HCP (the “Company” or “we”) (NYSE:HCP) announced results for the
quarter ended June 30, 2009. Funds from operations (“FFO”)
applicable to common shares was $146.1 million, or $0.55 per
diluted share, for the quarter ended June 30, 2009, compared to FFO
applicable to common shares of $119.1 million, or $0.50 per diluted
share, in the year-ago period.
FFO applicable to common shares for the quarter ended June 30,
2009 included the offsetting impact of the following: i)
impairments of $0.02 per diluted share; and ii) income of $0.02 per
diluted share resulting from an adjustment to the cost allocation
of certain assets acquired in 2006. FFO applicable to common shares
for the quarter ended June 30, 2008 included the negative impact of
$0.07 per diluted share of the following: i) impairments and
merger-related charges of $0.05 per diluted share; ii) a write down
in the carrying value of marketable securities of $0.01 per diluted
share; and iii) an ineffectiveness charge of $0.01 per diluted
share relating to the settlement of two forward-starting
interest-rate swaps. FFO is a supplemental non-GAAP financial
measure that the Company believes is helpful in evaluating the
operating performance of real estate investment trusts.
Net income applicable to common shares for the quarter ended
June 30, 2009 was $91.8 million, or $0.35 per diluted share,
compared to net income applicable to common shares of $225.9
million, or $0.96 per diluted share, in the year-ago period. Net
income applicable to common shares for the quarter ended
June 30, 2009 includes gain on sales of real estate of $30.5
million, compared to gain on sales of real estate of $190.5 million
in the year-ago period.
INVESTMENTS
During the quarter ended June 30, 2009, we funded
$30 million for construction and other capital projects,
primarily in our life science segment.
During the quarter ended June 30, 2009, we sold two hospitals
with an aggregate value of $46 million and recognized gains of
$30.5 million, which are excluded from FFO. During the quarter
ended June 30, 2009, we also sold marketable debt securities of $5
million.
On August 3, 2009, we purchased a $720 million participation in
first mortgage debt of HCR ManorCare at a discount for
approximately $590 million. The $720 million participation bears
interest at LIBOR plus 1.25% and represents 45% of the $1.6 billion
most senior tranche of HCR ManorCare’s mortgage debt incurred as
part of the financing for The Carlyle Group’s acquisition of Manor
Care, Inc. in December 2007. The mortgage debt matures in January
2012, with a one-year extension available at the borrower’s option
subject to certain conditions, and is secured by a first lien on
331 facilities located in 30 states. We obtained favorable
financing to fund 72% of the purchase price, resulting in a net
cash payment by HCP of $165 million.
FINANCING
On May 8, 2009, we completed a $440 million public offering of
20.7 million shares of our common stock at a price per share of
$21.25. We received net proceeds of $422 million, which were used
to repay all amounts of indebtedness outstanding under our bridge
loan credit facility, with the remainder used for general corporate
purposes.
On June 12, 2009, the Company entered into an interest rate swap
contract (pay float and receive fixed) with a notional amount of
$250 million that terminates in September 2011. This interest-rate
swap contract reduces our net floating rate asset exposure, which
increased as a result of the repayment of our floating rate bridge
loan credit facility.
Our financial leverage improved to 44% at June 30, 2009 from 48%
at December 31, 2008. Our adjusted fixed charge coverage for the
quarter ended June 30, 2009 improved to 2.6x from 2.3x for the
quarter ended June 30, 2008.
OTHER EVENTS
On June 18, 2009, we announced that the management agreements on
15 communities operated by Sunrise Senior Living, Inc. or its
subsidiaries (“Sunrise”) have been terminated effective October 1,
2009, for Sunrise’s failure to achieve certain performance
thresholds. The termination of the agreements does not require the
payment of a termination fee by the Company or our tenants. We
intend to enter into new arrangements with senior housing operators
for the 15 communities, reducing the Sunrise-managed communities in
the Company’s portfolio to 75 from the original 101 communities the
Company acquired in the 2006 CNL Retirement Properties, Inc.
transaction. We expect these arrangements to improve the operating
margins of the communities in a manner similar to the Company’s
successful transition of 11 former Sunrise communities to Emeritus
Corporation in December 2008. On June 30, 2009, we recognized
impairments of $6 million, or $0.02 per diluted share, related to
intangible assets associated with 12 of the 15 communities.
