HCP (the “Company” or “we”) (NYSE:HCP) announced results for the fourth
quarter and year ended December 31, 2012 as follows (in thousands,
except per share amounts):
FOURTH QUARTER COMPARISON
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Three Months Ended
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Three Months Ended
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December 31, 2012
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December 31, 2011
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Per Share
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Amount
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Per Share
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Amount
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Per Share
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Change
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FFO
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$
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317,839
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$
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0.71
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$
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150,578
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$
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0.37
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$
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0.34
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Litigation settlement charge(1) |
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—
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—
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125,000
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0.30
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(0.30
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)
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Merger-related items(2) |
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5,642
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0.01
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—
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—
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0.01
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FFO as adjusted
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$
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323,481
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$
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0.72
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$
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275,578
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$
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0.67
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$
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0.05
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FAD
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$
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253,841
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$
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0.57
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$
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202,890
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$
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0.50
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$
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0.07
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Net income applicable to common shares
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$
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239,881
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$
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0.53
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$
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61,996
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$
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0.15
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$
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0.38
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(1)
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This 2011 charge relates to the Ventas, Inc. (“Ventas”) litigation
settlement.
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(2)
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Merger-related items in 2012 of $0.01 per share associated with the
$1.7 billion Senior Housing Portfolio acquisition include direct
transaction costs and the impact of the negative carry of prefunding
the transaction with the $1.0 billion, or 22 million share, common
stock offering completed on October 19, 2012 on the calculation of
weighted average shares.
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In addition to the litigation settlement charge, operating results for
the quarter ended December 31, 2011, include the negative impact of
$0.01 per share for the write-down in the carrying value of a marketable
security. Net income for the quarters ended December 31, 2012 and 2011
also include gain on sales of real estate of $28 million and $3 million,
respectively.
FULL-YEAR COMPARISON
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Year Ended
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Year Ended
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December 31, 2012
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December 31, 2011
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Per Share
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Amount
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Per Share
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Amount
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Per Share
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Change
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FFO
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$
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1,166,508
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$
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2.72
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$
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877,907
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$
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2.19
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$
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0.53
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Preferred stock redemption charge(1) |
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10,432
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0.02
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—
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—
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0.02
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Litigation settlement charge(2) |
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—
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—
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125,000
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0.31
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(0.31
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Impairments(3) |
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7,878
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0.02
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15,400
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0.04
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(0.02
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Merger-related items(4) |
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5,642
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0.02
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26,596
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0.15
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(0.13
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FFO as adjusted
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$
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1,190,460
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$
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2.78
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$
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1,044,903
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$
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2.69
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$
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0.09
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FAD
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$
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949,306
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$
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2.22
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$
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830,651
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$
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2.14
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$
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0.08
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Net income applicable to common shares
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$
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812,289
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$
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1.90
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$
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515,302
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$
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1.29
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$
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0.61
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(1)
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In connection with the 2012 redemption of our preferred stock, we
incurred a one-time, non-cash redemption charge of $10.4 million or
$0.02 per share related to the original issuance costs of the
preferred stock.
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(2)
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This 2011 charge relates to the Ventas litigation settlement.
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(3)
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The 2012 impairment charge of $7.9 million, or $0.02 per share,
relates to the sale of a land parcel in our life science segment.
The 2011 impairment charge of $15.4 million, or $0.04 per share,
relates to our senior secured loan to Delphis Operations, L.P.
(“Delphis”).
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(4)
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The 2012 merger-related items of $0.02 per share attributable to the
$1.7 billion Senior Housing Portfolio acquisition include direct
transaction costs and the impact of the negative carry of prefunding
the transaction with the $1.0 billion, or 22 million share, common
stock offering completed on October 19, 2012 on the calculation of
weighted average shares. The 2011 merger-related items of $0.15 per
share are attributable to our HCR ManorCare acquisition, which
closed on April 7, 2011.
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In addition to the litigation settlement charge, impairments and
merger-related items, operating results for the year ended December 31,
2011 include interest income of $0.09 per share from the early payoff of
our Genesis debt investments. Net income for the years ended
December 31, 2012 and 2011 also include gain on sales of real estate of
$31 million and $3 million, respectively.
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.
FOURTH QUARTER HIGHLIGHTS
ACQUIRED $1.7 BILLION SENIOR HOUSING PORTFOLIO
During the quarter, we acquired 129 senior housing communities for $1.7
billion, from a joint venture between Emeritus Corporation (“Emeritus”)
and Blackstone Real Estate Partners VI, an affiliate of Blackstone (the
“Blackstone JV”). At closing, the 129 communities consisted of 95 that
were stabilized and 34 that were in lease–up. In connection with the
transaction, Emeritus entered into a new triple-net, master lease for
the 129 properties (the “Master Lease”) guaranteed by Emeritus. The
Master Lease provides aggregate contractual rent in the first year that
represents a 6.1% lease yield. The contractual rent will increase
annually by the greater of 3.7% on average or CPI over the initial five
years, and thereafter by the greater of 3.0% or CPI for the remaining
initial term. At the beginning of the sixth lease year, rent on the 34
lease–up properties will increase to the greater of the percentage
increase in CPI or fair market, subject to a floor of 103% and a cap of
130% of the prior year’s rent, allowing HCP to capture potential upside
from these non–stabilized assets.
Located in 29 states, the portfolio encompasses 10,077 units
representing a diversified care mix of 61% assisted living, 25%
independent living, 13% memory care and 1% skilled nursing. We are still
evaluating the acquisition of up to four additional communities related
to this transaction.
Concurrent with the acquisition, Emeritus purchased nine communities
from the Blackstone JV, for which we provided secured debt financing of
$52 million with a four-year term. The loan is secured by the underlying
real estate and is prepayable at Emeritus’ option. The interest rate on
the loan matches the yield on the Master Lease, including the annual
increases through maturity.
