Health Care REIT (NYSE:HCN) has been busy making big investments in 2013, already amounting to more than $5 billion during the year.
The company announced in May that it was making a $1.01 billion investment in Canadian senior housing operator Revera’s $1.35 billion portfolio using a RIDEA structure on the deal.
In January, the company closed on the $3.4 billion acquisition of Sunrise Senior Living, which is expected to increase to $4.3 billion in July after additional joint venture interests have been acquired.
“By the time we close up the final $700 million, we will have the best portfolio ever made available to any of the health care REITs,” said George Chapman, chief executive officer and chairman of Health Care REIT, during REIT Week in Chicago.
After completing more than $5 billion in transactions in 2013, the company is likely to shift its focus away from major external acquisitions and toward investments with existing operating partners.
About 36% of HCN’s portfolio is held through RIDEA joint ventures with operators such as Brandywine, Belmont Village, and Silverado. The company sees these relationships as a distinct advantage toward acquiring new properties going forward.
“Once a RIDEA transaction is completed, it probably makes sense to keep coming back to us, to fit in that same pattern,” said Chapman. “As we slow down on acquisitions, we know that we have a pipeline of new investments and transactions from our longstanding partners.”
The company has made more than $1 billion in investments in each of the last 13 quarters, with existing relationships representing 84% of the investments during the last four quarters. “People can talk about relationships, but ours are working,” said Chapman.
Going forward, HCN says it expects to see more consolidation in the industry to provide better infrastructure and support better operators.
“We think it’s almost inevitable that operators will have to come together, and that there will be M&A activity,” he said. “[By doing this they will have] more opportunity to compete in the brave new world.”
Written by John Yedinak