Nationwide Health Properties Beats Consensus Estimates; Raises Guidance

Nationwide Health Properties NHP had another solid quarter, beating Citi and consensus estimates by 1c/2c and raising core guidance by 1.5% at the midpoint, the third consecutive guidance increase. The company continues to make big strides on acquisitions, accumulating almost $700m of asset and debt investments YTD across various asset types and at attractive cap rates. Earnings beats and guidance raises have become regular occurrences for NHP, which reported 3Q FFO of 59c, 1c ahead of Citi estimates and 2c ahead of consensus. Full variance in note. FFO guidance (excluding one-time items) was raised to $2.27-$2.28 from $2.23-$2.25 vs Citi/consensus at $2.26/$2.25. Guidance implies flat to slight increase in 4Q vs 3Q, with upside from further acquisitions in 4Q. As opposed to healthcare peers, particularly VTR who has made a number of large-scale acquisitions highlighted by its latest $3.1bn acquisition of Atria, NHP has opted to follow a piece-meal acquisition strategy of bite-size deals financed by its ATM, attractive given the stock's rich valuation at a 6.1% implied cap rate. This approach is not without its merits, however, leading to the company chipping away at almost $700m of acquisitions YTD and leaving the balance sheet in good shape with solid liquidity remaining and room to lever-up the balance sheet. Citi has a Hold rating and $39 PT on NHP NHP closed Monday at $40.42