IRVINE, Calif., Feb. 9, 2016 /PRNewswire/ --
FOURTH QUARTER 2015 AND RECENT HIGHLIGHTS
-- FFO as adjusted and FAD per share increased
year-over-year by 1% to $0.80 and 2%
to $0.67, respectively; FFO per share
and EPS were ($0.99) and ($1.29), respectively (see "HCR ManorCare Update"
on page 3)
-- Raised $1.1
billion from capital recycling and financing activities,
including $600 million of 4.0% senior
unsecured notes that paid down 36% of 2016 debt
maturities
-- Completed $208
million of investment transactions
-- Leased 911,000 sq. ft. in our life science and
medical office ("MOB") portfolios, bringing occupancy to 98.2% and
91.9%, respectively
-- Pre-leased half of Phase I of The Cove life
science development, and commenced $185
million development of Phase II, adding two Class A life
science buildings representing 230,000 sq. ft.
-- Jim Mercer
retired from HCP as General Counsel on February 5, 2016; we thank Jim for his five years
of contributions and commitment to HCP; named Troy McHenry as HCP's new General
Counsel
-- Named NAREIT's 2015 Healthcare Leader in the
Light Award winner for sustainability achievements
FULL YEAR 2015 HIGHLIGHTS
-- FFO as adjusted and FAD per share increased
year-over-year by 4% to $3.16 and 6%
to $2.72, respectively; FFO per share
and EPS were ($0.02) and ($1.21), respectively
-- Completed $2.1
billion of accretive investments, including:
-- $1.1 billion in private pay senior housing, led
by the $847 million acquisition of
Chartwell's portfolio
-- $700 million
expansion in our life science and MOB office platform, including a
new $225 million institutional joint
venture with Morgan Stanley owning an on-campus MOB portfolio, and
$177 million Class A life science
development of The Cove Phase I
-- $278 million
increase in our international investments, expanding our U.K. care
home portfolio
-- Raised $3
billion from financing and capital recycling activities,
including $2.3 billion of debt at a
blended rate of 3.5%
-- Selling 50 HCR ManorCare ("HCRMC") non-strategic
assets with expected proceeds of $350
million (80% received to date)
-- Executed 3.2 million sq. ft. of leasing in our
life science and MOB portfolios
-- Welcomed Justin Hutchens as Chief Investment
Officer – Senior Housing and Care
-- Named to the Dow Jones Sustainability North
America Index for the third consecutive year and the Dow Jones
Sustainability World Index for the first time
2016 OUTLOOK AND DIVIDEND
-- Full year guidance, not including the
impact from unannounced future transactions, for FFO per share of
$2.74 – $2.80; FAD per share of $2.62 – $2.68; and
EPS of $1.49 – $1.55
-- Full year guidance for Same Property
Performance Cash Net Operating Income ("SPP Cash NOI") growth of
1.5% – 2.5%; excluding HCRMC, SPP Cash NOI growth of 2.3% – 3.3%,
led by our life science portfolio
-- Increased quarterly cash dividend to
$0.575 per share, which represents
our 31st consecutive year with a dividend
increase
-- HCP continues its representation as the first
REIT included in the S&P 500 Dividend Aristocrats index
IRVINE, CA, February 9, 2016 – HCP (NYSE:HCP) announced
results for the quarter and year ended December 31, 2015.
FOURTH QUARTER COMPARISON
|
Three Months
Ended
December 31,
2015
|
|
Three Months
Ended
December 31,
2014
|
|
Per Share
|
|
|
(in thousands,
except per share amounts)
|
Amount
|
|
Per Share
|
|
Amount
|
|
Per Share
|
|
Change
|
|
|
FFO
|
$
|
(458,678)
|
|
$
|
(0.99)
|
|
$
|
324,734
|
|
$
|
0.70
|
|
$
|
(1.69)
|
|
|
Other
impairments, net(1)
|
|
829,593
|
|
|
1.78
|
|
|
35,913
|
|
|
0.08
|
|
|
1.70
|
|
|
Transaction-related items
|
|
3,959
|
|
|
0.01
|
|
|
4,269
|
|
|
0.01
|
|
|
—
|
|
|
Foreign
currency remeasurement losses
|
|
60
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
FFO as
adjusted
|
$
|
374,934
|
|
$
|
0.80
|
|
$
|
364,916
|
|
$
|
0.79
|
|
$
|
0.01
|
|
|
FAD
|
$
|
313,588
|
|
$
|
0.67
|
|
$
|
304,963
|
|
$
|
0.66
|
|
$
|
0.01
|
|
|
Net (loss)
income
|
$
|
(599,164)
|
|
$
|
(1.29)
|
|
$
|
196,145
|
|
$
|
0.43
|
|
$
|
(1.72)
|
|
|
________________________________________
|
|
(1)
|
For the three months
ended December 31, 2015, other impairments, net include impairment
charges of: (i) $817 million related to our HCRMC direct financing
lease ("DFL") investments and (ii) $19 million related to our
equity investment in HCRMC, partially offset by impairment recovery
of $6 million related to a loan payoff in our hospital
segment.
|
In addition to the items discussed above, operating results for
the quarter ended December 31, 2015
included $0.01 per share of interest
income from monetizing a senior housing development loan.
Additionally, fourth quarter 2015 net loss included $0.03 per share of net gain on sales of real
estate from HCP Ventures III and IV, which is reflected in equity
income from unconsolidated joint ventures. Net income for the
quarter ended December 31, 2014
included net gain on sales of real estate of $0.01 per share.
FULL YEAR COMPARISON
|
Year
Ended
December 31,
2015
|
|
Year Ended
December 31,
2014
|
|
Per Share
|
|
|
(in
thousands, except per share amounts)
|
Amount
|
|
Per Share
|
|
Amount
|
|
Per Share
|
|
Change
|
|
|
FFO
|
$
|
(10,841)
|
|
$
|
(0.02)
|
|
$
|
1,381,634
|
|
$
|
3.00
|
|
$
|
(3.02)
|
|
|
Other
impairments, net(1)
|
|
1,446,800
|
|
|
3.11
|
|
|
35,913
|
|
|
0.08
|
|
|
3.03
|
|
|
Transaction-related items
|
|
32,932
|
|
|
0.07
|
|
|
(18,856)
|
|
|
(0.04)
|
|
|
0.11
|
|
|
Severance-related charges
|
|
6,713
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
Foreign
currency remeasurement gains
|
|
(5,437)
|
|
|
(0.01)
|
|
|
—
|
|
|
—
|
|
|
(0.01)
|
|
|
FFO as
adjusted(2)
|
$
|
1,470,167
|
|
$
|
3.16
|
|
$
|
1,398,691
|
|
$
|
3.04
|
|
$
|
0.12
|
|
|
FAD
|
$
|
1,261,849
|
|
$
|
2.72
|
|
$
|
1,178,822
|
|
$
|
2.57
|
|
$
|
0.15
|
|
|
Net (loss)
income
|
$
|
(560,552)
|
|
$
|
(1.21)
|
|
$
|
919,796
|
|
$
|
2.00
|
|
$
|
(3.21)
|
|
|
________________________________________
|
|
(1)
|
For the year ended
December 31, 2015, other impairments, net include impairment
charges of: (i) $1.3 billion related to our HCRMC DFL investments,
(ii) $112 million related to our Four Seasons Notes and (iii) $46
million related to our equity investment in HCRMC, partially offset
by impairment recovery of $6 million related to a loan payoff in
our hospital segment.
|
|
|
|
(2)
|
See the "Funds From
Operations" section of this release for additional
information.
|
In addition to the items above, 2015 operating results included
$0.04 per share of interest income
from monetizing three senior housing development loans. Net (loss)
income for the years ended December 31,
2015 and 2014 also included net gain on sales of real estate
of $0.01 per share and $0.07 per share, respectively. Additionally, 2015
net loss included $0.03 per share of
net gain on sales of real estate from HCP Ventures III and IV,
which is reflected in equity income from unconsolidated joint
ventures.
FFO, FFO as adjusted and FAD are supplemental non-GAAP financial
measures that we believe are useful in evaluating the operating
performance of real estate investment trusts. See the "Funds From
Operations" and "Funds Available for Distribution" sections of this
release for additional information regarding these non-GAAP
financial measures.
