24/7 Wall St. » HCN

Expected Upside in Lifestyle-Oriented REITs (HCN, SNH, UDR, ESS, CPT, RLJ, DRH, HHC, GGP)

Paul Ausick — Thu, 10 Nov 2011 19:28:00 +0000

The number and types of real estate investment trusts (REITs) is both large and varied, and, thus, better taken in smaller chunks. Our focus today hits those REITs that offer senior living centers, apartment buildings, and some mixed-use properties.

We’ve also culled some stocks from today’s list because either they don’t pay a dividend — or pay a low dividend for a REIT — or the company has already surpassed its current median target price. The companies we’ve selected are Health Care REIT, Inc. (NYSE: HCN), Senior Housing Properties Trust (NYSE: SNH), UDR, Inc. (NYSE: UDR), Essex Property Trust Inc. (NYSE: ESS), Camden Property Trust (NYSE: CPT), RLJ Lodging Trust (NYSE: RLJ), Diamondrock Hospitality Co. (NYSE: DRH), The Howard Hughes Corp. (NYSE: HHC), and General Growth Properties Inc. (NYSE: GGP).

Howard Hughes Corp. is not a REIT, but its operations are a near-identical fit with those of the trusts. It does not pay a dividend, but its upside potential is significant and we include it here as a “quasi-REIT.”

All data from Yahoo! Finance, and share prices were collected in the early afternoon today.

Health Care REIT, Inc. (NYSE: HCN) has a median target price of $53.00 from 13 brokers. Shares are trading today at $49.61, for an implied gain of $3.39, or 7%. HCN’s forward P/E is 13.11 and the company pays a dividend yield of 5.6%. The stock’s 52-week trading range is $41.03-$55.21, and at today’s price that’s about 21% above its 52-week low and 10% below the 52-week high.

HCN today completed a secondary offering of 12.65 million shares priced at $50/share. The company raised $632.5 million, which it plans to use for future investment, to pay down debt, and for general corporate purposes. Shares had been trading near the target price in advance of the offering. The attractive dividend yield makes the stock worth considering.

Senior Housing Properties Trust (NYSE: SNH) has a median target price of $24.00 from 7 brokers. Shares are trading today at $21.27, for an implied gain of $2.73, or 13%. SNH’s forward P/E is 7.31 and the company pays a dividend yield of 7%. The stock’s 52-week trading range is $19.09-$24.66, and at today’s price that’s about 11% above its 52-week low and 14% below the 52-week high.

Senior Housing Properties pays the highest dividend of any stock in this group and there is still headroom a nice implied gain. The 52-week high is barely above the target price, which could indicate a target price boost soon.

UDR, Inc. (NYSE: UDR) has a median target price of $27.00 from 18 brokers. Shares are trading today at $24.31, for an implied gain of $2.69, or 11%. UDR’s forward P/E is 17.12 and the company pays a dividend yield of 3.2%. The stock’s 52-week trading range is $20.04-$27.26, and at today’s price that’s about 21% above its 52-week low and 11% below the 52-week high.

UDR has been able to raise its rents due to its strategy of buying apartment properties in cities where job growth is better than average and higher priced housing is performing better.

Essex Property Trust Inc. (NYSE: ESS) has a median target price of $145.00 from 20 brokers. Shares are trading today at $135.09, for an implied gain of $9.91, or 7%. Essex’s forward P/E is 20.9 and the company pays a dividend yield of 3%. The stock’s 52-week trading range is $105.60-$148.44, and at today’s price that’s about 28% above its 52-week low and 9% below the 52-week high.

Essex’s target price is lower than its 52-week high and its forward P/E is higher than average as well, indicating that the stock could be priced at very near its full value. The 7% implied gain is further evidence that expectations for growth are not all that rosy.