ADDITIONAL INVESTMENT TRANSACTIONS
During the quarter, we made additional investments of $141 million as
follows: (i) $62 million to purchase the two MOBs of our previously
announced Boyer MOB acquisition; and (ii) $79 million to fund
development and other capital projects, primarily in our life science,
medical office and senior housing segments.
During the quarter, we sold two senior housing facilities for $111
million, a parcel of land in our life science segment for $18 million,
and a skilled nursing facility for $15 million; we also received $38
million in principal payments from our senior secured loan to Delphis.
FINANCING ACTIVITIES
In connection with funding the $1.7 billion Senior Housing Portfolio
acquisition, we completed the following capital market transactions:
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On October 19, 2012, we completed a public offering of 22 million
shares of common stock and received net proceeds of $979 million.
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On November 19, 2012, we issued $800 million of 2.625% senior
unsecured notes due in 2020. The notes were priced at 99.729% of the
principal amount with an effective yield-to-maturity of 2.667%. Net
proceeds from this offering were $792.8 million. We anticipate that a
portion of these net proceeds will be used to re-pay $150 million of
5.625% senior unsecured notes that mature in February 2013.
SUSTAINABILITY
During the quarter, we (i) earned 16 ENERGY STAR awards in our medical
office (11) and life science (5) segments as a result of the Company’s
energy conservation programs; and (ii) were awarded NAREIT’s 2012 Leader
in the Light Award, recognizing HCP as the leader in sustainability in
the healthcare sector, which incorporated our results from the Global
Real Estate Sustainability Benchmark (“GRESB”) survey. As of December
31, 2012, our medical office, life science and senior housing segments
have been awarded 93 ENERGY STAR labels. More information about HCP’s
sustainability efforts can be found on our website at www.hcpi.com/sustainability.html.
DIVIDEND
On January 24, 2013, our Board of Directors declared a quarterly cash
dividend of $0.525 per common share. The dividend will be paid on
February 19, 2013 to stockholders of record as of the close of business
on February 4, 2013. The annualized distribution rate for 2013 increased
5% to $2.10, compared to $2.00 for 2012, which represents the 28th
consecutive year with a dividend increase. HCP continues as the only
REIT included in the S&P 500 Dividend Aristocrats index.
OUTLOOK
For the full year 2013, we expect FFO applicable to common shares to
range between $2.92 and $2.98 per share, which estimate at the mid-point
represents an increase of 6% over the 2012 FFO as adjusted per share
amount; FAD applicable to common shares to range between $2.39 and $2.45
per share, which estimate at the mid-point represents an increase of 9%
over the 2012 comparable amount; net income applicable to common shares
to range between $1.95 and $2.01 per share, which estimate at the
mid-point represents an increase of 4% over the 2012 comparable amount.
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, February
12, 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
and year ended December 31, 2012. The conference call is accessible by
dialing (877) 724-7556 (U.S.) or (706) 645-4695 (International). The
participant passcode is 89679770. 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 February 26, 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 89679770. 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 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 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: national and local economic conditions;
continued 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.
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HCP, Inc.
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Consolidated Balance Sheets
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In thousands, except share and per share data
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(Unaudited)
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December 31,
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December 31,
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2012
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2011
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Assets
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Real estate:
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Buildings and improvements
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$
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10,537,484
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$
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8,816,551
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Development costs and construction in progress
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236,864
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190,590
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Land
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1,850,397
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1,722,948
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Accumulated depreciation and amortization
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(1,739,718
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)
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(1,449,579
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)
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Net real estate
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10,885,027
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9,280,510
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Net investment in direct financing leases
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6,881,393
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6,727,777
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Loans receivable, net
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276,030
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110,253
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Investments in and advances to unconsolidated joint ventures
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212,213
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224,052
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Accounts receivable, net of allowance of $1,668 and $1,341,
respectively
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34,150
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26,681
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Cash and cash equivalents
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|
247,673
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33,506
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Restricted cash
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37,848
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41,553
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Intangible assets, net
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552,701
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372,390
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Assets held for sale, net
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—
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106,295
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Other assets, net
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788,520
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485,458
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|
|
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|
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Total assets
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|
$
|
19,915,555
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$
|
17,408,475
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Liabilities and equity
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Bank line of credit
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$
|
—
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$
|
454,000
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Term loan
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|
222,694
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|
|
|
|
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—
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Senior unsecured notes
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6,712,624
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|
|
|
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5,416,063
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Mortgage debt
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|
1,676,544
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|
|
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|
1,715,039
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Mortgage debt and intangible liabilities on assets held for sale, net
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|
|
|
—
|
|
|
|
|
|
55,897
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Other debt
|
|
|
|
|
81,958
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|
|
|
|
|
87,985
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|
|
Intangible liabilities, net
|
|
|
|
|
105,909
|
|
|
|
|
|
117,777
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|
|
Accounts payable and accrued liabilities
|
|
|
|
|
293,994
|
|
|
|
|
|
275,478
|
|
|
Deferred revenue
|
|
|
|
|
68,055
|
|
|
|
|
|
65,614
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|
|
Total liabilities
|
|
|
|
|
9,161,778
|
|
|
|
|
|
8,187,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $1.00 par value: aggregate liquidation preference
of $295.5 million as of December 31, 2011
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|
|
|
|
—
|
|
|
|
|
|
285,173
|
|
|
Common stock, $1.00 par value: 750,000,000 shares authorized;
453,191,321 and 408,629,444 shares issued and outstanding,
respectively
|
|
|
|
|
453,191
|
|
|
|
|
|
408,629
|
|
|
Additional paid-in capital
|
|
|
|
|
11,180,066
|
|
|
|
|
|
9,383,536
|
|
|
Cumulative dividends in excess of earnings
|
|
|
|
|
(1,067,367
|
)
|
|
|
|
|
(1,024,274
|
)
|
|
Accumulated other comprehensive loss
|
|
|
|
|
(14,653
|
)
|
|
|
|
|
(19,582
|
)
|
|
Total stockholders’ equity
|
|
|
|
|
10,551,237
|
|
|
|
|
|
9,033,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint venture partners
|
|
|
|
|
14,752
|
|
|
|
|
|
16,971
|
|
|
Non-managing member unitholders
|
|
|
|
|
187,788
|
|
|
|
|
|
170,169
|
|
|
Total noncontrolling interests
|
|
|
|
|
202,540
|
|
|
|
|
|
187,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
|
|
10,753,777
|
|
|
|
|
|
9,220,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
|
|
$
|
19,915,555
|
|
|
|
|
$
|
17,408,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCP, Inc.