HCR MANORCARE UPDATE
The post-acute/skilled nursing ("SNF") industry and HCRMC
continued to experience a challenging operating environment in
2015, due to the ongoing change in reimbursement models which
reduces rates and lowers census, the result of shorter lengths of
stay. While HCRMC's operating performance was essentially in-line
with expectations during the first half of 2015, performance
declined during the second half of 2015. HCRMC's normalized Fixed
Charge Coverage ("FCC") for the 12-month period ending December 31, 2015 was 1.07x, trending from 1.17x
for the six-month period ended June 30,
2015, to 0.97x for the six-month period ended December 31, 2015. The decline in operating
performance began in the third quarter 2015, with further
deterioration in the fourth quarter 2015.
For the fourth quarter 2015, HCRMC reported normalized EBITDAR
of $110 million, which decreased
$36 million on a year-over-year basis
compared to the fourth quarter 2014, and decreased $17 million sequentially compared to the third
quarter 2015. The results were impacted by core operating
performance weakness and unfavorable non-routine items discussed
below. The level of performance was below expectations and
uncharacteristic for the fourth quarter, which has historically
been strong due in large part to increased census and the annual
Medicare rate increases on October 1.
HCRMC ended 2015 with $125 million
of cash and cash equivalents and continues to be current on its
obligations under the amended master lease (the "Master
Lease").
CORE OPERATING PERFORMANCE
Before the impact from non-routine items described below,
HCRMC's fourth quarter EBITDAR was below its forecast, primarily
due to the continued change in payor mix from traditional Medicare
to Managed Care plans, which reduced reimbursement rates and
lowered census. As a result, HCRMC reported a decline in its core
SNF operating metrics (which excludes the 50 non-strategic
disposition assets), with fourth quarter census decreasing 175
basis points from the prior year to 82.6%.
NON-ROUTINE ITEMS
As previously disclosed, HCRMC is in the process of exiting 50
non-strategic assets, of which 21 sales were completed in the
fourth quarter and an additional 11 closed in the first quarter
2016. As such, disruption resulting from transitioning operations
to new owners and closing costs led to additional underperformance
from this pool of assets. EBITDAR losses from the sale of
non-strategic assets totaled $11
million in the fourth quarter 2015, and $22 million for full year 2015. HCP continues to
expect total proceeds of $350 million
from the sales of the non-strategic assets, of which $280 million have closed to-date with the
remaining $70 million expected to
close in mid-2016.
In addition, HCRMC continues to defend against the Department of
Justice ("DOJ") civil complaint previously disclosed in
April 2015. HCRMC incurred legal and
regulatory defense costs of $3
million during the fourth quarter 2015 and $9 million for the full year 2015. The outcome of
the DOJ civil complaint remains uncertain, and HCRMC expects to
incur additional legal and regulatory defense costs in 2016.
HCRMC 2016 FORECAST
HCRMC's 2016 forecast anticipates their normalized EBITDAR at
$577 million before the temporary
impact from the pending asset sales and legal and regulatory
defense costs, which adjusted for the impact of these items is
estimated to be $555 million.
Furthermore, HCP reviewed sensitivities regarding certain key
assumptions in HCRMC's forecast, which primarily affected census,
to arrive at a potential range of projected outcomes for HCRMC's
2016 EBITDAR. HCP's forecast of HCRMC's 2016 EBITDAR ranges from
$505 million to $555 million,
resulting in a 2016 FCC range of 1.06x to 1.16x. HCP's estimated
FCC range reflects the contractual rent under the Master Lease,
including the 3.0% increase in April, and interest payments in
2016. HCP's sensitivities of HCRMC's 2016 performance reflect:
- reduced growth outlook facing the broader post-acute/SNF
industry and HCRMC, from the challenge associated with the
continued reduction in revenue per admission related to the shift
of patients from traditional fee-for-service to managed care and
shorter length of patient stays; and
- HCRMC's performance deterioration in the fourth quarter 2015
(described above), resulting in a lower starting point in
January 2016.
HCP has engaged advisors and continues to work closely with
HCRMC to jointly explore all opportunities that reduce our
concentration, improve the credit quality and coverage of our
Master Lease, and ensure HCRMC can continue to deliver high quality
care and services.
ACCOUNTING UPDATE FOR HCRMC PORTFOLIO AND IMPAIRMENT
CHARGE
As a result of HCRMC's fourth quarter performance deterioration
and the related decline in its FCC, we placed our real estate
portfolio operated by HCRMC on "Watch List" status at year end
2015, and changed our accounting treatment to recognize rental
income on a cash basis beginning January
2016. As such, we will no longer recognize non-cash
accretion income under the HCRMC DFLs, as reflected in our full
year 2016 earnings and FFO guidance provided
herein.
The reduced growth outlook for the broader post-acute/SNF
industry indicates challenges to the improvement in HCRMC's
financial performance over the next few years. At year end 2015, we
assessed the value of our HCRMC real estate portfolio, including
obtaining a third-party, independent valuation appraisal of our
HCRMC post-acute/SNF and senior housing portfolio. We reduced the
carrying value of our HCRMC DFL investments to $5.2 billion, which approximates its estimated
market value at year end 2015, which resulted in an impairment
charge of $817 million recorded in
the fourth quarter 2015. We also recorded a fourth quarter
impairment charge of $19 million
related to our 9% equity investment in HCRMC OpCo.
FOURTH QUARTER 2015 HIGHLIGHTS
CAPITAL RECYCLING AND FINANCING ACTIVITIES
During the fourth quarter, we generated $1.1 billion from capital recycling and financing
activities, led by the following:
- We completed sales of 21 HCRMC non-strategic assets for
$208 million.
- In December, we sold a portfolio of 61 MOBs and three hospitals
owned by HCP Ventures III and IV for $634
million, generating net proceeds to HCP of $45 million after debt repayments. Formed in 2006
and 2007, respectively, HCP Ventures III and IV invested in an MOB
portfolio split evenly between on- and off-campus buildings.
- As previously disclosed, we raised $110
million from creating a new institutional joint venture with
Morgan Stanley on our Memorial Hermann on-campus portfolio in
Houston, TX.
- In December, we issued $600
million of 4.0% senior unsecured notes due 2022. The notes
were priced at 99.577% of the principal amount with a
yield-to-maturity of 4.07%. Proceeds were used to repay our
$500 million 3.75% senior unsecured notes due this month and
to fund our investments.
Proceeds from capital recycling and other financing activities
were primarily used to pay down our revolving line of credit, which
was drawn to fund our 2015 investments.
INVESTMENT TRANSACTIONS
We completed $208 million of
investment transactions during the fourth quarter, bringing our
full year 2015 total investments to $2.1
billion, including:
- $83 million acquisition of
Edgewater Science and Technology Park, a six-building life science
portfolio representing 170,000 sq. ft. Strategically located in
South San Francisco, CA, the
multi-tenant campus was recently renovated and is currently 100%
occupied; and
- $57 million expansion (HCP's pro
rata share) of our relationship with Brookdale and MBK Senior Living, by acquiring
four senior housing communities valued at $103 million in aggregate.
LIFE SCIENCE AND MEDICAL OFFICE LEASING
During the fourth quarter, we completed 911,000 sq. ft. of
leasing in our life science and medical office portfolios,
consisting of 619,000 sq. ft. of renewals and 292,000 sq. ft. of
new leases, which increased our full year 2015 leasing activity to
3.2 million sq. ft. Significant leasing transactions included:
- 10-year lease with CytomX Therapeutics, Inc., an
oncology-focused biopharmaceutical company, for 76,000 sq. ft. at
The Cove Phase I development in South San
Francisco, CA, scheduled to commence in the fourth quarter
2016;
- 7-year renewal and expansion for 41,000 sq. ft. in San Diego, CA for a life science tenant;
and
- Two renewals averaging 9.5 years for 50,000 sq. ft. at MOBs in
Kentucky and Indiana.
In January, we executed a 5-year life science tenant renewal for
66,000 sq. ft. in Mountain View,
CA.
We have pre-leased approximately 50% of The Cove Phase I, which
consists of two buildings totaling up to 250,000 sq. ft., expected
to be completed in the third quarter of 2016. In response to Phase
I leasing success and continued strong demand from life science
users in South San Francisco, we
recently commenced the $185 million
development The Cove Phase II, which adds two Class A buildings
totaling up to 230,000 sq. ft. expected to be delivered by the
third quarter of 2017. Visit our website for more information,
including a link to see the development progress at
www.hcpi.com/portfolio/life-science.
At December 31, 2015, our life
science occupancy achieved its sixth consecutive quarterly all-time
high at 98.2%, representing an increase of 300 basis points over
prior year. Our medical office occupancy was 91.9%, representing an
increase of 110 basis points over prior year.
