IRVINE, Calif., Nov. 3, 2015 /PRNewswire/ -- HCP (NYSE:HCP)
announced results for the quarter ended September 30, 2015.
|
Three Months
Ended
September 30,
2015
|
|
Three Months
Ended
September 30,
2014
|
|
Per Share
|
|
|
(in thousands,
except per share amounts)
|
Amount
|
|
Per Share
|
|
Amount
|
|
Per Share
|
|
Change
|
|
|
FFO
|
$
|
263,370
|
|
$
|
0.57
|
|
$
|
377,304
|
|
$
|
0.82
|
|
$
|
(0.25)
|
|
|
Other
impairments(1)
|
|
96,856
|
|
|
0.21
|
|
|
—
|
|
|
—
|
|
|
0.21
|
|
|
Transaction-related items(2)
|
|
1,538
|
|
|
—
|
|
|
(31,026)
|
|
|
(0.07)
|
|
|
0.07
|
|
|
Foreign
currency remeasurement losses
|
|
4,036
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
FFO as
adjusted
|
$
|
365,800
|
|
$
|
0.79
|
|
$
|
346,278
|
|
$
|
0.75
|
|
$
|
0.04
|
|
|
FAD
|
$
|
309,946
|
|
$
|
0.67
|
|
$
|
297,709
|
|
$
|
0.65
|
|
$
|
0.02
|
|
|
Net
income
|
$
|
115,046
|
|
$
|
0.25
|
|
$
|
247,208
|
|
$
|
0.54
|
|
$
|
(0.29)
|
|
|
________________________________________
|
|
(1)
|
Other impairments
reflect the previously announced $70 million related to our Four
Seasons Health Care senior notes ("Four Seasons Notes") in
September 2015, and $27 million related to our 9% equity investment
in HCR ManorCare, Inc. ("HCRMC") for the quarter ended September
30, 2015. See Note 15 to the Consolidated Financial Statements for
the quarter ended September 30, 2015 included in our Quarterly
Report on Form 10-Q.
|
|
|
|
(2)
|
2014
transaction-related items primarily relate to the Brookdale
Transaction that closed in August 2014. See the "Non-GAAP Financial
Measures Reconciliations" section of the Management Discussion and
Analysis for the quarter ended September 30, 2015 included in our
Quarterly Report on Form 10-Q.
|
FFO, FFO as adjusted and FAD are supplemental non-GAAP financial
measures that we believe are useful in evaluating the operating
performance of real estate investment trusts. See the "Funds From
Operations" and "Funds Available for Distribution" sections of this
release for additional information regarding these non-GAAP
financial measures.
INVESTMENT TRANSACTIONS
During the third quarter, we expanded our senior housing joint
venture partnerships with Brookdale Senior Living and MBK Senior
Living with $26 million of new
investments, bringing our year-to-date total investments to
$1.9 billion.
As previously disclosed, in July
2015, we converted a $42
million (£27 million) loan to Maria Mallaband Care Group
("MMCG") into fee ownership of two care homes in the United Kingdom at an equal value. The
properties are triple-net leased to MMCG for an initial term of 15
years.
CAPITAL RECYCLING AND FINANCING ACTIVITIES
During the third quarter and through November 2, 2015, we raised $438 million from our capital recycling and
financing activities. The majority of the proceeds were used to pay
down our revolving line of credit, which was drawn to fund our 2015
investments. Our financial leverage improved 170 basis points, from
45.4% at the end of the second quarter, to 43.7% primarily as a
result of the capital recycling and financing transactions
completed through November 2, 2015,
as follows:
Capital Recycling
We generated $365 million through
1) asset sales, 2) a new joint venture as part of our Investment
Management platform and 3) loan repayments, as follows:
|
1)
|
$180 million from
asset sales:
|
|
- $130 million in
proceeds from 12 of the 50 non-strategic HCR ManorCare ("HCRMC")
facilities (described below).
- $50 million in
proceeds from land and other asset sales.
|
|
|
2)
|
$110 million from a
medical office joint venture adding to our Investment Management
platform:
|
|
- In June 2015, we
acquired a 1.2 million sq. ft. portfolio of 11 on-campus medical
office buildings from Memorial Hermann in a sale lease-back
transaction for $225 million. In October, we sold a 49%
non-controlling interest for $110 million to Prime Property Fund,
an investment fund advised by Morgan Stanley Real Estate Advisors.
HCP retained a 51% controlling interest and will act as the
managing member of the joint venture.
|
|
3)
|
$75 million from loan
repayments:
|
|
- $52 million (£34
million) from HC-One upon the sale of previously identified
non-strategic assets in their operating
portfolio.
- $23 million in
October as repayment for a loan in our hospital
segment.
|
|
Financing
During the third quarter and through November 2, 2015, we issued 1.8 million shares of
common stock at a weighted average price of $40.14 per share for net proceeds of $73 million under our at-the-market equity
offering program ("ATM Program").
HCR MANORCARE UPDATES
HCRMC's normalized fixed charge coverage ratio for the trailing
12 months ended September 30, 2015
was 1.11x, before any benefit from the non-strategic facility sales
described below. On a pro forma basis reflecting the annualized
effect from the April 2015 lease
amendment and completion of the facility sales, HCRMC's trailing
12-month normalized fixed charge coverage ratio ended September 30, 2015 would increase to
approximately 1.25x. For the nine-month period ended September 30, 2015, HCRMC's normalized EBITDAR
decreased 1.7% or $7 million
year-over-year, and normalized EBITDAR margins of 14% remained
essentially in-line with the comparable prior year period. HCRMC
had cash and cash equivalents of $151
million at September 30,
2015.
During the third quarter, we recorded an impairment charge of
$27 million, or $0.06 per share, related to our 9% equity
ownership interest in HCRMC, reducing the carrying amount of our
equity investment from $48 million to $21 million. The impairment primarily resulted
from our review of recent HCRMC operating results and market and
industry data, which, among other factors, show a declining trend
in admissions from hospitals and continuing trends in mix and
length of stay driven by Medicare Advantage and other managed care
plans.
Through November 2, 2015, we
completed sales of 12 of the 50 non-strategic HCRMC facilities,
generating proceeds of $130 million.
The remaining 38 facilities are under contract and expected to
close over the next six months. Total proceeds from all 50
facilities are expected to exceed $350
million, above the high end of our initial guidance of
between $250 and $350 million. As
previously announced, HCRMC will receive an annual rent reduction
equal to 7.75% of the proceeds received by HCP.
In addition, as part of our lease amendment transaction with
HCRMC, through November 2, 2015, we
obtained fee ownership in four of the nine recently built
post-acute facilities valued at $99
million, with an average occupancy of 85%. Transfer of the
remaining five facilities is expected to be completed over the next
six months.
LIFE SCIENCE AND MEDICAL OFFICE LEASING
During the third quarter, we completed 667,000 sq. ft. of
leasing in our life science and medical office portfolios,
consisting of 211,000 sq. ft. of new leases and 456,000 sq. ft. of
renewals.
We pre-leased 38,000 sq. ft. in the first phase of The Cove, the
newest generation of life science development. The first phase
consists of two buildings totaling 253,000 sq. ft. and is expected
to be completed in the third quarter of 2016. Visit our website for
more information, including a link to see the development progress
at www.hcpi.com/portfolio/life-science.
At September 30, 2015, our life
science occupancy reached 98.1%, representing the 5th consecutive
quarterly all-time high for this segment, and our medical office
occupancy was 91.5%, representing the 8th consecutive quarter with
occupancy above 90%.
EXECUTIVE MANAGEMENT ADDITION
On September 8, 2015, we welcomed
Justin Hutchens as Executive Vice
President and Chief Investment Officer – Senior Housing and Care.
Mr. Hutchens joined HCP from National Health Investors, Inc. (NYSE:
NHI) where he was employed since 2009 and most recently served as
President and Chief Executive Officer since 2011. He brings over 20
years of experience in REIT investments and senior care
operations.
