Zacks_Analysts' Blog : HCP Buys HCR Manor Care - Analyst Blog

HCP, Inc. (HCP), a real estate investment trust (REIT), has acquired 334 skilled nursing facilities of HCR Manor Care for a total purchase price of $6.1 billion in cash. HCR Manor Care will continue to operate the facilities under the long term triple net lease agreement under which the lessee pays all taxes, insurance and maintenance expense on the property.

Based in Toledo, Ohio, HCR Manor Care is a provider of short-term post hospital-rehabilitation, complex medical services and long-term care facilities. In recent years, HCR Manor Care has provided cost -effective services thereby saving patients from costly and delayed hospitalizations. 

This transaction is a strategic move by HCP to acquire facilities in premium markets, which have high barriers to entry. The transaction further consolidates HCP’s position in the post acute and skilled nursing sector. HCP has expanded relationships with experienced healthcare operators who lease on a long- term basis thereby, preventing the company from short term market swings and at the same time providing a stable revenue source.

HCP, Inc. is the largest real estate investment trust in the US engaged in acquiring, developing, managing, selling and leasing a diverse portfolio of healthcare real estate related properties. HCP currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

We are also maintaining our long-term Neutral recommendation on HCP. One of the company's competitors, Health Care REIT Inc. (HCN) currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.