HCP Marginally Misses 4Q Estimates - Analyst Blog
February 14 2012 - 10:40AM
Zacks
HCP Inc. (HCP), a health care real estate
investment trust (REIT), reported fourth quarter 2011 FFO (funds
from operations) of $150.6 million or 37 cents per share, compared
with $202.6 million or 62 cents in the year-earlier quarter. Funds
from operations, a widely used metric to gauge the performance of
REITs, is obtained after adding depreciation and amortization and
other non-cash expenses to net income.
Excluding non-recurring items, FFO for the reported quarter was
$275.6 million or 67 cents per share compared to $206.9 million or
64 cents in the year-ago quarter. The fourth quarter 2011 recurring
FFO marginally missed the Zacks Consensus Estimate by a penny.
For full year 2011, HCP reported FFO of $877.9 million or $2.19
per share, compared with $690.6 million or $2.25 in the previous
year. Recurring FFO for the reported fiscal was $1.0 billion or
$2.69 per share compared to $683.1 million or $2.23 in 2010. Fiscal
2011 recurring FFO exceeded the Zacks Consensus Estimate by 14
cents.
HCP reported total revenues of $461.6 million during the quarter
compared with $341.0 million in the year-ago period. Total revenues
for the reported quarter were ahead of the Zacks Consensus Estimate
of $459.0 million.
For full year 2011, HCP reported total revenues of $1.7 billion
compared with $1.3 billion in the year-ago period. Total revenues
for the reported fiscal were also ahead of the Zacks Consensus
Estimate of $1.6 billion.
During the reported quarter, HCP invested about $40 million
worth of capital to fund development and other capital projects,
primarily in the life science and medical office segments. The
company also executed 2 loan commitments to fund $35 million worth
of senior housing developments. In addition, HCP sold 3 senior
housing facilities for $19 million during the quarter, recognizing
a gain of $3.1 million.
During fourth quarter 2011, HCP entered into an agreement with
Ventas, Inc. (VTR) to settle all remaining claims
relating to Ventas' litigation against HCP. The litigation relates
to the lawsuit filed by Ventas regarding the ‘Tortious
Interference’ by HCP with business expectation arising out of the
former’s acquisition of Sunrise Senior Living Inc.
(SRZ) in April 2007.
‘Tortious Interference’ under Kentucky Law relates to
intentional interference with prospective contractual relation for
causing pecuniary harm by preventing another from acquiring or
continuing the prospective relation.
The conflict originated when Sunrise decided to conduct a
confidential auction of its assets, wherein both Ventas and HCP
were selected for final bids for the purchase. However,
negotiations with HCP fell flat in the final rounds and Ventas
ultimately managed to acquire the auctioned assets.
Subsequent to the quarter-end, the company issued $450 million
of 3.75% senior unsecured notes, scheduled to mature in 2019. The
transaction generated net proceeds of approximately $443.7 million,
which were utilized to repay the debt under its revolving credit
facility and for general corporate purposes.
For the reported quarter, adjusted same-property net operating
income (NOI) of the company was $216.5 million compared with $211.7
million in the year-ago period. For full year 2011, adjusted
same-property NOI was $837.6 million compared with $805.6 million
in 2010.
HCP declared a quarterly cash dividend of 50 cents per share for
first quarter 2012, which equates to an annualized distribution
rate of $2.00 for 2012, compared to $1.92 for 2011 – an increase of
4.2%. At year-end 2011, the company had cash and cash equivalents
of $33.5 million and total debt of approximately $8.4 billion.
For full year 2012, HCP expects FFO in the range of $2.70 to
$2.76 per share. We maintain our Neutral rating on the stock, which
presently has a Zacks #3 Rank translating into a short-term Hold
rating.
HCP INC (HCP): Free Stock Analysis Report
SUNRISE SENIOR (SRZ): Free Stock Analysis Report
VENTAS INC (VTR): Free Stock Analysis Report
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