On June 29, 2009, we, together with three of our tenants, filed
complaints against Sunrise based on Sunrise’s defaults under
management and related agreements covering 64 of the remaining 75
Sunrise-managed communities owned by the Company. The complaints
allege, among other things, that Sunrise systematically breached
various contractual and fiduciary duties. In addition to equitable
relief and monetary damages relating to the defaults, we are
seeking judicial confirmation of rights to terminate the agreements
on the 64 communities.
DIVIDEND
On July 29, 2009, we announced that our Board of Directors
declared a quarterly cash dividend on our common stock of $0.46 per
share. The dividend will be paid on August 19, 2009 to stockholders
of record as of the close of business on August 6, 2009.
FUTURE OPERATIONS
For the full year 2009, we presently expect net income
applicable to common shares to range between $0.98 and $1.04 per
diluted share, FFO applicable to common shares to range between
$2.13 and $2.19 per diluted share, and FFO applicable to common
shares, before giving effect to impairments, to range between $2.15
and $2.21 per diluted common share. The increase to the above
guidance amounts was due to our HCR ManorCare investment on August
3, 2009.
COMPANY INFORMATION
HCP has scheduled a conference call and webcast for Tuesday,
August 4, 2009 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, 2009. The
conference call is accessible by dialing (866) 700-6293 (U.S.) or
(617) 213-8835 (International). The participant passcode is
75468985. The webcast is accessible via the Company’s website at
www.hcpi.com. The link can be found on the “Event Calendar” page,
which is under the “Investor Relations” tab. A webcast replay of
the conference call will be available after 11:00 a.m. Pacific Time
(2:00 p.m. Eastern Time) on August 4, 2009 through August 18,
2009 on the Company’s website and a telephonic replay can be
accessed by calling (888) 286-8010 (U.S.) or (617) 801-6888
(International) and entering passcode 42923966. 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., an S&P 500 company, is a real estate investment
trust (REIT) that, together with its consolidated subsidiaries,
invests primarily in real estate serving the healthcare industry in
the United States. As of June 30, 2009, the Company’s portfolio of
properties, excluding assets held for sale but including properties
owned by our Investment Management Platform, totaled 682 properties
among the following segments: 259 senior housing, 100 life science,
253 medical office, 22 hospital and 48 skilled nursing. For more
information, 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 and Section
21E of the Securities Exchange Act of 1934. These statements
include among other things the expected improvement in operating
margins resulting from the transfer of 15 Sunrise-managed
communities, net income applicable to common shares on a diluted
basis, FFO applicable to common shares on a diluted basis, FFO
applicable to common shares on a diluted basis before giving effect
to impairments, gain on sales of real estate, real estate
depreciation and amortization, and joint venture adjustments for
the full year of 2009. These statements are made as of the date
hereof and are subject to known and unknown risks, uncertainties,
assumptions and other factors — many of which are out of the
Company’s control and difficult to forecast—that could cause actual
results to differ materially from those set forth in or implied by
forward-looking statements. These risks and uncertainties include
but are not limited to: national and local economic conditions,
including the possibility of a prolonged recession; 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 investment; 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 related developments; the Company’s ability to achieve
the expected benefits from acquisitions, including integrating and
preserving the goodwill of the acquired companies; the Company’s
ability to sell its properties when desired and on profitable
terms; 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 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 to maintain or increase
occupancy levels at, and rental income from, the senior housing
segment; the Company’s ability to realize the benefits of its
mezzanine investments; 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; 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; the
