Already approved by the House and expected to be approved today by the Senate, the Doc Fix delays Medicare payment cuts - originally scheduled to take effect on April 1 - to doctors for a year.
"The temporary patch is a near-term win for healthcare providers that have meaningful exposure to Medicare (i.e. Hospitals/SNFs) which should reduce reimbursement related risk in healthcare REIT stocks such as Medical Properties Trust (MPW), Omega Healthcare Investors (OHI), Sabra Healthcare (SBRA), Aviv REIT (AVIV) & HCP," says analyst Omotayo Okusanya. "That said, the temporary patch is just for a year, so conversation about a permanent solution is likely to re-emerge in 2015 Q1."
Okusanya also notes HCP is reportedly readying mezzanine financing for Formation Capital's purchase of HC-One in the U.K. four about $900M. This would be the first deal for the company since Lauralee Martin came on as CEO, "and is likely to be a catalyst for the stock given the typically highly accretive nature of mezz financing to HCP’s earnings.”
Sabra Health Care (SBRA +1.5%) invests $230M in acute care hospital investments in Fort Worth, Frisco, and Dallas, Texas, and a commitment of up to $66M in construction financing. 2 of the investments are structured as debt with an option to purchase the facilities.
The investments decrease Sabra's exposure to Genesis to 52.2% (from 60.8%), Skilled Nursing/Post Acute facilities to 70.6% (82.1%), and Medicare and Medicaid reimbursement to 58.3% (68.4%).
Health-care REITs are "squarely in the cross-hairs" of higher rates thanks to their long-term leases and high dividend yields, says Jefferies. Also, acquisitions have been "conspicuously missing" this year. If rising rates further temper deals over the next year, it's another negative as these have been an important source of earnings growth. Some of note: Ventas (VTR -3.5%), HCP (HCP -3%), Healthcare Trust (HTA -1.4%), Senior Housing (SNH -2.3%), Omega Healthcare (OHI -3.4%), Healthcare Realty (HR -0.5%), Medical Properties (MPW -3.4%), National Health (NHI -2.4%), Aviv (AVIV -1.7%), Sabra (SBRA -5.3%), and LTC (LTC -2.5%).
Sabra Health Care REIT (SBRA) declares $0.34/share quarterly dividend, 3% increase from prior dividend of $0.33. Forward yield 5.98%. For shareholders of record Feb. 15. Payable Feb. 28. Ex-div date Feb. 13. (PR)
Sabra Health Care REIT (SBRA) acquires four skilled nursing facilities, three in a sale-leaseback transaction with affiliates of Aurora Health Management for $21.8M, and a fourth 120-bed facility located in Virginia for $5.7M.