Seniors Housing Weekly Update - REITs Raising Capital For Deals
April 1, 2014
REITs Raising Capital For Deals
We keep waiting for the health care REIT sector rebound, at least from a stock market perspective. The first quarter of this year ended with a fairly even split among the REITs, with four dropping in price in March, three increasing and five basically flat for the month. While the price levels are almost all higher than the start of the year, they are still mostly between 20% and 30% below their highs of 2013. But guess what, interest rates have still not moved much, and cap rates are still low. Will we be seeing some renewed REIT investment activity? The answer would be yes, based on the capital raises that have resumed. HCP increased its credit facility by $500 million to $2.0 billion priced at LIBOR plus 92.5 basis points. National Health Investors announced a new $700 million credit facility that is on top of a $200 million convertible note issue it priced last week with a 3.25% coupon. Finally, Omega Healthcare Investors sold $400 million of senior notes with a 4.95% coupon. That’s a lot of dry powder ready to invest, so we will wait for the announcements.