IRVINE, Calif., Nov. 2, 2017 /PRNewswire/ -- HCP, Inc.
(NYSE:HCP) announced results for the quarter ended
September 30, 2017.
THIRD QUARTER 2017 AND RECENT HIGHLIGHTS
– EPS, FFO and FFO as adjusted per
share, were ($0.02), $0.33 and $0.48,
respectively
– Achieved year-over-year three-month SPP
Cash NOI growth of 3.2%, including 5.3% in the SHOP portfolio
– Entered into transactions which provide
a path to reduce Brookdale
concentration to approximately 15.7%
– Reentering the Boston life science market with $228 million acquisition of the Hayden Research
Campus, bringing our year-to-date announced acquisitions and
developments to $447
million
– Announced launch of sales process for
remaining UK holdings
– As previously announced, repurchased
$500 million of our 5.375% senior
notes due 2021
– Promoted Tom Klaritch to Chief Operating
Officer and appointed Shawn Johnston
as Chief Accounting Officer
– Increased 2017 FFO as adjusted guidance
range and reaffirmed aggregate 2017 SPP Cash NOI growth
guidance
|
|
Three Months
Ended
September 30, 2017
|
|
Three Months
Ended
September 30, 2016
|
|
|
(in thousands, except per share amounts)
|
|
Amount
|
|
Diluted
Per Share
|
|
Amount
|
|
Diluted
Per Share
|
|
Per Share
Change
|
Net income
(loss)
|
|
$
|
(7,788)
|
|
|
$
|
(0.02)
|
|
|
$
|
150,924
|
|
|
$
|
0.32
|
|
|
$
|
(0.34)
|
|
FFO
|
|
$
|
155,248
|
|
|
$
|
0.33
|
|
|
$
|
304,387
|
|
|
$
|
0.65
|
|
|
$
|
(0.32)
|
|
Other impairments
(recoveries), net(1)
|
|
2,738
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
Severance and related
charges(2)
|
|
3,889
|
|
|
0.01
|
|
|
14,464
|
|
|
0.03
|
|
|
(0.02)
|
|
Loss on debt
extinguishments(3)
|
|
54,227
|
|
|
0.11
|
|
|
—
|
|
|
—
|
|
|
0.11
|
|
Transaction-related
items
|
|
580
|
|
|
—
|
|
|
17,568
|
|
|
0.04
|
|
|
(0.04)
|
|
Casualty-related
charges (recoveries), net(4)
|
|
8,925
|
|
|
0.02
|
|
|
—
|
|
|
—
|
|
|
0.02
|
|
Other(5)
|
|
2,162
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
—
|
|
FFO as
adjusted
|
|
$
|
227,769
|
|
|
$
|
0.48
|
|
|
$
|
336,513
|
|
|
$
|
0.72
|
|
|
$
|
(0.24)
|
|
FFO as adjusted from
QCP
|
|
—
|
|
|
—
|
|
|
(101,549)
|
|
|
(0.22)
|
|
|
0.22
|
|
Comparable FFO as
adjusted(6)
|
|
$
|
227,769
|
|
|
$
|
0.48
|
|
|
$
|
234,964
|
|
|
$
|
0.50
|
|
|
$
|
(0.02)
|
|
FAD
|
|
$
|
202,407
|
|
|
|
|
$
|
317,540
|
|
|
|
|
|
|
_______________________________________
|
|
|
(1)
|
Relates to the
impairment of our Tandem Health Care Loan.
|
(2)
|
For the three months
ended September 30, 2017, primarily relates to the departure of our
former Executive Vice President and Chief Accounting Officer. For
the three months ended September 30, 2016, primarily relates to the
departure of our former President and Chief Executive
Officer.
|
(3)
|
Represents the
premium associated with the prepayment of $500 million of senior
unsecured notes.
|
(4)
|
Includes $11 million
of casualty-related charges and a $2 million deferred income tax
benefit.
|
(5)
|
Includes $2 million
of litigation costs.
|
(6)
|
Represents FFO as
adjusted excluding FFO as adjusted from QCP and interest expense
related to debt repaid using proceeds from the spin-off, assuming
these transactions occurred at the beginning of the earliest period
presented. Comparable FFO as adjusted allows management to evaluate
the performance of our remaining real estate portfolio following
the completion of the QCP spin-off.
|
FFO, FFO as adjusted, FAD, Comparable FFO as adjusted, SPP Cash
NOI and SPP NOI are supplemental non-GAAP financial measures that
we believe are useful in evaluating the operating performance of
real estate investment trusts. See "Discussion and Reconciliation
of Non-GAAP Financial Measures" for the quarter ended
September 30, 2017 for definitions, discussions of their uses
and inherent limitations, and reconciliations to the most directly
comparable financial measures calculated and presented in
accordance with GAAP on the Investor Relations section of our
website at http://ir.hcpi.com/financial-reconciliation.