SUSTAINABILITY LEADERSHIP
In November, HCP was named the 2015 Healthcare Leader in the
Light Award winner by the National Association of Real Estate
Investment Trusts ("NAREIT"). HCP has received a Leader in the
Light award seven of the past nine years for producing significant,
measurable results through our sustainability programs. More
information about HCP's sustainability efforts can be found on our
website at www.hcpi.com/sustainability.
DIVIDEND ARISTOCRAT
On January 28, 2016, our Board of
Directors declared a quarterly cash dividend of $0.575 per common share. The dividend will be
paid on February 23, 2016 to
stockholders of record as of the close of business on February 8, 2016. HCP has increased its dividend
for 31 consecutive years and is the first REIT included in the
S&P 500 Dividend Aristocrats index.
FULL YEAR 2016 OUTLOOK
Estimates of FFO and EPS reflect recognizing income from our
HCRMC investments on a cash basis beginning January 2016. The impact of removing non-cash
HCRMC income to our FFO run-rate is approximately $150 million, or $0.32 per share (no impact to FAD or SPP Cash
NOI).
For full year 2016, we expect: FFO per share to range between
$2.74 and $2.80; FAD per share to
range between $2.62 and $2.68; and
EPS to range between $1.49 and $1.55.
In addition, we expect 2016 SPP Cash NOI to increase between 1.5%
and 2.5%. Excluding HCRMC, we expect 2016 SPP Cash NOI to increase
between 2.3% and 3.3%. These estimates do not reflect the potential
impact from unannounced future transactions. Refer to the
"Projected Future Operations" and "Projected SPP Cash NOI" sections
of this release for additional information regarding these
estimates.
|
Full Year 2016 SPP
Cash NOI
|
|
|
|
Low
|
|
High
|
|
|
Senior
housing
|
1.25%
|
|
2.25%
|
|
|
Senior housing
RIDEA (69 properties)
|
3.0%
|
|
4.0%
|
|
|
Post-acute/skilled
nursing
|
(1.1%)
|
|
(0.1%)
|
|
|
Life
science
|
6.2%
|
|
7.2%
|
|
|
Medical
office
|
1.9%
|
|
2.9%
|
|
|
Hospital
|
1.7%
|
|
2.7%
|
|
|
SPP Cash NOI
growth
|
1.5%
|
|
2.5%
|
|
|
SPP Cash NOI growth,
excluding HCRMC portfolio
|
2.3%
|
|
3.3%
|
|
|
|
|
|
|
|
COMPANY INFORMATION
HCP has scheduled a conference call and webcast for Tuesday, February 9, 2016 at 9:00 a.m.
Pacific Time (12:00 p.m. Eastern Time) in order to present the
Company's performance and operating results for the quarter and
year ended December 31, 2015. The
conference call is accessible by dialing (888) 317-6003 (U.S.) or
(412) 317-6061 (International). The participant passcode is
3638438. The webcast is accessible via the Company's website at
www.hcpi.com. This link can be found on the "Event Calendar" page,
which is under the "Investor Relations" tab. Through February 24, 2016, an archive of the webcast will
be available on our website, and a telephonic replay can be
accessed by calling (877) 344-7529 (U.S.) or (412) 317-0088
(International) and entering passcode 10078967. The Company's
supplemental information package for the current period is
available with this earnings release on the Company's website in
the "Presentations" section of the "Investor Relations"
tab.
ABOUT HCP
HCP, Inc. is a fully integrated real estate investment trust
(REIT) that invests primarily in real estate serving the healthcare
industry in the United States. HCP's portfolio of assets is
diversified among five distinct sectors: senior housing,
post-acute/skilled nursing, life science, medical office and
hospital. A publicly traded company since 1985, HCP: (i) is
the first healthcare REIT selected to the S&P 500 index; (ii)
has increased its dividend per share for 31 consecutive years;
(iii) is the first REIT included in the S&P 500 Dividend
Aristocrats index; and (iv) is recognized as a global leader in
sustainability as a member of the Dow Jones and FTSE4Good
sustainability indices, as well as the recipient in three of the
past four years of both of the GRESB Global Healthcare Sector
Leader and the NAREIT Healthcare Leader in the Light Award.
For more information regarding HCP, visit www.hcpi.com.
FORWARD-LOOKING STATEMENTS
"Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995: The statements contained in this
release which are not historical facts are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. These statements include, among other things,
the Company's expectations with respect to (i) earnings, FFO and
FAD applicable to common shares on a diluted basis, SPP Cash NOI
growth projections, and other financial projections and assumptions
for the full year of 2016; (ii) the payment of the quarterly cash
dividend; (iii) outcomes relating to the acquisitions,
dispositions, developments and financing activities discussed
above; (iv) proceeds from HCRMC sales of non-strategic assets; and
(v) HCRMC's forecast and outlook. These statements are made as of
the date hereof, are not guarantees of future performance and are
subject to known and unknown risks, uncertainties, assumptions and
other factors—many of which are out of the Company's and its
management's control and difficult to forecast—that could cause
actual results to differ materially from those set forth in or
implied by such forward-looking statements. These risks and
uncertainties include but are not limited to: HCRMC's ability to
meet its contractual obligations under the HCRMC lease amendment
and risks related to the impact of the U.S. Department of Justice
lawsuit against HCRMC, including the possibility of larger than
expected litigation costs, adverse results and related
developments; our reliance on a concentration of a small number of
tenants and operators, for a significant portion of our revenues;
the financial weakness of tenants, operators and borrowers,
including potential bankruptcies and downturns in their businesses,
and their legal and regulatory proceedings, which results in
uncertainties regarding our ability to continue to realize the full
benefit of such tenants' and operators' leases and borrowers'
loans; the ability of our tenants, operators and borrowers to
conduct their respective businesses in a manner sufficient to
maintain or increase their revenues and to generate sufficient
income to make rent and loan payments to us and our ability to
recover investments made, if applicable, in their operations;
competition for tenants and operators, including with respect to
new leases and mortgages and the renewal or rollover of existing
leases; competition for skilled management, nurses and other
trained personnel; availability of suitable properties to acquire
at favorable prices and the competition for the acquisition and
financing of those properties; the ability of our own tenants and
operators to maintain costs and to compete for skilled management
and nurses; our ability to negotiate the same or better terms with
new tenants or operators if existing leases are not renewed or we
exercise our right to replace an existing tenant or operator upon
default; the risks associated with our investments in joint
ventures and unconsolidated entities, including our lack of sole
decision making authority and our reliance on our partners'
financial condition and continued cooperation; our ability to
achieve the benefits of investments, including those investments
discussed above, within expected time frames or at all, or within
expected cost projections; the potential impact on us and our
tenants, operators and borrowers from current and future litigation
matters, including the possibility of larger than expected
litigation costs, adverse results and related developments; the
effect on healthcare providers of legislation addressing
entitlement programs and related services, including Medicare and
Medicaid, which may result in future reductions in reimbursements;
changes in federal, state or local laws and regulations, including
those affecting the healthcare industry that affect our costs of
compliance or increase the costs, or otherwise affect the
operations, of our tenants and operators; volatility or uncertainty
in the capital markets, the availability and cost of capital as
impacted by interest rates, changes in our credit ratings, and the
value of our common stock, and other conditions that may adversely
impact our ability to fund our obligations or consummate
transactions, or reduce the earnings from potential transactions;
changes in global, national and local economic conditions, and
currency exchange rates; changes in the credit ratings on
United States ("U.S.") government
debt securities or default or delay in payment by the U.S. of its
obligations; our ability to manage our indebtedness level and
changes in the terms of such indebtedness; the ability to maintain
our qualification as a real estate investment trust; and other
risks and uncertainties described from time to time in the
Company's Securities and Exchange Commission filings. The Company
assumes no, and hereby disclaims any, obligation to update any of
the foregoing or any other forward-looking statements as a result
of new information or new or future developments, except as
otherwise required by law.
CONTACT
Timothy M. Schoen
Executive Vice President and Chief Financial Officer
949-407-0400
|
|
|
HCP,
Inc.