|
|
Consolidated Statements of Income
|
|
In thousands, except per share data
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and related revenues
|
|
|
|
$
|
278,141
|
|
|
|
|
$
|
245,198
|
|
|
|
|
$
|
1,013,815
|
|
|
|
|
$
|
1,002,578
|
|
|
Tenant recoveries
|
|
|
|
|
25,002
|
|
|
|
|
|
22,494
|
|
|
|
|
|
94,658
|
|
|
|
|
|
92,258
|
|
|
Resident fees and services
|
|
|
|
|
35,921
|
|
|
|
|
|
35,305
|
|
|
|
|
|
143,745
|
|
|
|
|
|
50,619
|
|
|
Income from direct financing leases
|
|
|
|
|
156,728
|
|
|
|
|
|
154,151
|
|
|
|
|
|
622,073
|
|
|
|
|
|
464,704
|
|
|
Interest income
|
|
|
|
|
12,223
|
|
|
|
|
|
665
|
|
|
|
|
|
24,536
|
|
|
|
|
|
99,864
|
|
|
Investment management fee income
|
|
|
|
|
472
|
|
|
|
|
|
468
|
|
|
|
|
|
1,895
|
|
|
|
|
|
2,073
|
|
|
Total revenues
|
|
|
|
|
508,487
|
|
|
|
|
|
458,281
|
|
|
|
|
|
1,900,722
|
|
|
|
|
|
1,712,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
107,255
|
|
|
|
|
|
100,701
|
|
|
|
|
|
417,130
|
|
|
|
|
|
416,396
|
|
|
Depreciation and amortization
|
|
|
|
|
99,373
|
|
|
|
|
|
84,348
|
|
|
|
|
|
358,245
|
|
|
|
|
|
349,922
|
|
|
Operating
|
|
|
|
|
73,921
|
|
|
|
|
|
69,055
|
|
|
|
|
|
283,998
|
|
|
|
|
|
220,151
|
|
|
General and administrative
|
|
|
|
|
25,120
|
|
|
|
|
|
19,679
|
|
|
|
|
|
79,454
|
|
|
|
|
|
96,121
|
|
|
Litigation settlement and provision
|
|
|
|
|
—
|
|
|
|
|
|
125,000
|
|
|
|
|
|
—
|
|
|
|
|
|
125,000
|
|
|
Impairments
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
7,878
|
|
|
|
|
|
15,400
|
|
|
Total costs and expenses
|
|
|
|
|
305,669
|
|
|
|
|
|
398,783
|
|
|
|
|
|
1,146,705
|
|
|
|
|
|
1,222,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net
|
|
|
|
|
254
|
|
|
|
|
|
(4,623
|
)
|
|
|
|
|
2,776
|
|
|
|
|
|
12,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes and equity income from unconsolidated
joint ventures
|
|
|
|
|
203,072
|
|
|
|
|
|
54,875
|
|
|
|
|
|
756,793
|
|
|
|
|
|
501,838
|
|
|
Income taxes
|
|
|
|
|
505
|
|
|
|
|
|
(960
|
)
|
|
|
|
|
1,636
|
|
|
|
|
|
(1,250
|
)
|
|
Equity income from unconsolidated joint ventures
|
|
|
|
|
11,652
|
|
|
|
|
|
13,952
|
|
|
|
|
|
54,455
|
|
|
|
|
|
46,750
|
|
|
Income from continuing operations
|
|
|
|
|
215,229
|
|
|
|
|
|
67,867
|
|
|
|
|
|
812,884
|
|
|
|
|
|
547,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before gain on sales of real estate
|
|
|
|
|
2,433
|
|
|
|
|
|
(187
|
)
|
|
|
|
|
2,504
|
|
|
|
|
|
4,049
|
|
|
Gain on sales of real estate
|
|
|
|
|
28,598
|
|
|
|
|
|
3,107
|
|
|
|
|
|
31,454
|
|
|
|
|
|
3,107
|
|
|
Total discontinued operations
|
|
|
|
|
31,031
|
|
|
|
|
|
2,920
|
|
|
|
|
|
33,958
|
|
|
|
|
|
7,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
246,260
|
|
|
|
|
|
70,787
|
|
|
|
|
|
846,842
|
|
|
|
|
|
554,494
|
|
|
Noncontrolling interests’ share in earnings
|
|
|
|
|
(5,232
|
)
|
|
|
|
|
(2,943
|
)
|
|
|
|
|
(14,302
|
)
|
|
|
|
|
(15,603
|
)
|
|
Net income attributable to HCP, Inc.
