HCP, Annaly Capital: REIT Volume Movers

(REIT volume movers report updated with ProLogis' debt financing and Simon Property Group's rejected acquisition.)

LONG BEACH, Calif. ( TheStreet) -- HCP ( HCP), a real estate investment trust, inked a deal to acquire most of the real estate assets of privately owned HCR ManorCare for $6.1 billion.

HCP shares changed hands at rapid speed Wednesday. Nearly 20 million shares were in play with over 90 minutes left in the trading session, compared with their average daily trading volume of 4.1 million shares.

>>REIT Earnings: Behind the Numbers

Investors were pleased with the acquisition news, bidding HCP shares 3.3% higher to trade at $34.05, off earlier highs.

HCP, a REIT that serves the healthcare industry, will buy 338 post-acute, skilled nursing and assisted living facilities in 30 states from private-equity group Carlyle, which owns HCR ManorCare. HCR ManorCare will continue to operate the assets under a long-term lease agreement.

HCP will pay $3.53 billion in cash, $1.72 billion reinvested from the payoff of HCP's existing debt investments in HCR ManorCare, and $852 million in HCP common stock issued directly to HCR ManoCare shareholders.

HCR ManorCare also will grant HCP an option to acquire a 9.9% interest in HCR ManorCare for an added $95 million.

Standard & Poor's REIT analyst Robert McMillan maintained a hold rating on HCP following its announcement.

"We continue to believe that the planned acquisition of these real estate assets will bolster HCP's portfolios heft and diversification," the analyst noted.

McMillan cut his 2011 FFO estimate on HCP to to $2.19, from $2.28, but reiterated a target price of $36.

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Funds from operations, or FFO, is a performance figure used by REITs to define cash flow from operations. The metric removes the profit-reducing effect of depreciation.

Elsewhere in the REIT sector shares of Digital Realty Trust ( DLR) gained 0.6% to trade at $51.77 following some favorable broker action.

Analysts at Goldman Sachs ( GS) initiated coverage of Digital Realty Trust with a conviction buy rating and $64 price target. The firm said that at 13.2 times its estimates for DLR's 2011 FFO, the REIT is attractively priced compared with sector peers, which average 16.6 times, given superior returns on invested capital, visible and secure cash flows and demonstrated access to capital.

Digital Realty's primary property holdings are datacenters, digital storage facilities which are used by companies to maintain their internet presence or beef up their data networks. Datacenters are expensive to build and maintain, and as such supply is relatively inelastic.

Last week Digital Realty said it expanded into the Singapore market, acquiring a new 360,500-square-foot data center facility in Singapore's International Business Park in the Jurong East area.

>>Digital Realty: REIT Volume Movers

General Growth Properties ( GGP), a shopping mall-owning REIT, fell 0.1%, reversing earlier intraday gains, to trade at $15.02 on Wednesday.

In November, General Growth announced the closing of a secondary public offering of 135 million shares of its common stock at a price of $14.75 per share.

General Growth said it planned to use the proceeds from the offering to fund a clawback provision under an agreement with Fairholme Funds, Pershing Square Capital Management and Teacher Retirement System of Texas.

Annaly Capital ( NLY) also priced a secondary offering in recent months. Annaly, a mortgage REIT, offered 60 million common shares in an effort to raise $1.1 billion to fund the purchase of mortgage-backed securities.

Annaly Capital shares fell 2.3% Wednesday on heavier-than-normal volume to trade at $17.80.

>>Rayonier, CommonWealth: REIT Action

ProLogis ( PLD) shares traded 0.3% lower after the industrial and retail property REIT announced the completion of certain loan refinancing.

ProLogis said Tuesday it completed a $180 million refinancing on three outstanding loans maturing in 2010 and 2011 for ProLogis North American Properties Fund I.

The new loan bares an initial two-year term with an additional two-year extension option following a partial repayment of $55 million.

"This refinancing is a good example of how ProLogis and our fund partners are working together to address the financing requirements of the funds," said ProLogis senior vice president and treasurer Phillip D. Joseph, Jr. "Through the additional capital contributions, we were able to rebalance the loan, secure terms that meet the fund's investment objectives and obtain a competitive interest rate."

With the refinancing of 2010 loans addressed, ProLogis reduced its 2011 fund debt maturities to less than $150 million.

Simon Property Group ( SPG) also topped headlines. The shopping mall owner's bid to acquire London-based Capital Shopping Centers was rejected.

Simon Property's offer valued the target at 2.9 billion pounds ($4.54 billion).

CSC said its unanimously rejected the offer, saying it "is yet another attempt by Simon to frustrate the Trafford Centre acquisition without putting forward a proper proposal for CSC shareholders to consider as an alternative."

CSC had planned a secondary offering to finance an acquisition of Manchester's Trafford Centre.

-- Written by Miriam Marcus Reimer in New York.

>To contact the writer of this article, click here: Miriam Reimer.

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