SAME PROPERTY PORTFOLIO OPERATING SUMMARY
The table below outlines the three-month same property portfolio
operating results for the quarter:
|
|
Year-Over-Year
|
|
|
Occupancy
|
|
SPP Growth
|
|
|
3Q17
|
|
3Q16
|
|
NOI
|
|
Cash NOI
|
Senior housing
triple-net
|
|
85.5%
|
|
87.1%
|
|
3.0%
|
|
2.7%
|
Senior housing
operating portfolio ("SHOP")(1)
|
|
86.3%
|
|
88.8%
|
|
3.9%
|
|
5.3%
|
Life
science
|
|
96.3%
|
|
97.1%
|
|
2.2%
|
|
4.0%
|
Medical
office
|
|
91.7%
|
|
92.2%
|
|
1.5%
|
|
2.5%
|
Other non-reportable
segments ("Other")(2)
|
|
N/A
|
|
N/A
|
|
1.7%
|
|
1.3%
|
Total
Portfolio
|
|
|
|
|
|
2.5%
|
|
3.2%
|
|
_______________________________________
|
|
|
(1)
|
SHOP SPP Cash NOI
growth consists of the following components: Assisted Living /
Independent Living 4.4% and CCRC joint venture 12.0%.
|
(2)
|
Other primarily
includes our hospitals and U.K. real estate investments. See our
Supplemental Report for additional details.
|
BROOKDALE
TRANSACTIONS
We have reached agreements to sell six assets to Brookdale
Senior Living, Inc. ("Brookdale") for $275 million and purchase Brookdale's 10% interest in two joint ventures
for $99 million. Additionally, HCP
and Brookdale have agreed to
terminate management agreements on 36 senior housing operating
properties and leases on 32 triple-net leased communities.
Brookdale has agreed to waive fees
on all management agreement terminations and we have agreed to
modify the rent on the remaining Brookdale triple-net portfolio, providing a
$5 million annual rent reduction. We
intend to either transition to other operators or sell the
aforementioned 68 properties during 2018. The anticipated sales are
expected to generate $600 million to $900
million of net proceeds to us depending on the mix of asset
sales versus transitions to new operators.
We have also agreed to sell our remaining investments in the
RIDEA II senior housing joint venture ("RIDEA II") to an investor
group led by Columbia Pacific Advisors, LLC ("CPA") for
$332 million. RIDEA II owns 49
communities, of which 46 are managed by Brookdale.
Combined, these transactions provide a path to reduce our
Brookdale concentration, on a pro
forma basis, from 27.0% of Cash NOI and Interest Income (excluding
the previously announced planned sale or transition of 25 Brookdale
assets) to approximately 15.7%. We intend to use the proceeds from
the dispositions primarily to repay debt and for general corporate
purposes.
A copy of the corresponding press release and investor
presentation with additional details is available on the Investor
Relations section of our website at http://ir.hcpi.com.
REENTERING BOSTON LIFE
SCIENCE MARKET
In October, we entered into definitive agreements to acquire a
$228 million value-add life science
campus known as the Hayden Research Campus located in the
Boston suburb of Lexington, Massachusetts. The Hayden
acquisition allows us to reenter the Boston life science market with immediate
scale and align with a leading local developer, owner and operator,
King Street Properties ("King
Street"). We will own an interest in this campus through a
consolidated joint venture with King
Street. The campus includes two existing buildings totaling
400,000 square feet and is currently 66% leased, anchored by major
life science tenants including Shire US, Inc., a subsidiary of
Shire plc, and Merck, Sharp and Dohme, a subsidiary of Merck and
Co., Inc. Additionally, King
Street is currently seeking approvals for the joint venture
to develop 209,000 square feet of life science space on the
campus.
HCP LAUNCHES SALE PROCESS FOR REMAINING UK HOLDINGS
We have launched a formal sales process for our remaining UK
holdings. We expect the sale to be completed during the first half
of 2018.
OTHER TRANSACTION ACTIVITY
ACQUISITIONS
During the third quarter, we announced $113 million of additional acquisitions, bringing
our year-to-date announced acquisitions and developments to
$447 million. Significant acquisition
activity during the third quarter includes:
- As previously disclosed, in July, we acquired a portfolio of
three medical office buildings in Texas for $49
million.
- In August, we acquired 6000 Shoreline Court, a 139,000 square
foot life science office building in South San Francisco, California for
$64 million. 6000 Shoreline is
adjacent to our Sierra Point
development site.
DISPOSITIONS
During the third quarter, we sold two triple-net senior housing
assets leased to Brookdale for
$15 million.
