Health Care REIT Making $2 Billion Bet on the United Kingdom

While not shying away from deals in the United States, Health Care REIT (NYSE: HCN) has already made $2 billion worth of investments in the United Kingdom said Thomas DeRosa, CEO of HCN during an interview with REIT.Com in New York.

About 12% of HCN’s assets are outside the U.S., with about 4-to-5% of those assets being in Canada and 8% are in the United Kingdom, he said. Most of the $2 billion is being invested in high end senior housing projects in London, where the company sees the most opportunity.

“There has been a huge demand there,” he said. “A much wealthier population is seeking private pay long-term care options, versus those offered by the national health service. So, we’re building state-of-the-art senior housing.”

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In the first half of 2014, the REIT generated more than $500 million in new investments. In the second quarter of this year, HCN has done over $400 million in new investments; and 92% of those new investments have been completed with the REIT’s existing operating partners.

Across its business units, senior housing and medical facilities are the bulk of the REIT’s new developments, including state-of-the-art skilled nursing facilities, he said.

During the interview, DeRosa said HCN is bucking the trend and not following the model of going out and acquiring large amounts of assets at one time. The company would rather work with its operating partners and source the deals from those existing customers.

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“We’re not just out there buying healthcare real estate,” he said. “There are lots of people who do that, participate in auctions of portfolios. That’s not really what we do. We are at the table with these operators. That’s a lot more compelling for our shareholders than paying high prices, low cap rates by participating in auctions.”

While the company might not be doing those kind of deals today, it has been active over the last couple of years purchasing large portfolios such as Sunrise Senior Living, which it paid roughly $1.9 billion in 2013 to acquire $4.3 billion worth of assets.

Watch the interview here.

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Written by Cassandra Dowell

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