Salomon Cuts Health Care Property Rating

The company's eighth largest tenant defaulted on its payments, which accounted for $10.6 million in annual revenues

Salomon Smith Barney downgraded Health Care Property Investors (HCP ) to underperform from in-line.

Analyst Jonathan Litt says Centennial Healthcare defaulted on its payments. Health Care Property says it sent default notices to the company, which is its eighth largest tenant. Litt says Centennial had accounted for $10.6 million, or 3.1%, of the company's annual revenues. He adds that the non-payment of roughly $900,000 in monthly rent resulted in Health Care Property's 19 cent loss per share in funds from operations on a fiscal basis.

Litt cut his $3.54 2003 funds from operations estimate to $3.35. He notes the company's exposure to Tenet Health's problems, and the risk as to whether Congress will reinstate expired Medicare reimbursements to skilled nursing facilities. He cut his target to $12.

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