Nothing can be more delightful for investors than stocks that have a combination of dividend and growth. There are very few sectors in the market that have this delightful blend and REITs (Real Estate Investment Trusts) are one of them. By investing in plush properties, these REITS are all set to soar to great heights in 2015. Let us look at some of these trusts and their giant acquisitions
Expanding portfolio
Health Care REIT (HCN, Financial) is one of the huge names in the real estate investment trusts category and has a market capitalisation of close to $27.2billion. During January 2015, the Boston Globe reported that Health Care REIT has spent $360million in acquiring nine assisted living communities that contained 691 residences from Intercontinental Real Estate Corporation of Boston. This sale was a record of its sorts in InterContinental’s history. These living communities included housing for seniors as well. Health Care REIT specialises in senior housing portfolio and this deal will bring about a huge expansion to the already bulging portfolio of Health Care. These nine communities include Plymouth, Leominster, Mass, Ridgefield, Billerica, Haverhill, Chelmsford, Nashua and Conn. This helped Health Care REIT to establish its presence in the eastern parts of the US as well. The operations of these communities will be taken care of by Benchmark that already manages 4% of Health Care’s existing properties. This acquisition by Health Care REIT will have a positive impact on the share prices that are already on an increasing trend as evident from the chart below.
Lapping up yet another luxury hotel
During Jan 26th, LaSalle Hotel Properties (LHO, Financial) declared that it had bought Westin Market Street Hotel for a deal worth $350m. Post the acquisition the luxury hotel came to be known as Park Central San Francisco. LaSalle’s impressive tally now stands at 46hotels, with most of them being categorised as luxury or premium. LaSalle found Westin Hotel to be an attractive option to purchase, because the latter was located in a prime submarket area, with headquarters of giants like Twitter, Instagram and Pinterest in close vicinity. Out of 46 hotels owned by La Salle, 7 are in the city of San Francisco and hence the city accounts for close to 17% of La Salle’s EBITDA, or earnings before interest, tax, depreciation and amortisation. Compared to Health Care REIT, La Salle has a far lower market capitalisation of $4.4billion; hence this acquisition would bring about a marked change in its financials for 2015. The following shows the share price trend of La Salle through 2014.
Diversification is the mantra
The biggest acquisition of 2015 in the real estate world was when Ventas Inc. (VTR, Financial) acquired American Realty Capital Healthcare Trust, commonly known as HCT, for a deal worth a whopping $2.6 billion (settled in cash and stock). Through this deal, Ventas got access to 143 properties that were owned by HCT. Out of these, close to 50% were properties of medical offices and the rest were made up of senior living, assisted living, hospitals etc. This diversification was exactly what Ventas was looking for. At present close to 1600 properties across the US and Canada is owned by Ventas. The highlight of this statistics is that these properties are a perfect mix of various diverse buildings. Ventas enjoys a market capitalisation of $23.7billion currently. This acquisition will add another feather to its diversification policy and will have positive effects on its earnings and share prices for 2015. This diversification also makes Ventas one of the most stable companies in the real estate sector. The following is the share price trend of Ventas for the last year:
Conclusion
All these major acquisitions have made these three real estate companies even more powerful in the market today. The value of the acquisitions made by them will materialise during 2015, resulting in a huge boost in earnings and shareholders’ worth. Hence investors of these real estate companies can look forward to a great and profitable 2015.
