IRVINE, Calif., Feb. 13, 2017 /PRNewswire/ --
FOURTH QUARTER 2016 AND RECENT HIGHLIGHTS
-- EPS, FFO and FFO as adjusted per share,
were $0.12, $0.35 and $0.59,
respectively
-- Achieved year-over-year three-month SPP
Cash NOI and SPP NOI growth of 2.6% and 2.4%, respectively
-- Completed the spin-off of Quality Care
Properties, Inc. ("QCP") (NYSE:QCP) on October 31, 2016
-- Completed $345
million of acquisitions and loan fundings and $472 million of dispositions in the fourth
quarter; in January, we completed the previously announced sale and
related financing of a 40% interest in our RIDEA II joint venture
generating $480 million in proceeds
-- Signed a 115,000 sq. ft. lease at Phase II
of The Cove development in South San
Francisco, bringing Phases I and II to 86% leased
-- Commenced the $211
million development of Phase III of The Cove, representing
up to 336,000 sq. ft.
-- Repaid $1.7
billion of debt during the fourth quarter and an additional
$440 million through February 13, 2017, using proceeds generated
primarily from QCP financing and our RIDEA II transaction; on track
with previously disclosed deleveraging plan and targeted credit
metrics
-- Appointed Tom Herzog as Chief Executive
Officer and as a member of the Board of Directors, Justin Hutchens as President, and Peter Scott as EVP and Chief Financial
Officer
-- Reset the quarterly dividend to
$0.37 per share, as previously
announced
FULL YEAR 2016 HIGHLIGHTS
-- EPS, FFO and FFO as adjusted per share were
$1.34, $2.39 and $2.74,
respectively
-- Achieved year-over-year SPP Cash NOI and
SPP NOI growth of 3.7% and 2.6%, respectively
-- Entered into definitive agreements to sell
64 communities triple-net leased to Brookdale Senior Living, Inc.
("Brookdale") for $1.125
billion and announced other planned transactions, resulting in
improved lease coverage, reduced tenant concentration, and a
stronger balance
sheet
-- Completed $723
million of acquisitions and loan fundings and $770 million of dispositions, excluding the
spin-off of QCP
-- Placed $271
million of development and redevelopment projects in
service, and commenced $580 million
of new development and redevelopment projects
-- Executed 4.1 million sq. ft. of leasing in
our life science and MOB portfolios
2017 GUIDANCE
-- Full year guidance for EPS of $1.32 – $1.38, FFO
per share of $1.88 – $1.94 and FFO as adjusted per share of
$1.89 – $1.95, in-line with preliminary Outlook provided
on November 1, 2016
-- Full year guidance for SPP Cash NOI growth
of 2.5% – 3.5%, in-line with preliminary Outlook provided on
November 1, 2016
IRVINE, CA, February 13, 2017 -- HCP (NYSE:HCP) announced
results for the quarter and year ended December 31, 2016.
FOURTH QUARTER COMPARISON
|
|
Three Months
Ended
December 31,
2016
|
|
Three Months
Ended
December 31,
2015
|
|
Per Share
|
|
(in thousands,
except per share amounts)
|
|
Amount
|
|
Per Share
|
|
Amount
|
|
Per Share
|
|
Change
|
|
Net income
(loss)
|
|
$
|
58,440
|
|
$
|
0.12
|
|
$
|
(599,164)
|
|
$
|
(1.29)
|
|
$
|
1.41
|
|
FFO
|
|
$
|
162,265
|
|
$
|
0.35
|
|
$
|
(458,678)
|
|
$
|
(0.99)
|
|
$
|
1.34
|
|
Other
impairments, net(1)
|
|
|
—
|
|
|
—
|
|
|
829,593
|
|
|
1.78
|
|
|
(1.78)
|
|
Transaction-related items(2)
|
|
|
62,016
|
|
|
0.13
|
|
|
3,959
|
|
|
0.01
|
|
|
0.12
|
|
Loss on
debt extinguishments(3)
|
|
|
46,020
|
|
|
0.10
|
|
|
—
|
|
|
—
|
|
|
0.10
|
|
Other(4)
|
|
|
5,899
|
|
|
0.01
|
|
|
60
|
|
|
—
|
|
|
0.01
|
|
FFO as
adjusted
|
|
$
|
276,200
|
|
$
|
0.59
|
|
$
|
374,934
|
|
$
|
0.80
|
|
$
|
(0.21)
|
|
FFO as
adjusted from QCP
|
|
|
(26,948)
|
|
|
(0.06)
|
|
|
(138,875)
|
|
|
(0.29)
|
|
|
0.23
|
|
Comparable FFO as
adjusted(5)
|
|
$
|
249,252
|
|
$
|
0.53
|
|
$
|
236,059
|
|
$
|
0.51
|
|
$
|
0.02
|
|
FAD
|
|
$
|
251,251
|
|
|
|
|
$
|
313,588
|
|
|
|
|
|
|
|
________________________________________
(1)
|
Other impairments,
net in the prior period include: (i) $817 million related to our
previous HCR ManorCare, Inc. ("HCRMC") direct financing lease
("DFL") investments and (ii) $19 million related to our previous
equity investment in HCRMC, partially offset by an impairment
recovery of $6 million related to a loan payoff.
|
(2)
|
Transaction-related
items for the three months ended December 31, 2016 primarily
consist of costs incurred for the QCP spin-off.
|
(3)
|
Represents penalties
of $46 million from the prepayment of $1.1 billion of senior
unsecured notes and $108 million of mortgage debt using proceeds
from the QCP spin-off.
|
(4)
|
For the three months
ended December 31, 2016, Other includes: (i) $3 million of
severance-related charges, (ii) $3 million of litigation expense
related to shareholder lawsuits and (iii) $0.3 million of foreign
currency remeasurement losses. For the three months ended December
31, 2015, Other includes $60,000 of foreign currency remeasurement
losses.
|
(5)
|
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 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.
|
In addition to the items discussed above, fourth quarter 2016
net income included net gain on sales of real estate of
$0.14 per share (of which
$0.04 per share is reflected in
equity income from unconsolidated joint ventures). During the
fourth quarter 2015, operating results included non-cash HCRMC
income of $0.08 per share.
Additionally, fourth quarter 2015 net income included: (i)
$0.01 per share of interest income
from monetizing a senior housing development loan and (ii)
$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.
