Real estate investment trust (REIT) - HCP Inc.
( HCP ) reported
first quarter 2013 adjusted FFO (funds from operations) per share
of 74 cents, 2 cents ahead of the Zacks Consensus Estimate of 72
cents and 7 cents above the prior-year quarter figure of 67 cents.
The company's operating results reflect a positive impact of 2
cents per share for gain on sales of marketable securities.
Including non-recurring items, HCP's FFO stood at 74 cents per
share, well ahead of 64 cents reported in the year-ago
HCP reported total revenue of $516.3 million during the quarter,
reflecting an increase of 13.3% from the year-ago period. However,
total revenue fell short of the Zacks Consensus Estimate of $522.0
Adjusted same-property net operating income (NOI) of the company
reached $355.5 million in the quarter, 1.1% ahead of $351.4 million
reported in the year-ago period. Excluding one-time items, NOI
growth was 2.9% and comprised mainly of a rent payment from Google
in the prior-year quarter. As of Mar 31, 2013, HCP had $17.4
billion of its properties under triple-net leases, representing 85%
of its owned portfolio.
Investments during 1Q
During the quarter, HCP made investments worth $96 million. This
included $38 million to acquire the 4 remaining senior housing
facilities from its prior disclosed The Blackstone Group
LP ( BX )
joint venture acquisition and $58 million to finance development
and other capital projects, mainly in its life science, medical
office and senior housing segments.
During the quarter, HCP placed into service a 70,000 square foot
building in Mountain View, Calif. It is 100% leased to
At the end of the quarter, HCP had cash and cash equivalents of
$47.5 million compared with $247.7 million at the prior-quarter
Encouragingly, HCP has increased its full-year 2013 guidance. The
company now expects FFO in the range of $2.94 - $3.00 per share
compared to the prior range of $2.92 - $2.98 per share. The
estimates exclude the impact of any future acquisitions or
On Apr 25, 2013, HCP announced a quarterly common stock cash
dividend of 52.5 cents per share. The dividend will be paid on May
21, 2013 to stockholders of record as of the close of business on
May 6. Notably, the company had made a hike of 5% in its quarterly
cash dividend rate in January this year.
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
The healthcare sector provides a steady source of income that
insulates the company from short-term market volatility. Yet, a
large portion of its revenue originates from a few tenants, which
exposes it to concentration risk and undermines its growth
potential to some extent.
HCP currently carries a Zacks Rank #3 (Hold). However, other REIT
stock that are performing better and deserve a look are
Simon Property Group Inc. ( SPG ) and
Acadia Realty Trust ( AKR ), both carrying a
Zacks Rank #2 (Buy).
Note: 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.ACADIA RLTY TR (AKR): Free Stock Analysis
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