SUSTAINABILITY LEADERSHIP
In September 2015, HCP was named
to the Dow Jones Sustainability North America Index for the third
consecutive year, and achieved constituency for the first time in
the Dow Jones Sustainability World Index. More information about
HCP's sustainability efforts can be found on our website at
www.hcpi.com/sustainability.
DIVIDEND ARISTOCRAT
On October 29, 2015, our Board of
Directors declared a quarterly cash dividend of $0.565 per common share, representing a 3.7%
increase over the prior year. The dividend will be paid on
November 24, 2015 to stockholders of
record as of the close of business on November 9, 2015. HCP has increased its dividend
for 30 consecutive years and is the only REIT included in the
S&P 500 Dividend Aristocrats index.
UPDATED FULL YEAR 2015 OUTLOOK
For full year 2015, we expect: FFO per share to range between
$1.74 and $1.80; FFO as adjusted per
share to range between $3.12 and
$3.18; FAD per share to range between $2.66 and $2.72; and EPS to range between
$0.52 and $0.58. In addition, we
continue to expect 2015 Same Property Portfolio Cash Net Operating
Income ("SPP Cash NOI") to increase between 0.0% and 1.0%.
Excluding HCRMC, we expect 2015 SPP Cash NOI to increase between
3.25% and 4.25%. These estimates do not reflect the potential
impact from unannounced future acquisitions and dispositions. Refer
to the "Projected Future Operations" and "Projected SPP Cash NOI"
sections of this release for additional information regarding these
estimates.
|
|
|
|
Full Year 2015 SPP
Cash NOI
|
|
|
|
|
|
|
Low
|
|
High
|
|
|
Senior
housing
|
|
|
|
3.25%
|
|
4.25%
|
|
|
Senior housing
RIDEA (20 properties)
|
|
|
|
6.8%
|
|
7.8%
|
|
|
Post-acute/skilled
nursing
|
|
|
|
(7.6%)
|
|
(6.6%)
|
|
|
Life
science
|
|
|
|
5.8%
|
|
6.8%
|
|
|
Medical
office
|
|
|
|
1.6%
|
|
2.6%
|
|
|
Hospital
|
|
|
|
1.8%
|
|
2.8%
|
|
|
SPP Cash NOI
growth
|
|
|
|
0.0%
|
|
1.0%
|
|
|
SPP Cash NOI growth,
excluding HCRMC portfolio
|
|
|
|
3.25%
|
|
4.25%
|
|
|
|
|
|
|
|
|
|
|
COMPANY INFORMATION
HCP has scheduled a conference call and webcast for Tuesday, November 3, 2015 at 9:00 a.m.
Pacific Time (12:00 p.m. Eastern Time) in order to present the
Company's performance and operating results for the quarter ended
September 30, 2015. The conference
call is accessible by dialing (888) 317-6003 (U.S.) or (412)
317-6061 (International). The participant passcode is 2790781. The
webcast is accessible via the Company's website at www.hcpi.com.
This link can be found on the "Event Calendar" page, which is under
the "Investor Relations" tab. Through November 18, 2015, an archive of the webcast will
be available on our website, and a telephonic replay can be
accessed by calling (877) 344-7529 (U.S.) or (412) 317-0088
(International) and entering passcode 10073754. The Company's
supplemental information package for the current period is
available with this earnings release on the Company's website in
the "Presentations" section of the "Investor Relations"
tab.
ABOUT HCP
HCP, Inc. is a fully integrated real estate investment trust
(REIT) that invests primarily in real estate serving the healthcare
industry in the United States. The
Company's portfolio of assets is diversified among five distinct
sectors: senior housing, post-acute/skilled nursing, life science,
medical office and hospital. A publicly traded company since 1985,
HCP: (i) was the first healthcare REIT selected to the S&P 500
index; (ii) has increased its dividend per share for 30 consecutive
years; (iii) is the only REIT included in the S&P 500 Dividend
Aristocrats index; and (iv) is a global leader in sustainability as
a member of the CDP, Dow Jones and FTSE4Good sustainability
leadership indices, as well as the GRESB Global Healthcare Sector
Leader for three of the past four years. For more information
regarding HCP, visit the Company's website at www.hcpi.com.
FORWARD-LOOKING STATEMENTS
"Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995: The statements contained in this
release which are not historical facts are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. These statements include, among other things,
the Company's expectations with respect to (i) earnings, FFO, FFO
as adjusted and FAD applicable to common shares on a diluted basis,
SPP Cash NOI growth projections, and other financial projections
and assumptions for the full year of 2015; (ii) pro forma leverage
ratios, total debt and total gross assets as of November 2, 2015; (iii) the payment of the
quarterly cash dividend; and (iv) anticipated outcomes relating to
the acquisitions, dispositions, developments and financing
activities discussed above. These statements are made as of the
date hereof, are not guarantees of future performance and are
subject to known and unknown risks, uncertainties, assumptions and
other factors—many of which are out of the Company's and its
management's control and difficult to forecast—that could cause
actual results to differ materially from those set forth in or
implied by such forward-looking statements. These risks and
uncertainties include but are not limited to: our reliance on a
concentration of a small number of tenants and operators, for a
significant portion of our revenues; the financial weakness of
tenants and operators, including potential bankruptcies and
downturns in their businesses, which results in uncertainties
regarding our ability to continue to realize the full benefit of
such tenants' and/or operators' leases or loans; the ability of our
tenants and operators 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; availability of suitable properties to acquire at
favorable prices and the competition for the acquisition and
financing of those properties; our ability to negotiate the same or
better terms with new tenants or operators if existing leases are
not renewed or we exercise our right to replace an existing tenant
or operator upon default; the risks associated with our investments
in joint ventures and unconsolidated entities, including our lack
of sole decision making authority and our reliance on our partners'
financial condition and continued cooperation; the risk that we may
not be able to achieve the benefits of investments, including those
investments discussed above, within expected time frames or at all,
or within expected cost projections; the potential impact of future
litigation matters, including the possibility of larger than
expected litigation costs, adverse results and related
developments; the effect on healthcare providers of legislation
addressing entitlement programs and related services, including
Medicare and Medicaid, which may result in future reductions in
reimbursements; changes in federal, state or local laws and
regulations, including those affecting the healthcare industry that
affect our costs of compliance or increase the costs, or otherwise
affect the operations, of our tenants and operators; volatility or
uncertainty in the capital markets, the availability and cost of
capital as impacted by interest rates, changes in our credit
ratings, and the value of our common stock, and other conditions
that may adversely impact our ability to fund our obligations or
consummate transactions, or reduce the earnings from potential
transactions; changes in global, national and local economic
conditions, and currency exchange rates; changes in the credit
ratings on United States ("U.S.")
government debt securities or default or delay in payment by the
U.S. of its obligations; our ability to manage our indebtedness
level and changes in the terms of such indebtedness; the ability to
maintain our qualification as a real estate investment trust; and
other risks and uncertainties described from time to time in the
Company's Securities and Exchange Commission filings. The Company
assumes no, and hereby disclaims any, obligation to update any of
the foregoing or any other forward-looking statements as a result
of new information or new or future developments, except as
otherwise required by law.
