HCP Announces Results for Quarter Ended March 31, 2013

HCP Announces Results for Quarter Ended March 31, 2013

HIGHLIGHTS

  • FFO per share increased 16% to $0.74; FFO as adjusted per share increased 10% to $0.74; FAD per share increased 15% to $0.62; and earnings per share increased 19% to $0.51

  • Raised 2013 full-year guidance as follows: FFO to a range of $2.94 to $3.00 per share; FAD to a range of $2.41 to $2.47 per share; earnings per share to a range of $1.97 to $2.03 per share

  • Achieved year-over-year three-month cash NOI SPP growth of 1.1%, or 2.9% excluding one-time items, comprised primarily of a rent payment from Google in the prior year quarter

  • Maintained 2013 full-year cash NOI SPP guidance of 2.5% to 3.5%

  • Completed $96 million of investment transactions

  • Earned nine ENERGY STAR labels in our medical office segment, bringing our total to 102 labels

LONG BEACH, Calif.--(BUSINESS WIRE)-- HCP (the "Company" or "we") (NYS: HCP) announced results for the quarter ended March 31, 2013 as follows (in thousands, except per share amounts):

Three Months Ended

March 31, 2013

Three Months Ended

March 31, 2012

Per Share

Amount

Per Share

Amount

Per Share

Change

FFO

$

339,529

$

0.74

$

264,806

$

0.64

$

0.10

Preferred stock redemption charge(1)

10,432

0.03

(0.03

)

FFO as adjusted

$

339,529

$

0.74

$

275,238

$

0.67

$

0.07

FAD

$

283,382

$

0.62

$

224,323

$

0.54

$

0.08

Net income applicable to common shares

$

230,107

$

0.51

$

175,257

$

0.43

$

0.08

(1)

In connection with the redemption of our preferred stock, we incurred a one-time, non-cash redemption charge of $10.4 million related to the original issuance costs of the preferred stock.


Operating results for the quarter ended March 31, 2013 include the positive impact of $0.02 per share related to gain on sales of marketable securities. Net income for the quarter ended March 31, 2012 includes gain on sales of real estate of $0.01 per share.

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" section of this release for additional information regarding FFO and FFO as adjusted and the "Funds Available for Distribution" section of this release for additional information regarding FAD.

INVESTMENT TRANSACTIONS

During the quarter, we made investments of $96 million as follows: (i) $38 million to purchase the four remaining senior housing facilities from our previously announced Blackstone JV acquisition; and (ii) $58 million to fund development and other capital projects, primarily in our life science, medical office and senior housing segments.

During the quarter, we placed into service a 70,000 square foot building located in Mountain View, California that is 100% leased to LinkedIn.

SUSTAINABILITY

During the quarter, we (i) earned nine ENERGY STAR awards in our medical office segment as a result of our energy conservation programs; (ii) were re-affirmed as a member of the FTSE4Good Sustainability Index, which measures the performance of companies that meet globally recognized corporate responsibility standards; and (iii) were awarded the "Best Site" designation by Best Workplaces for Commuters by offering outstanding commuter benefits for a life science campus in South San Francisco. As of March 31, 2013, our medical office, life science and senior housing segments have been awarded 102 ENERGY STAR labels. More information about HCP's sustainability efforts can be found on our website at www.hcpi.com/sustainability.html.

TRIPLE-NET LEASED PORTFOLIO DISCLOSURE

At March 31, 2013, $17.4 billion of our properties are under triple-net leases, representing 85% of our owned portfolio. Our senior housing, post-acute and hospital tenants operate $13.2 billion of these properties under triple-net leases with a 12-year average remaining term; of this amount, (i) $12.4 billion are master leased, and (ii) $10.9 billion are further supported by corporate guarantees. An expanded disclosure by individual master leases highlighting key credit attributes is presented on page eight of our supplemental information package, which is labeled "Triple-Net Master Lease Profile".

DIVIDEND

On April 25, 2013, our Board of Directors declared a quarterly cash dividend of $0.525 per common share. The dividend will be paid on May 21, 2013 to stockholders of record as of the close of business on May 6, 2013.

OUTLOOK

We are raising our guidance for the full-year 2013; we expect: FFO applicable to common shares to range between $2.94 and $3.00 per share; FAD applicable to common shares to range between $2.41 and $2.47 per share; and net income applicable to common shares to range between $1.97 and $2.03 per share. These estimates do not reflect the potential impact of future acquisitions or dispositions. See the "Projected Future Operations" section of this release for additional information regarding these estimates.