|
|
|
|
|
241,028
|
|
|
|
|
|
67,844
|
|
|
|
|
|
832,540
|
|
|
|
|
|
538,891
|
|
|
Preferred stock dividends
|
|
|
|
|
—
|
|
|
|
|
|
(5,282
|
)
|
|
|
|
|
(17,006
|
)
|
|
|
|
|
(21,130
|
)
|
|
Participating securities’ share in earnings
|
|
|
|
|
(1,147
|
)
|
|
|
|
|
(566
|
)
|
|
|
|
|
(3,245
|
)
|
|
|
|
|
(2,459
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income applicable to common shares
|
|
|
|
$
|
239,881
|
|
|
|
|
$
|
61,996
|
|
|
|
|
$
|
812,289
|
|
|
|
|
$
|
515,302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
$
|
0.47
|
|
|
|
|
$
|
0.14
|
|
|
|
|
$
|
1.83
|
|
|
|
|
$
|
1.28
|
|
|
Discontinued operations
|
|
|
|
|
0.07
|
|
|
|
|
|
0.01
|
|
|
|
|
|
0.07
|
|
|
|
|
|
0.01
|
|
|
Net income applicable to common shares
|
|
|
|
$
|
0.54
|
|
|
|
|
$
|
0.15
|
|
|
|
|
$
|
1.90
|
|
|
|
|
$
|
1.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
$
|
0.47
|
|
|
|
|
$
|
0.14
|
|
|
|
|
$
|
1.83
|
|
|
|
|
$
|
1.28
|
|
|
Discontinued operations
|
|
|
|
|
0.06
|
|
|
|
|
|
0.01
|
|
|
|
|
|
0.07
|
|
|
|
|
|
0.01
|
|
|
Net income applicable to common shares
|
|
|
|
$
|
0.53
|
|
|
|
|
$
|
0.15
|
|
|
|
|
$
|
1.90
|
|
|
|
|
$
|
1.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used to calculate earnings per common
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
447,889
|
|
|
|
|
|
407,907
|
|
|
|
|
|
427,047
|
|
|
|
|
|
398,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
448,903
|
|
|
|
|
|
409,730
|
|
|
|
|
|
428,316
|
|
|
|
|
|
400,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCP, Inc.
|
|
Consolidated Statements of Cash Flows
|
|
In thousands
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
846,842
|
|
|
|
|
$
|
554,494
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization of real estate, in-place lease and
other intangibles:
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
358,245
|
|
|
|
|
349,922
|
|
|
Discontinued operations
|
|
|
|
8,267
|
|
|
|
|
7,473
|
|
|
Amortization of above and below market lease intangibles, net
|
|
|
|
(2,232
|
)
|
|
|
|
(4,510
|
)
|
|
Amortization of deferred compensation
|
|
|
|
23,277
|
|
|
|
|
20,034
|
|
|
Amortization of deferred financing costs, net
|
|
|
|
16,501
|
|
|
|
|
25,769
|
|
|
Straight-line rents
|
|
|
|
(47,311
|
)
|
|
|
|
(59,173
|
)
|
|
Loan and direct financing lease interest accretion
|
|
|
|
(95,444
|
)
|
|
|
|
(93,003
|
)
|
|
Deferred rental revenues
|
|
|
|
(1,655
|
)
|
|
|
|
(2,319
|
)
|
|
Equity income from unconsolidated joint ventures
|
|
|
|
(54,455
|
)
|
|
|
|
(46,750
|
)
|
|
Distributions of earnings from unconsolidated joint ventures
|
|
|
|
3,384
|
|
|
|
|
3,273
|
|
|
Gain upon consolidation of joint venture
|
|
|
|
—
|
|
|
|
|
(7,769
|
)
|
|
Marketable securities losses, net
|
|
|
|
—
|
|
|
|
|
5,396
|
|
|
Gain upon settlement of loans receivable
|
|
|
|
—
|
|
|
|
|
(22,812
|
)
|
|
Gain on sale of real estate
|
|
|
|
(31,454
|
)
|
|
|
|
(3,107
|
)
|
|
Derivative (gains) losses, net
|
|
|
|
43
|
|
|
|
|
(1,226
|
)
|
|
Impairments
|
|
|
|
7,878
|
|
|
|
|
15,400
|
|
|
Changes in:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
|
(7,469
|
)
|
|
|
|
2,590
|
|
|
Other assets
|
|
|
|
(3,814
|
)
|
|
|
|
27,582
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
14,267
|
|
|
|
|
(47,103
|
)
|
|
Net cash provided by operating activities
|
|
|
|
1,034,870
|
|
|
|
|
724,161
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
Cash used in the senior housing portfolio acquisition
|
|
|
|
(1,701,410
|
)
|
|
|
|
—
|
|
|
Other acquisitions
|
|
|
|
(186,478
|
)
|
|
|
|
(113,324
|
)
|
|
Cash used in the HCR ManorCare Acquisition, net of cash acquired
|
|
|
|
—
|
|
|
|
|
(4,026,556
|
)
|
|
Cash used in the HCP Ventures II purchase, net of cash acquired
|
|
|
|
—
|
|
|
|
|
(135,550
|
)
|
|
Development of real estate
|
|
|
|
(133,596
|
)
|
|
|
|
(85,061
|
)
|
|
Leasing costs and tenant and capital improvements
|
|
|
|
(61,440
|
)
|
|
|
|
(52,903
|
)
|
|
Proceeds from sales of real estate, net
|
|
|
|
150,943
|
|
|
|
|
19,183
|
|
|
Purchase of an interest in unconsolidated joint ventures
|
|
|
|
—
|
|
|
|
|
(95,000
|
)
|
|
Distributions in excess of earnings from unconsolidated joint
ventures
|
|
|
|
2,915
|
|
|
|
|
2,408
|
|
|
Purchase of marketable securities
|
|
|
|
(214,859
|
)
|
|
|
|
(22,449
|
)
|
|
Principal repayments on loans receivable
|
|
|
|
45,046
|
|
|
|
|
303,941
|
|
|
Investments in loans receivable
|
|
|
|
(218,978
|
)
|
|
|
|
(369,939
|
)
|
|
Decrease (increase) in restricted cash
|
|
|
|
3,705
|
|
|
|
|
(5,234
|
)
|
|
Net cash used in investing activities
|
|
|
|
(2,314,152
|
)
|
|
|
|
(4,580,484
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
