HCP Prices Upsized Public Offering Of 15M Common Shares

HCP, Inc. (NYSE:HCP) has expanded and priced its public offering of 15 million shares of common stock at $28.90 per share, before deducting underwriting discounts and commissions. This indicates an increase of one million shares from the originally proposed offering of 14 million shares.

Specifically, the offering consists of two million shares, directly offered by the company and 13 million shares offered on a forward basis through a forward sale agreement with BofA Merrill Lynch or its affiliate. Moreover, the book-runner will provide a 30-day option to underwriters to purchase additional 2,250,000 shares of the HCP’s common stock.

The company plans to utilize net proceeds from the offering and forward sale agreement (if any) to pursue acquisitions and development opportunities. Further, remaining proceeds will be used for general corporate purposes, including repayment of the company’s outstanding debt and for other investment opportunities.

The common stock offering boosts the company's financial flexibility and helps meet its financial obligations efficiently. Moreover, it provides ample scope for deploying capital for long-term growth opportunities and rewarding higher returns to stockholders, at the same time.

In fact, in November, the company entered into an agreement to purchase a life-science and office campus — Sierra Point Towers in San Francisco — for $245 million. It consists of two buildings spanning 427,000 square feet of space. In addition, it is nearly 100% leased with a weighted average lease term of more than five years. The pending acquisition, expected to close in first-half 2019, will fortify the company’s presence in San Francisco. Along with The Shore at Sierra Point — the company’s waterfront life-science development in the same submarket — the acquisition offers densification opportunities to the company.

Shares of this Zacks Rank #3 (Hold) company have outperformed its industry over the past six months, rallying 23.5% compared to the industry’s gain of 3.7%. Also, the stock has seen the Zacks Consensus Estimate for current-year funds from operations (FFO) per share being revised marginally upward in a month’s time.

Key Picks

Some better-ranked stocks from the REIT space are OUTFRONT Media Inc. (NYSE:OUT) , PS Business Parks, Inc. (NYSE:PSB) and Cousins Properties Incorporated (NYSE:CUZ) , each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

OUTFRONT Media’s FFO per share estimates for 2018 have been marginally revised upward to $2.09 in the past 60 days. Its shares have gained 3.8% over the past six months.

PS Business Parks’ Zacks Consensus Estimate for 2018 FFO per share moved 0.9% north to $6.45 in the past month. Its shares have returned 13.4% in six months’ time.

Cousins Properties’ FFO per share estimates for 2018 have been revised marginally upward to 62 cents in 60 days’ time.

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