DEVELOPMENT UPDATE
During the quarter, we placed $101
million of development in service, including $94 million at Phase II of The Cove. At quarter
end, our development pipeline totaled $870
million, which includes $288
million that has been placed in service.
During the third quarter, we added $63
million of new projects to our development and redevelopment
pipelines.
BALANCE SHEET AND NEW CREDIT FACILITY
As previously announced, in July, we repurchased $500 million of our 5.375% senior notes due 2021
using capital recycling proceeds from the HC-One loan repayment and
Brookdale 64 disposition. In
connection with the tender offer, we incurred an extinguishment of
debt charge of approximately $54 million in the third
quarter.
At September 30, 2017, we had $1.5
billion of liquidity from a combination of cash and
availability under our $2.0 billion credit facility and no major
senior notes or secured debt maturities until early 2019.
On October 19, 2017, we closed on a new $2.0 billion unsecured revolving credit facility.
The new facility reduces our funded interest cost for committed
loans by five basis points and has a maturity date of October 19, 2021. Based on our current senior
unsecured long-term debt ratings, the facility bears interest
annually at LIBOR plus 100 basis points and has a facility fee of
20 basis points. The facility also includes two six-month extension
options at our discretion and the ability to increase the
commitments by an aggregate amount up to $750 million, subject to customary
conditions.
HURRICANE UPDATE
As a result of Hurricane Harvey and Hurricane Irma during the
third quarter of 2017, we recorded $11
million of casualty losses, net of a small insurance
recovery. The losses are comprised of $6
million of property damage and $5
million of other associated costs, including storm
preparation, clean up, relocation, and other costs. In
addition, we recorded a $2 million
deferred tax benefit associated with the casualty-related losses.
These items are excluded from FFO as adjusted.
EXECUTIVE LEADERSHIP
As previously announced, Tom Klaritch was promoted to Chief
Operating Officer in August 2017. Mr.
Klaritch will oversee our streamlined office platform, with the
life science and medical office businesses reporting to him, and
will work closely with the respective teams to continue to advance
the competitive performance and growth of the specialty office
platform. In addition, Mr. Klaritch will manage our
development projects and capital expenditures, oversee the IT
department focusing on automation and system integration across the
platform, and establish consistent operational reporting standards
across our verticals. Mr. Klaritch is an 18-year Company veteran
with 34 years of operational and financial management experience in
the medical office and hospital sectors.
In August, Shawn Johnston joined HCP as Senior Vice
President and Chief Accounting Officer. Mr. Johnston joined HCP
from a leading multifamily real estate investment trust, where he
was Chief Accounting Officer.
DIVIDEND
On October 26, 2017, our Board of
Directors declared a quarterly cash dividend of $0.37 per common share. The dividend will be paid
on November 21, 2017 to stockholders
of record as of the close of business on November 6, 2017.
SUSTAINABILITY
HCP's leadership in Environmental, Social and Governance (ESG)
standards was again recognized by two influential ESG benchmarking
institutions, the Dow Jones Sustainability Indices and Global Real
Estate Sustainability Benchmark (GRESB).
HCP was named to the Dow Jones Sustainability Index (DJSI)
North America and the DJSI World,
for the fifth and third consecutive years, respectively. In
addition, we achieved the "Green Star" designation from GRESB for
the sixth year in a row, representing the highest quadrant of
achievement in GRESB's annual sustainability survey.
More information about HCP's sustainability efforts can be found
on our website at www.hcpi.com/sustainability.
OUTLOOK
For full-year 2017, we expect EPS to range between $1.16 and $1.20; FFO per share to range between
$1.74 and $1.78; and FFO as adjusted
per share to range between $1.92 and
$1.96, representing a $0.02
per share increase at the mid-point. In addition, we expect 2017
SPP Cash NOI to increase between 2.5% and 3.5%. EPS and FFO per
share guidance do not yet reflect the non-cash accounting impact of
the Brookdale transactions.
Additionally, these estimates do not reflect the potential impact
from unannounced future transactions other than capital recycling
activities. For additional detail and information regarding these
estimates, refer to the "Projected Full Year 2017 SPP NOI and SPP
Cash NOI" table below, and the 2017 Guidance section of our
corresponding Supplemental Report, available in the Investor
Relations section of our website at http://ir.hcpi.com.