Company’s ability and willingness to maintain its qualification as
a REIT; 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
June 30, December 31, 2009 2008
Assets (Unaudited)
Real estate: Buildings and improvements $ 7,796,873 $ 7,752,714
Development costs and construction in progress 255,565 224,337 Land
1,550,490 1,550,219 Accumulated depreciation and amortization
(940,544 ) (820,441 ) Net real estate
8,662,384 8,706,829 Net investment in direct
financing leases 648,864 648,234 Loans receivable, net 1,078,418
1,076,392 Investments in and advances to unconsolidated joint
ventures 264,346 272,929 Accounts receivable, net of allowance of
$17,929 and $18,413, respectively 29,535 34,211 Cash and cash
equivalents 49,484 57,562 Restricted cash 32,351 35,078 Intangible
assets, net 433,874 505,986 Real estate held for sale, net — 19,799
Other assets, net 586,594 492,806 Total assets
$ 11,785,850 $ 11,849,826
Liabilities and Equity Bank
line of credit $ 100,000 $ 150,000 Term loan 200,000 200,000 Bridge
loan — 320,000 Senior unsecured notes 3,518,147 3,523,513 Mortgage
debt 1,592,712 1,641,734 Other debt 98,984 102,209 Intangible
liabilities, net 215,571 232,654 Accounts payable and accrued
liabilities 197,295 211,691 Deferred revenue 71,716
60,185 Total liabilities 5,994,425 6,441,986
Commitments and contingencies Preferred stock, $1.00 par
value: 50,000,000 shares authorized; 11,820,000 shares issued and
outstanding, liquidation preference of $25.00 per share 285,173
285,173 Common stock, $1.00 par value: 750,000,000 shares
authorized 275,253,104 and 253,601,454 shares issued and
outstanding, respectively 275,253 253,601 Additional paid-in
capital 5,298,213 4,873,727 Cumulative dividends in excess of
earnings (228,424 ) (130,068 ) Accumulated other comprehensive loss
(18,819 ) (81,162 ) Total stockholders’ equity
5,611,396 5,201,271 Joint venture partners 8,278 12,912
Non-managing member unitholders 171,751 193,657 Total
noncontrolling interests 180,029 206,569 Total
equity 5,791,425 5,407,840 Total liabilities
and equity $ 11,785,850 $ 11,849,826
HCP, Inc.
Consolidated Statements of
Income
In thousands, except per share
data
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2009 2008 2009 2008
Revenues: Rental and related revenues $ 231,728 $ 213,021 $
445,316 $ 419,926 Tenant recoveries 21,035 20,168 44,699 41,616
Income from direct financing leases 13,204 14,129 26,129 29,103
Investment management fee income 1,369 1,457
2,807 2,924
Total revenues
267,336 248,775 518,951 493,569
Costs and expenses: Depreciation and amortization 79,606
77,861 160,143 155,493 Operating 45,205 46,452 92,881 94,673
General and administrative 20,932 18,732 39,923 39,177 Impairments
5,906 1,574 5,906 1,574 Total costs and
expenses 151,649 144,619 298,853
290,917
Other income (expense): Interest and other
income, net 28,732 30,739 53,065 66,061 Interest expense
(75,340 ) (85,446 ) (152,014 ) (181,709 )
Total other income (expense) (46,608 ) (54,707 )
(98,949 ) (115,648 )
Income before income
taxes and equity income from unconsolidated joint ventures
69,079 49,449 121,149 87,004 Income taxes (841 ) (1,274 ) (1,756 )
(3,517 ) Equity income from unconsolidated joint ventures
1,127 1,221 665 2,509
Income from
continuing operations 69,365 49,396
120,058 85,996
Discontinued operations: Income
before gain on sales of real estate, net of income taxes 1,273
6,320 1,932 15,710 Impairments — (8,141 ) — (8,141 ) Gain on sales
of real estate, net of income taxes 30,540 190,505
31,897 200,643
Total discontinued operations
31,813 188,684 33,829 208,212
Net income 101,178 238,080 153,887 294,208 Noncontrolling
interests’ and participating securities’ share in earnings (4,111 )
(6,907 ) (8,252 ) (12,913 ) Preferred stock dividends (5,283
) (5,283 ) (10,566 ) (10,566 )
Net
income applicable to common shares $ 91,784 $ 225,890 $ 135,069
$ 270,729
Basic earnings per common share: Continuing
operations $ 0.23 $ 0.16 $ 0.39 $ 0.28 Discontinued operations
0.12 0.80 0.13 0.92 Net income
applicable to common shares $ 0.35 $ 0.96 $ 0.52 $ 1.20
Diluted earnings per common share: Continuing operations $
0.23 $ 0.16 $ 0.39 $ 0.28 Discontinued operations 0.12
0.80 0.13 0.91 Net income applicable to common
shares $ 0.35 $ 0.96 $ 0.52 $ 1.19
Weighted average
shares used to calculate earnings per common share: Basic
265,422 235,117 259,412 225,945
Diluted 265,542 236,099 259,516 226,745
HCP, Inc.
