HCP Announces Results for Quarter Ended June 30, 2012
<0> HCP, Inc.Timothy M. SchoenExecutive Vice President and Chief Financial Officer562-733-5309 </0>
HCP (the “Company” or “we”) (NYSE:HCP) announced results for the quarter ended June 30, 2012 as follows (in thousands, except per share amounts):
Merger-related items were attributable to the HCR ManorCare acquisition, which closed on April 7, 2011.
Operating results for the quarter ended June 30, 2012 include the positive impact of $0.02 per share resulting from a $7 million insurance recovery of past G&A expenses. In addition to the merger-related items disclosed above, operating results for the quarter ended June 30, 2011 include the positive impact of $0.10 per share for the following: (i) interest income of $0.09 per share or $35 million from the early payoff of our Genesis debt investments; and (ii) other income of $0.01 per share or $6 million received in connection with a litigation settlement that represents proceeds owed to the Company from a prior sale of assets.
FFO, FFO as adjusted and FAD are supplemental non-GAAP financial measures that the Company believes 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.
On June 28, 2012, we made an investment in senior unsecured notes with an aggregate par value of £138.5 million at a discount for £136.8 million (approximately $215 million), as part of the financing for Terra Firma’s £825 million acquisition of Four Seasons Health Care (“Four Seasons”), the largest elderly and specialist care provider in the United Kingdom with 445 care homes and 61 specialist care centers. The notes mature in June 2020 and are non-callable until June 2016. The notes bear interest on their par value at a fixed rate of 12.25% per annum, with an original discount resulting in a yield to maturity of 12.5%. Terra Firma, a leading European private equity firm, provided £345 million in equity financing, resulting in a loan-to-capitalization of 62% for the Four Seasons notes. The £136.8 million for this investment is funded by a GBP denominated term loan that serves as a natural hedge and is discussed below.
During the quarter, we made additional investments of $70 million as follows: (i) acquisition of a life science facility for $8 million; (ii) acquisition of a parcel of land adjacent to one of our hospitals for $3 million; and (iii) funding of development and other capital projects of $59 million, primarily in our life science, medical office and senior housing segments.
On July 30, 2012, we acquired an 80,000 sq. ft. on-campus medical office building (“MOB”) for $14 million.
On July 30, 2012, we executed agreements to acquire eight on-campus MOBs for $81 million from Scottsdale Healthcare. The eight on-campus MOBs located in Scottsdale, Arizona comprise approximately 398,000 rentable sq. ft. and have a current occupancy of 89%. We expect to close this acquisition early August 2012.
On July 30, 2012, we executed agreements to acquire a portfolio of 12 MOBs from The Boyer Company valued at $179 million, including non-managing member LLC units (“DownREIT units”) and debt valued at $41 million and $59 million, respectively; the MOBs are primarily located on the campuses of HCA, Iasis Healthcare and Community Health Systems and comprise 758,000 sq. ft. with a current occupancy of 88%. We expect to close this acquisition on or before August 31, 2012.
In June 2012, we completed a $376 million offering of 8.97 million shares of common stock at $41.88 per share.
On July 23, 2012, we issued $300 million of 3.15% senior unsecured notes due in 2022. The notes were priced at 98.888% of the principal amount with an effective yield to maturity of 3.28%. Net proceeds from this offering were $293.7 million.
On July 30, 2012, we entered into a credit agreement with a syndicate of banks for a £137 million four-year unsecured term loan (the “Loan”) that accrues interest at a rate of GBP LIBOR plus 1.20%. Concurrent with the closing of the Loan, we entered into a four-year interest rate swap agreement that fixes the rate of the Loan at 1.81%, subject to adjustments based on our credit ratings.
During the quarter, we earned seven ENERGY STAR awards in our senior housing (4), life science (2) and medical office (1) segments and achieved Platinum LEED status on one of our recently completed life science redevelopment properties in San Diego as a result of the Company’s energy conservation programs. As of June 30, 2012, our medical office, life science and senior housing segments have been awarded 75 ENERGY STAR labels. Further, in June 2012, we completed our first response to the Carbon Disclosure Project’s 2012 Investor questionnaire as well as our response to the 2012 Global Real Estate Sustainability Benchmark survey sponsored by NAREIT. More information about HCP’s sustainability efforts can be found on our website at .
On July 26, 2012, we announced that our Board of Directors declared a quarterly cash dividend of $0.50 per common share. The dividend will be paid on August 21, 2012 to stockholders of record as of the close of business on August 6, 2012.
For the full year 2012, we expect FFO applicable to common shares to range between $2.70 and $2.76 per share; FFO as adjusted applicable to common shares to range between $2.73 and $2.79 per share; FAD applicable to common shares to range between $2.18 and $2.24 per share; and net income applicable to common shares to range between $1.83 and $1.89 per share. See the “Projected Future Operations” section of this release for additional information regarding these estimates.
HCP has scheduled a conference call and webcast for Tuesday, July 31, 2012 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 June 30, 2012. The conference call is accessible by dialing (877) 724-7556 (U.S.) or (706) 645-4695 (International). The participant passcode is 96926459. The webcast is accessible via the Company’s website at . This link can be found on the “Event Calendar” page, which is under the “Investor Relations” tab. Through August 14, 2012, 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 96926459. 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.
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 hospitals. 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 27 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 .