HCP Inc.HCP

Morningstar Rating

Stock Research and Analysis

by David Rodziewicz

HCP is a diversified health-care real estate investment trust with a portfolio located primarily in the South and West. We think the company has done a good job of moving its portfolio mix toward more favorable property types, such as medical office Read more

Bulls Say

In 2008, HCP reduced its exposure to Sunrise Senior Living SRZ and Tenet THC, two of its more risky tenants.

Most of the company's real estate is unencumbered, and it has $1.4 billion in undrawn capacity on its revolving credit facility, giving the firm more than one option to manage near-term debt maturities.

Continued increases in health-care spending across all sectors should cater to HCP's diversified approach. Read more

Bears Say

If Sunrise Senior Living were to fail, it would materially disrupt HCP's senior living portfolio, which accounts for nearly 13% of total base rent.

If the economic recession is longer or deeper than expected, poorly capitalized health-care companies could fail, impairing HCP's ability to raise near-term rents.

Depending on management's capital-allocation decisions, a dividend cut is possible during the next few years.

If long-term interest rates rise, in addition to already-increased credit spreads, this firm's cost of capital would increase, pressuring asset values and reducing cash flow. Read more

Strategy

HCP's strategy is focused on establishing a diversified health-care portfolio. Although a majority of the company's portfolio is senior housing, it also has a meaningful presence in MOBs and life science Read more

Management

HCP earns a B for stewardship, in our opinion. James F. Flaherty III has been chairman of the board since 2005 and CEO since 2003. Flaherty's depth of experience in banking, capital markets, and health care is an ideal combination for running HCP; however, Read more

Profile

HCP is a diversified health-care real estate investment trust. Established in 1985, this Long Beach, Calif.-based REIT has an interest in nearly 800 health-care facilities Read more

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