COMPANY INFORMATION

HCP has scheduled a conference call and webcast for Tuesday, April 30, 2013 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 March 31, 2013. The conference call is accessible by dialing 877-724-7556 (U.S.) or 706-645-4695 (International). The participant passcode is 27390843. 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 May 14, 2013, an archive of the webcast will be available on our website and a telephonic replay can be accessed by calling 855-859-2056 (U.S.) or 404-537-3406 (International) and entering passcode 27390843. The Company's supplemental information package for the current period will also be available 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 28 consecutive years; and (iii) is the only REIT included in the S&P 500 Dividend Aristocrats index. 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, net income applicable to common shares on a diluted basis, FFO applicable to common shares on a diluted basis and FAD applicable to common shares on a diluted basis for the full year of 2013. 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 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: changes in global, national and local economic conditions; volatility in the capital markets, including changes in interest rates and the availability and cost of capital, which changes and volatility affect opportunities for profitable investments; the Company's ability to access external sources of capital when desired and on reasonable terms; the Company's ability to manage its indebtedness levels; changes in the terms of the Company's indebtedness; the Company's ability to maintain its credit ratings; the potential impact of existing and future litigation matters, including the possibility of larger than expected litigation costs and related developments; the Company's ability to successfully integrate the operations of acquired companies; risks associated with the Company's investments in joint ventures and unconsolidated entities, including its lack of sole decision-making authority and its reliance on its joint venture partners' financial condition and continued cooperation; competition for lessees and mortgagors (including new leases and mortgages and the renewal or rollover of existing leases); the Company's ability to reposition its properties on the same or better terms if existing leases are not renewed or the Company exercises its right to replace an existing operator or tenant upon default; continuing reimbursement uncertainty in the post-acute/skilled nursing segment; competition in the senior housing segment specifically and in the healthcare industry in general; the ability of the Company's operators and tenants from its senior housing segment to maintain or increase their occupancy levels and revenues; the ability of the Company's lessees and mortgagors to maintain the financial strength and liquidity necessary to satisfy their respective obligations to the Company and other third parties; the bankruptcy, insolvency or financial deterioration of the Company's operators, lessees, borrowers or other obligors; changes in healthcare laws and regulations, including the impact of future or pending healthcare reform, and other changes in the healthcare industry which affect the operations of the Company's lessees or obligors, including changes in the federal budget resulting in the reduction or nonpayment of Medicare or Medicaid reimbursement rates; the Company's ability to recruit and retain key management personnel; costs of compliance with regulations and environmental laws affecting the Company's properties; changes in tax laws and regulations; changes in the financial position or business strategies of HCR ManorCare; the Company's ability and willingness to maintain its qualification as a REIT due to economic, market, legal, tax or other considerations; changes in rules governing financial reporting, including new accounting pronouncements; and other risks 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.

HCP, Inc.

Consolidated Balance Sheets

In thousands, except share and per share data


(Unaudited)

March 31,

December 31,

2013

2012

Assets

Real estate:

Buildings and improvements

$

10,623,382

$

10,537,484

Development costs and construction in progress

223,534

236,864

Land

1,853,392

1,850,397

Accumulated depreciation and amortization

(1,822,628

)

(1,739,718

)

Net real estate

10,877,680

10,885,027

Net investment in direct financing leases

6,921,421

6,881,393

Loans receivable, net

291,870

276,030

Investments in and advances to unconsolidated joint ventures

209,810

212,213

Accounts receivable, net of allowance of $1,632 and $1,668, respectively

32,183

34,150

Cash and cash equivalents

47,547

247,673

Restricted cash

37,675

37,848

Intangible assets, net

537,692

552,701

Other assets, net

776,853

788,520

Total assets

$

19,732,731

$

19,915,555

Liabilities and equity

Bank line of credit

$

14,000

$

Term loan

208,213

222,694

Senior unsecured notes

6,563,749

6,712,624

Mortgage debt

1,680,792

1,676,544

Other debt

78,836

81,958

Intangible liabilities, net

101,633

105,909

Accounts payable and accrued liabilities

238,583

293,994

Deferred revenue

64,866

68,055

Total liabilities

8,950,672

9,161,778

Common stock, $1.00 par value: 750,000,000 shares authorized; 454,416,748 and 453,191,321 shares issued and outstanding, respectively

454,417

453,191

Additional paid-in capital

11,218,702

11,180,066

Cumulative dividends in excess of earnings

(1,075,249

)

(1,067,367

)

Accumulated other comprehensive loss

(16,604

)

(14,653

)

Total stockholders' equity

10,581,266

10,551,237

Joint venture partners

15,185

14,752

Non-managing member unitholders

185,608

187,788

Total noncontrolling interests

200,793

202,540

Total equity

10,782,059

10,753,777

Total liabilities and equity

$

19,732,731

$

19,915,555

HCP, Inc.

Consolidated Statements of Income

In thousands, except per share data


(Unaudited)

Three Months Ended

March 31,

2013

2012

Revenues:

Rental and related revenues

$

285,476

$

241,151

Tenant recoveries

24,203

22,650

Resident fees and services

36,891

36,179

Income from direct financing leases

156,870

154,535

Interest income

12,386

819

Investment management fee income

443

493

Total revenues

516,269

455,827

Costs and expenses:

Interest expense

109,351

103,752

Depreciation and amortization

104,717

85,280

Operating

73,605

67,333

General and administrative

20,744

20,089

Total costs and expenses

308,417

276,454

Other income, net

12,012

436

Income before income taxes and equity income from unconsolidated joint ventures

219,864

179,809

Income taxes

(881

)

709

Equity income from unconsolidated joint ventures