CONTACT
Timothy M. Schoen
Executive Vice President and Chief Financial Officer
949-407-0400
|
HCP,
Inc.
|
|
Consolidated
Balance Sheets
|
|
In thousands,
except share and per share data
|
|
(Unaudited)
|
|
|
September
30,
|
|
December
31,
|
|
|
2015
|
|
2014
|
|
|
Assets
|
|
|
|
|
|
Real
estate:
|
|
|
|
|
|
|
|
Buildings and
improvements
|
$
|
12,384,413
|
|
$
|
10,972,973
|
|
|
Development costs and
construction in progress
|
|
355,174
|
|
|
275,233
|
|
|
Land
|
|
2,016,606
|
|
|
1,889,438
|
|
|
Accumulated
depreciation and amortization
|
|
(2,506,844)
|
|
|
(2,250,757)
|
|
|
Net real
estate
|
|
12,249,349
|
|
|
10,886,887
|
|
|
|
|
|
|
|
|
|
Net investment in
direct financing leases
|
|
6,891,030
|
|
|
7,280,334
|
|
|
Loans receivable,
net
|
|
765,593
|
|
|
906,961
|
|
|
Investments in and
advances to unconsolidated joint ventures
|
|
607,790
|
|
|
605,448
|
|
|
Accounts receivable,
net of allowance of $3,683 and $3,785, respectively
|
|
49,994
|
|
|
36,339
|
|
|
Cash and cash
equivalents
|
|
120,498
|
|
|
183,810
|
|
|
Restricted
cash
|
|
65,709
|
|
|
48,976
|
|
|
Intangible assets,
net
|
|
559,677
|
|
|
481,013
|
|
|
Other assets,
net
|
|
883,333
|
|
|
940,172
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
22,192,973
|
|
$
|
21,369,940
|
|
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
|
|
Bank line of
credit
|
$
|
1,000,824
|
|
$
|
838,516
|
|
|
Term loans
|
|
540,784
|
|
|
213,610
|
|
|
Senior unsecured
notes
|
|
8,568,729
|
|
|
7,626,194
|
|
|
Mortgage
debt
|
|
939,982
|
|
|
984,431
|
|
|
Other debt
|
|
94,561
|
|
|
97,022
|
|
|
Intangible
liabilities, net
|
|
73,233
|
|
|
84,723
|
|
|
Accounts payable and
accrued liabilities
|
|
401,838
|
|
|
432,934
|
|
|
Deferred
revenue
|
|
112,565
|
|
|
95,411
|
|
|
Total
liabilities
|
|
11,732,516
|
|
|
10,372,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $1.00
par value: 750,000,000 shares authorized; 464,441,628 and
459,746,267 shares issued and outstanding, respectively
|
|
464,442
|
|
|
459,746
|
|
|
Additional paid-in
capital
|
|
11,612,246
|
|
|
11,431,987
|
|
|
Cumulative dividends
in excess of earnings
|
|
(1,876,486)
|
|
|
(1,132,541)
|
|
|
Accumulated other
comprehensive loss
|
|
(32,450)
|
|
|
(23,895)
|
|
|
Total stockholders'
equity
|
|
10,167,752
|
|
|
10,735,297
|
|
|
|
|
|
|
|
|
|
Joint venture
partners
|
|
106,572
|
|
|
73,214
|
|
|
Non-managing member
unitholders
|
|
186,133
|
|
|
188,588
|
|
|
Total noncontrolling
interests
|
|
292,705
|
|
|
261,802
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
10,460,457
|
|
|
10,997,099
|
|
|
|
|
|
|
|
|
|
Total liabilities and
equity
|
$
|
22,192,973
|
|
$
|
21,369,940
|
|
|
HCP,
Inc.
|
|
Consolidated
Statements of Operations
|
|
In thousands,
except per share data
|
|
(Unaudited)
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and related
revenues
|
$
|
293,566
|
|
$
|
321,451
|
|
$
|
845,382
|
|
$
|
894,465
|
|
|
Tenant
recoveries
|
|
33,084
|
|
|
29,323
|
|
|
94,356
|
|
|
81,867
|
|
|
Resident fees and
services
|
|
155,290
|
|
|
62,213
|
|
|
367,141
|
|
|
138,205
|
|
|
Income from direct
financing leases
|
|
155,717
|
|
|
165,687
|
|
|
478,976
|
|
|
495,724
|
|
|
Interest
income
|
|
19,842
|
|
|
17,517
|
|
|
89,049
|
|
|
51,150
|
|
|
Investment management
fee income
|
|
454
|
|
|
447
|
|
|
1,372
|
|
|
1,340
|
|
|
Total
revenues
|
|
657,953
|
|
|
596,638
|
|
|
1,876,276
|
|
|
1,662,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
122,157
|
|
|
111,275
|
|
|
357,569
|
|
|
324,755
|
|
|
Depreciation and
amortization
|
|
134,704
|
|
|
122,975
|
|
|
369,629
|
|
|
343,496
|
|
|
Operating
|
|
173,515
|
|
|
99,599
|
|
|
441,888
|
|
|
254,173
|
|
|
General and
administrative
|
|
20,534
|
|
|
19,479
|
|
|
74,152
|
|
|
62,034
|
|
|
Acquisition and
pursuit costs
|
|
1,553
|
|
|
5,475
|
|
|
23,350
|
|
|
13,376
|
|
|
Impairments
|
|
69,622
|
|
|
—
|
|
|
592,921
|
|
|
—
|
|
|
Total costs and
expenses
|
|
522,085
|
|
|
358,803
|
|
|
1,859,509
|
|
|
997,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sales of real
estate, net of income taxes
|
|
52
|
|
|
—
|
|
|
6,377
|
|
|
—
|
|
|
Other (expense)
income, net
|
|
(1,026)
|
|
|
3,111
|
|
|
11,753
|
|
|
5,750
|
|
|
Total other (expense)
income, net
|
|
(974)
|
|
|
3,111
|
|
|
18,130
|
|
|
5,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
income taxes and equity income from and impairment of
unconsolidated joint ventures
|
|
134,894
|
|
|
240,946
|
|
|
34,897
|
|
|
670,667
|
|
|
Income tax benefit
(expense)
|
|
1,980
|
|
|
(55)
|
|
|
6,620
|
|
|
(2,840)
|
|
|
Equity income from
unconsolidated joint ventures
|
|
8,314
|
|
|
10,168
|
|
|
33,916
|
|
|
39,388
|
|
|
Impairment of
investments in unconsolidated joint ventures
|
|
(27,234)
|
|
|
—
|
|
|
(27,234)
|
|
|
—
|
|
|
Income from
continuing operations
|
|
117,954
|
|
|
251,059
|
|
|
48,199
|
|
|
707,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before gain on
sales of real estate, net of income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,736
|
|
|
Gain on sales of real
estate, net of income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,010
|
|
|
Total discontinued
operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
117,954
|
|
|
251,059
|
|
|
48,199
|
|
|
736,961
|
|
|
Noncontrolling
interests' share in earnings
|
|
(2,592)
|
|
|
(3,405)
|
|
|
(8,566)
|
|
|
(11,311)
|
|
|
Net income
attributable to HCP, Inc.
|
|
115,362
|
|
|
247,654
|
|
|
39,633
|
|
|
725,650
|
|
|
Participating
securities' share in earnings
|
|
(316)
|
|
|
(446)
|
|
|
(1,020)
|
|
|
(1,999)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
applicable to common shares
|
$
|
115,046
|
|
$
|
247,208
|
|
$
|
38,613
|
|
$
|
723,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.25
|
|
$
|
0.54
|
|
$
|
0.08
|
|
$
|
1.52
|
|
|
Discontinued
operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.06
|
|
|
Net income applicable
to common shares
|
$
|
0.25
|
|
$
|
0.54
|
|
$
|
0.08
|
|
$
|
1.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.25
|
|
$
|
0.54
|
|
$
|
0.08
|
|
$
|
1.52
|
|
|
Discontinued
operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.06
|
|
|
Net income applicable
to common shares
|
$
|
0.25
|
|
$
|
0.54
|
|
$
|
0.08
|
|
$
|
1.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used to calculate earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
463,337
|
|
|
458,799
|
|
|
462,039
|
|
|
458,119
|
|
|
Diluted
|
|
463,586
|
|
|
459,141
|
|
|
462,302
|
|
|
458,473
|
|
|
HCP,
Inc.