|
|
Projected Full Year
2017
|
|
|
SPP NOI
|
|
SPP Cash
NOI
|
|
|
Low
|
|
High
|
|
Low
|
|
High
|
Senior housing
triple-net
|
|
2.0%
|
|
3.0%
|
|
5.0%
|
|
6.0%
|
SHOP
|
|
(2.9)%
|
|
(0.9)%
|
|
(2.0)%
|
|
—%
|
Life
science
|
|
2.0%
|
|
3.0%
|
|
3.5%
|
|
4.5%
|
Medical
office
|
|
1.4%
|
|
2.4%
|
|
2.5%
|
|
3.5%
|
Other(1)
|
|
2.0%
|
|
3.0%
|
|
0.8%
|
|
1.8%
|
SPP
Growth
|
|
1.2%
|
|
2.2%
|
|
2.5%
|
|
3.5%
|
|
_______________________________________
|
|
|
(1)
|
Other primarily
includes our hospitals and U.K. real estate investments. See our
Supplemental Report for additional details.
|
COMPANY INFORMATION
HCP has scheduled a conference call and webcast for Thursday, November 2, 2017 at 10:00 a.m.
Pacific Time (1:00 p.m. Eastern Time) to present its
performance and operating results for the quarter ended
September 30, 2017. The conference
call is accessible by dialing (888) 317-6003 (U.S.) or (412)
317-6061 (International). The conference ID number is 0914328. You
may also access the conference call via webcast at www.hcpi.com.
This link can be found in the "News and Events" section, which is
under "Investor Relations". Through November
17, 2017, an archive of the webcast will be available on our
website, and a telephonic replay can be accessed by dialing (877)
344-7529 (U.S.) or (412) 317-0088 (International) and entering
conference ID number 10112667. Our Supplemental Report for the
current period is available, with this earnings release, on our
website in the "Financial Information" section under "Investor
Relations".
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 owns a large-scale portfolio diversified across
multiple sectors, led by senior housing, life science and medical
office. Recognized as a global leader in sustainability, HCP has
been a publicly-traded company since 1985 and was the first
healthcare REIT selected to the S&P 500 index. 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, (i) all statements under the heading "Outlook,"
including without limitation with respect to expected EPS, FFO per
share, FFO as adjusted per share, SPP NOI, SPP Cash NOI and other
financial projections and assumptions, including those in the
"Projected Full Year 2017 SPP NOI and SPP Cash NOI" table in this
release, as well as comparable statements included in other
sections of this release; (ii) statements regarding the
payment of a quarterly cash dividend; (iii) statements regarding
timing, outcomes and other details relating to current, pending or
contemplated acquisitions, dispositions, developments, joint
venture transactions, capital recycling and financing activities,
and other transactions discussed in this release, including without
limitation those described under the heading "Development Update"';
and (iv) statements with respect to the executive leadership
updates described under the heading "Executive Leadership." 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 our and our 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: our reliance on
a concentration of a small number of tenants and operators for a
significant percentage of our revenues, with our concentration of
assets operated by Brookdale
increasing as a result of the consummation of the spin-off of QCP
on October 31, 2016; the financial condition of our existing
and future 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 existing and future 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; our concentration
in the healthcare property sector, particularly in senior housing,
life sciences, medical office buildings and hospitals, which makes
our profitability more vulnerable to a downturn in a specific
sector than if we were investing in multiple industries;
availability of suitable properties to acquire at favorable prices,
the competition for the acquisition and financing of those
properties, and the costs of associated property development; 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 foreclose on loan collateral or 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 acquisitions and other investments,
including those discussed above, within expected time frames or at
all, or within expected cost projections; operational risks
associated with third party management contracts, including the
additional regulation and liabilities of our RIDEA lease
structures; 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 our tenants and
operators of legislation, executive orders and other legal
requirements, including the Affordable Care Act and licensure,
certification and inspection requirements, as well as laws
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 or
other conditions, including currency exchange rates; our ability to
manage our indebtedness level and changes in the terms of such
indebtedness; competition for skilled management and other key
personnel; the ability to maintain our qualification as a real
estate investment trust; and other risks and uncertainties
described from time to time in our Securities and Exchange
Commission filings. You should not place undue reliance on any
forward-looking statements. We assume no, and hereby disclaim 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
Andrew Johns
Vice President – Finance and Investor Relations
949-407-0400
HCP, Inc.