Net borrowings (repayments) under bank line of credit
|
|
|
|
(454,000
|
)
|
|
|
|
454,000
|
|
|
Borrowings under term loan
|
|
|
|
214,789
|
|
|
|
|
—
|
|
|
Issuance of senior unsecured notes
|
|
|
|
1,550,000
|
|
|
|
|
2,400,000
|
|
|
Repayment of senior unsecured notes
|
|
|
|
(250,000
|
)
|
|
|
|
(292,265
|
)
|
|
Repayments of mortgage debt
|
|
|
|
(155,565
|
)
|
|
|
|
(169,783
|
)
|
|
Deferred financing costs
|
|
|
|
(27,565
|
)
|
|
|
|
(43,716
|
)
|
|
Preferred stock redemption
|
|
|
|
(295,500
|
)
|
|
|
|
—
|
|
|
Net proceeds from the issuance of common stock and exercise of
options
|
|
|
|
1,792,786
|
|
|
|
|
1,327,813
|
|
|
Dividends paid on common and preferred stock
|
|
|
|
(865,306
|
)
|
|
|
|
(787,689
|
)
|
|
Issuance of noncontrolling interests
|
|
|
|
1,584
|
|
|
|
|
14,028
|
|
|
Purchase of noncontrolling interests
|
|
|
|
(2,143
|
)
|
|
|
|
(34,104
|
)
|
|
Distributions to noncontrolling interests
|
|
|
|
(15,631
|
)
|
|
|
|
(15,156
|
)
|
|
Net cash provided by financing activities
|
|
|
|
1,493,449
|
|
|
|
|
2,853,128
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
214,167
|
|
|
|
|
(1,003,195
|
)
|
|
Cash and cash equivalents, beginning of year
|
|
|
|
33,506
|
|
|
|
|
1,036,701
|
|
|
Cash and cash equivalents, end of year
|
|
|
|
$
|
247,673
|
|
|
|
|
$
|
33,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCP, Inc.
|
|
Funds From Operations(1)
|
|
In thousands, except per share data
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income applicable to common shares
|
|
|
|
$
|
239,881
|
|
|
|
|
$
|
61,996
|
|
|
|
|
$
|
812,289
|
|
|
|
|
$
|
515,302
|
|
|
Depreciation and amortization of real estate, in-place lease and
other intangibles:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
99,373
|
|
|
|
|
|
84,348
|
|
|
|
|
|
358,245
|
|
|
|
|
|
349,922
|
|
|
Discontinued operations
|
|
|
|
|
800
|
|
|
|
|
|
3,019
|
|
|
|
|
|
8,267
|
|
|
|
|
|
7,473
|
|
|
Direct financing lease (“DFL”) depreciation
|
|
|
|
|
3,330
|
|
|
|
|
|
2,961
|
|
|
|
|
|
12,756
|
|
|
|
|
|
8,840
|
|
|
Gain on sales of real estate
|
|
|
|
|
(28,598
|
)
|
|
|
|
|
(3,107
|
)
|
|
|
|
|
(31,454
|
)
|
|
|
|
|
(3,107
|
)
|
|
Gain upon consolidation of joint venture
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(7,769
|
)
|
|
Equity income from unconsolidated joint ventures
|
|
|
|
|
(11,652
|
)
|
|
|
|
|
(13,952
|
)
|
|
|
|
|
(54,455
|
)
|
|
|
|
|
(46,750
|
)
|
|
FFO from unconsolidated joint ventures
|
|
|
|
|
14,438
|
|
|
|
|
|
16,479
|
|
|
|
|
|
64,933
|
|
|
|
|
|
56,887
|
|
|
Noncontrolling interests’ and participating securities’ share in
earnings
|
|
|
|
|
6,379
|
|
|
|
|
|
3,509
|
|
|
|
|
|
17,547
|
|
|
|
|
|
18,062
|
|
|
Noncontrolling interests’ and participating securities’ share in FFO
|
|
|
|
|
(6,112
|
)
|
|
|
|
|
(4,675
|
)
|
|
|
|
|
(21,620
|
)
|
|
|
|
|
(20,953
|
)
|
|
FFO applicable to common shares
|
|
|
|
$
|
317,839
|
|
|
|
|
$
|
150,578
|
|
|
|
|
$
|
1,166,508
|
|
|
|
|
$
|
877,907
|
|
|
Distributions on dilutive convertible units
|
|
|
|
|
3,631
|
|
|
|
|
|
—
|
|
|
|
|
|
13,028
|
|
|
|
|
|
6,916
|
|
|
Diluted FFO applicable to common shares
|
|
|
|
$
|
321,470
|
|
|
|
|
$
|
150,578
|
|
|
|
|
$
|
1,179,536
|
|
|
|
|
$
|
884,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted FFO per common share
|
|
|
|
$
|
0.71
|
|
|
|
|
$
|
0.37
|
|
|
|
|
$
|
2.72
|
|
|
|
|
$
|
2.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used to calculate diluted FFO per share
|
|
|
|
|
454,992
|
|
|
|
|
|
409,730
|
|
|
|
|
|
434,328
|
|
|
|
|
|
403,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of adjustments to FFO:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock redemption charge(2) |
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
10,432
|
|
|
|
|
|
—
|
|
|
Litigation settlement charge(3) |
|
|
|
|
—
|
|
|
|
|
|
125,000
|
|
|
|
|
|
—
|
|
|
|
|
|
125,000
|
|
|
Merger-related items(4) |
|
|
|
|
5,642
|
|
|
|
|
|
—
|
|
|
|
|
|
5,642
|
|
|
|
|
|
26,596
|
|
|
Impairments(5) |
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
7,878
|
|
|
|
|
|
15,400
|
|
|
|
|
|
|
$
|
5,642
|
|
|
|
|
$
|
125,000
|
|
|
|
|
$
|
23,952
|
|
|
|
|
$
|
166,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO as adjusted applicable to common shares
|
|
|
|
$
|
323,481
|
|
|
|
|
$
|
275,578
|
|
|
|
|
$
|
1,190,460
|
|
|
|
|
$
|
1,044,903
|
|
|
Distributions on dilutive convertible units and other
|
|
|
|
|
3,613
|
|
|
|
|
|
2,858
|
|
|
|
|
|
12,957
|
|
|
|
|
|
11,646
|
|
|
Diluted FFO as adjusted applicable to common shares
|
|
|
|
$
|
327,094
|
|
|
|
|
$
|
278,436
|
|
|
|
|
$
|
1,203,417
|
|
|
|
|
$
|
1,056,549