FULL YEAR COMPARISON
|
|
Year Ended
December 31,
2016
|
|
Year Ended
December 31,
2015
|
|
Per Share
|
|
(in thousands,
except per share amounts)
|
|
Amount
|
|
Per Share
|
|
Amount
|
|
Per Share
|
|
Change
|
|
Net income
(loss)
|
|
$
|
626,549
|
|
$
|
1.34
|
|
$
|
(560,552)
|
|
$
|
(1.21)
|
|
$
|
2.55
|
|
FFO
|
|
$
|
1,119,153
|
|
$
|
2.39
|
|
$
|
(10,841)
|
|
$
|
(0.02)
|
|
$
|
2.41
|
|
Other
impairments, net(1)
|
|
|
—
|
|
|
—
|
|
|
1,446,800
|
|
|
3.11
|
|
|
(3.11)
|
|
Transaction-related items(2)
|
|
|
96,586
|
|
|
0.20
|
|
|
32,932
|
|
|
0.07
|
|
|
0.13
|
|
Loss on
debt extinguishments(3)
|
|
|
46,020
|
|
|
0.10
|
|
|
—
|
|
|
—
|
|
|
0.10
|
|
Severance-related charges(4)
|
|
|
16,965
|
|
|
0.04
|
|
|
6,713
|
|
|
0.01
|
|
|
0.03
|
|
Other(5)
|
|
|
3,666
|
|
|
0.01
|
|
|
(5,437)
|
|
|
(0.01)
|
|
|
0.02
|
|
FFO as
adjusted
|
|
$
|
1,282,390
|
|
$
|
2.74
|
|
$
|
1,470,167
|
|
$
|
3.16
|
|
$
|
(0.42)
|
|
FFO as
adjusted from QCP
|
|
|
(328,341)
|
|
|
(0.70)
|
|
|
(575,471)
|
|
|
(1.22)
|
|
|
0.52
|
|
Comparable FFO as
adjusted(6)
|
|
$
|
954,049
|
|
$
|
2.04
|
|
$
|
894,696
|
|
$
|
1.94
|
|
$
|
0.10
|
|
FAD
|
|
$
|
1,215,696
|
|
|
|
|
$
|
1,261,849
|
|
|
|
|
|
|
|
________________________________________
(1)
|
Other impairments,
net in the prior period include: (i) $1.3 billion related to our
previous HCRMC DFL investments, (ii) $112 million related to our
Four Seasons Health Care senior notes ("Four Seasons Notes") and
(iii) $46 million related to our previous equity investment in
HCRMC, partially offset by an impairment recovery of $6 million
related to a loan payoff.
|
(2)
|
Transaction-related
items for the year ended December 31, 2016 primarily consist of
costs incurred for the QCP spin-off.
|
(3)
|
Represents penalties
of $46 million from the prepayment of $1.1 billion of senior
unsecured notes and $108 million of mortgage debt using proceeds
from the QCP spin-off.
|
(4)
|
Severance-related
charges for the year ended December 31, 2016 primarily relate to
the departure of our former President and Chief Executive Officer.
Severance-related charges for the year ended December 31, 2015
relate to the departure of our former Executive Vice President and
Chief Investment Officer.
|
(5)
|
For the year ended
December 31, 2016, Other includes: (i) $3 million of litigation
expense related to shareholder lawsuits and (ii) $0.6 million of
foreign currency remeasurement losses. For the year ended December
31, 2015, Other includes $5 million of foreign currency
remeasurement gains.
|
(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 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.
|
In addition to the items discussed above, 2016 net income
includes: (i) net gain on sales of real estate of $0.39 per share (of which $0.04 per share is reflected in equity income
from unconsolidated joint ventures) and (ii) $0.04 per share of interest income from
monetizing three senior housing development loans. In 2015,
operating results included non-cash HCRMC income of $0.30 per share. Additionally, 2015 net income
included: (i) $0.04 per share of
interest income from monetizing three senior housing development
loans and (ii) $0.04 per share of net
gain on sales of real estate (of which $0.03 per share is reflected in equity income
from unconsolidated joint ventures).
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 the "Funds From Operations",
"Funds Available for Distribution" and "Net Operating Income and
Same Property Performance" sections of this release for additional
information regarding these non-GAAP financial measures.
BROOKDALE TRANSACTIONS AND
OTHER DISPOSITIONS & TRANSITIONS
BROOKDALE ASSET SALES &
TRANSITIONS
During the fourth quarter, we transitioned seven of the eight
previously announced expiring Brookdale triple-net leases to RIDEA
structures; four remain with Brookdale and three were transferred to Sonata
Senior Living.
In January 2017, we completed the
previously announced sale of a 40% interest in our RIDEA II senior
housing joint venture and the related financing of the venture,
generating $480 million of proceeds
which were used to pay down our revolving credit facility.
Our previously disclosed transaction to sell 64 communities
triple-net leased to Brookdale for
$1.125 billion is scheduled to close
in the first quarter of 2017. In addition, we continue to market an
additional 25 communities triple-net leased to Brookdale and expect to sell or transition
these assets during 2017.
Combined, these transactions reduce Brookdale concentration while improving lease
coverage and strengthening our balance sheet and credit
profile.
OTHER DISPOSITIONS & TRANSITIONS
Dispositions
During the fourth quarter, we completed $472 million of dispositions, bringing our
year-to-date total dispositions to $770
million. Significant transactions in the quarter
included:
- As previously disclosed, in November, we sold four life science
facilities in South San Francisco,
CA encompassing 457,000 sq. ft. for $311 million to the current tenant.
- As previously disclosed, in October, we sold seven of ten
properties subject to a master lease to the current operator for an
aggregate purchase price of $88
million. Concurrently, we modified the in-place master lease
to transition the operations of the remaining three properties to a
new regional operator.
In January 2017, we sold four life
science facilities in Salt Lake City,
UT encompassing 324,000 sq. ft. for $76 million to the current tenant.
Transitions
- In October, we transitioned four triple-net leased assets to
RIDEA structures, three managed by Elmcroft Senior Living and one
managed by Frontier Management.
INVESTMENT TRANSACTIONS
During the fourth quarter, we completed $345 million of acquisitions and loan fundings,
bringing our year-to-date total acquisitions and loan fundings to
$723 million. Significant
transactions in the quarter included:
- In November, we entered into agreements with Maria Mallaband
Care Group ("Maria Mallaband") to acquire a portfolio of
predominantly private pay prime care homes located in London/South-East
England for $131 million (£105 million). In mid-2017,
through the exercise of a call option, we intend to convert our
bridge loan provided to Maria Mallaband in November into fee
ownership and enter into a Master Lease with Maria Mallaband.
- In December, we acquired a 10-asset portfolio of MOBs,
including nine on-campus, leased to affiliates of Community Health
Systems for an aggregate purchase price of $163 million. The nine on-campus MOBs are
affiliated with seven hospitals, each of which is a leader in its
respective market.
BALANCE SHEET AND FINANCING ACTIVITIES
Repaid $1.7 billion of debt during
the fourth quarter and an additional $440
million through February 13,
2017, using proceeds generated from QCP financing, RIDEA II
transaction and other dispositions. We remain on track with our
previously disclosed deleveraging plan and continue to target net
debt to EBITDA in the low to mid six-times range and a target
financial leverage in the 43% to 44% range by the end of 2017.
- In November, we repaid $500
million of 6.0% senior notes scheduled to mature in
January 2017 and $600 million of 6.7% senior notes scheduled to
mature in January 2018. In addition,
during the fourth quarter we paid down $454
million on our revolving credit facility and $135 million of mortgage debt with maturity dates
ranging from the fourth quarter of 2016 to 2018.
