and move forward while diversifying the income stream. Additionally, the expansion overseas to the U.K. seems to be continuing as planned. This helps from a geographic diversification and a hedge as the market in the U.S. has seen rapid expansion post ACA and therefore potential for more competitive leasing opportunities moving forward (bad for lessor). At current levels, it just feels like much of the bad news is priced on. We bought a bit early but Alex made a great move already with his timing yesterday before ex-div.
Good luck with your decision.
FD