|
Consolidated
Balance Sheets
|
In thousands,
except share and per share data
|
(unaudited)
|
|
|
|
September 30,
2017
|
|
December 31,
2016
|
Assets
|
|
|
|
|
Real
Estate:
|
|
|
|
|
Buildings and
improvements
|
|
$
|
11,052,578
|
|
|
$
|
11,692,654
|
|
Development costs and
construction in progress
|
|
429,459
|
|
|
400,619
|
|
Land
|
|
1,752,890
|
|
|
1,881,487
|
|
Accumulated
depreciation and amortization
|
|
(2,699,174)
|
|
|
(2,648,930)
|
|
Net real
estate
|
|
10,535,753
|
|
|
11,325,830
|
|
Net investment in
direct financing leases
|
|
715,104
|
|
|
752,589
|
|
Loans receivable,
net
|
|
402,152
|
|
|
807,954
|
|
Investments in and
advances to unconsolidated joint ventures
|
|
822,369
|
|
|
571,491
|
|
Accounts receivable,
net of allowance of $4,312 and $4,459, respectively
|
|
34,571
|
|
|
45,116
|
|
Cash and cash
equivalents
|
|
133,887
|
|
|
94,730
|
|
Restricted
cash
|
|
27,135
|
|
|
42,260
|
|
Intangible assets,
net
|
|
400,867
|
|
|
479,805
|
|
Assets held for sale,
net
|
|
216,074
|
|
|
927,866
|
|
Other assets,
net
|
|
616,169
|
|
|
711,624
|
|
Total
assets
|
|
$
|
13,904,081
|
|
|
$
|
15,759,265
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
Bank line of
credit
|
|
$
|
605,837
|
|
|
$
|
899,718
|
|
Term loans
|
|
226,205
|
|
|
440,062
|
|
Senior unsecured
notes
|
|
6,393,926
|
|
|
7,133,538
|
|
Mortgage
debt
|
|
145,417
|
|
|
623,792
|
|
Other debt
|
|
94,818
|
|
|
92,385
|
|
Intangible
liabilities, net
|
|
53,427
|
|
|
58,145
|
|
Liabilities of assets
held for sale, net
|
|
8,653
|
|
|
3,776
|
|
Accounts payable and
accrued liabilities
|
|
381,189
|
|
|
417,360
|
|
Deferred
revenue
|
|
140,378
|
|
|
149,181
|
|
Total
liabilities
|
|
8,049,850
|
|
|
9,817,957
|
|
Commitments and
contingencies
|
|
|
|
|
Common stock, $1.00
par value: 750,000,000 shares authorized; 469,034,877 and
468,081,489 shares issued and outstanding, respectively
|
|
469,035
|
|
|
468,081
|
|
Additional paid-in
capital
|
|
8,224,531
|
|
|
8,198,890
|
|
Cumulative dividends
in excess of earnings
|
|
(3,137,642)
|
|
|
(3,089,734)
|
|
Accumulated other
comprehensive income (loss)
|
|
(24,491)
|
|
|
(29,642)
|
|
Total stockholders'
equity
|
|
5,531,433
|
|
|
5,547,595
|
|
|
|
|
|
|
Joint venture
partners
|
|
145,496
|
|
|
214,377
|
|
Non-managing member
unitholders
|
|
177,302
|
|
|
179,336
|
|
Total noncontrolling
interests
|
|
322,798
|
|
|
393,713
|
|
Total
equity
|
|
5,854,231
|
|
|
5,941,308
|
|
|
|
|
|
|
Total liabilities
and equity
|
|
$
|
13,904,081
|
|
|
$
|
15,759,265
|
|
HCP, Inc.
|
Consolidated
Statements of Operations
|
In thousands,
except per share data
|
(unaudited)
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues:
|
|
|
|
|
|
|
|
|
Rental and related
revenues
|
|
$
|
266,109
|
|
|
$
|
290,280
|
|
|
$
|
816,147
|
|
|
$
|
872,828
|
|
Tenant
recoveries
|
|
36,860
|
|
|
34,809
|
|
|
105,794
|
|
|
99,715
|
|
Resident fees and
services
|
|
126,040
|
|
|
170,752
|
|
|
391,688
|
|
|
500,717
|
|
Income from direct
financing leases
|
|
13,240
|
|
|
14,234
|
|
|
40,516
|
|
|
44,791
|
|
Interest
income
|
|
11,774
|
|
|
20,482
|
|
|
50,974
|
|
|
71,298
|
|
Total
revenues
|
|
454,023
|
|
|
530,557
|
|
|
1,405,119
|
|
|
1,589,349
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
71,328
|
|
|
117,860
|
|
|
235,834
|
|
|
361,255
|
|
Depreciation and
amortization
|
|
130,588
|
|
|
141,407
|
|
|
397,893
|
|
|
421,181
|
|
Operating
|
|
155,338
|
|
|
187,714
|
|
|
467,582
|
|
|
542,751
|
|
General and
administrative
|
|
23,523
|
|
|
34,781
|
|
|
67,287
|
|
|
83,011
|
|
Acquisition and
pursuit costs
|
|
580
|
|
|
2,763