- In January, we paid down $440
million on our revolving credit facility primarily using
proceeds from our RIDEA II joint venture disposition.
As of February 13, 2017, we had
$1.6 billion of liquidity from a
combination of cash and availability under our credit facility.
In October, S&P reaffirmed our BBB credit rating, while
Fitch reaffirmed our BBB credit rating and improved our outlook to
stable.
LIFE SCIENCE AND MEDICAL OFFICE LEASING
During the fourth quarter, we completed 1.1 million sq. ft. of
leasing in our life science and medical office portfolios,
consisting of 450,000 sq. ft. of new leases and 668,000 sq. ft. of
renewals.
Significant leasing transactions were primarily in our life
science portfolio, including a 10-year lease with Five Prime
Therapeutics, Inc., a biotechnology company, for 115,000 sq. ft. at
Phase II of The Cove, projected to commence in January 2018. This brings Phases I and II to 86%
leased.
We commenced the $211 million
development of Phase III, which adds two Class A buildings
representing up to 336,000 sq. ft., and expect it to be delivered
by the fourth quarter of 2018. Visit our website for additional
information, including a link to view our development progress at
The Cove, at
www.hcpi.com/portfolio-diversification/life-science.
QCP SPIN TRANSACTION
On October 31, 2016, we completed
the spin-off of QCP into an independent publicly-traded REIT. A
copy of the press release is available in the Investor Relations
section of our website at http://ir.hcpi.com.
EXECUTIVE LEADERSHIP
Our Board of Directors elected Tom
Herzog as CEO and to serve as a member of the Board and also
elected Justin Hutchens as
President. Both elections were effective January 1, 2017.
Peter Scott joined the company as
Executive Vice President and Chief Financial Officer, effective
February 13, 2017.
Copies of both press releases are available in the Investor
Relations section of our website at http://ir.hcpi.com.
DIVIDEND
On February 2, 2017, our Board
declared a quarterly cash dividend of $0.37 per common share. The dividend will be paid
on March 2, 2017 to stockholders of
record as of the close of business on February 15, 2017. A
copy of the press release is available in the Investor Relations
section of our website at http://ir.hcpi.com.
SUSTAINABILITY
In November, HCP was named the 2016 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 eight of the past ten years for producing significant,
measurable results through our sustainability programs.
Additionally, we achieved constituency in the North America Dow
Jones Sustainability Index (DJSI) for the fourth consecutive year,
as well as the World DJSI for the second time. Accordingly, HCP was
included in The Sustainability Yearbook, a listing of the world's
most sustainable companies which includes only those companies in
the top 15% of their industry, as scored by the DJSI assessment.
More information about HCP's sustainability efforts can be found on
our website at www.hcpi.com/sustainability.
FULL YEAR 2017 GUIDANCE
For full year 2017, we expect: EPS to range between $1.32 and $1.38; FFO per share to range between
$1.88 and $1.94; and FFO as adjusted
per share to range between $1.89 and
$1.95. In addition, we expect 2017 SPP Cash NOI to increase
between 2.5% and 3.5%. 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 "Projected Future Operations"
and "Projected SPP Cash NOI" sections of this release, 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 Cash
NOI
|
|
Projected Full Year
2017
SPP NOI
|
|
|
Low
|
|
High
|
|
Low
|
|
High
|
Senior housing
triple-net
|
|
3.9%
|
|
4.9%
|
|
1.1%
|
|
2.1%
|
Senior housing
operating portfolio (SHOP)(1)
|
|
2.0%
|
|
3.0%
|
|
2.0%
|
|
3.0%
|
Life
science
|
|
2.5%
|
|
3.5%
|
|
0.4%
|
|
1.4%
|
Medical
office
|
|
2.0%
|
|
3.0%
|
|
1.3%
|
|
2.3%
|
Other(2)
|
|
0.75%
|
|
1.75%
|
|
1.8%
|
|
2.8%
|
SPP
growth
|
|
2.5%
|
|
3.5%
|
|
1.2%
|
|
2.2%
|
________________________________________
(1)
|
The 2016 SHOP SPP
Cash NOI growth rate was favorably impacted by 240 basis points due
to year-end true-ups of group purchase rebates. The higher 2016
jumping-off point from these rebates contributed to a 200 basis
point lower 2017 SHOP SPP Cash NOI growth rate versus what was
provided in our November 1st preliminary Outlook. However, of note,
the 2017 contribution from SHOP SPP Cash NOI is in line with our
November 1st preliminary Outlook.
|
(2)
|
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 Monday, February 13, 2017 at 9:00 a.m.
Pacific Time (12:00 p.m. Eastern Time) to present its
performance and operating results for the quarter and year ended
December 31, 2016. The conference
call is accessible by dialing (888) 317-6003 (U.S.) or (412)
317-6061 (International). The conference ID number is 6632291. 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 February
28, 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 10099205. 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 "Full Year 2017 Guidance,"
including without limitation with respect to expected EPS, FFO per
share, FFO as adjusted per share, Comparable FFO per share, SPP
Cash NOI and SPP NOI projections, and other financial projections
and assumptions, including those in the "Projected Future
Operations" and "Projected SPP NOI and SPP Cash NOI" sections of
this release, as well as comparable statements included in other
sections of this release; (ii) statements regarding the payment of
the quarterly cash dividend; and (iii) statements regarding timing,
outcomes and other details relating to the 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 "Strategic Brookdale
Transactions and Other Dispositions." 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 HCP'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: our reliance on a
concentration of a small number of tenants and operators for a
significant percentage of our revenues, with our concentration in
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 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 HCP's Securities and Exchange Commission filings. The
Company cautions investors not to place undue reliance on any
forward-looking statements. HCP 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
Andrew Johns
Vice President – Finance and Investor Relations
949-407-0400
HCP,
Inc.