|
|
Consolidated
Statements of Cash Flows
|
|
In
thousands
|
|
(Unaudited)
|
|
|
Nine Months Ended
September 30,
|
|
|
2015
|
|
2014
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
$
|
48,199
|
|
$
|
736,961
|
|
|
Adjustments to
reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and
amortization
|
369,629
|
|
343,496
|
|
|
Amortization of market
lease intangibles, net
|
(980)
|
|
(619)
|
|
|
Amortization of
deferred compensation
|
21,068
|
|
16,467
|
|
|
Amortization of
deferred financing costs, net
|
14,950
|
|
14,122
|
|
|
Straight-line
rents
|
(24,817)
|
|
(35,082)
|
|
|
Loan and direct
financing lease interest accretion
|
(71,243)
|
|
(58,271)
|
|
|
Deferred rental
revenues
|
(1,496)
|
|
(420)
|
|
|
Equity income from
unconsolidated joint ventures
|
(33,916)
|
|
(39,388)
|
|
|
Distributions of
earnings from unconsolidated joint ventures
|
4,587
|
|
3,895
|
|
|
Lease termination
income, net
|
(1,103)
|
|
(38,001)
|
|
|
Gain on sales of real
estate
|
(6,377)
|
|
(28,010)
|
|
|
Foreign exchange and
other gains, net
|
(7,103)
|
|
(2,143)
|
|
|
Impairments
|
620,155
|
|
—
|
|
|
Changes
in:
|
|
|
|
|
|
Accounts receivable,
net
|
(10,634)
|
|
(7,193)
|
|
|
Other
assets
|
(1,186)
|
|
(14,345)
|
|
|
Accounts payable and
accrued liabilities
|
(52,073)
|
|
(8,447)
|
|
|
Net cash provided by
operating activities
|
867,660
|
|
883,022
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Acquisition of RIDEA
III, net
|
(770,325)
|
|
—
|
|
|
Cash used to acquire
the CCRC unconsolidated joint venture interest, net
|
—
|
|
(370,186)
|
|
|
Acquisitions of other
real estate
|
(430,336)
|
|
(467,147)
|
|
|
Development of real
estate
|
(190,082)
|
|
(118,732)
|
|
|
Leasing costs and
tenant and capital improvements
|
(52,371)
|
|
(44,953)
|
|
|
Proceeds from sales
of real estate, net
|
19,555
|
|
36,938
|
|
|
Contributions to
unconsolidated joint ventures
|
(43,242)
|
|
(2,935)
|
|
|
Distributions in
excess of earnings from unconsolidated joint ventures
|
16,086
|
|
1,986
|
|
|
Proceeds from the
sales of marketable securities
|
782
|
|
—
|
|
|
Principal repayments
on loans receivable
|
51,491
|
|
49,503
|
|
|
Investments in loans
receivable and other
|
(283,252)
|
|
(24,480)
|
|
|
Increase in
restricted cash
|
(3,891)
|
|
(17,219)
|
|
|
Net cash used in
investing activities
|
(1,685,585)
|
|
(957,225)
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Net borrowings under
bank line of credit
|
282,099
|
|
70,000
|
|
|
Repayments under bank
line of credit
|
(102,063)
|
|
—
|
|
|
Borrowings under term
loan
|
333,014
|
|
—
|
|
|
Issuance of senior
unsecured notes
|
1,338,555
|
|
1,150,000
|
|
|
Repayments of senior
unsecured notes
|
(400,000)
|
|
(487,000)
|
|
|
Issuance of mortgage
and other debt
|
—
|
|
39,671
|
|
|
Repayments of
mortgage and other debt
|
(50,187)
|
|
(202,134)
|
|
|
Deferred financing
costs
|
(14,556)
|
|
(16,550)
|
|
|
Issuance of common
stock and exercise of options
|
169,497
|
|
73,059
|
|
|
Repurchase of common
stock
|
(8,006)
|
|
(11,599)
|
|
|
Dividends paid on
common stock
|
(783,578)
|
|
(750,835)
|
|
|
Issuance of
noncontrolling interests
|
4,812
|
|
4,282
|
|
|
Distributions to and
purchase of noncontrolling interests
|
(13,707)
|
|
(11,719)
|
|
|
Net cash provided by
(used in) financing activities
|
755,880
|
|
(142,825)
|
|
|
Effect of foreign
exchange on cash and cash equivalents
|
(1,267)
|
|
3
|
|
|
Net decrease in cash
and cash equivalents
|
(63,312)
|
|
(217,025)
|
|
|
Cash and cash
equivalents, beginning of period
|
183,810
|
|
300,556
|
|
|
Cash and cash
equivalents, end of period
|
$
|
120,498
|
|
$
|
83,531
|
|
|
HCP,
Inc.
|
|
Funds From
Operations(1)
|
|
In thousands,
except per share data
|
|
(Unaudited)
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
applicable to common shares
|
$
|
115,046
|
|
$
|
247,208
|
|
$
|
38,613
|
|
$
|
723,651
|
|
|
Depreciation and
amortization
|
|
134,704
|
|
|
122,975
|
|
|
369,629
|
|
|
343,496
|
|
|
Other depreciation
and amortization(2)
|
|
5,204
|
|
|
4,769
|
|
|
17,016
|
|
|
12,571
|
|
|
Impairment of real
estate
|
|
—
|
|
|
—
|
|
|
2,948
|
|
|
—
|
|
|
Gain on sales of real
estate
|
|
(52)
|
|
|
—
|
|
|
(6,377)
|
|
|
(28,010)
|
|
|
Equity income from
unconsolidated joint ventures
|
|
(8,314)
|
|
|
(10,168)
|
|
|
(33,916)
|
|
|
(39,388)
|
|
|
FFO from
unconsolidated joint ventures
|
|
20,530
|
|
|
14,571
|
|
|
69,322
|
|
|
48,683
|
|
|
Noncontrolling
interests' and participating securities' share in
earnings
|
|
2,908
|
|
|
3,851
|
|
|
9,586
|
|
|
13,310
|
|
|
Noncontrolling
interests' and participating securities' share in FFO
|
|
(6,656)
|
|
|
(5,902)
|
|
|
(18,983)
|
|
|
(17,425)
|
|
|
FFO applicable to
common shares
|
$
|
263,370
|
|
$
|
377,304
|
|
$
|
447,838
|
|
$
|
1,056,888
|
|
|
Distributions on
dilutive convertible units
|
|
2,365
|
|
|
3,486
|
|
|
—
|
|
|
10,327
|
|
|
Diluted FFO
applicable to common shares
|
$
|
265,735
|
|
$
|
380,790
|
|
$
|
447,838
|
|
$
|
1,067,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted FFO per
common share
|
$
|
0.57
|
|
$
|
0.82
|
|
$
|
0.97
|
|
$
|
2.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used to calculate diluted FFO per share
|
|
467,772
|
|
|
465,247
|
|
|
462,302
|
|
|
464,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of
adjustments to FFO:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
impairments(3)
|
$
|
96,856
|
|
$
|
—
|
|
$
|
617,207
|
|
$
|
—
|
|
|
|
Transaction-related
items(4)
|
|
1,538
|
|
|
(31,026)
|
|
|
28,973
|
|
|
(23,125)
|
|
|
|
Severance-related
charge(5)
|
|
—
|
|
|
—
|
|
|
6,713
|
|
|
—
|
|
|
|
Foreign currency
remeasurement losses (gains)
|
|
4,036
|
|
|
—
|
|
|
(5,497)
|
|
|
—
|
|
|
|
$
|
102,430
|
|
$
|
(31,026)
|
|
$
|
647,396
|
|
$
|
(23,125)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO as adjusted
applicable to common shares
|
$
|
365,800
|
|
$
|
346,278
|
|
$
|
1,095,234
|
|
$
|
1,033,763
|
|
|
|
Distributions on
dilutive convertible units and other
|
|
3,443
|
|
|
3,554
|
|
|
10,198
|
|
|
10,383
|
|
|
|
Diluted FFO as
adjusted applicable to common shares
|
$
|
369,243
|
|
$
|
349,832
|
|
$
|
1,105,432
|
|
$
|
1,044,146
|
|
|
|
Per common share
impact of adjustments on diluted FFO
|
$
|
0.22
|
|
$
|
(0.07)
|
|
$
|
1.39
|
|
$
|
(0.05)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted FFO as
adjusted per common share
|
$
|
0.79
|
|
$
|
0.75
|
|
$
|
2.36
|
|
$
|
2.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used to calculate diluted FFO as adjusted per
share
|
|
469,590
|
|
|
465,247
|
|
|
468,320
|
|
|
464,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________________________________
|
|
(1)
|
We believe Funds From
Operations ("FFO") is an important supplemental measure of
operating performance for a REIT. Because the historical cost
accounting convention used for real estate assets utilizes
straight-line depreciation (except on land), such accounting
presentation implies that the value of real estate assets
diminishes predictably over time. Since real estate values instead
have historically risen and fallen with market conditions,
presentations of operating results for a REIT that use historical
cost accounting for depreciation could be less informative. The
term FFO was developed by the REIT industry to address this issue.
