Aided by growth in revenues,
) - a healthcare real estate investment trust (REIT) - reported
third quarter 2013 adjusted FFO (funds from operations) per share
of 79 cents, 2 cents ahead of the Zacks Consensus Estimate and 10
cents above the prior-year quarter figure.
HEALTH CR REIT (HCN): Free Stock Analysis
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HCP reported total revenue of nearly $544.0 million during the
quarter, reflecting an increase of 16.2% from the year-ago
period. Total revenue also exceeded the Zacks Consensus Estimate
of $514 million.
Adjusted same-property net operating income (NOI) of the company
reached $359.8 million in the quarter depicting growth of 3.7%
year over year.
Notably, the company received £129 million ($202 million) from
the par payoff of its Barchester debt investments. This led to an
income of 5 cents per share. Including severance-related charges
for the termination of the company's former Chairman, Chief
Executive Officer and President on Oct 2, 2013 as well as
impairments in the prior-year quarter, FFO came in at 73 cents
per share, up from 67 cents reported in the prior-year period.
During the quarter, HCP funded $55 million for construction and
other capital projects, mainly in its life science, medical
office and senior housing divisions. Moreover, in July, the
company extended its ties with life science tenant,
Roche/Genentech, in South San Francisco, CA. In particular, HCP
executed a new five-year lease for a 63,000 sq. ft. building,
leading to a total of 857,000 sq. ft. in leasing.
In September, HCP bought a 60-bed inpatient rehabilitation
facility from Kindred Healthcare in Webster, Texas that was
valued at $15 million. As part of the exchange, the company sold
a 62-bed hospital in Greenfield, WI. The move resulted in a gain
of $8 million and helped improve the master lease coverage.
Following the quarter end, HCP established its ties with a
genomic diagnostics tenant, CardioDx, at its Redwood City,
California life science campus, through the execution of an
eight-year, 69,000 sq. ft. new lease deal. Notably, the lease
with CardioDx will anchor around 75% of two redevelopment
buildings that were repositioned in 2011.
The company also disclosed the resignation of James F. Flaherty
from its board of directors on Oct 28.
At the end of the quarter, HCP had cash and cash equivalents of
$49.4 million, down from $53.1 million at the prior-quarter end.
HCP expects adjusted FFO to range between $2.97 and $3.03 per
share for full-year 2013. The mid-point of the estimate reflects
a rise of 8% over the 2012 comparable figure. The estimates
exclude the impact of any future acquisitions or dispositions.
On Oct 24, 2013, HCP announced a quarterly common stock cash
dividend of 52.5 cents per share. The dividend will be paid on
Nov 19, 2013 to stockholders of record as of the close of
business on Nov 4.
We believe that going forward, HCP is well poised for a strong
growth trajectory given its well-balanced, diversified portfolio,
opportunistic acquisitions, aging population, rising healthcare
expenses, decent balance sheet, and improving credit metrics.
However, the company's dependence on a limited number of
operators and tenants for a large share of its revenues is a
concern. Also, cut-throat competition remains a deterrent.
HCP currently carries a Zacks Rank #3 (Hold).
Another healthcare REIT,
), reported third-quarter 2013 normalized funds from operations
(FFO) per share of $1.04, which exceeded the Zacks Consensus
Estimate of $1.02 by nearly 2% and the year-ago quarter figure by
Results were driven by strategic investments made this year and
last year. In particular, the company experienced an uptick in
net operating income in its private pay seniors housing
communities, triple-net lease portfolio and medical office
We now look forward to the results of
Healthcare Realty Trust Inc.
) (scheduled to report on Oct 30) and
Health Care REIT Inc.
) (Nov 5).
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.