|
Consolidated
Balance Sheets
|
In thousands,
except share and per share data
|
|
|
|
December
31,
|
|
December
31,
|
|
|
2016
|
|
2015
|
Assets
|
|
|
|
|
Real
estate:
|
|
|
|
|
|
|
Buildings and
improvements
|
|
$
|
11,692,654
|
|
$
|
12,007,071
|
Development costs and
construction in progress
|
|
|
400,619
|
|
|
388,576
|
Land
|
|
|
1,881,487
|
|
|
1,934,610
|
Accumulated
depreciation and amortization
|
|
|
(2,648,930)
|
|
|
(2,476,015)
|
Net real
estate
|
|
|
11,325,830
|
|
|
11,854,242
|
|
|
|
|
|
|
|
Net investment in
direct financing leases
|
|
|
752,589
|
|
|
750,693
|
Loans receivable,
net
|
|
|
807,954
|
|
|
768,743
|
Investments in and
advances to unconsolidated joint ventures
|
|
|
571,491
|
|
|
605,244
|
Accounts receivable,
net of allowance of $4,459 and $3,261, respectively
|
|
|
45,116
|
|
|
48,929
|
Cash and cash
equivalents
|
|
|
94,730
|
|
|
340,442
|
Restricted
cash
|
|
|
42,260
|
|
|
46,090
|
Intangible assets,
net
|
|
|
479,805
|
|
|
586,657
|
Assets held for sale
and discontinued operations, net
|
|
|
927,866
|
|
|
5,654,326
|
Other assets,
net
|
|
|
711,624
|
|
|
794,483
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
15,759,265
|
|
$
|
21,449,849
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
|
Bank line of
credit
|
|
$
|
899,718
|
|
$
|
397,432
|
Term loans
|
|
|
440,062
|
|
|
524,807
|
Senior unsecured
notes
|
|
|
7,133,538
|
|
|
9,120,107
|
Mortgage
debt
|
|
|
623,792
|
|
|
932,212
|
Other debt
|
|
|
92,385
|
|
|
94,445
|
Intangible
liabilities, net
|
|
|
58,145
|
|
|
56,147
|
Liabilities of assets
held for sale and discontinued operations, net
|
|
|
3,776
|
|
|
25,266
|
Accounts payable and
accrued liabilities
|
|
|
417,360
|
|
|
430,786
|
Deferred
revenue
|
|
|
149,181
|
|
|
122,330
|
Total
liabilities
|
|
|
9,817,957
|
|
|
11,703,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $1.00
par value: 750,000,000 shares authorized; 468,081,489 and
465,488,492 shares issued and outstanding, respectively
|
|
|
468,081
|
|
|
465,488
|
Additional paid-in
capital
|
|
|
8,198,890
|
|
|
11,647,039
|
Cumulative dividends
in excess of earnings
|
|
|
(3,089,734)
|
|
|
(2,738,414)
|
Accumulated other
comprehensive loss
|
|
|
(29,642)
|
|
|
(30,470)
|
Total stockholders'
equity
|
|
|
5,547,595
|
|
|
9,343,643
|
|
|
|
|
|
|
|
Joint venture
partners
|
|
|
214,377
|
|
|
217,066
|
Non-managing member
unitholders
|
|
|
179,336
|
|
|
185,608
|
Total noncontrolling
interests
|
|
|
393,713
|
|
|
402,674
|
|
|
|
|
|
|
|
Total
equity
|
|
|
5,941,308
|
|
|
9,746,317
|
|
|
|
|
|
|
|
Total liabilities and
equity
|
|
$
|
15,759,265
|
|
$
|
21,449,849
|
HCP,
Inc.
|
Consolidated
Statements of Operations
|
In thousands,
except per share data
|
|
|
|
Three Months
Ended
December
31,
|
|
Year Ended
December
31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and related
revenues
|
|
$
|
286,968
|
|
$
|
292,083
|
|
$
|
1,159,791
|
|
$
|
1,116,830
|
Tenant
recoveries
|
|
|
34,565
|
|
|
31,785
|
|
|
134,280
|
|
|
125,022
|
Resident fees and
services
|
|
|
186,118
|
|
|
158,312
|
|
|
686,835
|
|
|
525,453
|
Income from direct
financing leases
|
|
|
14,789
|
|
|
15,010
|
|
|
59,580
|
|
|
61,000
|
Interest
income
|
|
|
17,510
|
|
|
23,135
|
|
|
88,808
|
|
|
112,184
|
Total
revenues
|
|
|
539,950
|
|
|
520,325
|
|
|
2,129,294
|
|
|
1,940,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
103,148
|
|
|
122,027
|
|
|
464,403
|
|
|
479,596
|
Depreciation and
amortization
|
|
|
146,927
|
|
|
139,686
|
|
|
568,108
|
|
|
504,905
|
Operating
|
|
|
195,648
|
|
|
171,665
|
|
|
738,399
|
|
|
610,679
|
General and
administrative
|
|
|
20,600
|
|
|
21,835
|
|
|
103,611
|
|
|
95,965
|
Acquisition and
pursuit costs
|
|
|
3,760
|
|
|
3,959
|
|
|
9,821
|
|
|
27,309
|
(Recoveries)
impairments, net
|
|
|
—
|
|
|
(6,108)
|
|
|
—
|
|
|
108,349
|
Total costs and
expenses
|
|
|
470,083
|
|
|
453,064
|
|
|
1,884,342
|
|
|
1,826,803
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sales of real
estate, net
|
|
|
45,093
|
|
|
—
|
|
|
164,698
|
|
|
6,377
|
Loss on debt
extinguishments
|
|
|
(46,020)
|
|
|
—
|
|
|
(46,020)
|
|
|
—
|
Other (loss) income,
net
|
|
|
(1,410)
|
|
|
3,147
|
|
|
3,654
|
|
|
16,208
|
Total other (loss)
income, net
|
|
|
(2,337)
|
|
|
3,147
|
|
|
122,332
|
|
|
22,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
income taxes and equity income from unconsolidated joint
ventures
|
|
|
67,530
|
|
|
70,408
|
|
|
367,284
|
|
|
136,271
|
Income tax (expense)
benefit
|
|
|
(3,372)
|
|
|
2,596
|
|
|
(4,473)
|
|
|
9,807
|
Equity income from
unconsolidated joint ventures
|
|
|
15,388
|
|
|
12,144
|
|
|
11,360
|
|
|
6,590
|
Income from
continuing operations
|
|
|
79,546
|
|
|
85,148
|
|
|
374,171
|
|
|
152,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
impairments, transaction costs and income taxes
|
|
|
40,470
|
|
|
156,141
|
|
|
400,701
|
|
|
643,109
|
Impairments,
net
|
|
|
—
|
|
|
(835,701)
|
|
|
—
|
|
|
(1,341,399)
|
Transaction
costs
|
|
|
(58,256)
|
|
|
—
|
|
|
(86,765)
|
|
|
—
|
Income tax
expense
|
|
|
(460)
|
|
|
(205)
|
|
|
(48,181)
|
|
|
(796)
|
Total discontinued
operations
|
|
|
(18,246)
|
|
|
(679,765)
|
|
|
265,755
|
|
|
(699,086)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
61,300
|
|
|
(594,617)
|
|
|
639,926
|
|
|
(546,418)
|
Noncontrolling
interests' share in earnings
|
|
|
(2,639)
|
|
|
(4,251)
|
|
|
(12,179)
|
|
|
(12,817)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to HCP, Inc.
|
|
|
58,661
|
|
|
(598,868)
|
|
|
627,747
|
|
|
(559,235)
|
Participating
securities' share in earnings
|
|
|
(221)
|
|
|
(296)
|
|
|
(1,198)
|
|
|
(1,317)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
applicable to common shares
|
|
$
|
58,440
|
|
$
|
(599,164)
|
|
$
|
626,549
|
|
$
|
(560,552)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.12
|
|
$
|
(1.29)
|
|
$
|
1.34
|
|
$
|
(1.21)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.12
|
|
$
|
(1.29)
|
|
$
|
1.34
|
|
$
|
(1.21)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used to calculate earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
467,979
|
|
|
465,036
|
|
|
467,195
|
|
|
462,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
468,210
|
|
|
465,036
|
|
|
467,403
|
|
|
462,795
|
HCP,
Inc.
