Uncommon Financial Wisdom

Health Care REIT after the 3rd Quarter November 17, 2011

HCN continues its great performance.
$644 M in new investments
FFO growth of 13% for the quarter
FAD growth of 7% for the quarter
FFO payout drops to 80% while FAD payout drops to 91%
Raised $632M in capital in November
Fixed charge coverage 2.5X
Debt to unappreciated Book Cap 43%
Dividend growth 4% for quarter
93% MOB Occupancy Rate
11.6% return over the last year
14.5% return over the last decade

This is the 11th year I have been investing in HCN. The strategy employed over the last 5-7 years is to move away from skilled nursing into medical office buildings, senior housing, and campus complexes with the whole medical facilities range [housing, assisted living, skilled nursing, medical office building, acute care hospitals]. Currently they are down to 27% skilled nursing and up to 18% MOBs and 46% in senior housing [either triple net leases or operating]. Geographically they are concentrated on the two coasts.

Currently the dividend yield to cost is 5.9%. My personal yield to cost is over 12%. This is a strong performer and in my opinion will continue to deliver great performance with the demographic tail wind pushing it along.