Health Care REIT Inc. (NYSE:HCN) announced the pricing of its underwritten public offering of 12 million shares of common stock at $58.75 per share on Aug. 8. The offer was increased in size from 11 million shares announced this week.
The Toledo-based real estate investment trust (REIT) estimates that the gross proceeds from this offering will be approximately $705 million or $811 million if the underwriters’ option is exercised in full. The company granted underwriters an option to purchase up to an additional 1.8 million shares during the next 30 days.
The company intends to use the net proceeds from this offering to repay advances under its unsecured lines of credit, to pay other outstanding indebtedness and for general corporate purposes, including investing in health care and seniors housing properties, according to the information announced on the Business Wire Aug. 8.
“Health Care REIT continues to differentiate itself through the consistency of its relationship investment program, as evidenced by $602 million of second quarter investments from existing relationships. Total investments of $1.1 billion during the quarter brings our total year-to-date investments of $1.9 billion and drives a three-cent increase in our 2012 earnings expectations,” stated George Chapman, chairman, CEO and president of Health Care REIT.
Bank of America Merrill Lynch, Morgan Stanley, UBS Investment Bank, Barclays Capital, J.P. Morgan and Wells Fargo Securities are acting as joint block-running managers for the current public offering by Health Care REIT.
“Our ability to source high-quality investments in the seniors housing and (medical office building) sectors has significantly strengthened the quality of our portfolio and increased our private pay percentage. As we move into the second half of 2012, our investment pipeline remains strong as we continue to execute our business plan,” Chapman stated.
Health Care REIT announced Aug. 6 that it anticipates acquiring $925 million of seniors housing and medical office properties in the third quarter of 2012. The estimate is based on acquisitions closed so far in the third quarter and potential acquisitions for which the company has signed a letter of intent or other customary preliminary documentation.
The company believes that the potential acquisitions will include properties that, collectively, generate 97 percent of their revenues from private pay sources.
The anticipated acquisitions are expected to include approximately $583 million of senior housing triple-net lease properties, approximately $271 million of senior housing operating properties where the company is the majority owner, and approximately $71 million of medical office properties.
Approximately 81 percent of the potential acquisitions are expected to involve existing portfolio partners, consistent with its relationship investment strategy. The aggregate acquisition amount includes approximately $134 million of debt that the company expects to assume at an average interest rate of 5.6 percent.
The stock offering is being used to raise capital for investments already made and new investments, taking advantage of the positive environment in the senior housing and medical office building markets, according to Jeff Miller, executive vice president of operations at Health Care REIT.
The company believes that premier senior housing operators and health care systems choose to develop long-term business partnerships with Health Care REIT because of its reputation as a trusted capital partner with unique and sophisticated structures that meet the operators’ capital and operational needs.
Health Care REIT’s capital programs, combined with its comprehensive planning, development and property management services, make it a single-source solution for acquiring and developing real estate assets that include senior living communities, medical office buildings, inpatient and outpatient medical centers, and life science facilities.
All amounts reported by the company are estimates that are subject to change. The company’s anticipated acquisitions are in various stages of development and some or all transactions may not be completed on currently anticipated terms or within expected time frames, or at all.
On Aug. 6, the company announced operating results for its second quarter ending June 30, 2012. As previously announced, the board of directors declared a cash dividend of 74 cents per share for the quarter, compared to 71.5 cents per share for the same period in 2011, representing a 3.5 percent increase.
The cash dividend, scheduled to be paid Aug. 20, will be the company’s 165th consecutive quarterly dividend payment.
During the recent recession, the company generated one-year and five-year cumulative total returns of 21.1 percent and 71.3 percent, respectively. During the past 41 years, its investment strategy has generated a 16 percent average annual return for its shareholders, according to its 2011 annual report.
Health Care REIT Inc., a Standard & Poors 500 company with headquarters in Toledo, is a real estate investment trust that invests across the full spectrum of senior housing and health care real estate. The company’s diversified $15.8 billion portfolio consisted of 1,010 properties in 46 states and Canada, according to its website.
The company relocated its home offices into in the former headquarters of Dana Corp. at 4500 Dorr St. in September 2010. At that time, it employed about 95 people, Miller said.
He reported that the company has added positions as its portfolio has grown. It now employs a total of 365 employees across the country with about 140 of them based in Toledo.
The Senior Living Group and Medical Facilities Group are located in Toledo.
The firm’s Management Services Group is based in Jupiter, Fla. The company operates regional offices in Atlanta, Dallas, Phoenix, Minneapolis, Newport Beach, Calif., and Brentwood, Tenn.