Consolidated
Balance Sheets
In thousands,
except share and per share data
(Unaudited)
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
2015
|
|
2014
|
|
|
Assets
|
|
|
|
|
|
Real
estate:
|
|
|
|
|
|
|
|
Buildings and
improvements
|
$
|
12,501,511
|
|
$
|
10,972,973
|
|
|
Development costs and
construction in progress
|
|
390,584
|
|
|
275,233
|
|
|
Land
|
|
1,995,657
|
|
|
1,889,438
|
|
|
Accumulated
depreciation and amortization
|
|
(2,605,036)
|
|
|
(2,250,757)
|
|
|
Net real
estate
|
|
12,282,716
|
|
|
10,886,887
|
|
|
|
|
|
|
|
|
|
Net investment in
direct financing leases
|
|
5,905,009
|
|
|
7,280,334
|
|
|
Loans receivable,
net
|
|
768,743
|
|
|
906,961
|
|
|
Investments in and
advances to unconsolidated joint ventures
|
|
605,244
|
|
|
605,448
|
|
|
Accounts receivable,
net of allowance of $3,261 and $3,785, respectively
|
|
48,929
|
|
|
36,339
|
|
|
Cash and cash
equivalents
|
|
346,500
|
|
|
183,810
|
|
|
Restricted
cash
|
|
60,616
|
|
|
48,976
|
|
|
Intangible assets,
net
|
|
614,227
|
|
|
481,013
|
|
|
Other assets,
net
|
|
817,865
|
|
|
901,668
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
21,449,849
|
|
$
|
21,331,436
|
|
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
|
|
Bank line of
credit
|
$
|
397,432
|
|
$
|
838,516
|
|
|
Term loans
|
|
524,807
|
|
|
212,986
|
|
|
Senior unsecured
notes
|
|
9,120,107
|
|
|
7,589,960
|
|
|
Mortgage
debt
|
|
932,212
|
|
|
982,785
|
|
|
Other debt
|
|
94,445
|
|
|
97,022
|
|
|
Intangible
liabilities, net
|
|
75,273
|
|
|
84,723
|
|
|
Accounts payable and
accrued liabilities
|
|
436,239
|
|
|
432,934
|
|
|
Deferred
revenue
|
|
123,017
|
|
|
95,411
|
|
|
Total
liabilities
|
|
11,703,532
|
|
|
10,334,337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $1.00
par value: 750,000,000 shares authorized; 465,488,492 and
459,746,267 shares issued and outstanding, respectively
|
|
465,488
|
|
|
459,746
|
|
|
Additional paid-in
capital
|
|
11,647,039
|
|
|
11,431,987
|
|
|
Cumulative dividends
in excess of earnings
|
|
(2,738,414)
|
|
|
(1,132,541)
|
|
|
Accumulated other
comprehensive loss
|
|
(30,470)
|
|
|
(23,895)
|
|
|
Total stockholders'
equity
|
|
9,343,643
|
|
|
10,735,297
|
|
|
|
|
|
|
|
|
|
Joint venture
partners
|
|
217,066
|
|
|
73,214
|
|
|
Non-managing member
unitholders
|
|
185,608
|
|
|
188,588
|
|
|
Total noncontrolling
interests
|
|
402,674
|
|
|
261,802
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
9,746,317
|
|
|
10,997,099
|
|
|
|
|
|
|
|
|
|
Total liabilities and
equity
|
$
|
21,449,849
|
|
$
|
21,331,436
|
|
|
|
|
HCP,
Inc.
Consolidated
Statements of Operations
In thousands,
except per share data
(Unaudited)
|
|
|
|
|
Three Months
Ended
December
31,
|
|
Year Ended
December
31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and related
revenues
|
$
|
299,100
|
|
$
|
279,791
|
|
$
|
1,144,482
|
|
$
|
1,174,256
|
|
|
Tenant
recoveries
|
|
32,129
|
|
|
28,821
|
|
|
126,485
|
|
|
110,688
|
|
|
Resident fees and
services
|
|
158,312
|
|
|
103,760
|
|
|
525,453
|
|
|
241,965
|
|
|
Income from direct
financing leases
|
|
154,859
|
|
|
167,346
|
|
|
633,835
|
|
|
663,070
|
|
|
Interest
income
|
|
23,135
|
|
|
23,341
|
|
|
112,184
|
|
|
74,491
|
|
|
Investment management
fee income
|
|
501
|
|
|
469
|
|
|
1,873
|
|
|
1,809
|
|
|
Total
revenues
|
|
668,036
|
|
|
603,528
|
|
|
2,544,312
|
|
|
2,266,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
122,027
|
|
|
114,987
|
|
|
479,596
|
|
|
439,742
|
|
|
Depreciation and
amortization
|
|
141,156
|
|
|
116,499
|
|
|
510,785
|
|
|
459,995
|
|
|
Operating
|
|
172,487
|
|
|
130,430
|
|
|
614,375
|
|
|
384,603
|
|
|
General and
administrative
|
|
21,870
|
|
|
20,141
|
|
|
96,022
|
|
|
82,175
|
|
|
Acquisition and
pursuit costs
|
|
3,959
|
|
|
3,766
|
|
|
27,309
|
|
|
17,142
|
|
|
Impairments,
net
|
|
810,932
|
|
|
—
|
|
|
1,403,853
|
|
|
—
|
|
|
Total costs and
expenses
|
|
1,272,431
|
|
|
385,823
|
|
|
3,131,940
|
|
|
1,383,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sales of real
estate
|
|
—
|
|
|
3,288
|
|
|
6,377
|
|
|
3,288
|
|
|
Other income,
net
|
|
2,651
|
|
|
1,778
|
|
|
14,404
|
|
|
7,528
|
|
|
Total other income,
net
|
|
2,651
|
|
|
5,066
|
|
|
20,781
|
|
|
10,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income
before income taxes and equity income from and impairment of
unconsolidated joint ventures
|
|
(601,744)
|
|
|
222,771
|
|
|
(566,847)
|
|
|
893,438
|
|
|
Income tax benefit
(expense)
|
|
2,391
|
|
|
2,590
|
|
|
9,011
|
|
|
(250)
|
|
|
Equity income from
unconsolidated joint ventures
|
|
23,397
|
|
|
10,182
|
|
|
57,313
|
|
|
49,570
|
|
|
Impairments of
investments in unconsolidated joint ventures
|
|
(18,661)
|
|
|
(35,913)
|
|
|
(45,895)
|
|
|
(35,913)
|
|
|
(Loss) income from
continuing operations
|
|
(594,617)
|
|
|
199,630
|
|
|
(546,418)
|
|
|
906,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before gain on
sales of real estate, net of income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,736
|
|
|
Gain on sales of real
estate, net of income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,010
|
|
|
Total discontinued
operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
(594,617)
|
|
|
199,630
|
|
|
(546,418)
|
|
|
936,591
|
|
|
Noncontrolling
interests' share in earnings
|
|
(4,251)
|
|
|
(3,047)
|
|
|
(12,817)
|
|
|
(14,358)
|
|
|
Net (loss) income
attributable to HCP, Inc.
|
|
(598,868)
|
|
|
196,583
|
|
|
(559,235)
|
|
|
922,233
|
|
|
Participating
securities' share in earnings
|
|
(296)
|
|
|
(438)
|
|
|
(1,317)
|
|
|
(2,437)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
applicable to common shares
|
$
|
(599,164)
|
|
$
|
196,145
|
|
$
|
(560,552)
|
|
$
|
919,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
(1.29)
|
|
$
|
0.43
|
|
$
|
(1.21)
|
|
$
|
1.94
|
|
|
Discontinued
operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.07
|
|
|
Net (loss) income
applicable to common shares
|
$
|
(1.29)
|
|
$
|
0.43
|
|
$
|
(1.21)
|
|
$
|
2.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
(1.29)
|
|
$
|
0.43
|
|
$
|
(1.21)
|
|
$
|
1.94
|
|
|
Discontinued
operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.06
|
|
|
Net (loss) income
applicable to common shares
|
$
|
(1.29)
|
|
$
|
0.43
|
|
$
|
(1.21)
|
|
$
|
2.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used to calculate earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
465,036
|
|
|
459,333
|
|
|
462,795
|
|
|
458,425
|
|
|
Diluted
|
|
465,036
|
|
|
459,752
|
|
|
462,795
|
|
|
458,796
|
|
|
|
|
HCP,
Inc.