|
Consolidated
Statements of Cash Flows
|
In
thousands
|
|
|
|
Year Ended December
31,
|
|
|
2016
|
|
2015
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
(loss)
|
|
$
|
639,926
|
|
$
|
(546,418)
|
Adjustments to
reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
Depreciation and
amortization of real estate, in-place lease and other
intangibles:
|
|
|
|
|
Continuing
operations
|
|
568,108
|
|
504,905
|
Discontinued
operations
|
|
4,890
|
|
5,880
|
Amortization of market
lease intangibles, net
|
|
(1,197)
|
|
(1,295)
|
Amortization of
deferred compensation
|
|
22,884
|
|
26,127
|
Amortization of
deferred financing costs
|
|
20,014
|
|
20,222
|
Straight-line
rents
|
|
(18,003)
|
|
(28,859)
|
Loan and direct
financing lease non-cash interest:
|
|
|
|
|
Continuing
operations
|
|
599
|
|
(5,648)
|
Discontinued
operations
|
|
—
|
|
(90,065)
|
Deferred rental
revenues
|
|
(1,959)
|
|
(2,813)
|
Equity income from
unconsolidated joint ventures
|
|
(11,360)
|
|
(57,313)
|
Distributions of
earnings from unconsolidated joint ventures
|
|
26,492
|
|
15,111
|
Lease termination
income, net
|
|
—
|
|
(1,103)
|
Gain on sales of real
estate, net
|
|
(164,698)
|
|
(6,377)
|
Deferred income tax
expense
|
|
47,195
|
|
—
|
Loss on debt
extinguishments
|
|
46,020
|
|
—
|
Foreign exchange and
other losses (gains), net
|
|
188
|
|
(7,178)
|
Impairments,
net
|
|
—
|
|
1,449,748
|
Changes
in:
|
|
|
|
|
Accounts receivable,
net
|
|
3,813
|
|
(9,569)
|
Other assets,
net
|
|
(10,805)
|
|
(19,453)
|
Accounts payable and
accrued liabilities
|
|
42,024
|
|
(23,757)
|
Net cash provided by
operating activities
|
|
1,214,131
|
|
1,222,145
|
Cash flows from
investing activities:
|
|
|
|
|
Acquisitions of RIDEA
III, net
|
|
—
|
|
(770,325)
|
Acquisitions of other
real estate
|
|
(467,162)
|
|
(613,252)
|
Development of real
estate
|
|
(421,322)
|
|
(281,017)
|
Leasing costs and
tenant and capital improvements
|
|
(91,442)
|
|
(84,282)
|
Proceeds from sales
of real estate, net
|
|
647,754
|
|
58,623
|
Contributions to
unconsolidated joint ventures
|
|
(10,186)
|
|
(69,936)
|
Distributions in
excess of earnings from unconsolidated joint ventures
|
|
28,366
|
|
30,989
|
Proceeds from the
sales of marketable securities
|
|
—
|
|
2,348
|
Principal repayments
on loans receivable, DFLs and other
|
|
231,990
|
|
625,701
|
Investments in loans
receivable and other
|
|
(273,693)
|
|
(575,652)
|
Purchase of
securities for debt defeasance
|
|
(73,278)
|
|
—
|
Decrease in
restricted cash
|
|
18,356
|
|
4,798
|
Net cash used in
investing activities
|
|
(410,617)
|
|
(1,672,005)
|
Cash flows from
financing activities:
|
|
|
|
|
Net borrowings under
bank line of credit
|
|
1,108,417
|
|
98,743
|
Repayments under bank
line of credit
|
|
(540,000)
|
|
(511,521)
|
Proceeds related to
QCP spin-off, net
|
|
1,691,268
|
|
—
|
Cash impact of QCP
spin-off
|
|
(6,096)
|
|
—
|
Borrowings under term
loan
|
|
—
|
|
333,014
|
Issuance of senior
unsecured notes
|
|
—
|
|
1,936,017
|
Repayments of senior
unsecured notes
|
|
(2,000,000)
|
|
(400,000)
|
Debt extinguishment
costs
|
|
(45,406)
|
|
—
|
Repayments of
mortgage and other debt
|
|
(316,774)
|
|
(57,845)
|
Deferred financing
costs
|
|
(9,450)
|
|
(19,995)
|
Issuance of common
stock and exercise of options
|
|
67,650
|
|
206,471
|
Repurchase of common
stock
|
|
(8,685)
|
|
(8,738)
|
Dividends paid on
common stock
|
|
(979,542)
|
|
(1,046,638)
|
Issuance of
noncontrolling interests
|
|
11,834
|
|
110,775
|
Purchase of
noncontrolling interests
|
|
(1,300)
|
|
(7,049)
|
Distributions to
noncontrolling interests
|
|
(26,181)
|
|
(19,147)
|
Net cash (used in)
provided by financing activities
|
|
(1,054,265)
|
|
614,087
|
Effect of foreign
exchange on cash and cash equivalents
|
|
(1,019)
|
|
(1,537)
|
Net (decrease)
increase in cash and cash equivalents
|
|
(251,770)
|
|
162,690
|
Cash and cash
equivalents, beginning of year
|
|
346,500
|
|
183,810
|
Cash and cash
equivalents, end of year
|
|
$
|
94,730
|
|
$
|
346,500
|
Less: cash and cash
equivalents of discontinued operations
|
|
|
—
|
|
|
(6,058)
|
Cash and cash
equivalents of continuing operations, end of year
|
|
$
|
94,730
|
|
$
|
340,442
|
HCP,
Inc.
