TOLEDO-Healthcare REIT Inc.'s (HCN) Q3 earnings call focused a great deal on the close to $2 billion acquisition of Sunrise Senior Living, which was announced in August. Along with the positives of that acquisition, scheduled to close in 2013, came information about dispositions of which there has been $250 million so far in 2012, and same-store NOI, which increased by 3.6%, partly due to a 7% increase in the REIT's senior housing operating portfolio.

According to HCN's chairman, CEO and president George L. Chapman, when the Sunrise Senior transaction closes in early 2013, "investments during the last year will total approximately $12 billion." Chapman added that HCN has accelerated joint venture buyouts from the Sunrise portfolio. As a result, "by the middle of 2013, we expect to own 100% interest in 115 Sunrise communities, and a minority interest in 10 communities for a total investment of $4.3 billion," he says.

Scott Brinker, executive vice president of investments, added that HCN signed an agreement to sell Sunrise Senior Living's management company to a partnership of KKR and Beecken Petty for $130 million, with HCN retaining a 20% ownership interest. Furthermore, "We believe we're in a great position entering 2013, having prefunded our Sunrise transaction," Brinker says, referring to the $1.7 billion stock offering that helped with the takeover. "We're also accelerating our disposition efforts, and can say that we're all very excited about our platform, portfolio and growth prospects heading into next year."

HCN has sold $250 million so far in 2012, with $450 million pending in the fourth quarter. Brinker noted that, of the total $700 million in dispositions, approximately $500 million of that sold are skilled nursing facilities. "And of the remaining $450 million, there is about $80 million in debt on those properties," he commented. "The bottom line is, it's a great time for us to evaluate the portfolio; it's a good environment for us to sell in."

Other financial highlights during the quarter included:

A Q3 normalized FFO of $0.91 per share and normalized FAD of $0.82 per share.
Reduction of debt to underappreciated book capitalization to 38% from 45% during the same period a year ago.
Funding of a $250 million Canadian denominated unsecured term loan.
Increase of the quarterly cash dividend do $0.765 per share.

Instant Insights /

Sunrise Acquisition, Increase NOI Highlight Healthcare REIT's Q3

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