|
|
|
Per common share impact of adjustments on diluted FFO
|
|
|
|
$
|
0.01
|
|
|
|
|
$
|
0.30
|
|
|
|
|
$
|
0.06
|
|
|
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted FFO as adjusted per common share
|
|
|
|
$
|
0.72
|
|
|
|
|
$
|
0.67
|
|
|
|
|
$
|
2.78
|
|
|
|
|
$
|
2.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used to calculate diluted FFO as adjusted
per share
|
|
|
|
|
452,122
|
|
|
|
|
|
415,624
|
|
|
|
|
|
433,607
|
|
|
|
|
|
393,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 designed by the REIT industry to address this issue. FFO is
defined as net income applicable to common shares (computed in
accordance with U.S. generally accepted accounting principles or
“GAAP”), excluding gains or losses from acquisition and dispositions
of depreciable real estate or related interests, impairments of, or
related to, depreciable real estate, plus real estate and DFL
depreciation and amortization, with 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 determined 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. Our computation of FFO may
not be comparable to FFO reported by other REITs that do not define
the term in accordance with the current National Association of Real
Estate Investment Trusts’ (“NAREIT”) definition or that have a
different interpretation of the current NAREIT definition from us.
In addition, we present FFO before the impact of litigation
settlement charges, preferred stock redemption charges, impairments
(recoveries) of non-depreciable assets and merger-related items
(“FFO as adjusted”). Management believes FFO as adjusted is a useful
alternative measurement. This measure is a modification of the
NAREIT definition of FFO and should not be used as an alternative to
net income (determined in accordance with GAAP).
|
|
(2)
|
|
|
|
In connection with the redemption of our preferred stock, we
incurred a one-time, non-cash redemption charge of $10.4 million or
$0.02 per share related to the original issuance costs of the
preferred stock.
|
|
(3)
|
|
|
|
The 2011 charge of $125 million, or $0.31 per share, relates to the
Ventas settlement.
|
|
(4)
|
|
|
|
The 2012 merger-related items of $0.02 per share attributable to the
$1.7 billion Senior Housing Portfolio acquisition include direct
transaction costs and the impact of the negative carry of prefunding
the transaction with the $1.0 billion, or 22 million shares, common
stock offering completed on October 19, 2012 on the calculation of
weighted average shares. The 2011 merger-related items of $0.15 per
share are attributable to the HCR ManorCare acquisition, which
closed on April 7, 2011.
|
|
(5)
|
|
|
|
The 2012 impairment charge of $7.9 million, or $0.02 per share,
relates to the sale of a land parcel in our life science segment.
The 2011 impairment charge of $15.4 million, or $0.04 per share,
relates to our senior secured loan to Delphis.
|
|
|
|
|
|
|
|
|
|
HCP, Inc.
|
|
Funds Available for Distribution(1)
|
|
In thousands, except per share data
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO as adjusted applicable to common shares
|
|
|
|
$
|
323,481
|
|
|
|
|
$
|
275,578
|
|
|
|
|
$
|
1,190,460
|
|
|
|
|
$
|
1,044,903
|
|
|
Amortization of above and below market lease intangibles, net
|
|
|
|
|
(377
|
)
|
|
|
|
|
(1,239
|
)
|
|
|
|
|
(2,232
|
)
|
|
|
|
|
(4,510
|
)
|
|
Amortization of deferred compensation
|
|
|
|
|
6,330
|
|
|
|
|
|
4,748
|
|
|
|
|
|
23,277
|
|
|
|
|
|
20,034
|
|
|
Amortization of deferred financing costs, net(2) |
|
|
|
|
4,086
|
|
|
|
|
|
3,651
|
|
|
|
|
|
16,501
|
|
|
|
|
|
13,716
|
|
|
Straight-line rents
|
|
|
|
|
(13,703
|
)
|
|
|
|
|
(12,237
|
)
|
|
|
|
|
(47,311
|
)
|
|
|
|
|
(59,173
|
)
|
|
DFL accretion(3) |
|
|
|
|
(23,168
|
)
|
|
|
|
|
(25,499
|
)
|
|
|
|
|
(94,240
|
)
|
|
|
|
|
(74,007
|
)
|
|
DFL depreciation
|
|
|
|
|
(3,330
|
)
|
|
|
|
|
(2,961
|
)
|
|
|
|
|
(12,756
|
)
|
|
|
|
|
(8,840
|
)
|
|
Deferred revenues – tenant improvement related
|
|
|
|
|
(313
|
)
|
|
|
|
|
(237
|
)
|
|
|
|
|
(1,570
|
)
|
|
|
|
|
(2,371
|
)
|
|
Deferred revenues – additional rents (SAB 104)
|
|
|
|
|
(2,443
|
)
|
|
|
|
|
(798
|
)
|
|
|
|
|
(85
|
)
|
|
|
|
|
52
|
|
|
Leasing costs and tenant and capital improvements
|
|
|
|
|
(18,623
|
)
|
|
|
|
|
(21,131
|
)
|
|
|
|
|
(61,440
|
)
|
|
|
|
|
(52,903
|
)
|
|
Joint venture and other FAD adjustments(3) |
|
|
|
|
(18,099
|
)
|
|
|
|
|
(16,985
|
)
|
|
|
|
|
(61,298
|
)
|
|
|
|
|
(46,250
|
)
|
|
FAD applicable to common shares
|
|
|
|
$
|
253,841
|
|
|
|
|
$
|
202,890
|
|
|
|
|
$
|
949,306
|
|
|
|
|
$
|
830,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions on dilutive convertible units