Consolidated Statements of Cash
Flows
(In thousands)
(Unaudited)
Six Months Ended
June 30,
2009 2008
Cash flows from
operating activities: Net income $ 153,887 $ 294,208
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 160,143
155,493 Discontinued operations 84 6,553 Amortization of above and
below market lease intangibles, net (10,980 ) (4,029 ) Stock-based
compensation 7,537 7,485 Amortization of debt premiums, discounts
and issuance costs, net 5,455 6,162 Straight-line rents (25,759 )
(19,533 ) Interest accretion (11,567 ) (13,026 ) Deferred rental
revenue 7,890 13,279 Equity income from unconsolidated joint
ventures (665 ) (2,509 ) Distributions of earnings from
unconsolidated joint ventures 2,589 2,073 Gain on sales of real
estate (31,897 ) (200,643 ) Marketable securities (gains) losses,
net (293 ) 2,782 Derivative losses, net 154 2,360 Impairments 5,906
9,715 Changes in: Accounts receivable 4,676 12,972 Other assets
(7,594 ) 5,399 Accounts payable and accrued liabilities (9,469 )
(6,047 )
Net cash provided by operating
activities
250,097 272,694
Cash flows from investing activities:
Acquisitions and development of real estate (39,319 ) (72,884 )
Lease commissions and tenant and capital improvements (18,826 )
(32,359 ) Proceeds from sales of real estate, net 52,281 512,883
Contributions to unconsolidated joint ventures — (2,826 )
Distributions in excess of earnings from unconsolidated joint
ventures 4,428 6,182 Proceeds from the sale of marketable
securities 4,800 10,700 Proceeds from the sales of interests in
unconsolidated joint ventures — 2,855 Principal repayments on loans
receivable and direct financing leases 4,727 2,835 Investments in
loans receivable (16 ) (2,190 ) Decrease in restricted cash 2,727
4,040 Net cash provided by investing activities 10,802 429,236
Cash flows from financing activities: Net repayments under
bank line of credit (50,000 ) (951,700 ) Repayments of bridge loan
(320,000 ) (200,000 ) Repayments of mortgage debt (51,060 ) (29,945
) Issuance of mortgage debt — 258,726 Repurchase of senior
unsecured notes (7,735 ) — Settlement of cash flow hedge — 5,180
Debt issuance costs — (5,784 ) Repurchase of common stock (2,181 )
— Net proceeds from the issuance of common stock and exercise of
options 423,634 572,973 Dividends paid on common and preferred
stock and participating securities (244,698 ) (217,019 ) Purchase
of noncontrolling interests (9,097 ) — Distributions to
noncontrolling interests (7,840 ) (13,841 ) Net cash used in
financing activities (268,977 ) (581,410 ) Net increase (decrease)
in cash and cash equivalents (8,078 ) 120,520 Cash and cash
equivalents, beginning of period 57,562 96,269 Cash and cash
equivalents, end of period $ 49,484 $ 216,789
HCP, Inc.