Consolidated
Statements of Cash Flows
In
thousands
(Unaudited)
|
|
|
|
|
Year Ended December
31,
|
|
|
2015
|
|
2014
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net (loss)
income
|
$
|
(546,418)
|
|
$
|
936,591
|
|
|
Adjustments to
reconcile net (loss) income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and
amortization
|
510,785
|
|
459,995
|
|
|
Amortization of market
lease intangibles, net
|
(1,295)
|
|
(949)
|
|
|
Amortization of
deferred compensation
|
26,127
|
|
21,885
|
|
|
Amortization of
deferred financing costs, net
|
20,222
|
|
19,260
|
|
|
Straight-line
rents
|
(28,859)
|
|
(41,032)
|
|
|
Loan and direct
financing lease interest accretion
|
(95,713)
|
|
(78,286)
|
|
|
Deferred rental
revenues
|
(2,813)
|
|
(1,884)
|
|
|
Equity income from
unconsolidated joint ventures
|
(57,313)
|
|
(49,570)
|
|
|
Distributions of
earnings from unconsolidated joint ventures
|
15,111
|
|
5,045
|
|
|
Lease termination
income, net
|
(1,103)
|
|
(38,001)
|
|
|
Gain on sales of real
estate
|
(6,377)
|
|
(31,298)
|
|
|
Foreign exchange and
other gains, net
|
(7,178)
|
|
(2,270)
|
|
|
Impairments,
net
|
1,449,748
|
|
35,913
|
|
|
Changes
in:
|
|
|
|
|
|
Accounts receivable,
net
|
(9,569)
|
|
(8,845)
|
|
|
Other
assets
|
(19,453)
|
|
(6,287)
|
|
|
Accounts payable and
accrued liabilities
|
(23,757)
|
|
28,354
|
|
|
Net cash provided by
operating activities
|
1,222,145
|
|
1,248,621
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Acquisition of RIDEA
III, net
|
(770,325)
|
|
—
|
|
|
Acquisition of the
CCRC unconsolidated joint venture interest, net
|
—
|
|
(370,186)
|
|
|
Acquisitions of other
real estate
|
(613,252)
|
|
(503,470)
|
|
|
Development of real
estate
|
(281,017)
|
|
(178,513)
|
|
|
Leasing costs and
tenant and capital improvements
|
(84,282)
|
|
(71,734)
|
|
|
Proceeds from sales
and pending sales of real estate, net
|
58,623
|
|
104,557
|
|
|
Contributions to
unconsolidated joint ventures
|
(69,936)
|
|
(2,935)
|
|
|
Distributions in
excess of earnings from unconsolidated joint ventures
|
30,989
|
|
2,657
|
|
|
Proceeds from sales
of marketable securities
|
2,348
|
|
—
|
|
|
Principal repayments
on loans receivable, DFLs and other
|
625,701
|
|
119,511
|
|
|
Investments in loans
receivable, DFLs and other
|
(575,652)
|
|
(600,019)
|
|
|
Decrease (increase)
in restricted cash
|
4,798
|
|
(11,747)
|
|
|
Net cash used in
investing activities
|
(1,672,005)
|
|
(1,511,879)
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Net borrowings under
bank line of credit
|
98,743
|
|
845,190
|
|
|
Repayments under bank
line of credit
|
(511,521)
|
|
—
|
|
|
Borrowings under term
loan
|
333,014
|
|
—
|
|
|
Issuance of senior
unsecured notes
|
1,936,017
|
|
1,150,000
|
|
|
Repayments of senior
unsecured notes
|
(400,000)
|
|
(487,000)
|
|
|
Issuance of mortgage
and other debt
|
—
|
|
35,445
|
|
|
Repayments of
mortgage and other debt
|
(57,845)
|
|
(447,784)
|
|
|
Deferred financing
costs
|
(19,995)
|
|
(16,550)
|
|
|
Issuance of common
stock and exercise of options
|
206,471
|
|
96,592
|
|
|
Repurchase of common
stock
|
(8,738)
|
|
(12,703)
|
|
|
Dividends paid on
common stock
|
(1,046,638)
|
|
(1,001,559)
|
|
|
Issuance of
noncontrolling interests
|
110,775
|
|
4,674
|
|
|
Purchase of
noncontrolling interests
|
(7,049)
|
|
(5,897)
|
|
|
Distributions to
noncontrolling interests
|
(19,147)
|
|
(15,611)
|
|
|
Net cash provided by
financing activities
|
614,087
|
|
144,797
|
|
|
Effect of foreign
exchange on cash and cash equivalents
|
(1,537)
|
|
1,715
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
162,690
|
|
(116,746)
|
|
|
Cash and cash
equivalents, beginning of year
|
183,810
|
|
300,556
|
|
|
Cash and cash
equivalents, end of year
|
$
|
346,500
|
|
$
|
183,810
|
|
|
|
|
HCP,
Inc.
Funds From
Operations(1)
In thousands,
except per share data
(Unaudited)
|
|
|
|
|
Three Months
Ended
December
31,
|
|
Year Ended
December
31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income applicable to common shares
|
$
|
(599,164)
|
|
$
|
196,145
|
|
$
|
(560,552)
|
|
$
|
919,796
|
|
|
Depreciation and
amortization
|
|
141,156
|
|
|
116,499
|
|
|
510,785
|
|
|
459,995
|
|
|
Other depreciation
and amortization(2)
|
|
5,207
|
|
|
6,293
|
|
|
22,223
|
|
|
18,864
|
|
|
Impairment of real
estate
|
|
—
|
|
|
—
|
|
|
2,948
|
|
|
—
|
|
|
Gain on sales of real
estate
|
|
—
|
|
|
(3,288)
|
|
|
(6,377)
|
|
|
(31,298)
|
|
|
Equity income from
unconsolidated joint ventures
|
|
(23,397)
|
|
|
(10,182)
|
|
|
(57,313)
|
|
|
(49,570)
|
|
|
FFO from
unconsolidated joint ventures
|
|
21,176
|
|
|
22,190
|
|
|
90,498
|
|
|
70,873
|
|
|
Noncontrolling
interests' and participating securities' share in
earnings
|
|
4,547
|
|
|
3,485
|
|
|
14,134
|
|
|
16,795
|
|
|
Noncontrolling
interests' and participating securities' share in FFO
|
|
(8,203)
|
|
|
(6,408)
|
|
|
(27,187)
|
|
|
(23,821)
|
|
|
FFO applicable to
common shares
|
$
|
(458,678)
|
|
$
|
324,734
|
|
$
|
(10,841)
|
|
$
|
1,381,634
|
|
|
Distributions on
dilutive convertible units
|
|
—
|
|
|
3,472
|
|
|
—
|
|
|
13,799
|
|
|
Diluted FFO
applicable to common shares
|
$
|
(458,678)
|
|
$
|
328,206
|
|
$
|
(10,841)
|
|
$
|
1,395,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted FFO per
common share
|
$
|
(0.99)
|
|
$
|
0.70
|
|
$
|
(0.02)
|
|
$
|
3.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used to calculate diluted FFO per share
|
|
465,036
|
|
|
465,832
|
|
|
462,795
|
|
|
464,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of
adjustments to FFO:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other impairments,
net(3)
|
$
|
829,593
|
|
$
|
35,913
|
|
$
|
1,446,800
|
|
$
|
35,913
|
|
|
Transaction-related
items(4)
|
|
3,959
|
|
|
4,269
|
|
|
32,932
|
|
|
(18,856)
|
|
|
Severance-related
charge
|
|
—
|
|
|
—
|
|
|
6,713
|
|
|
—
|
|
|
Foreign currency
remeasurement losses (gains)
|
|
60
|
|
|
—
|
|
|
(5,437)
|
|
|
—
|
|
|
$
|
833,612
|
|
$
|
40,182
|
|
$
|
1,481,008
|
|
$
|
17,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO as adjusted
applicable to common shares
|
$
|
374,934
|
|
$
|
364,916
|
|
$
|
1,470,167
|
|
$
|
1,398,691
|
|
|
Distributions on
dilutive convertible units and other
|
|
3,397
|
|
|
3,388
|
|
|
13,597
|
|
|
13,766
|
|
|
Diluted FFO as
adjusted applicable to common shares
|
$
|
378,331
|
|
$
|
368,304
|
|
$
|
1,483,764
|
|
$
|
1,412,457
|
|
|
Per common share
impact of adjustments on diluted FFO
|
$
|
1.79
|
|
$
|
0.09
|
|
$
|
3.18
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted FFO as
adjusted per common share
|
$
|
0.80
|
|
$
|
0.79
|
|
$
|
3.16
|
|
$
|
3.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used to calculate diluted FFO as adjusted per
share
|
|
471,273
|
|
|
465,832
|
|
|
469,064
|
|
|
464,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________________________________
|
|
(1)
|
We believe Funds From
Operations ("FFO") is an important supplemental measure of
operating performance for a REIT. Because the historical cost
accounting convention used for real estate assets utilizes
straight-line depreciation (except on land), such accounting
presentation implies that the value of real estate assets
diminishes predictably over time. Since real estate values instead
have historically risen and fallen with market conditions,
presentations of operating results for a REIT that use historical
cost accounting for depreciation could be less informative. The
term FFO was developed by the REIT industry to address this issue.
