Health Care REIT Inc. (HCN), a real estate investment trust (REIT) that operates senior housing and health care real estate, has recently announced plans to offer 10.0 million common shares at $43.75 each to raise cash. The company had earlier announced its offer of 9 million shares. Health Care REIT will also grant the underwriters an option to purchase an additional 1.5 million shares to cover any over-allotments.

BofA Merrill Lynch, the investment banking and wealth management division of Bank of America Corporation (BAC); J.P. Morgan Securities LLC, the investment banking division of JPMorgan Chase & Co. (JPM); and UBS Investment Bank, the investment banking division of UBS AG (UBS) are acting as joint book-running managers for the offering.

However, deep cuts in Medicare have been proposed over the next five years by reducing or freezing payments to skilled nursing facilities, hospitals, and other healthcare providers. With a large portion of revenues being determined by government payout rates, forces beyond the company's control could negatively affect revenue and operator coverage ratios. Consequently, we maintain our Neutral rating on Health Care REIT, which currently has a Zacks #3 Rank that indicates a short-term Hold rating.