|
|
|
|
|
2,310
|
|
|
|
|
|
1,758
|
|
|
|
|
|
7,714
|
|
|
|
|
|
6,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted FAD applicable to common shares
|
|
|
|
$
|
256,151
|
|
|
|
|
$
|
204,648
|
|
|
|
|
$
|
957,020
|
|
|
|
|
$
|
837,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted FAD per common share
|
|
|
|
$
|
0.57
|
|
|
|
|
$
|
0.50
|
|
|
|
|
$
|
2.22
|
|
|
|
|
$
|
2.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used to calculate diluted FAD per common
share
|
|
|
|
|
450,207
|
|
|
|
|
|
413,338
|
|
|
|
|
|
431,429
|
|
|
|
|
|
390,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
|
Funds Available for Distribution (“FAD”) is defined as FFO as
adjusted after excluding the impact of the following: (i)
amortization of acquired above/below 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 (vi)
deferred revenues. Further, FAD is computed after deducting
recurring capital expenditures, including leasing costs and second
generation tenant and capital improvements and includes similar
adjustments to compute our share of FAD from our unconsolidated
joint ventures. 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 ability to fund its ongoing dividend payments. In addition,
management believes that in order to further understand and analyze
our liquidity, FAD should be compared with net cash flows from
operating activities as determined in accordance with GAAP and
presented in its consolidated financial statements. FAD does not
represent cash generated from operating activities determined in
accordance with GAAP, and FAD should not be considered as an
alternative to net income (determined in accordance with GAAP) as an
indication of our performance, as an alternative to net cash flows
from operating activities (determined in accordance with GAAP), or
as a measure of our liquidity.
|
|
(2)
|
|
|
|
Excludes $11.3 million related to the write-off of unamortized loan
fees related to an expired bridge loan commitment and $0.8 million
related to the amortization of deferred issuance costs of the senior
notes, which costs are included in merger-related items for the year
ended December 31, 2011.
|
|
(3)
|
|
|
|
For the quarter and year ended December 31, 2012, DFL accretion
reflects an elimination of $15.0 million and $59.4 million,
respectively. For the quarter and year ended December 31, 2011, DFL
accretion reflects an elimination of $14.5 million and $42.2
million, respectively. Our ownership interest in HCR ManorCare OpCo
is accounted for using the equity method, which requires an ongoing
elimination of DFL income that is proportional to our ownership in
HCR ManorCare OpCo. Further, our share of earnings from HCR
ManorCare OpCo (equity income) increases for the corresponding
elimination of related lease expense recognized at the HCR ManorCare
OpCo level, which we present as a non-cash joint venture FAD
adjustment.
|
|
|
|
|
|
|
|
|
|
HCP, Inc.
|
|
Net Operating Income and Same Property Performance(1)(2)
|
|
Dollars in thousands
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
Net income
|
|
|
|
$
|
246,260
|
|
|
|
|
$
|
70,787
|
|
|
|
|
$
|
846,842
|
|
|
|
|
$
|
554,494
|
|
|
Interest income
|
|
|
|
|
(12,223
|
)
|
|
|
|
|
(665
|
)
|
|
|
|
|
(24,536
|
)
|
|
|
|
|
(99,864
|
)
|
|
Investment management fee income
|
|
|
|
|
(472
|
)
|
|
|
|
|
(468
|
)
|
|
|
|
|
(1,895
|
)
|
|
|
|
|
(2,073
|
)
|
|
Interest expense
|
|
|
|
|
107,255
|
|
|
|
|
|
100,701
|
|
|
|
|
|
417,130
|
|
|
|
|
|
416,396
|
|
|
Depreciation and amortization
|
|
|
|
|
99,373
|
|
|
|
|
|
84,348
|
|
|
|
|
|
358,245
|
|
|
|
|
|
349,922
|
|
|
General and administrative
|
|
|
|
|
25,120
|
|
|
|
|
|
19,679
|
|
|
|
|
|
79,454
|
|
|
|
|
|
96,121
|
|
|
Litigation settlement
|
|
|
|
|
—
|
|
|
|
|
|
125,000
|
|
|
|
|
|
—
|
|
|
|
|
|
125,000
|
|
|
Impairments
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
7,878
|
|
|
|
|
|
15,400
|
|
|
Other income, net
|
|
|
|
|
(254
|
)
|
|
|
|
|
4,623
|
|
|
|
|
|
(2,776
|
)
|
|
|
|
|
(12,732
|
)
|
|
Income taxes
|
|
|
|
|
(505
|
)
|
|
|
|
|
960
|
|
|
|
|
|
(1,636
|
)
|
|
|
|
|
1,250
|
|
|
Equity income from unconsolidated joint ventures
|
|
|
|
|
(11,652
|
)
|
|
|
|
|
(13,952
|
)
|
|
|
|
|
(54,455
|
)
|
|
|
|
|
(46,750
|
)
|
|
Total discontinued operations, net of income taxes
|
|
|
|
|
(31,031
|
)
|
|
|
|
|
(2,920
|
)
|
|
|
|
|
(33,958
|
)
|
|
|
|
|
(7,156
|
)
|
|
NOI(1) |
|
|
|
$
|
421,871
|
|
|
|
|
$
|
388,093
|
|
|
|
|
$
|
1,590,293
|
|
|
|
|
$
|
1,390,008
|
|
|
Straight-line rents
|
|
|
|
|
(13,703
|
)
|
|
|
|
|
(12,237
|
)
|
|
|
|
|
(47,311
|
)
|
|
|
|
|
(59,173
|
)
|
|
DFL accretion
|
|
|
|
|
(23,168
