HCP is a real estate investment trust engaged in investing primarily in real estate serving the healthcare industry. Co. acquires, develops, leases, manages and disposes of healthcare real estate, and provides financing to healthcare providers. Co.'s portfolio is comprised of investments in five healthcare segments: senior housing; post-acute/skilled nursing; life science; medical office; and hospital. Co. makes investments within its healthcare segments using the following investment products: properties under lease, debt investments, developments and redevelopments, investment management and investments in senior housing operations. At Dec 31 2013, Co. had 1,079 properties in the U.S.
HCP economic moat comes from its successful strategy of renting health-care properties to tenant operators under long-term, triple-net leases that provide for steady and slow-growing cash flow over time. These leases impose switching costs on HCP's tenants. Many of HCP properties are located close to hospital campuses. Prime location properties create a sustainable competitive advantage for HCP.
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Leases create some protection from inflation due to built in escalators and tenant responsibility to share increased operating costs
Largest tenant HCR ManaorCare (roughly 1/3 business)
Tenant's may push for lower rents upon lease expirations
REITs have been bid up in low interest rate enviromment. REITs could fall out of favor as interest rates rise
Favorable industry trends
Growing and aging population
Favorable regulatory environment
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