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GTSF IC Stock Presentartion- Nationwide Health Properties Inc

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GTSF IC Stock Presentartion- Nationwide Health Properties Inc Powered By Docstoc
					Nationwide Health Properties
         Inc. (NHP)




         Tripp Norton
Stock Name: Nationwide Health     Stock Symbol: NHP
Properties Inc.

Industry: Healthcare Facilities   First & Last Name: Tripp Norton


Sector: REIT                      Position: Executive Secretary


03/04/10: $33.09                  Presentation Date: March 4th,
                                  2010

Recommendation: Buy 2% of a       Initial/ Final Recommendation:
Healthcare Facilities REIT        Initial
                        Business Summary
•   Invests in senior housing facilities, long-term care facilities, and medical office buildings
    throughout the United States.

•   NHP generally acquires real estate and then leases the assets under long-term triple-
    net master leases to senior housing and long-term care operators and various types of
    leases to multiple tenants in the case of medical office buildings.

•   NHP employs a conservative, long-term approach to real estate investments.
         • 4.5 Billion in healthcare real estate
         • 576 properties in 43 states
         • 279 Assisted and independent Living
         • 197 Skilled Nursing
         • 11 Continuing care retirement communities
         • 82 Medical Office Buildings
         • 7 specialty hospitals
         • Over 78 multi-facility operators
                        Types of Facilities
• Senior Housing/Assisted and Independent Living Facilities
    – Offer studio, one bedroom and two bedroom apartments on a month-to-month
      basis primarily to elderly individuals, including those with Alzheimer’s or related
      dementia, with various levels of assistance requirements
• Medical Office Buildings
    – Typically on or near an acute care hospital campus. They usually house several
      different unrelated medical practices, although they can be associated with a large
      single-specialty or multi-specialty group.
• Long-Term Care/Skilled Nursing Facilities
    – Provide rehabilitative, restorative, skilled nursing and medical treatment for patients
      and residents who do not require the high-technology, care-intensive, high-cost
      setting of an acute care or rehabilitative hospital.
• Continuing Care Retirement Communities
    – Communities provide a continuum of care. At the most basic level, independent
      living residents might receive meal service, maid service or other services as part of
      their monthly rent.
• Specialty Hospitals
    – Rehabilitation hospitals provide inpatient and outpatient medical care to patients
      requiring high intensity physical, respiratory, neurological, and orthopedic or other
      treatment protocols and for intermediate periods in their recovery.
           Asset Type (Based on Investment)                                   Pay Source   Medicaid
                                                                                            (17%)


                             Skilled
                             Nursing
                             (26%)                                                                    Medicare
                                                                                                       (17%)
Independent                                                  Private
and Assisted
                                                Other (6%)   Pay
Living (49%)                                                 (73%)




                                          MOB’s (19%)



             Locations (Based on Revenue)                              Tenant/ Operator (Based on
    WA
                                   WI
                                                                                Revenue)
    (6%)
                                   (6%)                                       Top 5 = 39%
                                                  MA (6%)
                                                                              Top 10= 55%
                                                                              Top 15= 63%
  CA (11%)




                  TX (14%)
                       Percentage of Net Operating Income



                     8.00%
                                                       Assisted and Independent
                                                       Living Facilities
        11.00%                                         Skilled Nursing Facilities

2.00%                                                  Continuing Care Retirement
2.00%                                                  Communities
                                          48.00%       Specialty Hospitals
    3.00%

                                                       Triple-net Medical Office
                                                       Buildings
                                                       Multi-tenant Medical Office
                                                       Buildings
            26.00%
                                                       Other Income
                  Financial Summary
• Over the past year Nationwide Health Properties financial situation has
  started to return to the pre-real-estate crash levels.

• Income from continuing operations is only slightly off from its pre crash
  levels and up $20 million YOY.

• Primary source of debt financing are unsecured medium-term notes
  (MTNs) with varying maturities and interest rates (See attachment) and its
  unsecured revolving credit facility.
    – Current credit ratings are: S&P - BBB, Moody’s – Baa2 and Fitch - BBB-
      (positive outlook).

• Increased their cash position in order to leverage several struggling
  acquisitions targets.

