Standard & Poor's Corp. placed the ratings of Health and Retirement Properties Trust on CreditWatch, reflecting concerns about the real estate investment trust's "shift in operating strategy."
HRPT has invested primarily in retirement and long-term-care facilities in 27 states. But recently, the Newton, Mass.-based REIT announced plans to purchase and lease 21 "Courtyard by Marriott" hotels and invest in 14 nursing homes in England.
The investments, totaling $224 million, "will alter the business risk profile of the trust and increase operator exposure to Marriott International and Host Marriott Corp. to over 40% of revenues from 31%," Standard & Poor's said. Proposed acquisitions also will increase the REIT's leverage, it said.
Currently, HRPT has ratings of BBB and BBB- on debt totaling $345 million, including a $145 million shelf registration. Over the next several months, the rating agency will evaluate the impact of the investments on HRPT's credit quality.