|
|
|
2,504
|
|
|
6,061
|
|
Impairments
(recoveries), net
|
|
25,328
|
|
|
—
|
|
|
82,010
|
|
|
—
|
|
Total costs and
expenses
|
|
406,685
|
|
|
484,525
|
|
|
1,253,110
|
|
|
1,414,259
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Gain (loss) on sales
of real estate, net
|
|
5,182
|
|
|
(9)
|
|
|
322,852
|
|
|
119,605
|
|
Loss on debt
extinguishments
|
|
(54,227)
|
|
|
—
|
|
|
(54,227)
|
|
|
—
|
|
Other income
(expense), net
|
|
(10,556)
|
|
|
1,432
|
|
|
40,723
|
|
|
5,064
|
|
Total other income
(expense), net
|
|
(59,601)
|
|
|
1,423
|
|
|
309,348
|
|
|
124,669
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes and equity income (loss) from unconsolidated
joint ventures
|
|
(12,263)
|
|
|
47,455
|
|
|
461,357
|
|
|
299,759
|
|
Income tax benefit
(expense)
|
|
5,481
|
|
|
424
|
|
|
14,630
|
|
|
(1,101)
|
|
Equity income (loss)
from unconsolidated joint ventures
|
|
1,062
|
|
|
(2,053)
|
|
|
4,571
|
|
|
(4,028)
|
|
Income (loss) from
continuing operations
|
|
(5,720)
|
|
|
45,826
|
|
|
480,558
|
|
|
294,630
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
Income (loss) before
transaction costs and income taxes
|
|
—
|
|
|
121,229
|
|
|
—
|
|
|
360,226
|
|
Transaction
costs
|
|
—
|
|
|
(14,805)
|
|
|
—
|
|
|
(28,509)
|
|
Income tax benefit
(expense)
|
|
—
|
|
|
1,789
|
|
|
—
|
|
|
(47,721)
|
|
Total discontinued
operations
|
|
—
|
|
|
108,213
|
|
|
—
|
|
|
283,996
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
(5,720)
|
|
|
154,039
|
|
|
480,558
|
|
|
578,626
|
|
Noncontrolling
interests' share in earnings
|
|
(1,937)
|
|
|
(2,789)
|
|
|
(7,687)
|
|
|
(9,540)
|
|
Net income (loss)
attributable to HCP, Inc.
|
|
(7,657)
|
|
|
151,250
|
|
|
472,871
|
|
|
569,086
|
|
Participating
securities' share in earnings
|
|
(131)
|
|
|
(326)
|
|
|
(560)
|
|
|
(977)
|
|
Net income (loss)
applicable to common shares
|
|
$
|
(7,788)
|
|
|
$
|
150,924
|
|
|
$
|
472,311
|
|
|
$
|
568,109
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.02)
|
|
|
$
|
0.32
|
|
|
$
|
1.01
|
|
|
$
|
1.22
|
|
Diluted
|
|
$
|
(0.02)
|
|
|
$
|
0.32
|
|
|
$
|
1.01
|
|
|
$
|
1.22
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used to calculate earnings per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
468,975
|
|
|
467,628
|
|
|
468,642
|
|
|
466,931
|
|
Diluted
|
|
468,975
|
|
|
467,835
|
|
|
468,828
|
|
|
467,132
|
|
HCP, Inc.
|
Funds From
Operations
|
In thousands,
except per share data
|
(unaudited)
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net income (loss)
applicable to common shares
|
|
$
|
(7,788)
|
|
|
$
|
150,924
|
|
|
$
|
472,311
|
|
|
$
|
568,109
|
|
Real estate related
depreciation and amortization
|
|
130,588
|
|
|
142,874
|
|
|
397,893
|
|
|
425,582
|
|
Real estate related
depreciation and amortization on unconsolidated joint
ventures
|
|
16,358
|
|
|
12,607
|
|
|
47,711
|
|
|
36,347
|
|
Real estate related
depreciation and amortization on noncontrolling interests and
other
|
|
(3,678)
|
|
|
(5,270)
|
|
|
(11,711)
|
|
|
(15,708)
|
|
Other depreciation
and amortization(1)
|
|
2,360
|
|
|
2,986
|
|
|
7,718
|
|
|
8,922
|
|
Loss (gain) on sales
of real estate, net
|
|
(5,182)
|
|
|
9
|
|
|
(322,852)
|
|
|
(119,605)
|
|
Loss (gain) on sales
of real estate, net on unconsolidated joint ventures
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(215)
|
|
Loss (gain) on sales
of real estate, net on noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
Taxes associated with
real estate dispositions(2)
|
|
—
|
|
|
257
|
|
|
(5,498)
|
|
|
53,434
|
|
Impairments
(recoveries) of real estate, net(3)
