Morgan Keegan Updates Its Model On Health Care REIT Following Offering

Health Care REIT HCN issued $1.4 billion of senior notes yesterday in five, eleven, and thirty-year tranches. As a result, the company's capital structure will have more debt and less equity than had previously modeled. The minor resulting changes to Morgan Keegan's estimates have no bearing on its Outperform rating or the view that Health Care REIT can sustain above-average FFO and FAD growth.

Morgan Keegan is lowering its 2011 FFO estimate from $3.26 to $3.22 and raising its 2012 estimate from $3.75 to $3.76. Morgan Keegan is lowering the 2011 FAD estimate from $2.96 to $2.90 and 2012 estimate from $3.43 to $3.40. Its FAD growth rate in the second half of 2012 (apples-to-apples in terms of the Genesis HealthCare acquisition) is 5.4%, well above the healthcare REIT sector norm of 3%-4%.

Morgan Keegan has an Outperform rating and $59 PT on HCN

HCN closed Wednesday at $52.15