• The majority of their leases are also triple net leases which make the
  tenants responsible for the maintenance as well as the insurance and
  taxes.
Debit Maturities
 2010
                 0% 1% 0%
 2011          1%       6%     7%
 2012
 2013
 2014              22%                25%
 2015
 2016
 2017
 2018
              3%
 2019                               13%
 Thereafter              22%
                            Recent Headlines
•   March 3rd: Nationwide Health Properties, Inc. Acquires Five Additional On Campus
    Pacific Medical Buildings
     – Announced the acquisition of five additional medical office buildings, all located on the campuses
       of A-rated healthcare systems, from Pacific Medical Buildings LLC. Transaction valued at $211
       million

•   February 17th : Nationwide Health Properties, Inc. Reports 2009 Fourth Quarter and
    Full Year Results
     – Completed $90 Million Transaction and Amended and Restated Development Pipeline Agreement
       with PMB
     – Issued $76 Million of Equity in the Fourth Quarter-
     – Cash Balance of $382 Million at Year End
     – FAD Payout Ratio of 83% Supports $0.44 per Share Cash Dividend
     – Balance Sheet and Liquidity Position Strong

•   February 11th: Forbes REIT ReportCard
     – Ranks NHP as the only REIT with an A+ in both performance grade and value grade.

•   February 5th: Nationwide Health Properties Inc. (NHP) Announces Closing Acquisition
    Of Two PMB Buildings
     – Acquisition of two medical office buildings under an amendment to the original agreement with
       Pacific Medical Buildings for $74 million
                Industry Analysis
- Unlike other REITS the Healthcare Facility industry has
  their investments in commercial real estate which has not
  been heavily affected by the current financial crisis.
- There will always be doctors needing offices, patients
  needing hospitals, and old people needing assisted living
  facilities.
- If President Obama has his way and implements universal
  health care then there is going to be a greater demand for
  health services which need facilities.
- The percentage of people 65+ is growing and will continue
  to grow till 2030.
- The percentage of the GDP that health care takes is also
  growing.
Industry Growth Chart
 Fundamental/Competitive Analysis
                      Nationwide
                                                       Health Care     Ventas Inc.
                    Health Properties HCP, Inc. (HCP)
                                                      REIT Inc.(HCN)     (VTR)
                       Inc. (NHP)
 Market Cap(B)             3.9              8.5             5.3            7
       EPS                1.13             0.35            1.21          7.05
  FFO per share           2.27             1.06            3.13          2.68
FFO Payout Ratio           79%             85%             87%            73%
       P/E                28.66           84.82           34.76          36.51
       P/S                10.15            7.35            9.31          7.26
       P/B                2.03             1.55            1.49          2.89
    Dividend              1.76             1.84             2.7          2.05
 Dividend Yield           5.25             6.43            6.52          4.73
  Current Ratio           3.019            6.52            6.55          1.748
   Debt/Equity            84.71           97.85           89.17         146.51
  Gross Margin           92.64%          82.00%          91.19%          66.52
Net Profit Margin        29.14%           9.19%          27.28%         19.84%
Operating Margin         28.09%          34.20%          27.52%         18.13%
       ROA                3.27             0.88            2.64          3.21
       ROE                6.56             1.33            5.09          9.15
   NAV Growth
                         10.85             5.8             9.8            6.5
     (4 year)
1 Year Chart
5 Year Chart
                          Scenarios
• Best Case
   – Obama gets his healthcare package passed and the demand for health
     care increases thus the need for facilities also increases.
   – People continue to get older and need to have assisted living homes,
     long term care homes and retirement communities.
   – The company continues to grow as the market increases in demand.
• Worst Case
   – National health care limits growth of the healthcare industry
   – People don’t move into retirement communities but continue to live in
     their houses
   – People get healthier
   – Interest rates rise and NHP will have to refinance at higher rates,
     which, in the case of fixed rate debt, will create higher interest
     payments over the life of the loans.
      Conclusion/Recommendation
• Recommendation is to buy 2% of portfolio of a Healthcare
  facilities REIT, whether it is NHP or a competitor.
• Healthcare REIT’s
   – Relative rescission resilient with their always being the need for
     health care.
   – The baby boomers getting older and needing more health services
   – REIT structure provides opportunity to invest directly in real estate
     and indirectly in healthcare industry
• NHP
   – Long-term triple-net master leases with quality operators
   – NHP is one of the few healthcare REITs with investment grade
     ratings by Moody’s, Standard & Poors and Fitch.
   – Offers potential of growth as a company
   – Cheaper than competitors

				
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posted:1/4/2011
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