|
Funds From
Operations(1)
|
In thousands,
except per share data
|
(Unaudited)
|
|
|
|
Three Months
Ended
December
31,
|
|
Year Ended
December
31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
applicable to common shares
|
|
$
|
58,440
|
|
$
|
(599,164)
|
|
$
|
626,549
|
|
$
|
(560,552)
|
|
Depreciation and
amortization
|
|
|
147,416
|
|
|
141,156
|
|
|
572,998
|
|
|
510,785
|
|
Other depreciation
and amortization(2)
|
|
|
2,998
|
|
|
5,207
|
|
|
11,919
|
|
|
22,223
|
|
Gain on sales of real
estate, net
|
|
|
(45,093)
|
|
|
—
|
|
|
(164,698)
|
|
|
(6,377)
|
|
Taxes associated with
real estate disposition(3)
|
|
|
7,017
|
|
|
—
|
|
|
60,451
|
|
|
—
|
|
Impairment of real
estate
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,948
|
|
Equity income from
unconsolidated joint ventures
|
|
|
(15,388)
|
|
|
(23,397)
|
|
|
(11,360)
|
|
|
(57,313)
|
|
FFO from
unconsolidated joint ventures
|
|
|
11,967
|
|
|
21,176
|
|
|
44,071
|
|
|
90,498
|
|
Noncontrolling
interests' and participating securities' share in
earnings
|
|
|
2,860
|
|
|
4,547
|
|
|
13,377
|
|
|
14,134
|
|
Noncontrolling
interests' and participating securities' share in FFO
|
|
|
(7,952)
|
|
|
(8,203)
|
|
|
(34,154)
|
|
|
(27,187)
|
|
FFO applicable to
common shares
|
|
$
|
162,265
|
|
$
|
(458,678)
|
|
$
|
1,119,153
|
|
$
|
(10,841)
|
|
Distributions on
dilutive convertible units
|
|
|
—
|
|
|
—
|
|
|
8,732
|
|
|
—
|
|
Diluted FFO
applicable to common shares
|
|
$
|
162,265
|
|
$
|
(458,678)
|
|
$
|
1,127,885
|
|
$
|
(10,841)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted FFO per
common share
|
|
$
|
0.35
|
|
$
|
(0.99)
|
|
$
|
2.39
|
|
$
|
(0.02)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used to calculate diluted FFO per share
|
|
|
468,210
|
|
|
465,036
|
|
|
471,566
|
|
|
462,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of
adjustments to FFO:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other impairments,
net(4)
|
|
$
|
—
|
|
$
|
829,593
|
|
$
|
—
|
|
$
|
1,446,800
|
|
Transaction-related
items
|
|
|
62,016
|
|
|
3,959
|
|
|
96,586
|
|
|
32,932
|
|
Loss on debt
extinguishments(5)
|
|
|
46,020
|
|
|
—
|
|
|
46,020
|
|
|
—
|
|
Severance-related
charges(6)
|
|
|
2,501
|
|
|
—
|
|
|
16,965
|
|
|
6,713
|
|
Litigation
provision
|
|
|
3,081
|
|
|
—
|
|
|
3,081
|
|
|
—
|
|
Foreign currency
remeasurement losses (gains)
|
|
|
317
|
|
|
60
|
|
|
585
|
|
|
(5,437)
|
|
|
|
$
|
113,935
|
|
$
|
833,612
|
|
$
|
163,237
|
|
$
|
1,481,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO as adjusted
applicable to common shares
|
|
$
|
276,200
|
|
$
|
374,934
|
|
$
|
1,282,390
|
|
$
|
1,470,167
|
|
Distributions on
dilutive convertible units and other
|
|
|
2,315
|
|
|
3,397
|
|
|
12,849
|
|
|
13,597
|
|
Diluted FFO as
adjusted applicable to common shares
|
|
$
|
278,515
|
|
$
|
378,331
|
|
$
|
1,295,239
|
|
$
|
1,483,764
|
|
Per common share
impact of adjustments on diluted FFO
|
|
$
|
0.24
|
|
$
|
1.79
|
|
$
|
0.35
|
|
$
|
3.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted FFO as
adjusted per common share
|
|
$
|
0.59
|
|
$
|
0.80
|
|
$
|
2.74
|
|
$
|
3.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used to calculate diluted FFO as adjusted per
share
|
|
|
474,318
|
|
|
471,273
|
|
|
473,340
|
|
|
469,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO as adjusted from
QCP
|
|
$
|
26,948
|
|
$
|
138,875
|
|
$
|
328,341
|
|
$
|
575,471
|
|
Diluted Comparable
FFO as adjusted applicable to common
shares(7)
|
|
$
|
251,567
|
|
$
|
239,456
|
|
$
|
966,898
|
|
$
|
908,293
|
|
FFO as adjusted from
QCP per common share
|
|
$
|
0.06
|
|
$
|
0.29
|
|
$
|
0.70
|
|
$
|
1.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Comparable
FFO as adjusted per common share(7)
|
|
$
|
0.53
|
|
$
|
0.51
|
|
$
|
2.04
|
|
$
|
1.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________________________________
(1)
|
See "Results of
Operations-Non-GAAP Financial Measures" and "Non-GAAP Financial
Measure Reconciliations" included in our Annual Report on Form 10-K
for the year ended December 31, 2016 for definitions of FFO
and FFO as adjusted and an important discussion of their uses and
inherent limitations.
|
(2)
|
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. Beginning January 2016, we changed our accounting
treatment for our previous HCRMC DFL investments to recognize
rental income on a cash basis and no longer recognize non-cash
depreciation.
|
(3)
|
Represents income tax
expense associated with state built-in gain tax payable upon the
disposition of specific real estate assets, of which $47 million
relates to our previous HCRMC real estate portfolio. See Note 5 to
the Consolidated Financial Statements for the year ended December
31, 2016 included in our Annual Report on Form 10-K.
|
(4)
|
For the three months
ended December 31, 2015, other impairments, net include: (i) $817
million related to our previous HCRMC DFL investments and (ii) $19
million related to our previous equity investment in HCRMC,
partially offset by an impairment recovery of $6 million related to
a loan payoff. For the year ended December 31, 2015, other
impairments, net include: (i) $1.3 billion related to our previous
HCRMC DFL investments, (ii) $112 million related to our Four
Seasons Notes and (iii) $46 million related to our previous equity
investment in HCRMC, partially offset by an impairment recovery of
$6 million related to a loan payoff.
|
(5)
|
Represents penalties
of $46 million from the prepayment of $1.1 billion of senior
unsecured notes and $108 million of mortgage debt using proceeds
from the QCP spin-off.
|
(6)
|
Severance-related
charges for the year ended December 31, 2016 primarily relate to
the departure of our former President and Chief Executive Officer.
Severance-related charges for the year ended December 31, 2015
relate to the departure of our former Executive Vice President and
Chief Investment Officer.
|
(7)
|
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 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(1)
|
In
thousands
|
(Unaudited)
|
|
|
|
Three Months
Ended
December
31,
|
|
Year Ended
December
31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO as adjusted
applicable to common shares
|
|
$
|
276,200
|
|
$
|
374,934
|
|
$
|
1,282,390
|
|
$
|
1,470,167
|
Amortization of
market lease intangibles, net
|
|
|
196
|
|
|
(315)
|
|
|
(1,197)
|
|
|
(1,295)
|
Amortization of
deferred compensation(2)
|
|
|
2,687
|
|
|
5,059
|
|
|
15,581
|
|
|
23,233
|
Amortization of
deferred financing costs
|
|
|
4,416
|
|
|
5,272
|
|
|
20,014
|
|
|
20,222
|
Straight-line
rents
|
|
|
(3,591)
|
|
|
(4,042)
|
|
|
(18,003)
|
|
|
(28,859)
|
DFL non-cash
interest(3)
|
|
|
633
|
|
|
(23,685)
|
|
|
2,600
|
|
|
(87,861)
|
Other depreciation
and amortization
|
|
|
(2,998)
|
|
|
(5,207)
|
|
|
(11,919)
|
|
|
(22,223)
|
Deferred revenues –
tenant improvement related
|
|
|
(432)
|
|
|
(457)
|
|
|
(1,883)
|
|
|
(2,594)
|
Deferred revenues –
additional rents
|
|
|
(500)
|
|
|
(860)
|
|
|
(76)
|
|
|
(219)
|
Leasing costs and
tenant and capital improvements
|
|
|
(26,179)
|
|
|
(31,193)
|
|
|
(88,953)
|
|
|
(82,072)
|
Lease restructure
payments
|
|
|
2,124
|
|
|
6,289
|
|
|
16,604
|
|
|
22,657
|
Joint venture
adjustments – CCRC entrance fees(4)
|
|
|
7,574
|
|
|
8,870
|
|
|
29,998
|
|
|
30,918
|
Joint venture and
other FAD adjustments(3)
|
|
|
(8,879)
|
|
|
(21,077)
|
|
|
(29,460)
|
|
|
(80,225)
|
FAD applicable to
common shares
|
|
$
|
251,251
|
|
$
|
313,588
|
|
$
|
1,215,696
|
|
$
|
1,261,849
|
Distributions on
dilutive convertible units
|
|
|
2,466
|
|
|
3,547
|
|
|
13,088
|
|
|
14,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted FAD
applicable to common shares
|
|
$
|
253,717
|
|
$
|
317,135
|
|
$
|
1,228,784
|
|
$
|
1,276,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
________________________________________
(1)
|
See "Results of
Operations-Non-GAAP Financial Measures" and "Non-GAAP Financial
Measure Reconciliations" included in our Annual Report on Form 10-K
for the year ended December 31, 2016 for the definition of FAD and
an important discussion of its uses and inherent
limitations.