FFO as defined by the National Association of Real Estate
Investment Trusts ("NAREIT") is net income (loss) applicable to
common shares (computed in accordance with U.S. generally accepted
accounting principles or "GAAP"), excluding gains or losses from
sales of property, impairments of, or related to, depreciable real
estate, plus real estate and direct financing lease ("DFL")
depreciation and amortization, and after adjustments for joint
ventures. Adjustments for joint ventures are calculated to reflect
FFO on the same basis. FFO does not represent cash generated from
operating activities in accordance with GAAP, is not necessarily
indicative of cash available to fund cash needs and should not be
considered an alternative to net income (loss). We compute FFO in
accordance with the current NAREIT definition; however, other REITs
may report FFO differently or have a different interpretation of
the current NAREIT definition from ours. FFO as adjusted represents
FFO before the impact of severance-related charges, impairments
(recoveries) of non-depreciable assets, foreign currency
remeasurement losses (gains) and transaction-related items (defined
below). Transaction-related items include acquisition and pursuit
costs (e.g., due diligence and closing) and gains/charges incurred
as a result of mergers and acquisitions and lease amendment or
termination activities. Management believes that FFO as adjusted
provides a meaningful supplemental measurement of our FFO run-rate.
This measure is a modification of the NAREIT definition of FFO and
should not be used as an alternative to net income (loss)
(determined in accordance with GAAP) or NAREIT FFO.
|
|
|
|
(2)
|
For the three months
ended September 30, 2015, other depreciation and amortization
include: (i) $3 million of DFL depreciation and (ii) $2 million of
lease incentive amortization (reduction of straight-line rents) for
the consideration given to terminate the 30 purchase options of the
153-property amended lease portfolio in the 2014 Brookdale
Transaction. For the nine months ended September 30, 2015, other
depreciation and amortization include: (i) $10 million of DFL
depreciation and (ii) $7 million of lease incentive amortization
(reduction of straight-line rents) related to the 2014 Brookdale
Transaction.
|
|
|
|
(3)
|
For the three months
ended September 30, 2015, other impairments include: (i) $70
million related to our Four Seasons Notes and (ii) $27 million
related to our equity investment in HCRMC. For the nine months
ended September 30, 2015, other impairments include: (i) $478
million related to our DFL investments with HCRMC, (ii) $112
million related to our Four Seasons Notes and (iii) $27 million
related to our equity investment in HCRMC. See Note 15 to the
Consolidated Financial Statements for the quarter ended September
30, 2015 included in our Quarterly Report on Form 10-Q.
|
|
|
|
(4)
|
2014
transaction-related items primarily relate to the Brookdale
Transaction that closed in August 2014. See the "Non-GAAP Financial
Measures Reconciliations" section of the Management Discussion and
Analysis for the quarter ended September 30, 2015 included in our
Quarterly Report on Form 10-Q.
|
|
|
|
(5)
|
The severance-related
charge relates to the resignation of our former Executive Vice
President and Chief Investment Officer.
|
|
HCP,
Inc.
|
|
Funds Available
for Distribution(1)
|
|
In thousands,
except per share data
|
|
(Unaudited)
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO as adjusted
applicable to common shares
|
$
|
365,800
|
|
$
|
346,278
|
|
$
|
1,095,234
|
|
$
|
1,033,763
|
|
|
Amortization of
market lease intangibles, net
|
|
(344)
|
|
|
(276)
|
|
|
(980)
|
|
|
(619)
|
|
|
Amortization of
deferred compensation(2)
|
|
5,344
|
|
|
5,461
|
|
|
18,174
|
|
|
16,467
|
|
|
Amortization of
deferred financing costs, net
|
|
5,224
|
|
|
4,648
|
|
|
14,950
|
|
|
14,122
|
|
|
Straight-line
rents
|
|
(7,069)
|
|
|
(8,627)
|
|
|
(24,817)
|
|
|
(35,082)
|
|
|
DFL
accretion(3)
|
|
(22,662)
|
|
|
(18,760)
|
|
|
(64,176)
|
|
|
(57,995)
|
|
|
Other depreciation
and amortization
|
|
(5,204)
|
|
|
(4,769)
|
|
|
(17,016)
|
|
|
(12,571)
|
|
|
Deferred revenues –
tenant improvement related
|
|
(746)
|
|
|
(456)
|
|
|
(2,137)
|
|
|
(1,673)
|
|
|
Deferred revenues –
additional rents
|
|
254
|
|
|
551
|
|
|
641
|
|
|
1,253
|
|
|
Leasing costs and
tenant and capital improvements
|
|
(23,212)
|
|
|
(17,044)
|
|
|
(50,879)
|
|
|
(44,502)
|
|
|
Lease restructure
payments(4)
|
|
6,067
|
|
|
4,289
|
|
|
16,368
|
|
|
4,289
|
|
|
Joint venture
adjustments – CCRC entrance fees(5)
|
|
8,386
|
|
|
3,978
|
|
|
22,048
|
|
|
3,978
|
|
|
Joint venture and
other FAD adjustments(3)
|
|
(21,892)
|
|
|
(17,564)
|
|
|
(59,153)
|
|
|
(47,575)
|
|
|
FAD applicable to
common shares
|
$
|
309,946
|
|
$
|
297,709
|
|
$
|
948,257
|
|
$
|
873,855
|
|
|
Distributions on
dilutive convertible units
|
|
3,547
|
|
|
3,486
|
|
|
10,683
|
|
|
10,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted FAD
applicable to common shares
|
$
|
313,493
|
|
$
|
301,195
|
|
$
|
958,940
|
|
$
|
884,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted FAD per
common share
|
$
|
0.67
|
|
$
|
0.65
|
|
$
|
2.05
|
|
$
|
1.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used to calculate diluted FAD per common share
|
|
469,590
|
|
|
465,247
|
|
|
468,320
|
|
|
464,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
________________________________________
|
|
(1)
|
Funds Available for
Distribution ("FAD") is defined as FFO as adjusted after excluding
the impact of the following: (i) amortization of acquired market
lease intangibles, net; (ii) amortization of deferred compensation
expense; (iii) amortization of deferred financing costs, net; (iv)
straight-line rents; (v) accretion and depreciation related to DFLs
and lease incentive amortization (reduction of straight-line
rents); and (vi) deferred revenues, excluding amounts amortized
into rental income that are associated with tenant funded
improvements owned/recognized by us and up-front cash payments made
by tenants to reduce their contractual rents. Also, FAD is: (i)
computed after deducting recurring capital expenditures, including
leasing costs and second generation tenant and capital
improvements; and (ii) includes lease restructure payments and
adjustments to compute our share of FAD from our unconsolidated
joint ventures and those related to CCRC non-refundable entrance
fees. Other REITs or real estate companies may use different
methodologies for calculating FAD, and accordingly, our FAD may not
be comparable to those reported by other REITs. Although our FAD
computation may not be comparable to that of other REITs,
management believes FAD provides a meaningful supplemental measure
of our performance and is frequently used by analysts, investors,
and other interested parties in the evaluation of our performance
as a REIT. FAD does not represent cash generated from operating
activities determined in accordance with GAAP, is not necessarily
indicative of cash available to fund cash needs and should not be
considered as an alternative to net income (loss) determined in
accordance with GAAP.
