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Health Care REIT's Gross Investments Over $3B in 2010 - CEO Chapman Sees Great Opportunities Ahead

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Published on Jan 14, 2011

http://www.reit.com Health Care REIT (NYSE: HCN) was founded in June 1970 (under the name Health Care Fund) as the first publicly traded health care REIT. Today, the company is a leading player in the health care sector. George Chapman, chairman, president and chief executive officer of Health Care REIT, sat down with REIT.com to discuss his company's growth plans and dealing with an evolving health care market.

"All of us in the health care industry are dealing with constant change," Chapman said. "Most recently, in the acute care space the world has changed because so many of our procedures are outpatient procedures today. All of that requires different types of real estate platforms, so all of us in the health care REIT sector are really required to look at what has become somewhat outmoded and could become obsolete in five, 10 or 15 years and replace it with better facilities or renovate existing facilities into more customer-friendly spaces."

Health Care REIT started as a skilled-nursing home company but now maintains a diverse portfolio within the health care space as part of its core strategy, Chapman said.

"We invest from early stage senior housing all the way through acute-care hospitals," Chapman said. "We think this strategy gives us the opportunity to pick the best risk-reward situation at any given time."

In 2010, Chapman said all of the sectors in which it operates (skilled nursing, assisted living and acute care) had net operating income (NOI) upticks. Independent-living, which tends to be demand driven as opposed to need-driven, was among the hardest hit in the recession but Chapman said even that segment has maintained occupancy levels in the 88 percent area.

When 2010 began, Chapman said he was optimistic about his company's prospects and projected acquisitions in the $1 billion to $1.5 billion range. However, the company has exceeded even those positive expectations.

"What happened was that people have come to us looking for a relationship-oriented company. Part of the reason they want to work with us is that specialty lenders have left the space, the government agencies do a good job but are a little slower than they like, and, frankly, some of the private equity funds that invested in our space are coming up on fund life issues," Chapman said. "We have recently upticked our guidance to $2.7 billion of gross investments and we could exceed that and expect to do the same in 2011. This is a period of great opportunity, and the debt and equity markets are as well priced as I have seen them in my career."

By Allen Kenney

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