FFO as defined by the NAREIT is net income (loss) applicable to
common shares (computed in accordance with U.S. generally accepted
accounting principles or "GAAP"), excluding gains or losses from
sales of property, impairments of, or related to, depreciable real
estate, plus real estate and other depreciation and amortization,
and after adjustments for joint ventures. Adjustments for joint
ventures are calculated to reflect FFO on the same basis. FFO does
not represent cash generated from operating activities in
accordance with GAAP, is not necessarily indicative of cash
available to fund cash needs and should not be considered an
alternative to net income (loss). We compute FFO in accordance with
the current NAREIT definition; however, other REITs may report FFO
differently or have a different interpretation of the current
NAREIT definition from ours. FFO as adjusted represents FFO before
the impact of severance-related charges, impairments (recoveries)
of non-depreciable assets, foreign currency remeasurement losses
(gains) and transaction-related items (defined below).
Transaction-related items include acquisition and pursuit costs
(e.g., due diligence and closing) and gains/charges incurred as a
result of mergers and acquisitions and lease amendment or
termination activities. Management believes that FFO as adjusted
provides a meaningful supplemental measurement of our FFO run-rate.
This measure is a modification of the NAREIT definition of FFO and
should not be used as an alternative to net income (loss)
(determined in accordance with GAAP) or NAREIT FFO.
|
|
|
|
(2)
|
For the three months
ended December 31, 2015, other depreciation and amortization
includes: (i) $3 million of DFL depreciation and (ii) $2 million of
lease incentive amortization (reduction of straight-line rents) for
the consideration given to terminate the 30 purchase options of the
153-property amended lease portfolio in the 2014 Brookdale
Transaction. For the year ended December 31, 2015, other
depreciation and amortization includes: (i) $13 million of DFL
depreciation and (ii) $9 million of lease incentive amortization
(reduction of straight-line rents) related to the 2014 Brookdale
Transaction.
|
|
|
|
(3)
|
For the three months
ended December 31, 2015, other impairments, net include impairment
charges of: (i) $817 million related to our HCRMC DFL investments
and (ii) $19 million related to our equity investment in HCRMC,
partially offset by impairment recovery of $6 million related to a
loan payoff in our hospital segment. For the year ended December
31, 2015, other impairments, net include: (i) $1.3 billion related
to our HCRMC DFL investments, (ii) $112 million related to our Four
Seasons unsecured notes, (iii) $46 million related to our equity
investment in HCRMC, partially offset by (iv) impairment recovery
of $6 million related to a loan payoff in our hospital segment. For
the three months and year ended December 31, 2014, other impairment
relates to our equity investment in HCRMC. See Note 17 to the
Consolidated Financial Statements for the year ended December 31,
2015 included in our Annual Report on Form 10-K.
|
|
|
|
(4)
|
2014
transaction-related items primarily relate to the Brookdale
Transaction that closed in August 2014. See the "Non-GAAP Financial
Measures Reconciliations" section of the Management Discussion and
Analysis for the year ended December 31, 2015 included in our
Annual Report on Form 10-K.
|
|
|
|
HCP,
Inc.
Funds Available
for Distribution(1)
In thousands,
except per share data
(Unaudited)
|
|
|
|
|
Three Months
Ended
December
31,
|
|
Year Ended
December
31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO as adjusted
applicable to common shares
|
$
|
374,934
|
|
$
|
364,916
|
|
$
|
1,470,167
|
|
$
|
1,398,691
|
|
|
Amortization of
market lease intangibles, net
|
|
(315)
|
|
|
(330)
|
|
|
(1,295)
|
|
|
(949)
|
|
|
Amortization of
deferred compensation(2)
|
|
5,059
|
|
|
5,418
|
|
|
23,233
|
|
|
21,885
|
|
|
Amortization of
deferred financing costs, net
|
|
5,272
|
|
|
5,138
|
|
|
20,222
|
|
|
19,260
|
|
|
Straight-line
rents
|
|
(4,042)
|
|
|
(5,950)
|
|
|
(28,859)
|
|
|
(41,032)
|
|
|
DFL
accretion(3)
|
|
(23,685)
|
|
|
(19,573)
|
|
|
(87,861)
|
|
|
(77,568)
|
|
|
Other depreciation
and amortization
|
|
(5,207)
|
|
|
(6,293)
|
|
|
(22,223)
|
|
|
(18,864)
|
|
|
Deferred revenues –
tenant improvement related
|
|
(457)
|
|
|
(633)
|
|
|
(2,594)
|
|
|
(2,306)
|
|
|
Deferred revenues –
additional rents
|
|
(860)
|
|
|
(831)
|
|
|
(219)
|
|
|
422
|
|
|
Leasing costs and
tenant and capital improvements
|
|
(31,193)
|
|
|
(29,962)
|
|
|
(82,072)
|
|
|
(74,464)
|
|
|
Lease restructure
payments(4)
|
|
6,289
|
|
|
5,136
|
|
|
22,657
|
|
|
9,425
|
|
|
Joint venture
adjustments – CCRC entrance fees(5)
|
|
8,870
|
|
|
7,414
|
|
|
30,918
|
|
|
11,443
|
|
|
Joint venture and
other FAD adjustments(3)
|
|
(21,077)
|
|
|
(19,487)
|
|
|
(80,225)
|
|
|
(67,121)
|
|
|
FAD applicable to
common shares
|
$
|
313,588
|
|
$
|
304,963
|
|
$
|
1,261,849
|
|
$
|
1,178,822
|
|
|
Distributions on
dilutive convertible units
|
|
3,547
|
|
|
3,472
|
|
|
14,230
|
|
|
13,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted FAD
applicable to common shares
|
$
|
317,135
|
|
$
|
308,435
|
|
$
|
1,276,079
|
|
$
|
1,192,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted FAD per
common share
|
$
|
0.67
|
|
$
|
0.66
|
|
$
|
2.72
|
|
$
|
2.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used to calculate diluted FAD per common share
|
|
471,273
|
|
|
465,832
|
|
|
469,064
|
|
|
464,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
________________________________________
|
|
(1)
|
Funds Available for
Distribution ("FAD") is defined as FFO as adjusted after excluding
the impact of the following: (i) amortization of acquired market
lease intangibles, net; (ii) amortization of deferred compensation
expense; (iii) amortization of deferred financing costs, net; (iv)
straight-line rents; (v) accretion and depreciation related to DFLs
and lease incentive amortization (reduction of straight-line
rents); and (vi) deferred revenues, excluding amounts amortized
into rental income that are associated with tenant funded
improvements owned/recognized by us and up-front cash payments made
by tenants to reduce their contractual rents. Also, FAD is: (i)
computed after deducting recurring capital expenditures, including
leasing costs and second generation tenant and capital
improvements; and (ii) includes lease restructure payments and
adjustments to compute our share of FAD from our unconsolidated
joint ventures and those related to CCRC non-refundable entrance
fees. Other REITs or real estate companies may use different
methodologies for calculating FAD, and accordingly, our FAD may not
be comparable to those reported by other REITs. Although our FAD
computation may not be comparable to that of other REITs,
management believes FAD provides a meaningful supplemental measure
of our performance and is frequently used by analysts, investors,
and other interested parties in the evaluation of our performance
as a REIT. FAD does not represent cash generated from operating
activities determined in accordance with GAAP, is not necessarily
indicative of cash available to fund cash needs and should not be
considered as an alternative to net income (loss) determined in
accordance with GAAP.
|
|
|
|
(2)
|
For the year ended
December 31, 2015, excludes $3 million related to the acceleration
of deferred compensation for restricted stock units and stock
options that vested upon the resignation of our former Executive
Vice President and Chief Investment Officer, which is included in
the severance-related charge for the year ended December 31,
2015.
|
|
|
|
(3)
|
For the three months
and year ended December 31, 2015, DFL accretion reflects an
elimination of $14 million and $58 million, respectively. Our
equity investment in HCRMC is accounted for using the equity
method, which requires an ongoing elimination of DFL income that is
proportional to our ownership in HCRMC. Further, our share of
earnings from HCRMC (equity income) increases for the corresponding
elimination of related lease expense recognized at the HCRMC entity
level, which we present as a non-cash joint venture FAD
adjustment.
|
|
|
|
(4)
|
Over a period of
three years from the closing of the 2014 Brookdale Transaction, we
will receive installment payments valued at $55 million for
terminating the leases on the HCP owned 49-property portfolio; we
include these installment payments in FAD as the payments are
collected.
|
|
|
|
(5)
|
Represents our 49%
share of non-refundable entrance fees included in FAD as the fees
are collected by our CCRC JV.
|
|
|
|
HCP,
Inc.