|
)
|
|
|
|
|
(25,499
|
)
|
|
|
|
|
(94,240
|
)
|
|
|
|
|
(74,007
|
)
|
|
Amortization of above and below market lease intangibles, net
|
|
|
|
|
(377
|
)
|
|
|
|
|
(1,239
|
)
|
|
|
|
|
(2,232
|
)
|
|
|
|
|
(4,510
|
)
|
|
Lease termination fees
|
|
|
|
|
(63
|
)
|
|
|
|
|
(2,457
|
)
|
|
|
|
|
(636
|
)
|
|
|
|
|
(5,873
|
)
|
|
NOI adjustments related to discontinued operations
|
|
|
|
|
49
|
|
|
|
|
|
477
|
|
|
|
|
|
1,486
|
|
|
|
|
|
2,061
|
|
|
Adjusted NOI(1) |
|
|
|
$
|
384,609
|
|
|
|
|
$
|
347,138
|
|
|
|
|
$
|
1,447,360
|
|
|
|
|
$
|
1,248,506
|
|
|
Non-SPP adjusted NOI
|
|
|
|
|
(20,691
|
)
|
|
|
|
|
1,649
|
|
|
|
|
|
(563,681
|
)
|
|
|
|
|
(400,643
|
)
|
|
Same property portfolio adjusted NOI(2) |
|
|
|
$
|
363,918
|
|
|
|
|
$
|
348,787
|
|
|
|
|
$
|
883,679
|
|
|
|
|
$
|
847,863
|
|
|
Adjusted NOI % change – SPP(2) |
|
|
|
|
4.3%
|
|
|
|
|
|
|
|
|
|
|
|
4.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 adjusted NOI to make decisions about resource
allocations, to assess and compare property level performance, and
evaluate SPP. We believe that net income is the most directly
comparable GAAP measure to NOI. NOI should not be viewed as an
alternative measure of operating performance to net income
(determined in accordance with GAAP) since it excludes certain
components from net income. Further, NOI may not be comparable to
that of other REITs, 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 interest income,
investment management fee income, interest expense, depreciation and
amortization, general and administrative expenses, litigation
settlement, impairments, impairment recoveries, other income, net,
income taxes, equity income from and impairments of unconsolidated
joint ventures, and discontinued operations. Adjusted NOI is
calculated as NOI eliminating the effects of straight-line rents,
DFL accretion, amortization of above and below market lease
intangibles, and lease termination fees. Adjusted NOI is sometimes
referred to as “cash NOI.”
|
|
(2)
|
|
|
|
Same property portfolio (“SPP”) statistics allow management to
evaluate the performance of the Company’s real estate portfolio
under a consistent population, which eliminates the changes in the
composition of the Company’s portfolio of properties. The Company
identifies its 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. Accordingly, it takes a stabilized
property a minimum of 12 months in operations under a consistent
reporting structure to be included in the Company’s SPP. SPP NOI
excludes certain non-property specific operating expenses that are
allocated to each operating segment on a consolidated basis.
|
|
|
|
|
|
|
|
|
|
HCP, Inc.
|
|
Projected Future Operations(1)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Full Year 2013
|
|
|
|
|
|
Low
|
|
|
|
High
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
|
|
$
|
1.95
|
|
|
|
|
$
|
2.01
|
|
|
Real estate depreciation and amortization
|
|
|
|
|
0.92
|
|
|
|
|
|
0.92
|
|
|
DFL depreciation
|
|
|
|
|
0.03
|
|
|
|
|
|
0.03
|
|
|
Joint venture FFO adjustments
|
|
|
|
|
0.02
|
|
|
|
|
|
0.02
|
|
|
Diluted FFO per common share
|
|
|
|
$
|
2.92
|
|
|
|
|
$
|
2.98
|
|
|
Amortization of net below 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
|
|
|
|
|
(0.12
|
)
|
|
|
|
|
(0.12
|
)
|
|
DFL accretion(2) |
|
|
|
|
(0.20
|
)
|
|
|
|
|
(0.20
|
)
|
|
DFL depreciation
|
|
|
|
|
(0.03
|
)
|
|
|
|
|
(0.03
|
)
|
|
Leasing costs and tenant and capital improvements
|
|
|
|
|
(0.14
|
)
|
|
|
|
|
(0.14
|
)
|
|
Joint venture and other FAD adjustments(2) |
|
|
|
|
(0.12
|
)
|
|
|
|
|
(0.12
|
)
|
|
Diluted FAD per common share
|
|
|
|
$
|
2.39
|
|
|
|
|
$
|
2.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
|
Except as otherwise noted above, 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. Except as otherwise noted, these estimates do not
reflect the potential impact of 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. There can be no
assurance that our actual results will not differ materially from
the estimates set forth above. The aforementioned ranges represent
management’s best estimate of results 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)
|
|
|
|
Our ownership interest in HCR ManorCare OpCo is accounted for using
the equity method, which requires an ongoing elimination of DFL
income that is proportional to our ownership in HCR ManorCare OpCo.
Further, our share of earnings from HCR ManorCare OpCo (equity
income) increases for the corresponding elimination of related lease
expense recognized at the HCR ManorCare OpCo level, which we present
as a non-cash joint venture FAD adjustment.
|
