Fitch Affirms Health Care REIT Inc. at 'BBB'; Outlook Stable

NEW YORK--(Business Wire)--
Fitch Ratings has affirmed the ratings for Health Care REIT, Inc. (NYSE:HCN) as
follows:

--Issuer Default Rating (IDR) at 'BBB';

--Unsecured bank credit facility at 'BBB';

--Senior unsecured notes at 'BBB';

--Convertible Senior unsecured notes at 'BBB';

--Preferred stock at'BBB-'.

The Rating Outlook is Stable.

The affirmation of HCN's ratings is based on HCN's large and growing portfolio
of 620 properties and investments throughout 39 states, strong coverage and
leverage ratios, portfolio diversity by investment type and geography, and its
financial flexibility generated by a strong liquidity position and a sizable
pool of unencumbered assets.

HCN's portfolio of investments across five major health service property types,
consists of long-term triple-net-leases to experienced operators of seniors
housing and health care facilities. The majority of HCN's assets are master
leased or cross-collateralized, thereby minimizing the ability of operators to
selectively renew high performing assets. Additionally, fewer than 6% of HCN's
leases expire annually, and the company has a sizable platform of medical office
assets that were 90.6% leased at June 30, 2009.

HCN continues to exhibit leverage and coverage metrics that are commensurate
with a 'BBB' rating. HCN's net debt to recurring operating EBITDA ratio pro
forma for the company's September 2009 equity offering was 4.7 times (x). The
rating affirmations also reflect HCN's 2.7x fixed-charge coverage ratio (defined
as recurring EBITDA less Fitch's estimate of capital expenditures and
straight-line rents, divided by interest expense, capitalized interest and
preferred stock dividends) for the 12 months ended June 30, 2009. Both of these
metrics are adequate for the rating category.

Further supporting the ratings is HCN's solid liquidity position driven by $356
million in net proceeds from its September 2009 equity offering, the proceeds of
which will be used to invest in additional health care and senior housing
properties, to repay borrowings under the company's unsecured revolving credit
facility and other outstanding indebtedness. Fitch notes that HCN's estimated
liquidity surplus (cash, availability under its revolving credit facility,
expected retained cash flows from operating activities less debt maturities and
expected capital expenditures through Dec. 31, 2011) of over $800 million is
supported by the sizeable availability under its credit facility, proceeds from
its most recent equity offering, and a manageable debt maturity schedule.

The company has $362.4 million of debt maturities through 2011, including $340
million of convertible senior unsecured notes that are putable to HCN, and $459
million of unfunded development commitments, which could be fully funded with
cash on hand and committed capacity under the existing credit facility. HCN's
Fitch-estimated unencumbered asset to unsecured debt ratio was 2.15x on a gross
book value basis, pro forma for the equity offering.

A key concern for Fitch is the company's sizeable development pipeline, which
has a total budget of $1.2 billion. Fitch notes that development activities
contain risks not present in ownership of stabilized product. These risks are
somewhat offset by the fact that HCN has an established development track
record. Another mitigant to development risk is that while construction-related
assets on HCN's balance sheet represented $730 million of $6.2 billion (12%) of
total book assets as of June 30, 2009, Fitch expects this exposure will decrease
as assets are completed and placed into the stabilized portfolio.

Additional concerns include HCN's moderate exposure to government reimbursement
risk and operator exposure. Fitch also notes that the increased utilization of
secured debt will decrease the size of the unencumbered asset pool and modestly
reduce financial flexibility.

Fitch acknowledges that the company has grown significantly in recent years and
that the bulk of the growth has come from assets that have private pay revenue
sources. In addition, HCN's exposure to skilled nursing facilities and specialty
hospitals, which generate the majority of their revenues from government
sources, has declined. Skilled nursing facilities and specialty hospitals
represented 36.4% of HCN's total portfolio investment balance in the second
quarter of 2009 (2Q'09), down from 38.5% during the 2Q'08 and from 39% during
the 2Q'07.

HCN's top five operators account for 28% of total revenues. However, as HCN's
portfolio has grown, the contribution from its top five facility operators has
decreased from 31% during 2Q'08.

Fitch notes that although HCN has recently accessed secured debt, secured debt
to undepreciated capital is estimated to remain below 15% throughout the
remainder of the year. In addition, HCN's unencumbered asset to unsecured debt
ratio is estimated to remain above 2.0x absent additional secured debt
transactions.

The Stable Outlook centers on Fitch's expectations that HCN's credit metrics
will remain relatively unchanged, its manageable debt maturity schedule and a
strong liquidity position. The Outlook also takes into account Fitch's view that
fundamentals within the senior health care sector will continue to be upheld by
strong demographics and limited new supply, particularly within the medical
office building and outpatient space.

The following factors may have a positive impact on HCN's ratings:

--Fitch-defined fixed charge coverage were to sustain above 2.7x (fixed charge
coverage was 2.7x for the 12 months ended June 30, 2009);

--Total debt to annualized recurring EBITDA were to sustain below 5.5x (leverage
was 5.5x as of June 30, 2009);

--Fitch's estimation of HCN's unencumbered asset to unsecured debt coverage
ratio were to sustain above 2.25x (coverage was 2.15x as of June 30, 2009 pro
forma for HCN's September 2009 equity offering).

The following factors may have a negative impact on HCN's ratings:

--Fitch-defined fixed charge coverage were to fall below 2.2x or lower for
several consecutive quarters;

--Total debt to annualized recurring EBITDA were to sustain above 6.5x;

--HCN's Fitch-estimated unencumbered asset to unsecured debt coverage ratio were
to sustain below 1.8x.

HCN is based in Toledo, Ohio, and is an approximately $6.8 billion (total
undepreciated book capitalization) equity REIT with a focus in health care real
estate, including independent living, assisted living and skilled nursing
facilities, continuing care retirement communities, hospitals and medical office
buildings. The company also offers property management and development services
to its customers. As of June 30, 2009, the company had investments in 620 health
care facilities located in 39 states with 64 operators and over 800 medical
office building tenants.

Additional information is available at www.fitchratings.com.

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Fitch Ratings, New York
Taqim Spradley, 212-908-0291
Jan Svec, 212-908-0304
or
Media Relations:
Sandro Scenga, 212-908-0278
Email: sandro.scenga@fitchratings.com

Copyright Business Wire 2009