Funds From Operations
Information
In thousands, except per share
data
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2009 2008 (1) 2009 2008 (1)
Net income
applicable to common shares $ 91,784 $ 225,890 $ 135,069 $
270,729 Depreciation and amortization of real estate, in-place
lease and other intangibles: Continuing operations 79,606 77,861
160,143 155,493 Discontinued operations 23 1,827 84 6,553 Gain on
sales of real estate (30,540 ) (190,505 ) (31,897 ) (200,643 )
Equity income from unconsolidated joint ventures (1,127 ) (1,221 )
(665 ) (2,509 ) FFO from unconsolidated joint ventures 6,940 5,108
12,571 11,728 Noncontrolling interests’ and participating
securities’ share in earnings 4,111 6,907 8,252 12,913
Noncontrolling interests’ and participating securities’ share in
FFO (4,703 ) (6,756 ) (9,497 ) (13,789
) Funds from operations applicable to common shares (2) $ 146,094 $
119,111 $ 274,060 $ 240,475 Distributions on convertible
units $ 2,941 $ 2,398 $ 4,561 $ 7,163
Diluted funds from
operations applicable to common shares $ 149,035 $ 121,509 $
278,621 $ 247,638 Basic funds from operations per common
share (2) $ 0.55 $ 0.51 $ 1.06 $ 1.06 Diluted funds from
operations per common share (2) $ 0.55 $ 0.50 $ 1.05 $ 1.06
Weighted average shares used to calculate diluted funds from
operations per common share 271,457 241,314
264,243 234,112
Impact of merger-related charges
and impairments: Merger-related charges (3) $ – $ 1,141 $ – $
2,330 Impairments 5,906 9,715 5,906
9,715 $ 5,906 $ 10,856 $ 5,906 $ 12,045 Per common share impact of
impairments and merger-related charges on diluted funds from
operations $ 0.02 $ 0.05 $ 0.03 $ 0.05
___________________________________________________
(1)
Presentation and certain
computational changes have been made for the adoption of FSP EITF
03-6-1, Determining Whether Instruments Granted in Share Based
Payment Transactions Are Participating Securities, to compute
earnings per share and funds from operations per share under the
two-class method.
(2)
The Company believes funds from operations applicable to common
shares, diluted funds from operations applicable to common shares
and basic and diluted funds from operations per common share are
important supplemental measures of operating performance for a real
estate investment trust. Because the historical cost accounting
convention used for real estate assets requires 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 real estate investment trust that uses historical cost
accounting for depreciation could be less informative. The term
funds from operations (“FFO”) was designed by the real estate
investment trust 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),
excluding gains or losses from real estate dispositions, plus real
estate 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 in accordance with U.S. generally accepted
accounting principles, is not necessarily indicative of cash
available to fund cash needs and should not be considered an
alternative to net income. The Company’s computation of FFO may not
be comparable to FFO reported by other real estate investment
trusts 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 the Company.
(3)
Merger-related charges in the periods ended June 30, 2008 include
the amortization of fees associated with our acquisition financing
for Slough Estates USA Inc. (“SEUSA”), as well as other SEUSA
integration costs.
HCP, Inc.
Projected Funds From
Operations (1)
(Unaudited)
PROJECTED FUTURE OPERATIONS (Full Year 2009): 2009
Low High
Diluted
earnings per common share $ 0.98 $ 1.04 Gain on sales of real
estate (0.12 ) (0.12 ) Real estate depreciation and amortization
1.19 1.19 Joint venture adjustments 0.08 0.08
Diluted funds from operations per common share
2.13 2.19 Impairments 0.02 0.02
Diluted funds from operations per common share before
impairments $ 2.15 $ 2.21
________________________________________
(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 activities, property dispositions and the
earnings impact of the events referenced in this release. Expect as
otherwise noted, these estimates do not reflect the potential
impact of future acquisitions, impairments, the bankruptcy or
insolvency of the Company’s operators, lessees, borrowers or other
obligors, the effect of any restructuring of the Company’s
contractual relationships with such entities, realized gains or
losses on marketable securities, ineffectiveness related to our
cash flow hedges, offerings of debt or equity securities or
existing and future litigation matters. By definition, FFO does not
include real estate-related depreciation and amortization or gains
and losses associated with real estate disposition activities, but
does include impairments. There can be no assurance that the
Company's 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.