|
|
|
|
(2)
|
For the nine months
ended September 30, 2015, excludes $3 million related to the
acceleration of deferred compensation for restricted stock units
and stock options that vested upon the resignation of our former
Executive Vice President and Chief Investment Officer, which is
included in the severance-related charge for the nine months ended
September 30, 2015.
|
|
|
|
(3)
|
For the three months
ended September 30, 2015 and 2014, DFL accretion reflects an
elimination of $14 million and $16 million, respectively. For the
nine months ended September 30, 2015 and 2014, DFL accretion
reflects an elimination of $44 million and $47 million,
respectively. Our equity investment in HCRMC is accounted for using
the equity method, which requires an ongoing elimination of DFL
income that is proportional to our ownership in HCRMC. Further, our
share of earnings from HCRMC (equity income) increases for the
corresponding elimination of related lease expense recognized at
the HCRMC entity level, which we present as a non-cash joint
venture FAD adjustment.
|
|
|
|
(4)
|
Over a period of
three years from the closing of the 2014 Brookdale Transaction, we
will receive installment payments valued at $55 million for
terminating the leases on the HCP owned 49-property portfolio; we
include these installment payments in FAD as the payments are
collected.
|
|
|
|
(5)
|
Represents our 49%
share of non-refundable entrance fees included in FAD as the fees
are collected by our CCRC JV.
|
|
HCP,
Inc.
|
|
Net Operating
Income and Same Property
Performance(1)(2)
|
|
Dollars in
thousands
|
|
(Unaudited)
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
Net
income
|
$
|
117,954
|
|
$
|
251,059
|
|
$
|
48,199
|
|
$
|
736,961
|
|
|
Interest
income
|
|
(19,842)
|
|
|
(17,517)
|
|
|
(89,049)
|
|
|
(51,150)
|
|
|
Investment management
fee income
|
|
(454)
|
|
|
(447)
|
|
|
(1,372)
|
|
|
(1,340)
|
|
|
Interest
expense
|
|
122,157
|
|
|
111,275
|
|
|
357,569
|
|
|
324,755
|
|
|
Depreciation and
amortization
|
|
134,704
|
|
|
122,975
|
|
|
369,629
|
|
|
343,496
|
|
|
General and
administrative
|
|
20,534
|
|
|
19,479
|
|
|
74,152
|
|
|
62,034
|
|
|
Acquisition and
pursuit costs
|
|
1,553
|
|
|
5,475
|
|
|
23,350
|
|
|
13,376
|
|
|
Impairments
|
|
69,622
|
|
|
—
|
|
|
592,921
|
|
|
—
|
|
|
Gain on sales of real
estate, net of income taxes
|
|
(52)
|
|
|
—
|
|
|
(6,377)
|
|
|
—
|
|
|
Other expense
(income), net
|
|
1,026
|
|
|
(3,111)
|
|
|
(11,753)
|
|
|
(5,750)
|
|
|
Income tax (benefit)
expense
|
|
(1,980)
|
|
|
55
|
|
|
(6,620)
|
|
|
2,840
|
|
|
Equity income from
unconsolidated joint ventures
|
|
(8,314)
|
|
|
(10,168)
|
|
|
(33,916)
|
|
|
(39,388)
|
|
|
Impairment of
investments in unconsolidated joint ventures
|
|
27,234
|
|
|
—
|
|
|
27,234
|
|
|
—
|
|
|
Total discontinued
operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,746)
|
|
|
NOI
|
$
|
464,142
|
|
$
|
479,075
|
|
$
|
1,343,967
|
|
$
|
1,356,088
|
|
|
Non-cash adjustments
to NOI
|
|
(30,193)
|
|
|
(65,644)
|
|
|
(80,906)
|
|
|
(132,499)
|
|
|
Cash (adjusted)
NOI
|
$
|
433,949
|
|
$
|
413,431
|
|
$
|
1,263,061
|
|
$
|
1,223,589
|
|
|
Non-SPP cash
(adjusted) NOI
|
|
(46,547)
|
|
|
(22,830)
|
|
|
(111,015)
|
|
|
(78,750)
|
|
|
Same property
portfolio cash (adjusted) NOI(2)
|
$
|
387,402
|
|
$
|
390,601
|
|
$
|
1,152,046
|
|
$
|
1,144,839
|
|
|
Cash (adjusted) NOI
% change – SPP(2)
|
|
(0.8%)
|
|
|
|
|
|
0.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
________________________________________
|
|
(1)
|
We believe Net
Operating Income from Continuing Operations ("NOI") provides
investors relevant and useful information because it reflects only
income and operating expense items that are incurred at the
property level and presents them on an unleveraged basis. We use
NOI and cash NOI to make decisions about resource allocations, to
assess and compare property level performance, and evaluate our
same property portfolio ("SPP"). We believe that net income (loss)
is the most directly comparable GAAP measure to NOI. NOI should not
be viewed as an alternative measure of operating performance to net
income (loss) as defined by GAAP since it does not reflect various
excluded items. Further, our definition of NOI may not be
comparable to the definition used by other REITs or real estate
companies, as they may use different methodologies for calculating
NOI.
|
|
|
|
NOI is defined as
rental and related revenues, including tenant recoveries, resident
fees and services, and income from DFLs, less property level
operating expenses; NOI excludes all of the other financial
statement amounts itemized above. Cash NOI is calculated as NOI
after eliminating the effects of straight-line rents, DFL
accretion, amortization of market lease intangibles and lease
termination fees. Cash NOI is oftentimes referred to as "adjusted
NOI."
|
|
|
|
(2)
|
SPP statistics allow
management to evaluate the performance of our real estate portfolio
under a consistent population by eliminating changes in the
composition of our portfolio of properties. We identify our SPP as
stabilized properties that remained in operations and were
consistently reported as leased properties or operating properties
(RIDEA) for the duration of the year-over-year comparison periods
presented, excluding assets held for sale. Accordingly, it takes a
stabilized property a minimum of 12 months in operations under a
consistent reporting structure to be included in our SPP. Newly
acquired operating assets are generally considered stabilized at
the earlier of lease up (typically when the tenant(s) controls the
physical use of at least 80% of the space) or 12 months from the
acquisition date. Newly completed developments and redevelopments
are considered stabilized at the earlier of lease up or 24 months
from the date the property is placed in service. SPP NOI excludes
certain non-property specific operating expenses that are allocated
to each operating segment on a consolidated basis. SPP cash NOI
excludes the effects of foreign exchange rate movements by using
the average current period exchange rate to translate from British
pound sterling into U.S. dollars for the comparison periods. A
property is removed from our SPP when it is sold, placed into
redevelopment or changes its reporting structure.
|
|
HCP,
Inc.
