[外行报告] HEALTHCARE REAL ESTATE INVESTMENT TRUSTS研究报告2007 [推广有奖]

Overview: We are launching our coverage of the healthcare REIT sector with Outperform ratings on Health Care
Property Investors, Health Care REIT, Nationwide Health Properties and Ventas and a Market Perform rating on
Healthcare Realty Trust. Our view of the industry is that operators have recovered from reimbursement and
overbuilding crises of a few years ago, materially strengthening REIT portfolios. In fact, the pendulum has swung the
other way, with an overheated M&A market making acquisition pricing unattractive in some cases while driving REIT
valuations to levels not seen since the industry recovered from a wave of nursing home and assisted living
bankruptcies in 1998-2001. Offsetting these trends, in our view, are a stable interest rate environment (healthcare
REIT shares are more strongly correlated to interest rates than equity REITs in general) and a material increase in
overall growth for several of the companies in our coverage. Additionally, the primary risk factor for healthcare REITs
relative to other equity REITs, a volatile regulatory/reimbursement environment, appears stable and generally not
unfavorable.
Summary of Recommendations
We are initiating coverage of Health Care Property Investors (HCP) with an Outperform rating. HCPI is the
largest and best-diversified healthcare REIT and its credit ratings are overall the sector’s best. Our Outperform rating
is based on the company’s overhaul of its portfolio in recent years that has resulted in what we believe is sustainable
mid-high single-digit FFO growth, above most of its peers. The company divides its investments among assisted
living, medical office building, hospital, nursing home, and other assets. This diversification helps insulate the
company from industry-specific problems, and is concentrated in the less reimbursement-sensitive assisted living and
medical office building sectors. Since CEO Jay Flaherty took the company’s reins in 2003, he has overhauled the
portfolio, added new management, become an aggressive acquiror, and utilized joint ventures and DownREIT units to
enhance investment returns.
We are initiating coverage of Health Care REIT (HCN) with an Outperform rating. Health Care REIT is the first
REIT to invest exclusively in health care, and it invests primarily in senior housing. In today’s overheated acquisition
market, Health Care REIT is augmenting acquisitions with development projects. As of December 31, 2006 the
company had $138 million in construction in progress, the highest in our coverage. In December 2006, Health Care
REIT completed the acquisition of Windrose Medical Properties Trust, a REIT focused primarily on medical office
buildings. This offers the company a new, complementary, and potentially faster growing asset class. The shares offer
the highest dividend yield in our coverage. We expect the additions of Windrose and an active development pipeline
to boost the company’s FFO growth, warranting a higher valuation.
We are initiating coverage of Healthcare Realty Trust (HR) with a Market Perform rating. The company has
announced its plans to exit the senior housing sector (20% of 12/31/06 investments) and focus on medical office
building investments. It will pay a special dividend of $4.75 per share in May and then cut its quarterly dividend by
42%. The company has made very few acquisitions in recent years, owing to what it perceives as unfavorable pricing,
and will instead focus on development. Management, led by CEO David Emery, has considerable experience in
medical office building development and property management. Our concern is that until developed properties come
online and work through initial lease-up, the shares offer little appreciation potential.
We are initiating coverage of Nationwide Health Properties (NHP) with an Outperform rating. Similar to HCPI,
NHP’s CEO, Mark Pasquale, took over a slow-growing erstwhile healthcare REIT industry leader in 2004 and, through
portfolio pruning and aggressive acquisitions, has re-invigorated growth. We expect FFO growth of 5.5%, driven by
internal growth (primarily through rent escalators), additional accretive acquisitions, and enhanced investment returns
thorough two joint ventures—a 90%-owned medical office building partnership with an experienced property manager,
and a 25%-owned senior housing JV with a state pension fund. The company’s investments have been primarily in
senior housing, with a recent focus on continuing care retirement communities, high-end nursing homes, and medical
office buildings.
We are initiating coverage of Ventas (VTR) with an Outperform rating. Ventas has outperformed other healthcare
REITs and sustained more rapid FFO growth through both accretive acquisitions and lease structures that feature
higher-than-average annual escalators. It has also reduced its risk profile by increasing its proportion of revenues
derived from private pay sources and reduced its reliance on its major tenant, Kindred Healthcare. In January, Ventas
signed an agreement to buy Sunrise Senior Living REIT, a Canadian REIT owning 74 private pay assisted living
communities in the U.S. and Canada, for C$15 per share, or $1.8 billion. The properties are managed by Sunrise
Senior Living, a high-quality, high-end, brand-name assisted living company. Ventas expects to preserve the
Canadian REIT structure, which will enable it to both own and operate the properties in a taxable subsidiary,
enhancing growth opportunities. Even without Sunrise—shareholders will vote on April 11, and HCPI has made a
C$18 per share counter-offer—we expect Ventas to continue to generate strong growth though both accretive
acquisitions and lease terms that emphasize above-average annual escalators.

Sector Background
Healthcare REITs, like other REITs, invest in income-producing facilities. Predominantly, they purchase properties
and lease them to tenants. Less frequently, they purchase operating properties and provide mortgage capital and
other debt to operators. As with other REITs, they distribute at least 95% of their GAAP profits to shareholders in
order to maintain their tax-free status. The current weighted average yield for 12 publicly-traded healthcare REITs is
5.3% compared to 3.7% for the SNL Equity REIT index.
Healthcare REITs invest in two broad types of properties. The first is single-tenant inpatient facilities. These consist of
the following.
• Senior housing--Nursing homes (skilled nursing facilities, or SNFs), assisted living facilities (ALFs),
independent living facilities (ILFs), and continuing care retirement communities (CCRCs).
• Hospitals: General acute-care hospitals but also specialty hospitals such as long-term acute care hospitals
(LTACs) and inpatient rehabilitation facilities (IRFs).
• Single-tenant outpatient facilities such as ambulatory surgery centers (ASCs), diagnostic imaging centers,
and dialysis centers.
Among inpatient facilities, the bulk of investments are made in senior housing. These properties are numerous, and
for several reasons have limited access to traditional credit channels as a source of funding, making them logical
targets for REITs.
Multi-tenant outpatient facilities are the second broad asset class in which healthcare REITs invest. These are
primarily medical office buildings (MOBs), often on or adjacent to a hospital campus, in which many physicians,
therapists, and other healthcare providers rent space. Other types of outpatient facilities include comprehensive
outpatient centers and physician clinics housing several physician specialties and associated ancillary services, often
with the physicians belonging to a single group practice.

Table of Contents
Overview ................................................................................................................3
Sector Background................................................................................................4
Investments: Types of Properties .......................................................................5
Investment Approach ............................................................................................9
Initiating Coverage Basic Reports
Health Care Property Investors, Inc. ............................................................12
Healthcare Realty Trust ..................................................................................30
Health Care REIT.............................................................................................46
Nationwide Health Properties .......................................................................66
Ventas, Inc. ......................................................................................................85
Appendix.................................................................................................................101
Disclosures.............................................................................................................118

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