|
|
22,590
|
|
|
—
|
|
|
22,590
|
|
|
—
|
|
FFO applicable to
common shares
|
|
$
|
155,248
|
|
|
$
|
304,387
|
|
|
$
|
608,162
|
|
|
$
|
956,864
|
|
Distributions on
dilutive convertible units and other
|
|
—
|
|
|
2,376
|
|
|
5,250
|
|
|
10,622
|
|
Diluted FFO
applicable to common shares
|
|
$
|
155,248
|
|
|
$
|
306,763
|
|
|
$
|
613,412
|
|
|
$
|
967,486
|
|
Diluted FFO per
common share
|
|
$
|
0.33
|
|
|
$
|
0.65
|
|
|
$
|
1.30
|
|
|
$
|
2.05
|
|
Weighted average
shares used to calculate diluted FFO per common
share
|
|
469,156
|
|
|
471,994
|
|
|
473,519
|
|
|
473,011
|
|
Impact of
adjustments to FFO:
|
|
|
|
|
|
|
|
|
Transaction-related items(4)
|
|
$
|
580
|
|
|
$
|
17,568
|
|
|
$
|
2,476
|
|
|
$
|
34,570
|
|
Other
impairments (recoveries), net(5)
|
|
2,738
|
|
|
—
|
|
|
8,526
|
|
|
—
|
|
Severance and
related charges(6)
|
|
3,889
|
|
|
14,464
|
|
|
3,889
|
|
|
14,464
|
|
Loss on debt
extinguishments(7)
|
|
54,227
|
|
|
—
|
|
|
54,227
|
|
|
—
|
|
Litigation
costs
|
|
2,303
|
|
|
—
|
|
|
7,507
|
|
|
—
|
|
Casualty-related
charges (recoveries), net(8)
|
|
8,925
|
|
|
—
|
|
|
8,925
|
|
|
—
|
|
Foreign currency
remeasurement losses (gains)
|
|
(141)
|
|
|
94
|
|
|
(986)
|
|
|
268
|
|
|
|
$
|
72,521
|
|
|
$
|
32,126
|
|
|
$
|
84,564
|
|
|
$
|
49,302
|
|
FFO as adjusted
applicable to common shares
|
|
$
|
227,769
|
|
|
$
|
336,513
|
|
|
$
|
692,726
|
|
|
$
|
1,006,166
|
|
Distributions on
dilutive convertible units and other
|
|
1,493
|
|
|
3,467
|
|
|
5,095
|
|
|
10,549
|
|
Diluted FFO as
adjusted applicable to common shares
|
|
$
|
229,262
|
|
|
$
|
339,980
|
|
|
$
|
697,821
|
|
|
$
|
1,016,715
|
|
Per common share
impact of adjustments on diluted FFO
|
|
$
|
0.15
|
|
|
$
|
0.07
|
|
|
$
|
0.17
|
|
|
$
|
0.10
|
|
Diluted FFO as
adjusted per common share
|
|
$
|
0.48
|
|
|
$
|
0.72
|
|
|
$
|
1.47
|
|
|
$
|
2.15
|
|
Weighted average
shares used to calculate diluted FFO as adjusted per common
share
|
|
473,836
|
|
|
473,692
|
|
|
473,519
|
|
|
473,011
|
|
FFO as adjusted from
QCP
|
|
$
|
—
|
|
|
$
|
101,549
|
|
|
$
|
—
|
|
|
$
|
301,393
|
|
Diluted Comparable
FFO as adjusted applicable to common
shares(9)
|
|
$
|
229,262
|
|
|
$
|
238,431
|
|
|
$
|
697,821
|
|
|
$
|
715,322
|
|
FFO as adjusted from
QCP per common share
|
|
$
|
—
|
|
|
$
|
(0.22)
|
|
|
$
|
—
|
|
|
$
|
(0.64)
|
|
Diluted Comparable
FFO as adjusted per common share
|
|
$
|
0.48
|
|
|
$
|
0.50
|
|
|
$
|
1.47
|
|
|
$
|
1.51
|
|
|
_______________________________________
|
|
|
(1)
|
Other depreciation
and amortization includes DFL depreciation and lease incentive
amortization (reduction of straight-line rents) for the
consideration given to terminate the 30 purchase options on the
153-property amended lease portfolio in the 2014 Brookdale
transaction.
|
(2)
|
For the nine months
ended September 30, 2017, represents income tax benefit
associated with the disposition of real estate assets in our RIDEA
II transaction. For the nine months ended September 30, 2016,
represents income tax expense associated with the state built-in
gain tax payable upon the disposition of specific real estate
assets, of which $49 million relates to the HCRMC real estate
portfolio.
|
(3)
|
Represents
impairments on 11 senior housing triple-net facilities.
|
(4)
|
On January 1, 2017,
we early adopted the Financial Accounting Standards Board
Accounting Standards Update No. 2017-01, Clarifying the
Definition of a Business ("ASU 2017-01") which prospectively
results in recognizing the majority of our real estate acquisitions
as asset acquisitions rather than business combinations.