|
|
Projected Future
Operations(1)
|
|
(Unaudited)
|
|
|
Full Year
2015
|
|
|
Low
|
|
High
|
|
|
|
|
|
|
|
Diluted earnings per
common share
|
$ 0.52
|
|
$ 0.58
|
|
|
Depreciation and
amortization
|
1.10
|
|
1.10
|
|
|
Other depreciation
and amortization
|
0.05
|
|
0.05
|
|
|
Impairment of real
estate
|
0.01
|
|
0.01
|
|
|
Gain on sales of real
estate
|
(0.01)
|
|
(0.01)
|
|
|
Joint venture FFO
adjustments
|
0.07
|
|
0.07
|
|
|
Diluted FFO per
common share
|
$ 1.74
|
|
$ 1.80
|
|
|
Other impairments,
net
|
1.31
|
|
1.31
|
|
|
Transaction-related
items
|
0.07
|
|
0.07
|
|
|
Severance-related
charge
|
0.01
|
|
0.01
|
|
|
Foreign currency
remeasurement gains
|
(0.01)
|
|
(0.01)
|
|
|
Diluted FFO as
adjusted per common share
|
$ 3.12
|
|
$ 3.18
|
|
|
Amortization of net
market lease intangibles and deferred revenues
|
(0.01)
|
|
(0.01)
|
|
|
Amortization of
deferred compensation
|
0.05
|
|
0.05
|
|
|
Amortization of
deferred financing costs, net
|
0.04
|
|
0.04
|
|
|
Straight-line
rents
|
(0.07)
|
|
(0.07)
|
|
|
DFL
accretion
|
(0.18)
|
|
(0.18)
|
|
|
Other depreciation
and amortization
|
(0.05)
|
|
(0.05)
|
|
|
Leasing costs and
tenant and capital improvements
|
(0.19)
|
|
(0.19)
|
|
|
Lease restructure
payments
|
0.05
|
|
0.05
|
|
|
Joint venture
adjustments – CCRC entrance fees
|
0.06
|
|
0.06
|
|
|
Joint venture and
other FAD adjustments
|
(0.16)
|
|
(0.16)
|
|
|
Diluted FAD per
common share
|
$ 2.66
|
|
$ 2.72
|
|
|
|
|
|
|
|
________________________________________
|
|
(1)
|
The foregoing
projections reflect management's view of current and future market
conditions, including assumptions with respect to rental rates,
occupancy levels, development items and the earnings impact of the
events referenced in this release. These projections do not reflect
the potential impact of unannounced future acquisitions,
dispositions, other impairments or recoveries, the future
bankruptcy or insolvency of our operators, lessees, borrowers or
other obligors, the effect of any future restructuring of our
contractual relationships with such entities, gains or losses on
marketable securities, ineffectiveness related to our cash flow
hedges, or existing and future litigation matters including the
possibility of larger than expected litigation costs and related
developments. Our actual results may differ materially from the
projections set forth above. The aforementioned ranges represent
management's best estimates based upon the underlying assumptions
as of the date of this press release. Except as otherwise required
by law, management assumes no, and hereby disclaims any, obligation
to update any of the foregoing projections as a result of new
information or new or future developments.
|
|
HCP,
Inc.
|
|
Pro Forma Leverage
Ratios, Total Debt and Total Gross Assets
|
|
Dollars in
thousands
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
Pro Forma Leverage
Ratios
|
|
November
2,
2015
|
|
|
|
|
|
|
|
Financial
Leverage(1)
|
|
|
43.7%
|
|
|
Consolidated
Debt/Consolidated Gross Assets
|
|
|
44.1%
|
|
|
|
|
|
|
Pro Forma Total
Debt(2)
|
|
|
|
|
|
|
|
|
|
Bank line of
credit
|
|
$
|
1,000,824
|
|
|
Term loans
|
|
540,784
|
|
|
Senior unsecured
notes
|
|
8,568,729
|
|
|
Mortgage
debt
|
|
939,982
|
|
|
Other debt
|
|
94,561
|
|
|
Consolidated Debt at
September 30, 2015
|
|
11,144,880
|
|
|
HCP's share of
unconsolidated joint venture mortgage debt
|
|
309,539
|
|
|
HCP's share of
unconsolidated joint venture other debt
|
|
174,136
|
|
|
Total
Debt(3) at September 30, 2015
|
|
$
|
11,628,555
|
|
|
Pro forma
adjustments
|
|
(405,000)
|
|
|
Pro Forma Total Debt
at November 2, 2015
|
|
$
|
11,223,555
|
|
|
|
|
|
|
Pro Forma Total
Gross Assets(4)
|
|
|
|
|
|
|
|
|
|
Consolidated total
assets
|
|
$
|
22,192,973
|
|
|
Investments in and
advances to unconsolidated joint ventures
|
|
|
(607,790)
|
|
|
Accumulated
depreciation and amortization
|
|
|
2,895,267
|
|
|
Consolidated Gross
Assets at September 30, 2015
|
|
|
24,480,450
|
|
|
HCP's share of
unconsolidated joint venture gross assets
|
|
|
1,310,478
|
|
|
Total Gross
Assets(5) at September 30, 2015
|
|
$
|
25,790,928
|
|
|
Pro forma
adjustments
|
|
|
(116,000)
|
|
|
Pro Forma Total
Gross Assets at November 2, 2015
|
|
$
|
25,674,928
|
|
|
|
________________________________________
|
|
(1)
|
Represents Total Debt
divided by Total Gross Assets. Financial Leverage is a supplemental
measure of our financial position, which enables both management
and investors to analyze our leverage and to compare our leverage
to that of other companies. The ratio of Consolidated Debt to
Consolidated Gross Assets is the most directly comparable GAAP
measure to Financial Leverage. Our pro rata share of total debt
from our unconsolidated joint ventures is not intended to reflect
our actual liability or ability to access assets should there be a
default under any or all such loans or a liquidation of the joint
ventures. We have provided reconciliations of the June 30, 2015
measure to the most comparable GAAP measure in our Current Report
on Form 8-K dated August 4, 2015.
|
|
|
|
(2)
|
Represents Total Debt
as of September 30, 2015, pro forma for significant transactions
that closed after September 30, 2015 and projected cash flows from
operations subsequent to September 30, 2015. Pro forma adjustments
include the reduction of debt from the proceeds of the following:
(i) $99 million from a portion of 12 HCRMC non-strategic facility
sales, (ii) $110 million from the sale of a noncontrolling interest
in a medical office joint venture, (iii) $23 million from the sale
of stock under our ATM Program, (iv) $23 million from the payoff of
a loan in our hospital segment and (v) $150 million from cash
generated from operations.
|
|
|
|
(3)
|
Represents
Consolidated Debt plus our pro rata share of total debt from our
unconsolidated joint ventures.
|
|
|
|
(4)
|
Represents Total
Gross Assets as of September 30, 2015, pro forma for significant
transactions that closed after September 30, 2015. Pro forma
adjustments include the following: (i) $99 million from a portion
of 12 HCRMC non-strategic facility sales and (ii) $17 million from
the payoff of a loan in our hospital segment.
|
|
|
|
(5)
|
Represents
Consolidated Gross Assets plus our pro rata share of total assets
from our unconsolidated joint ventures and equity interest in
HCRMC, after adding back accumulated depreciation and
amortization.
|
|
HCP,
Inc.