Net Operating
Income and Same Property
Performance(1)(2)
Dollars in
thousands
(Unaudited)
|
|
|
|
|
Three Months
Ended
December
31,
|
|
Year Ended
December
31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
Net (loss)
income
|
$
|
(594,617)
|
|
$
|
199,630
|
|
$
|
(546,418)
|
|
$
|
936,591
|
|
|
Interest
income
|
|
(23,135)
|
|
|
(23,341)
|
|
|
(112,184)
|
|
|
(74,491)
|
|
|
Investment management
fee income
|
|
(501)
|
|
|
(469)
|
|
|
(1,873)
|
|
|
(1,809)
|
|
|
Interest
expense
|
|
122,027
|
|
|
114,987
|
|
|
479,596
|
|
|
439,742
|
|
|
Depreciation and
amortization
|
|
141,156
|
|
|
116,499
|
|
|
510,785
|
|
|
459,995
|
|
|
General and
administrative
|
|
21,870
|
|
|
20,141
|
|
|
96,022
|
|
|
82,175
|
|
|
Acquisition and
pursuit costs
|
|
3,959
|
|
|
3,766
|
|
|
27,309
|
|
|
17,142
|
|
|
Impairments,
net
|
|
810,932
|
|
|
—
|
|
|
1,403,853
|
|
|
—
|
|
|
Gain on sales of real
estate
|
|
—
|
|
|
(3,288)
|
|
|
(6,377)
|
|
|
(3,288)
|
|
|
Other income,
net
|
|
(2,651)
|
|
|
(1,778)
|
|
|
(14,404)
|
|
|
(7,528)
|
|
|
Income tax (benefit)
expense
|
|
(2,391)
|
|
|
(2,590)
|
|
|
(9,011)
|
|
|
250
|
|
|
Equity income from
unconsolidated joint ventures
|
|
(23,397)
|
|
|
(10,182)
|
|
|
(57,313)
|
|
|
(49,570)
|
|
|
Impairment of
investments in unconsolidated joint ventures
|
|
18,661
|
|
|
35,913
|
|
|
45,895
|
|
|
35,913
|
|
|
Total discontinued
operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,746)
|
|
|
NOI
|
$
|
471,913
|
|
$
|
449,288
|
|
$
|
1,815,880
|
|
$
|
1,805,376
|
|
|
Non-cash adjustments
to NOI
|
|
(28,052)
|
|
|
(25,877)
|
|
|
(108,958)
|
|
|
(158,376)
|
|
|
Cash (adjusted)
NOI
|
$
|
443,861
|
|
$
|
423,411
|
|
$
|
1,706,922
|
|
$
|
1,647,000
|
|
|
Non-SPP cash
(adjusted) NOI
|
|
(30,509)
|
|
|
(8,757)
|
|
|
(178,549)
|
|
|
(126,451)
|
|
|
Same property
portfolio cash (adjusted) NOI(2)
|
$
|
413,352
|
|
$
|
414,654
|
|
$
|
1,528,373
|
|
$
|
1,520,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash (adjusted) NOI
% change – SPP(2)
|
|
(0.3%)
|
|
|
|
|
|
0.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
________________________________________
|
|
(1)
|
We believe Net
Operating Income from Continuing Operations ("NOI") provides
investors relevant and useful information because it reflects only
income and operating expense items that are incurred at the
property level and presents them on an unleveraged basis. We use
NOI and cash NOI to make decisions about resource allocations,
assess and compare property level performance, and evaluate our
same property portfolio ("SPP"). We believe that net income (loss)
is the most directly comparable GAAP measure to NOI. NOI should not
be viewed as an alternative measure of operating performance to net
income (loss) as defined by GAAP since it does not reflect various
excluded items. Further, our definition of NOI may not be
comparable to the definition used by other REITs or real estate
companies, as they may use different methodologies for calculating
NOI.
|
|
|
|
NOI is defined as
rental and related revenues, including tenant recoveries, resident
fees and services, and income from DFLs, less property level
operating expenses; NOI excludes all of the other financial
statement amounts itemized above. Cash NOI is calculated as NOI
after eliminating the effects of straight-line rents, DFL
accretion, amortization of market lease intangibles and lease
termination fees. Cash NOI is oftentimes referred to as "adjusted
NOI."
|
|
|
|
(2)
|
SPP statistics allow
management to evaluate the performance of our real estate portfolio
under a consistent population by eliminating changes in the
composition of our portfolio of properties. We identify our SPP as
stabilized properties that remained in operations and were
consistently reported as leased properties or operating properties
(RIDEA) for the duration of the year-over-year comparison periods
presented, excluding assets held for sale. Accordingly, it takes a
stabilized property a minimum of 12 months in operations under a
consistent reporting structure to be included in our SPP. Newly
acquired operating assets are generally considered stabilized at
the earlier of lease up (typically when the tenant(s) controls the
physical use of at least 80% of the space) or 12 months from the
acquisition date. Newly completed developments and redevelopments
are considered stabilized at the earlier of lease up or 24 months
from the date the property is placed in service. SPP NOI excludes
certain non-property specific operating expenses that are allocated
to each operating segment on a consolidated basis. SPP cash NOI
excludes the effects of foreign exchange rate movements by using
the average current period exchange rate to translate from British
pound sterling into U.S. dollars for the comparison periods. A
property is removed from our SPP when it is sold, placed into
redevelopment or changes its reporting structure.
|
|
|
|
HCP,
Inc.
Projected Future
Operations(1)
(Unaudited)
|
|
|
|
|
Full Year
2016
|
|
|
Low
|
|
High
|
|
|
|
|
|
|
|
Diluted earnings per
common share
|
$ 1.49
|
|
$ 1.55
|
|
|
Depreciation and
amortization
|
1.21
|
|
1.21
|
|
|
Other depreciation
and amortization
|
0.03
|
|
0.03
|
|
|
Gain on sales of real
estate
|
(0.05)
|
|
(0.05)
|
|
|
Joint venture FFO
adjustments
|
0.06
|
|
0.06
|
|
|
Diluted FFO per
common share
|
$ 2.74
|
|
$ 2.80
|
|
|
Amortization of net
market lease intangibles and deferred revenues
|
(0.01)
|
|
(0.01)
|
|
|
Amortization of
deferred compensation
|
0.04
|
|
0.04
|
|
|
Amortization of
deferred financing costs, net
|
0.04
|
|
0.04
|
|
|
Straight-line
rents
|
(0.03)
|
|
(0.03)
|
|
|
Other depreciation
and amortization
|
(0.03)
|
|
(0.03)
|
|
|
Leasing costs and
tenant and capital improvements
|
(0.19)
|
|
(0.19)
|
|
|
Lease restructure
payments
|
0.04
|
|
0.04
|
|
|
Joint venture
adjustments – CCRC entrance fees
|
0.07
|
|
0.07
|
|
|
Joint venture and
other FAD adjustments
|
(0.05)
|
|
(0.05)
|
|
|
Diluted FAD per
common share
|
$ 2.62
|
|
$ 2.68
|
|
|
|
|
|
|
|
________________________________________
|
|
(1)
|
The foregoing
projections reflect management's view of current and future market
conditions, including assumptions with respect to rental rates,
occupancy levels, development items and the earnings impact of the
events referenced in this release. These projections do not reflect
the potential impact of unannounced future acquisitions,
dispositions, other impairments or recoveries, the future
bankruptcy or insolvency of our operators, lessees, borrowers or
other obligors, the effect of any future restructuring of our
contractual relationships with such entities, gains or losses on
marketable securities, ineffectiveness related to our cash flow
hedges, or existing and future litigation matters including the
possibility of larger than expected litigation costs and related
developments. Our actual results may differ materially from the
projections set forth above. The aforementioned ranges represent
management's best estimates based upon the underlying assumptions
as of the date of this press release. Except as otherwise required
by law, management assumes no, and hereby disclaims any, obligation
to update any of the foregoing projections as a result of new
information or new or future developments.
|
|
|
|
HCP,
Inc.