HCP, Inc.
Reconciliation of Consolidated
Financial Leverage to Total Financial Leverage (“Financial
Leverage”)
In thousands
(Unaudited)
June 30, December 31, 2009 2008
Total Gross Assets:
Consolidated total assets $ 11,785,850 $ 11,849,826 Investments in
and advances to unconsolidated joint ventures (264,346 ) (272,929
)
Accumulated depreciation and amortization 1,123,709 994,426
Accumulated depreciation and amortization from assets held for sale
— 24,257 Consolidated Gross
Assets $ 12,645,213 $ 12,595,580 HCP’s share of the Investment
Management Platform (“IMP”) total assets 553,071 561,397 HCP’s
share of the IMP accumulated depreciation and amortization
55,760 46,629 Total Gross Assets $ 13,254,044
$ 13,203,606
Total Debt: Bank line of credit $ 100,000 $
150,000 Bridge and term loans 200,000 520,000 Senior unsecured
notes 3,518,147 3,523,513 Mortgage debt 1,592,712 1,641,734 Other
debt 98,984 102,209 Consolidated Debt $
5,509,843 $ 5,937,456 HCP’s share of the IMP debt 343,949
346,470 Total Debt $ 5,853,792 $
6,283,926
Consolidated Debt/Consolidated Gross
Assets 44 % 47 %
Financial Leverage 44 %
48 %
Reconciliation of Adjusted
Fixed Charge Coverage
(Unaudited)
Three Months Ended June 30, 2009 2008
Net
income $ 101,178 $ 238,080 Interest expense: Continuing
operations 75,340 85,446 Discontinued operations — 140 Income
taxes: Continuing operations 841 1,274 Discontinued operations 130
— Depreciation and amortization of real estate, in-place lease and
other intangibles: Continuing operations 79,606 77,861 Discontinued
operations 23 1,827 Equity income from unconsolidated joint
ventures (1,127 ) (1,221 ) HCP’s share of EBITDA from the IMP
10,603 10,624 Other joint venture adjustments 581 611
EBITDA $ 267,175 $ 414,642 Impairments 5,906 9,715 Gain on
sales of real estate (30,540 ) (190,505 )
Adjusted
EBITDA $ 242,541 $ 233,852 Interest expense: Continuing
operations 75,340 85,446 Discontinued operations — 140 HCP’s share
of interest expense from the IMP 5,071 5,153 Capitalized interest
6,327 7,538 Preferred stock dividends 5,283 5,283
Fixed charges $ 92,021 $ 103,560
Adjusted fixed charge
coverage 2.6x 2.3x
HCP, Inc.
Reporting Definitions
Adjusted Fixed Charge Coverage. Adjusted EBITDA divided
by Fixed Charges. The Company uses Adjusted Fixed Charge Coverage,
a non-GAAP financial measure, as a measure of liquidity. The
Company believes Adjusted Fixed Charge Coverage provides investors,
particularly fixed income investors, relevant and useful
information because it measures the Company’s ability to meet its
interest payments on outstanding debt and pay dividends to its
preferred stockholders. The Company’s various debt agreements
contain covenants that require the Company to maintain ratios
similar to Adjusted Fixed Charge Coverage and credit rating
agencies utilize similar ratios in evaluating and determining the
credit rating on certain debt instruments of the Company. However,
since this ratio is derived from Adjusted EBITDA and Fixed Charges,
its usefulness is limited by the same factors that limit the
usefulness of Adjusted EBITDA and Fixed Charges. Further, the
Company’s computation of Adjusted Fixed Charge Coverage may not be
comparable to similar fixed charge coverage ratios reported by
other companies.