|
(2)
|
Excludes $7 million
primarily related to the acceleration of deferred compensation for
restricted stock units that vested upon the departure of HCP's
former President and Chief Executive Officer, which is included in
the severance-related charges for the year ended December 31, 2016.
Excludes $3 million related to the acceleration of deferred
compensation for restricted stock units and stock options that
vested upon the departure of HCP's former Executive Vice President
and Chief Investment Officer, which is included in the
severance-related charges for the year ended December 31,
2015.
|
(3)
|
For the three months
and year ended December 31, 2015, DFL non-cash interest reflects an
elimination of $14 million and $58 million, respectively. Our
previous equity investment in HCRMC was accounted for using the
equity method, which required an elimination of DFL income that was
proportional to our ownership in HCRMC. Further, our share of
earnings from HCRMC (equity income) increased for the corresponding
elimination of related lease expense recognized at the HCRMC entity
level, which we presented as a non-cash joint venture FAD
adjustment. Beginning January 2016, as a result of placing our
previous equity investment in HCRMC on a cash basis, we no longer
eliminated our proportional ownership share of income from DFLs to
equity income (loss) from unconsolidated joint ventures.
|
(4)
|
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)
|
Dollars in
thousands
|
(Unaudited)
|
|
|
|
Three Months
Ended
December
31,
|
|
Year Ended
December
31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net income
(loss)
|
|
$
|
61,300
|
|
$
|
(594,617)
|
|
$
|
639,926
|
|
$
|
(546,418)
|
Interest
income
|
|
|
(17,510)
|
|
|
(23,135)
|
|
|
(88,808)
|
|
|
(112,184)
|
Interest
expense
|
|
|
103,148
|
|
|
122,027
|
|
|
464,403
|
|
|
479,596
|
Depreciation and
amortization
|
|
|
146,927
|
|
|
139,686
|
|
|
568,108
|
|
|
504,905
|
General and
administrative
|
|
|
20,600
|
|
|
21,835
|
|
|
103,611
|
|
|
95,965
|
Acquisition and
pursuit costs
|
|
|
3,760
|
|
|
3,959
|
|
|
9,821
|
|
|
27,309
|
(Recoveries)
impairments, net
|
|
|
—
|
|
|
(6,108)
|
|
|
—
|
|
|
108,349
|
Gain on sales of real
estate, net
|
|
|
(45,093)
|
|
|
—
|
|
|
(164,698)
|
|
|
(6,377)
|
Loss on debt
extinguishments
|
|
|
46,020
|
|
|
—
|
|
|
46,020
|
|
|
—
|
Other loss (income),
net
|
|
|
1,410
|
|
|
(3,147)
|
|
|
(3,654)
|
|
|
(16,208)
|
Income tax expense
(benefit)
|
|
|
3,372
|
|
|
(2,596)
|
|
|
4,473
|
|
|
(9,807)
|
Equity income from
unconsolidated joint ventures
|
|
|
(15,388)
|
|
|
(12,144)
|
|
|
(11,360)
|
|
|
(6,590)
|
Discontinued
operations
|
|
|
18,246
|
|
|
679,765
|
|
|
(265,755)
|
|
|
699,086
|
HCP's share of
unconsolidated joint ventures revenues
|
|
|
55,024
|
|
|
50,095
|
|
|
215,804
|
|
|
191,986
|
HCP's share of
unconsolidated joint ventures operating expenses
|
|
|
(42,137)
|
|
|
(40,169)
|
|
|
(169,035)
|
|
|
(154,259)
|
NOI
|
|
$
|
339,679
|
|
$
|
335,451
|
|
$
|
1,348,856
|
|
$
|
1,255,353
|
Non-SPP
NOI
|
|
|
(46,498)
|
|
|
(49,088)
|
|
|
(308,951)
|
|
|
(241,775)
|
SPP
NOI
|
|
$
|
293,181
|
|
$
|
286,363
|
|
$
|
1,039,905
|
|
$
|
1,013,578
|
Non-cash adjustment
to SPP NOI
|
|
|
(1,603)
|
|
|
(2,111)
|
|
|
(6,152)
|
|
|
(16,789)
|
SPP cash (adjusted)
NOI
|
|
$
|
291,578
|
|
$
|
284,252
|
|
$
|
1,033,753
|
|
$
|
996,789
|
SPP NOI %
change
|
|
|
2.4%
|
|
|
|
|
|
2.6%
|
|
|
|
SPP Cash (adjusted)
NOI % change
|
|
|
2.6%
|
|
|
|
|
|
3.7%
|
|
|
|
________________________________________
(1)
|
See "Results of
Operations-Non-GAAP Financial Measures," "Results of
Operations-Segment Analysis" and "Note 14 to the Consolidated
Financial Statements" included in our Annual Report on Form 10-K
for the year ended December 31, 2016 for definitions of NOI, Cash
(adjusted) NOI and SPP and an important discussion of their uses
and inherent limitations.
|
HCP,
Inc.