Projected SPP Cash
NOI(1)
Dollars in
thousands
(Unaudited)
|
|
|
|
|
For the projected
full year 2016 (low):
|
|
|
|
|
|
Senior
|
|
Post-acute/
|
|
Life
|
|
Medical
|
|
|
|
|
|
|
|
Housing
|
|
Skilled nursing
|
|
Science
|
|
Office
|
|
Hospital
|
|
Total
|
|
|
NOI(2)
|
|
$
|
703,800
|
|
$
|
429,500
|
|
$
|
280,900
|
|
$
|
270,800
|
|
$
|
85,600
|
|
$
|
1,770,600
|
|
|
Non-cash adjustments
to NOI(3)
|
|
|
(11,000)
|
|
|
(600)
|
|
|
(900)
|
|
|
(2,600)
|
|
|
1,300
|
|
|
(13,800)
|
|
|
Cash (adjusted)
NOI
|
|
|
692,800
|
|
|
428,900
|
|
|
280,000
|
|
|
268,200
|
|
|
86,900
|
|
|
1,756,800
|
|
|
Non-SPP cash
(adjusted) NOI
|
|
|
(71,000)
|
|
|
(7,800)
|
|
|
(25,600)
|
|
|
(24,200)
|
|
|
—
|
|
|
(128,600)
|
|
|
SPP cash
(adjusted) NOI
|
|
$
|
621,800
|
|
$
|
421,100
|
|
$
|
254,400
|
|
$
|
244,000
|
|
$
|
86,900
|
|
|
1,628,200
|
|
|
Addback
adjustments(4)
|
|
|
|
|
|
|
|
|
|
|
|
142,400
|
|
|
Other income and
expenses(5)
|
|
|
|
|
|
|
|
|
|
|
|
83,000
|
|
|
Costs and
expenses(6)
|
|
|
|
|
|
|
|
|
|
|
|
(1,145,600)
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
708,000
|
|
|
|
|
For the projected
full year 2016 (high):
|
|
|
|
|
|
Senior
|
|
Post-acute/
|
|
Life
|
|
Medical
|
|
|
|
|
|
|
|
Housing
|
|
Skilled nursing
|
|
Science
|
|
Office
|
|
Hospital
|
|
Total
|
|
|
NOI(2)
|
|
$
|
711,600
|
|
$
|
434,200
|
|
$
|
284,000
|
|
$
|
273,800
|
|
$
|
86,500
|
|
$
|
1,790,100
|
|
|
Non-cash adjustments
to NOI(3)
|
|
|
(11,900)
|
|
|
(1,000)
|
|
|
(1,100)
|
|
|
(2,900)
|
|
|
1,275
|
|
|
(15,625)
|
|
|
Cash (adjusted)
NOI
|
|
|
699,700
|
|
|
433,200
|
|
|
282,900
|
|
|
270,900
|
|
|
87,775
|
|
|
1,774,475
|
|
|
Non-SPP cash
(adjusted) NOI
|
|
|
(71,800)
|
|
|
(7,900)
|
|
|
(26,100)
|
|
|
(24,500)
|
|
|
—
|
|
|
(130,300)
|
|
|
SPP cash
(adjusted) NOI
|
|
$
|
627,900
|
|
$
|
425,300
|
|
$
|
256,800
|
|
$
|
246,400
|
|
$
|
87,775
|
|
|
1,644,175
|
|
|
Addback
adjustments(4)
|
|
|
|
|
|
|
|
|
|
|
|
145,925
|
|
|
Other income and
expenses(5)
|
|
|
|
|
|
|
|
|
|
|
|
87,000
|
|
|
Costs and
expenses(6)
|
|
|
|
|
|
|
|
|
|
|
|
(1,141,600)
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
735,550
|
|
|
|
|
For the year ended
December 31, 2015:
|
|
|
|
|
|
Senior
|
|
Post-acute/
|
|
Life
|
|
Medical
|
|
|
|
|
|
|
|
Housing
|
|
Skilled nursing
|
|
Science
|
|
Office
|
|
Hospital
|
|
Total
|
|
|
NOI(2)
|
|
$
|
669,938
|
|
$
|
533,109
|
|
$
|
272,767
|
|
$
|
255,675
|
|
$
|
84,391
|
|
$
|
1,815,880
|
|
|
Non-cash adjustments
to NOI(3)
|
|
|
(16,127)
|
|
|
(78,738)
|
|
|
(10,128)
|
|
|
(5,025)
|
|
|
1,060
|
|
|
(108,958)
|
|
|
Cash (adjusted)
NOI
|
|
|
653,811
|
|
|
454,371
|
|
|
262,639
|
|
|
250,650
|
|
|
85,451
|
|
|
1,706,922
|
|
|
Non-SPP cash
(adjusted) NOI
|
|
|
(39,713)
|
|
|
(28,616)
|
|
|
(23,090)
|
|
|
(11,172)
|
|
|
(4)
|
|
|
(102,595)
|
|
|
SPP cash
(adjusted) NOI
|
|
$
|
614,098
|
|
$
|
425,755
|
|
$
|
239,549
|
|
$
|
239,478
|
|
$
|
85,447
|
|
|
1,604,327
|
|
|
Addback
adjustments(4)
|
|
|
|
|
|
|
|
|
|
|
|
211,553
|
|
|
Other income and
expenses(5)
|
|
|
|
|
|
|
|
|
|
|
|
201,162
|
|
|
Costs and
expenses(6)
|
|
|
|
|
|
|
|
|
|
|
|
(1,113,712)
|
|
|
Impairments,
net
|
|
|
|
|
|
|
|
|
(1,403,853)
|
|
|
Impairment of
investments in unconsolidated joint ventures
|
|
|
|
|
|
|
|
|
(45,895)
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(546,418)
|
|
|
|
|
Projected SPP cash
(adjusted) NOI growth for the full year 2016:
|
|
|
|
|
|
Senior
|
|
Post-acute/
|
|
Life
|
|
Medical
|
|
|
|
|
|
|
|
Housing
|
|
Skilled nursing
|
|
Science
|
|
Office
|
|
Hospital
|
|
Total
|
|
|
Low
|
|
|
1.25%
|
|
|
(1.1%)
|
|
|
6.2%
|
|
|
1.9%
|
|
|
1.7%
|
|
|
1.5%
|
|
|
High
|
|
|
2.25%
|
|
|
(0.1%)
|
|
|
7.2%
|
|
|
2.9%
|
|
|
2.7%
|
|
|
2.5%
|
|
|
________________________________________
|
|
(1)
|
The foregoing
projections reflect management's view of current and future market
conditions, including assumptions with respect to rental rates,
occupancy levels, development items and the earnings impact of the
events referenced in this release. These projections do not reflect
the potential impact of unannounced future acquisitions,
dispositions, other impairments or recoveries, the future
bankruptcy or insolvency of our operators, lessees, borrowers or
other obligors, the effect of any future restructuring of our
contractual relationships with such entities, gains or losses on
marketable securities, ineffectiveness related to our cash flow
hedges, or existing and future litigation matters including the
possibility of larger than expected litigation costs and related
developments. Our actual results may differ materially from the
projections set forth above. The aforementioned ranges represent
management's best estimates based upon the underlying assumptions
as of the date of this press release. Except as otherwise required
by law, management assumes no, and hereby disclaims any, obligation
to update any of the foregoing projections as a result of new
information or new or future developments.
|
|
|
|
(2)
|
Represents rental and
related revenues, including tenant recoveries, resident fees and
services, and income from DFLs, less property level operating
expenses.
|
|
|
|
(3)
|
Represents
straight-line rents, DFL accretion, amortization of market lease
intangibles and lease termination fees.
|
|
|
|
(4)
|
Represents non-cash
adjustments to NOI and non-SPP cash (adjusted) NOI.
|
|
|
|
(5)
|
Represents interest
income, investment management fee income, gain on sales of real
estate, other income, net, income taxes and equity income from
unconsolidated joint ventures.
|
|
|
|
(6)
|
Represents interest
expense, depreciation and amortization, general and administrative
expenses, and acquisition and pursuit costs.
|
No reconciliations of projected senior housing RIDEA portfolio
SPP Cash NOI growth and consolidated SPP Cash NOI growth, excluding
HCRMC are included in this release because we are unable to
quantify certain amounts that would be required to be included in
the comparable GAAP financial measures without unreasonable
efforts, and we believe such reconciliations would imply a degree
of precision that would be confusing or misleading to
investors.
Logo - http://photos.prnewswire.com/prnh/20150831/262611LOGO
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/hcp-announces-results-for-the-fourth-quarter-and-year-ended-december-31-2015-300217234.html
SOURCE HCP, Inc.