|
|
Projected SPP Cash
NOI(1)
|
|
Dollars in
thousands
|
|
(Unaudited)
|
|
|
For the projected
full year 2015 (low):
|
|
|
|
Senior
|
|
Post-acute/
|
|
Life
|
|
Medical
|
|
|
|
|
|
|
|
Housing
|
|
Skilled nursing
|
|
Science
|
|
Office
|
|
Hospital
|
|
Total
|
|
|
NOI(2)
|
|
$
|
667,000
|
|
$
|
529,000
|
|
$
|
270,300
|
|
$
|
254,300
|
|
$
|
83,600
|
|
$
|
1,804,200
|
|
|
Non-cash adjustments
to NOI(3)
|
|
|
(17,100)
|
|
|
(78,000)
|
|
|
(9,900)
|
|
|
(5,000)
|
|
|
1,100
|
|
|
(108,900)
|
|
|
Cash (adjusted)
NOI
|
|
|
649,900
|
|
|
451,000
|
|
|
260,400
|
|
|
249,300
|
|
|
84,700
|
|
|
1,695,300
|
|
|
Non-SPP cash
(adjusted) NOI
|
|
|
(113,000)
|
|
|
(20,400)
|
|
|
(11,700)
|
|
|
(29,600)
|
|
|
(100)
|
|
|
(174,800)
|
|
|
SPP cash
(adjusted) NOI
|
|
$
|
536,900
|
|
$
|
430,600
|
|
$
|
248,700
|
|
$
|
219,700
|
|
$
|
84,600
|
|
|
1,520,500
|
|
|
Addback
adjustments(4)
|
|
|
|
|
|
|
|
|
|
|
|
283,700
|
|
|
Other income and
expenses(5)
|
|
|
|
|
|
|
|
|
|
|
|
180,000
|
|
|
Costs and
expenses(6)
|
|
|
|
|
|
|
|
|
|
|
|
(1,117,000)
|
|
|
Impairments,
net
|
|
|
|
|
|
|
|
|
|
|
|
(586,921)
|
|
|
Impairment of
investments in unconsolidated joint ventures
|
|
|
|
|
|
(27,234)
|
|
|
Net income
|
|
|
|
|
|
|
$
|
253,045
|
|
|
|
|
For the projected
full year 2015 (high):
|
|
|
|
Senior
|
|
Post-acute/
|
|
Life
|
|
Medical
|
|
|
|
|
|
|
|
Housing
|
|
Skilled nursing
|
|
Science
|
|
Office
|
|
Hospital
|
|
Total
|
|
|
NOI(2)
|
|
$
|
674,400
|
|
$
|
534,800
|
|
$
|
273,300
|
|
$
|
257,100
|
|
$
|
84,500
|
|
$
|
1,824,100
|
|
|
Non-cash adjustments
to NOI(3)
|
|
|
(18,000)
|
|
|
(79,200)
|
|
|
(10,300)
|
|
|
(5,300)
|
|
|
1,000
|
|
|
(111,800)
|
|
|
Cash (adjusted)
NOI
|
|
|
656,400
|
|
|
455,600
|
|
|
263,000
|
|
|
251,800
|
|
|
85,500
|
|
|
1,712,300
|
|
|
Non-SPP cash
(adjusted) NOI
|
|
|
(114,300)
|
|
|
(20,300)
|
|
|
(12,000)
|
|
|
(30,000)
|
|
|
(50)
|
|
|
(176,650)
|
|
|
SPP cash
(adjusted) NOI
|
|
$
|
542,100
|
|
$
|
435,300
|
|
$
|
251,000
|
|
$
|
221,800
|
|
$
|
85,450
|
|
|
1,535,650
|
|
|
Addback
adjustments(4)
|
|
|
|
|
|
|
|
|
|
|
|
288,450
|
|
|
Other income and
expenses(5)
|
|
|
|
|
|
|
|
|
|
|
|
184,000
|
|
|
Costs and
expenses(6)
|
|
|
|
|
|
|
|
|
|
|
|
(1,113,000)
|
|
|
Impairments,
net
|
|
|
|
|
|
|
|
|
|
|
|
(586,921)
|
|
|
Impairment of
investments in unconsolidated joint ventures
|
|
|
|
|
|
(27,234)
|
|
|
Net income
|
|
|
|
|
|
|
$
|
280,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended
December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior
|
|
Post-acute/
|
|
Life
|
|
Medical
|
|
|
|
|
|
|
|
Housing
|
|
Skilled nursing
|
|
Science
|
|
Office
|
|
Hospital
|
|
Total
|
|
|
NOI(2)
|
|
$
|
695,672
|
|
$
|
553,235
|
|
$
|
251,034
|
|
$
|
222,757
|
|
$
|
82,678
|
|
$
|
1,805,376
|
|
|
Non-cash adjustments
to NOI(3)
|
|
|
(78,197)
|
|
|
(69,141)
|
|
|
(10,075)
|
|
|
(1,406)
|
|
|
443
|
|
|
(158,376)
|
|
|
Cash (adjusted)
NOI
|
|
|
617,475
|
|
|
484,094
|
|
|
240,959
|
|
|
221,351
|
|
|
83,121
|
|
|
1,647,000
|
|
|
Non-SPP cash
(adjusted) NOI
|
|
|
(97,493)
|
|
|
(18,048)
|
|
|
(5,914)
|
|
|
(5,128)
|
|
|
7
|
|
|
(126,576)
|
|
|
SPP cash
(adjusted) NOI
|
|
$
|
519,982
|
|
$
|
466,046
|
|
$
|
235,045
|
|
$
|
216,223
|
|
$
|
83,128
|
|
|
1,520,424
|
|
|
Addback
adjustments(4)
|
|
|
|
|
|
|
|
|
|
|
|
284,952
|
|
|
Other income and
expenses(5)
|
|
|
|
|
|
|
|
|
|
|
|
136,436
|
|
|
Costs and
expenses(6)
|
|
|
|
|
|
|
|
|
|
|
|
(999,054)
|
|
|
Impairment of
investments in unconsolidated joint ventures
|
|
|
|
|
|
(35,913)
|
|
|
Total discontinued
operations
|
|
|
|
|
|
29,746
|
|
|
Net income
|
|
|
|
|
|
|
|
|
$
|
936,591
|
|
|
|
|
Projected SPP cash
(adjusted) NOI growth for the full year 2015:
|
|
|
|
Senior
|
|
Post-acute/
|
|
Life
|
|
Medical
|
|
|
|
|
|
|
|
Housing
|
|
Skilled nursing
|
|
Science
|
|
Office
|
|
Hospital
|
|
Total
|
|
|
Low
|
|
3.25%
|
|
(7.6%)
|
|
5.8%
|
|
1.6%
|
|
1.8%
|
|
—%
|
|
|
High
|
|
4.25%
|
|
(6.6%)
|
|
6.8%
|
|
2.6%
|
|
2.8%
|
|
1.0%
|
|
|
|
________________________________________
|
|
(1)
|
The foregoing
projections reflect management's view of current and future market
conditions, including assumptions with respect to rental rates,
occupancy levels, development items and the earnings impact of the
events referenced in this release. These projections do not reflect
the potential impact of unannounced future acquisitions,
dispositions, other impairments or recoveries, the future
bankruptcy or insolvency of our operators, lessees, borrowers or
other obligors, the effect of any future restructuring of our
contractual relationships with such entities, gains or losses on
marketable securities, ineffectiveness related to our cash flow
hedges, or existing and future litigation matters including the
possibility of larger than expected litigation costs and related
developments. Our actual results may differ materially from the
projections set forth above. The aforementioned ranges represent
management's best estimates based upon the underlying assumptions
as of the date of this press release. Except as otherwise required
by law, management assumes no, and hereby disclaims any, obligation
to update any of the foregoing projections as a result of new
information or new or future developments.
|
|
|
|
(2)
|
Represents rental and
related revenues, including tenant recoveries, resident fees and
services, and income from DFLs, less property level operating
expenses.
|
|
|
|
(3)
|
Represents
straight-line rents, DFL accretion, amortization of market lease
intangibles and lease termination fees.
|
|
|
|
(4)
|
Represents non-cash
adjustments to NOI and non-SPP cash (adjusted) NOI.
|
|
|
|
(5)
|
Represents interest
income, investment management fee income, gain on sales of real
estate, net of income taxes (continuing operations), other income,
net, income taxes and equity income from unconsolidated joint
ventures.
|
|
|
|
(6)
|
Represents interest
expense, depreciation and amortization, general and administrative
expenses, and acquisition and pursuit costs.
|
|
|
|
No reconciliations of
projected senior housing RIDEA portfolio SPP Cash NOI growth and
consolidated SPP Cash NOI growth, excluding HCRMC are included in
this release because we are unable to quantify certain amounts that
would be required to be included in the comparable GAAP financial
measures without unreasonable efforts, and we believe such
reconciliations would imply a degree of precision that would be
confusing or misleading to investors.
|
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SOURCE HCP