Real estate investment trust (REIT) -
) reported fourth quarter 2012 adjusted FFO (funds from
operations) per share of 72 cents, a penny ahead of the Zacks
Consensus Estimate of 71 cents and a nickel above the prior-year
quarter figure of 67 cents. The results were driven by
better-than-expected growth in revenue.
For full year 2012, adjusted FFO came in at $2.78 per share, a
cent above the Zacks Consensus Estimate of $2.77 per share and
exceeded the prior-year figure of $2.69 per share.
Including non-recurring items, HCP's FFO stood at 71 cents per
share, well ahead of 37 cents reported in the year-ago period.
For full year 2012, FFO per share came in at $2.72 per share and
surpassed the year-ago figure of $2.19 per share.
HCP reported total revenue of $508.5 million during the quarter,
reflecting an increase of 11.0% from the year-ago period. Total
revenue also exceeded the Zacks Consensus Estimate of $500.0
million. For full year 2012, total revenue stood at $1.9 billion,
up 11.0% year over year and marginally ahead of the Zacks
Consensus Estimate of $1.89 billion.
Adjusted same-property net operating income (NOI) of the company
reached $363.9 million in the quarter, 4.3% ahead of $348.8
million reported in the year-ago period. For full year 2012,
adjusted same-property NOI also increased 4.2% from a year ago to
Senior Housing Portfolio acquisition
During the reported quarter, HCP acquired 129 senior housing
communities for $1.7 billion .The properties were purchased from
a joint venture between
) and an affiliate company of
The Blackstone Group LP
). Of the 129 communities, 95 were stabilized and 34 were in
Spread across a wide geographical area spanning 29 states, the
acquired portfolio includes a diversified mix of healthcare
facilities totaling 10,077 units. By segment, the properties
comprise a mix of 61% for assisted living, 25% for independent
living, 13% for memory care and 1% for skilled nursing.
Furthermore, the company is assessing the acquisition of up to 4
additional communities related to this transaction.
Emeritus entered into a new triple-net, master lease for the 129
properties. The Master Lease offers aggregate contractual rent in
the first year, which reflects a 6.1% lease yield. In accordance
with the acquisition, Emeritus purchased 9 communities from the
Blackstone JV, for a secured debt financing of $52 million.
Other Investments during 4Q
During the quarter, HCP made investments of $141 million. This
included $62 million for purchasing two MOBs (medical office
buildings) of its prior announced Boyer MOB acquisition and $79
million to finance development and other capital projects, mainly
in its life science, medical office and senior housing segments.
Moreover, the company sold two senior housing facilities for $111
million, a parcel of land in its life science segment for $18
million, and a skilled nursing facility for $15 million. HCP also
received $38 million in principal payments from its senior
secured loan to Delphis.
At the end of the quarter, HCP had cash and cash equivalents of
In an effort to finance the $1.7 billion Senior Housing Portfolio
acquisition, the company completed an equity offering of 22
million shares and generated proceeds of $979 million during the
Moreover, during the quarter, the company issued $800 million of
2.625% senior unsecured notes scheduled to mature in 2020. The
transaction generated net proceeds of approximately $792.8
million. The company expects to use a part of the proceeds to
repay its notes that mature in Feb 2013.
For full-year 2013, HCP expects FFO of $2.92 - $2.98 per share,
excluding the impact of any future acquisitions.
On Jan 24, 2013, HCP announced a 5% hike in its quarterly cash
dividend rate. The company will now pay a dividend of 52.5 cents
per share compared with 50 cents paid in the prior quarter. The
increased dividend will be paid on Feb 19, 2013 to stockholders
of record on Feb 4.
We are encouraged with the better-than-expected performance of
HCP. This REIT has one of the most diversified portfolios in the
healthcare sector and exposure to all types of facilities.
Moreover, the Senior Housing portfolio closure during the fourth
quarter boosted the company's portfolio diversification activity.
The healthcare sector provides a steady source of income that
insulates the company from short-term market volatility. Also,
the recent dividend hike boosts investors' confidence on the
HCP currently retains a Zacks Rank #2 (Buy). Another REIT stock
that is performing better and is worth a look is
Terreno Realty Corp.
), carrying a Zacks Rank #1 (Strong Buy).
FFO, 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.
BLACKSTONE GRP (BX): Free Stock Analysis
EMERITUS CORP (ESC): Free Stock Analysis
HCP INC (HCP): Free Stock Analysis Report
TERRENO REALTY (TRNO): Free Stock Analysis
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