Acquisition and pursuit costs relating to completed asset
acquisitions are capitalized, including those costs incurred prior
to January 1, 2017. Real estate acquisitions completed prior to
January 1, 2017 were deemed business combinations and the related
acquisition and pursuit costs were expensed as incurred. For the
three and nine months ended September 30, 2016, primarily relates
to the QCP spin-off.
|
(5)
|
For the three months
ended September 30, 2017, relates to the impairment of our Tandem
Mezzanine Loan. For the nine months ended September 30, 2017,
relates to the impairments of our Tandem Mezzanine Loan, net of the
impairment recovery upon the sale of our Four Seasons Notes in the
first quarter of 2017.
|
(6)
|
For the three months
ended September 30, 2017, primarily relates to the departure of our
former Executive Vice President and Chief Accounting Officer. For
the three months ended September 30, 2016, primarily relates to the
departure of our former President and Chief Executive
Officer.
|
(7)
|
Represents the
premium associated with the prepayment of $500 million of senior
unsecured notes.
|
(8)
|
Includes $11 million
of casualty-related charges and a $2 million deferred income tax
benefit.
|
(9)
|
Excludes FFO as
adjusted from QCP and interest expense related to debt repaid using
proceeds from the spin-off, assuming these transactions occurred at
the beginning of the earliest period presented. Comparable FFO as
adjusted allows management to evaluate the performance of our
remaining real estate portfolio following the completion of the QCP
spin-off.
|
HCP, Inc.
|
Funds Available
for Distribution
|
In
thousands
|
(unaudited)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
FFO as adjusted
applicable to common shares
|
$
|
227,769
|
|
|
$
|
336,513
|
|
|
$
|
692,726
|
|
|
$
|
1,006,166
|
|
Amortization of
deferred compensation(1)
|
3,237
|
|
|
3,389
|
|
|
10,329
|
|
|
12,894
|
|
Amortization of
deferred financing costs
|
3,439
|
|
|
5,037
|
|
|
11,141
|
|
|
15,598
|
|
Straight-line
rents
|
(4,060)
|
|
|
(3,295)
|
|
|
(12,236)
|
|
|
(14,412)
|
|
Other depreciation
and amortization
|
(2,360)
|
|
|
(2,986)
|
|
|
(7,718)
|
|
|
(8,921)
|
|
Leasing costs, tenant
improvements, and recurring capital
expenditures(2)
|
(28,783)
|
|
|
(23,822)
|
|
|
(79,903)
|
|
|
(66,176)
|
|
Lease restructure
payments
|
311
|
|
|
1,868
|
|
|
1,165
|
|
|
14,480
|
|
CCRC entrance
fees(3)
|
6,074
|
|
|
4,975
|
|
|
14,436
|
|
|
16,524
|
|
Deferred income
taxes(4)
|
(3,807)
|
|
|
(3,431)
|
|
|
(10,523)
|
|
|
(8,977)
|
|
Other FAD
adjustments
|
587
|
|
|
(708)
|
|
|
1,692
|
|
|
(2,739)
|
|
FAD applicable to
common shares
|
$
|
202,407
|
|
|
$
|
317,540
|
|
|
$
|
621,109
|
|
|
$
|
964,437
|
|
Distributions on
dilutive convertible units and other
|
1,596
|
|
|
3,513
|
|
|
5,250
|
|
|
10,622
|
|
Diluted FAD
applicable to common shares
|
$
|
204,003
|
|
|
$
|
321,053
|
|
|
$
|
626,359
|
|
|
$
|
975,059
|
|
|
_______________________________________
|
|
|
(1)
|
Excludes $0.5 million
related to the acceleration of deferred compensation for restricted
stock units that vested upon the departure of our former Executive
Vice President and Chief Accounting Officer, which is included in
the severance and related charges for the three and nine months
ended September 30, 2017. Excludes $6 million related to the
acceleration of deferred compensation for restricted stock units
and stock options that vested upon the departure of our former
President and Chief Executive Officer, which is included in
severance and related charges for the three and nine months ended
September 30, 2016.
|
(2)
|
Includes our share of
leasing costs and tenant and capital improvements from
unconsolidated joint ventures.
|
(3)
|
Represents our 49%
share of non-refundable entrance fees as the fees are collected by
our CCRC JV, net of reserves and CCRC JV entrance fee
amortization.
|
(4)
|
Excludes $2 million
of deferred tax benefit from the casualty-related charges, which is
included in casualty-related charges (recoveries), net for the
three and nine months ended September 30, 2017.
|
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SOURCE HCP, Inc.