HCP Inc. (HCP) said Wednesday that it boosted its share offering by 35% to 15.5 million shares amid strong investor demand and priced the shares at a 6.4% discount to Tuesday's closing price.

Analysts said the move is partially in response to the health care real-estate investment trust's recent purchase of a $720 million participation in the first mortgage debt of post-acute care services provider HCR ManorCare. On Monday, HCP said it purchased the participation at a discount for about $590 million. HCP then said it obtained "favorable" financing to fund 72% of the purchase price, resulting in a net cash payment by HCP of $165 million.

Although shares were down Wednesday morning, analyst generally applauded the additional share offering.

"It's a smart move," said David Aubuchon, analyst at Robert W. Baird & Co. Aubuchon said the increased offering allows HCP to keep its debt ratio around 45% after its HCR Manorcare investment. REIT debt ratios are closely watched by investors as a sign of balance sheet strength and a company's financial flexibility-especially in a economic downturn.

In addition, the company is taking advantage of the strength in the equity markets, says Aubuchon. HCP trust joins a number of other companies across industries who have taken advantage of increased investor appetite for shares to raise cash in recent months.

HCP, which has investments including senior housing, medical office and skilled nursing properties, had originally said late Tuesday it would offer 11.5 million shares. It expects proceeds to repay all borrowings under its revolving credit facility, with any remainder for general corporate purposes.

The offering will boost shares outstanding by at least 6%, and underwriters will have the option to buy up to 2.3 million more shares to cover any excess demand.

Tuesday, the company reported second-quarter funds from operations rose 10%, beating Wall Street's expectations.

HCP shares recently traded down 4.31% to $25.30.

- By Veronica Dagher; 212-416-2261; veronica.dagher@dowjones.com

(Kerry Grace Been contributed to this report)