The firm raised its price target to $23 from $18 on shares of the Newton, MA-based real estate investment trust.
"SNH indicated it plans to sell a JV (joint venture) interest in two office properties located in Boston. We believe the sale will yield a significant gain and improve SNH's financial position," RBC wrote in a note earlier today.
The REIT plans to sell two office and laboratory properties located in the Seaport district in Boston.
"We believe SNH's leverage metrics are currently stretched, and are likely limiting the company's ability to deploy capital into new investment opportunities. However, we think the proposed joint venture transaction would solve this issue," RBC noted.
The company could generate $550 million to $650 million of proceeds through selling its 45% interest in the properties, the firm estimates.
"While the shares have performed well year-to-date, we believe the stock trades at a significant discount to our YE16 NAV estimate and the multiple trades at a discount to the historical average," RBC added.
The REIT's portfolio includes senior living communities and properties leased to medical providers and biotech laboratories.
Shares of Senior Housing closed up 2.36% to $19.92 on Friday.
Separately, TheStreet Ratings Team has a "Hold" rating with a score of C on the stock.
The primary factors that have impacted the rating are mixed. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations.
But the team also finds weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.
You can view the full analysis from the report here: SNH