Consolidated Debt represents the carrying amount of bank
line of credit, bridge and term loans, senior unsecured notes,
mortgage debt and other debt as reported in the Company’s
consolidated financial statements.
Consolidated Gross Assets represents the carrying amount
of total assets, excluding investments in and advances to
unconsolidated joint ventures, after adding back accumulated
depreciation and amortization, as reported in the Company’s
consolidated financial statements.
Consolidated Secured Debt represents mortgage debt
secured by real estate as reported in the Company’s consolidated
financial statements.
EBITDA and Adjusted EBITDA represents the real estate
industry’s earnings before interest, taxes, depreciation and
amortization (“EBITDA”), a non-GAAP financial measure, as a measure
of both operating performance and liquidity. Adjusted EBITDA is
calculated as EBITDA excluding impairments and gains or losses from
real estate dispositions. The Company uses EBITDA and Adjusted
EBITDA to measure both its operating performance and liquidity. The
Company considers Adjusted EBITDA to provide investors relevant and
useful information because it permits investors to view income from
its operations on an unleveraged basis before the effects of taxes,
non-cash depreciation and amortization, impairments and gains or
losses from real estate dispositions. By excluding interest
expense, Adjusted EBITDA allows investors to measure the Company’s
operating performance independent of its capital structure and
indebtedness and, therefore, allows for a more meaningful
comparison of its operating performance between quarters as well as
annual periods and to compare its operating performance to that of
other companies, both in the real estate industry and in other
industries. As a liquidity measure, the Company believes that
EBITDA and Adjusted EBITDA help investors analyze the Company’s
ability to meet its interest payments on outstanding debt and to
make preferred dividend payments. The Company believes investors
should consider EBITDA and Adjusted EBITDA, in conjunction with net
income (the primary measure of the Company’s performance) and the
other required GAAP measures of its performance and liquidity, to
improve their understanding of the Company’s operating results and
liquidity, and to make more meaningful comparisons of its
performance between periods and as against other companies. EBITDA
and Adjusted EBITDA have limitations as analytical tools and should
be used in conjunction with the Company’s required GAAP
presentations. EBITDA and Adjusted EBITDA do not reflect the
Company’s historical cash expenditures or future cash requirements
for capital expenditures or contractual commitments. While Adjusted
EBITDA is a relevant and widely used measure of operating
performance and liquidity, it does not represent net income or cash
flow from operations as defined by GAAP and it should not be
considered as an alternative to those indicators in evaluating
operating performance or liquidity. Further, the Company’s
computation of EBITDA and Adjusted EBITDA may not be comparable to
similar measures reported by other companies.
Financial Leverage represents Total Debt divided by Total
Gross Assets. The Company believes that its Financial Leverage is a
meaningful supplemental measure of its financial position, which
enables both management and investors to analyze its leverage and
to compare its leverage to that of other companies. The Company
believes that the ratio of consolidated debt to consolidated gross
assets is the most directly comparable U.S. generally accepted
accounting principles (“GAAP”) measure to Financial Leverage. The
Company’s computation of its financial leverage may not be
identical to the computations of financial leverage reported by
other companies. The Company’s share of total debt is not intended
to reflect its actual liability or ability to access assets should
there be a default under any or all of such loans or a liquidation
of the joint ventures.
Investment Management Platform (“IMP”) includes the
following unconsolidated joint ventures: (i) HCP Life Science, (ii)
HCP Ventures II, (iii) HCP Ventures III, LLC and (iv) HCP Ventures
IV, LLC.
Total Debt represents Consolidated Debt plus the
Company’s pro rata share of debt from the Investment Management
Platform.
Total Gross Assets represents the Consolidated Gross
Assets plus the Company’s pro rata share of total assets from the
Investment Management Platform, after adding back accumulated
depreciation and amortization.
HCP (NYSE:HCP)
Historical Stock Chart
From Jun 2024 to Jul 2024
HCP (NYSE:HCP)
Historical Stock Chart
From Jul 2023 to Jul 2024