|
Projected Future
Operations(1)
|
(Unaudited)
|
|
|
|
Full Year
2017
|
|
|
Low
|
|
High
|
|
|
|
|
|
Diluted earnings
per common share
|
|
$
1.32
|
|
$
1.38
|
Depreciation and
amortization
|
|
1.13
|
|
1.13
|
Other depreciation and
amortization
|
|
0.02
|
|
0.02
|
Gain on sales of real
estate, net
|
|
(0.70)
|
|
(0.70)
|
Joint venture FFO
adjustments
|
|
0.11
|
|
0.11
|
Diluted FFO per
common share
|
|
$
1.88
|
|
$
1.94
|
Transaction-related
items and other
|
|
0.01
|
|
0.01
|
Diluted FFO as
adjusted per common share
|
|
$
1.89
|
|
$
1.95
|
|
|
|
|
|
________________________________________
(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
unannounced future transactions, except as described herein, 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 larger than expected litigation
settlements and related expenses related to existing or future
litigation matters. 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 NOI
and Cash NOI(1)
|
Dollars in
thousands
|
(Unaudited)
|
|
For the projected
full year 2017 (low):
|
|
|
|
Senior Housing
Triple-net
|
|
SHOP
|
|
Life
Science
|
|
Medical
Office
|
|
Other
|
|
Total
|
NOI(2)
|
|
$
|
319,000
|
|
$
|
238,800
|
|
$
|
273,900
|
|
$
|
293,000
|
|
$
|
117,700
|
|
$
|
1,242,400
|
Non-SPP NOI
|
|
|
(35,200)
|
|
|
(48,250)
|
|
|
(34,700)
|
|
|
(41,300)
|
|
|
(7,800)
|
|
|
(167,250)
|
SPP
NOI
|
|
|
283,800
|
|
|
190,550
|
|
|
239,200
|
|
|
251,700
|
|
|
109,900
|
|
|
1,075,150
|
Non-cash adjustments
to SPP NOI(3)
|
|
|
5,500
|
|
|
—
|
|
|
5,100
|
|
|
1,000
|
|
|
(4,150)
|
|
|
7,450
|
SPP cash (adjusted)
NOI
|
|
$
|
289,300
|
|
$
|
190,550
|
|
$
|
244,300
|
|
$
|
252,700
|
|
$
|
105,750
|
|
|
1,082,600
|
Addback
adjustments(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
159,800
|
Other income and
expenses(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
337,100
|
Costs and
expenses(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(944,900)
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
634,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the projected
full year 2017 (high):
|
|
|
|
Senior Housing
Triple-net
|
|
SHOP
|
|
Life
Science
|
|
Medical
Office
|
|
Other
|
|
Total
|
NOI(2)
|
|
$
|
323,200
|
|
$
|
241,300
|
|
$
|
276,800
|
|
$
|
295,700
|
|
$
|
118,900
|
|
$
|
1,255,900
|
Non-SPP NOI
|
|
|
(36,600)
|
|
|
(48,900)
|
|
|
(35,200)
|
|
|
(41,500)
|
|
|
(7,950)
|
|
|
(170,150)
|
SPP
NOI
|
|
|
286,600
|
|
|
192,400
|
|
|
241,600
|
|
|
254,200
|
|
|
110,950
|
|
|
1,085,750
|
Non-cash adjustments
to SPP NOI(3)
|
|
|
5,500
|
|
|
—
|
|
|
5,100
|
|
|
1,000
|
|
|
(4,150)
|
|
|
7,450
|
SPP cash (adjusted)
NOI
|
|
$
|
292,100
|
|
$
|
192,400
|
|
$
|
246,700
|
|
$
|
255,200
|
|
$
|
106,800
|
|
|
1,093,200
|
Addback
adjustments(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
162,700
|
Other income and
expenses(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
344,100
|
Costs and
expenses(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(937,900)
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
662,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended
December 31, 2016:
|
|
|
|
Senior Housing
Triple-net
|
|
SHOP
|
|
Life
Science
|
|
Medical
Office
|
|
Other
|
|
Total
|
NOI(2)
|
|
$
|
416,408
|
|
$
|
243,752
|
|
$
|
292,057
|
|
$
|
273,994
|
|
$
|
122,645
|
|
$
|
1,348,856
|
Non-SPP NOI
|
|
|
(135,723)
|
|
|
(56,945)
|
|
|
(53,822)
|
|
|
(25,522)
|
|
|
(14,695)
|
|
|
(286,707)
|
SPP
NOI
|
|
|
280,685
|
|
|
186,807
|
|
|
238,235
|
|
|
248,472
|
|
|
107,950
|
|
|
1,062,149
|
Non-cash adjustments
to SPP NOI(3)
|
|
|
(2,252)
|
|
|
—
|
|
|
114
|
|
|
(733)
|
|
|
(2,985)
|
|
|
(5,856)
|
SPP cash (adjusted)
NOI
|
|
$
|
278,433
|
|
$
|
186,807
|
|
$
|
238,349
|
|
$
|
247,739
|
|
$
|
104,965
|
|
|
1,056,293
|
Addback
adjustments(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
292,563
|
Other income and
expenses(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
217,278
|
Costs and
expenses(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,191,963)
|
Discontinued
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
265,755
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
639,926
|
Projected SPP NOI
change for the full year 2017:
|
|
|
|
Senior Housing
Triple-net
|
|
SHOP
|
|
Life
Science
|
|
Medical
Office
|
|
Other
|
|
Total
|
Low
|
|
1.1%
|
|
2.0%
|
|
0.4%
|
|
1.3%
|
|
1.8%
|
|
1.2%
|
High
|
|
2.1%
|
|
3.0%
|
|
1.4%
|
|
2.3%
|
|
2.8%
|
|
2.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected SPP cash
(adjusted) NOI change for the full year 2017:
|
|
|
|
Senior Housing
Triple-net
|
|
SHOP(7)
|
|
Life
Science
|
|
Medical
Office
|
|
Other
|
|
Total
|
Low
|
|
3.9%
|
|
2.0%
|
|
2.5%
|
|
2.0%
|
|
0.75%
|
|
2.5%
|
High
|
|
4.9%
|
|
3.0%
|
|
3.5%
|
|
3.0%
|
|
1.75%
|
|
3.5%
|
________________________________________
(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 impact of unannounced future transactions, except as described
herein, 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
larger than expected litigation settlements and related expenses
related to existing or future litigation matters. 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, tenant recoveries, resident fees and services,
and income from DFLs, less property level operating expenses,
including our share of unconsolidated joint ventures.
|
(3)
|
Represents
straight-line rents, DFL non-cash interest, amortization of market
lease intangibles, net and lease termination fees.
|
(4)
|
Represents non-SPP
NOI and non-cash adjustments to SPP NOI.
|
(5)
|
Represents interest
income, gain on sales of real estate, other income, net, income
taxes and equity income (loss) from unconsolidated joint ventures,
excluding NOI.
|
(6)
|
Represents interest
expense, depreciation and amortization, general and administrative
expenses, acquisition and pursuit costs, and loss on debt
extinguishments.
|
(7)
|
The 2016 SHOP SPP
Cash NOI growth rate was favorably impacted by 240 basis points due
to year-end true-ups of group purchase rebates. The higher 2016
jumping-off point from these rebates contributed to a 200 basis
point lower 2017 SHOP SPP Cash NOI growth rate versus what was
provided in our November 1st preliminary Outlook. However, of note,
the 2017 contribution from SHOP SPP Cash NOI is in line with our
November 1st preliminary Outlook.
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/hcp-announces-results-for-the-quarter-and-year-ended-december-31-2016-300406076.html
SOURCE HCP, Inc.