Filed under: REIT Tagged: CPT, DRH, ESS, GGP, HCN, HHC, RLJ, SNH, UDR

Corporate Bond Floodgates Open Wide (IBM, JNJ, DELL, HD, AGN, AXP, ATK, AON, HPQ, MHS, HSP, HCN, PH, GR, USB, BRK.B, FTE, CM)

Administrator — Wed, 08 Sep 2010 16:16:42 +0000

If corporations have high credit ratings, there is an opportunity to borrow for rates that have not been seen in years (or ever). August saw key bond issuances at extremely low rates from Johnson & Johnson (NYSE: JNJ) and from International Business Machines Corp. (NYSE: IBM), but this is nothing compared to what we are seeing in September. We are not even a full work week into the month, there was Labor Day, and there is Rosh Hashanah starting Wednesday at sundown. This month is already nearly double in planned corporate bond issuances from September-2009 with names such as Dell Inc. (NASDAQ: DELL), Home Depot Inc. (NYSE: HD), Allergan Inc. (NYSE: AGN), American Express Company (NYSE: AXP), Alliant Techsystems Inc. (NYSE: ATK), AON Corp. (NYSE: AON), Hewlett Packard Co. (NYSE: HPQ), Medco Health Solutions Inc. (NYSE: MHS), Hospira Inc. (NYSE: HSP), Health Care Reit Inc. (NYSE: HCN), Parker Hannifin Corporation (NYSE: PH), Goodrich Corp. (NYSE: GR), and U.S. Bancorp (NYSE: USB). Berkshire Hathaway Inc. (NYSE: BRK.B) is getting a bond offering off for its BNSF rail unit and cross-border we have seen set offerings for France Telecom (NYSE: FTE), Canadian Imperial Bank of Commerce (NYSE: CM)

In August, IBM (NYSE: IBM) sold bonds at record low rates at 1% for 3-year notes, which would lead one to wonder why it did not issue more to go out on the curve. Johnson & Johnson (NYSE: JNJ) sold $1.1 billion via $550 million in 10-Year notes at 2.95% and $550 million in 30-Year bonds at 4.5%.

Filed under: Bonds, Dividend, Economy, Secondary Offering, Shareholder Issues Tagged: AGN, AON, ATK, AXP, BRK-B, CM, DELL, FTE, GR, HCN, HD, HPQ, HSP, IBM, JNJ, MHS, PH, USB

Top Analyst Upgrades (BCS, BBBY, DLTR, EMC, GHL, HCN, NTAP, SNH, WSM, INTC)

247wallst — Thu, 27 Aug 2009 12:19:30 +0000

These are this morning’s top pre-market analyst upgrades, initiations, and positive broker research calls we have seen early this Thursday morning from Wall Street firms:

Barclays (BCS) Raised to Outperform at KBW.
Bed Bath & Beyond (BBBY) Started as Buy at Citigroup.
Dollar Tree (DLTR) Raised to Overweight at Barclays.
EMC Corp (EMC) Started as Buy at Citigroup.
Greenhill & CO. (GHL) Raised to Neutral from Sell at Goldman Sachs.
Health Care REIT (HCN) Started as Outperform at Wells Fargo.
NetApp (NTAP) Started as Buy at Citigroup.
Senior Housing (SNH) Raised to Outperform at Wells Fargo.
Williams-Sonoma (WSM) Started as Buy at Citigroup.

Elsewhere, JPMorgan is maintaining a cautious stance on Intel Corp. (NASDAQ: INTC) on poor demand expectations, but it raisedx its target to $17.00 from $12.00.

JON C. OGG

Posted in Analyst Calls Tagged: BBBY, BCS, DLTR, EMC, GHL, HCN, INTC, NTAP, SNH, WSM

Health Care REIT Raising Cash (HCN, SRZ)

247wallst — Wed, 03 Sep 2008 15:18:01 +0000

Health Care REIT, Inc. (NYSE:HCN) has filed to sell up to 6,000,000 shares of common stock in a secondary offering. These shares of common stock to be sold are going to registered under the REIT’s existing shelf registration statement on file with the SEC. The underwriting syndicate consists of Deutsche Bank, Bank of America, UBS, and Merrill Lynch. The underwriters will receive a 30-day option to purchase up to an additional 900,000 shares to cover over-allotments.

Net proceeds from the offering will be used to invest in additionalsenior housing and health care properties, and the proceeds will beused to repay borrowings under Health Care’s unsecured line of credit.Just yesterday the company announced it would acquire its 90% interestin a venture of 29 properties from Sunrise Senior Living Inc. (NYSE:SRZ) in a deal that would be financed with approximately $365.4 millionin cash, plus a 90% interest in the $309 million of existing debt heldby the venture.

Shares of Health Care REIT closed down over 3% at $50.10 and shares areindicated down over 1% more in after-hours trading. Its 52-weektrading range is $39.26 to $53.98.

Jon C. Ogg
September 3, 2008