NEW YORK (TheStreet) -- Shares of Aviv REIT INC. (AVIV) are up 14.62% to $34.50 in pre-market trading after it was reported that Omega Healthcare Investors (OHI) - Get Report will buy Aviv REIT in a stock deal valued at $3 billion, according to Reuters.
Aviv shareholders will receive 0.90 Omega shares for each share held.
Maryland-based Omega is a real estate investment trust (REIT) investing in and providing financing to the long-term care industry.
Chicago-based Aviv owns post-acute and long-term care skilled nursing facilities and other healthcare properties.
TheStreet Ratings team rates AVIV REIT INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AVIV REIT INC (AVIV) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 12.2%. Since the same quarter one year prior, revenues rose by 23.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $28.60 million or 12.32% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -24.40%.
- When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, AVIV REIT INC's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for AVIV REIT INC is rather high; currently it is at 50.79%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.65% trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 31.8% when compared to the same quarter one year ago, falling from $9.92 million to $6.76 million.
- You can view the full analysis from the report here: AVIV Ratings Report