HCP Inc.’s HCP second-quarter 2019 funds from operations (FFO) as adjusted of 44 cents per share surpassed the Zacks Consensus Estimate of 43 cents. Comparable FFO as adjusted in the prior-year quarter was 47 cents per share.
Results were supported by decent performance of the company’s life-science and medical-office segment. However, decline in rental and related revenues unfavorably impacted top-line growth to some extent.
This healthcare real estate investment trust (REIT) generated revenues of $491.6 million, surpassing the Zacks Consensus Estimate of $447 million. Further, the figure was higher than the year-ago number of $469.6 million.
Behind the Headlines
HCP witnessed 3.5% year-over-year rise in the three-month cash SPP net operating income (NOI). There was 6.1% growth in life-science cash NOI, 3.8% rise in the medical office segment, 2.5% advancement in other non-reportable segments and 1.4% increase in senior-housing portfolio cash NOI.
During the second quarter, HCP completed the acquisition of nine recently-built senior housing communities for $445 million. The portfolio is concentrated primarily in Florida and operated by Discovery Senior Living.
During the June-end quarter, 15 senior housing communities, operated by Sunrise Senior Living, were converted from triple-net leases to RIDEA structures.
HCP had cash and cash equivalents of around $130.5 million as of Jun 30, 2019, up from $110.8 million recorded at the end of 2018.
HCP raised its 2019 FFO as adjusted guidance to $1.73-$1.77 per share from $1.70-$1.76 per share. The Zacks Consensus Estimate for the same is pegged at $1.74.
Furthermore, the company expects 2019 SPP cash NOI growth for total portfolio to be 2-3%.
HCP is expected to continue benefiting from a diversified portfolio, rising healthcare spending and aging population. Strategic investments, tie-ups and opportunistic investments would also drive decent cash flows.
Nevertheless, the company witnessed a decline in rental and related revenues in the second quarter compared with the prior-year quarter, which might hurt top-line growth, going forward. In fact, we identify stiff competition as a major hurdle for the company in the days ahead.
HCP, Inc. Price and EPS Surprise
HCP currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other REITs
Cousins Properties Incorporated CUZ reported second-quarter 2019 FFO per share (before TIER transaction costs) of 71 cents, missing the Zacks Consensus Estimate by a whisker. Nonetheless, the figure was higher than the prior-year quarter’s reported number of 60 cents.
Public Storage’s PSA second-quarter 2019 core FFO per share of $2.64 improved 2.7% from the prior-year figure of $2.57. The reported figure also surpassed the Zacks Consensus Estimate by a whisker.
Ventas, Inc. VTR reported second-quarter 2019 normalized FFO of 97 cents, beating the Zacks Consensus Estimate of 96 cents. However, the figure was lower than the year-ago number of $1.08.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Cousins Properties Incorporated (CUZ): Free Stock Analysis Report
Ventas, Inc. (VTR): Free Stock Analysis Report
HCP, Inc. (HCP): Free Stock Analysis Report
Public Storage (PSA): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.