Trade Idea – HCP

On 29 January 2018 the HCP shares have been sold at USD 24. The realized return over appr. 3 weeks before any taxes and fees is 2.56%.

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Trade Idea – HCP

HCP is an integrated REIT that invests mainly in healthcare related real estate portfolio (senior housing, life science and medical office) in the US. Since 1985 it has been a publicly listed company and is the first healthcare REIT selected into the S&P 500 index.
Mostly inorganic type of growth strategy characterized its development.

  • In 1999 it completed a merge process with American Health Properties, which was the largest transaction ever closed in the healthcare REIT sector at that time (USD 1bn deal value). Its assets under management reached USD 2.5bn.
  • With the acquisition of CNL Retirement Properties in 2006 for USD 5.3bn value it practically doubled its size.
  • In 2007 it created the life science platform through the USD 2.9bn value purchase of Slough Estates (83 properties).
  • In 2012 it acquired a USD 1.7bn senior housing portfolio from a joint venture between Emeritus and Blackstone.
  • In 2016 the spin-off of Quality Care Properties (QCP) into an independent publicly-traded REIT has been completed.

 

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Historical share price development of HCP (source: Yahoo Finance)

Currently the company is on the path of revitalizing/transforming its portfolio (reducing Brookdale concentration, announced sales process related to the remaining UK holdings, reentering the Boston life science market).
The latest (2017 Q3) report provided lower net income and FFO numbers compared to the previous comparable period.
Many REITs are underperforming nowadays on the basis of increasing rates, however HCP still offers significant expected dividend yield (over 6% per annum).
Long position in HCP has been opened on 18 January 2018 at USD 23.4.