Zacks_Analysts' Blog : Health Care REIT Beats by a Sliver - Analyst Blog

Health Care REIT Inc. (HCN), a real estate investment trust (REIT) that operates senior housing and health care real estates, reported third quarter 2011 FFO (funds from operations) of 85 cents per share compared  with 31 cents per share in the year-earlier quarter.

Funds from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

Excluding one-time items, recurring FFO in the reported quarter  came in at 89 cents per share, compared  with 79 cents in the year-ago quarter. Recurring quarterly FFO per share was ahead of  the Zacks Consensus Estimate by a penny.

Total revenue during the reported quarter stood at $384.8 million compared with $168.9 million in the year-earlier quarter. Total revenue easily surpassed the Zacks Consensus Estimate of $374 million.

During the reported quarter, Health Care REIT made gross investments of $644 million, including $569 million in acquisitions.

The investments include $308 million for ten seniors housing communities operated by Chelsea Senior Living and $146 million for 630,000 rentable square feet of medical office buildings. The medical office buildings are over 95% occupied. The remaining investments were in high quality seniors housing and health care facilities.

During the quarter, the company disposed assets worth $298 million and for full-year 2011, Health Care REIT expects to sale assets worth $350 million.

Health Care REIT declared a quarterly dividend of 72 cents per share during third quarter 2011, up considerably from 69 cents paid in the year-earlier quarter. Moreover, the company  declared a quarterly cash dividend of 74 cents per share for February 2012.

At quarter end, the company had cash and cash equivalents of $136.7 million. For full-year 2011, Health Care REIT updated its FFO guidance from the range of $3.34 – $3.40 per share to a range of $3.38 – $3.43. We remain encouraged by the strong quarterly results of the company and expect it to meet its earnings expectation in the coming quarters.

Health Care REIT currently retains a Zacks #4 Rank, which translates into a short-term Sell rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, HCP Inc. (HCP) has a Zacks #3 Rank, which translates into a short term Hold rating.