HEALTHPEAK PROPERTIES, INC. IRVINE, Calif., Feb. 9, 2016 /PRNewswire/ --
FOURTH QUARTER 2015 AND RECENT HIGHLIGHTS
-- FFO as adjusted and FAD per share increased year-over-year by 1% to $0.80 and 2% to $0.67, respectively; FFO per share and EPS were ($0.99) and ($1.29), respectively (see "HCR ManorCare Update" on page 3)
-- Raised $1.1 billion from capital recycling and financing activities, including $600 million of 4.0% senior unsecured notes that paid down 36% of 2016 debt maturities
-- Completed $208 million of investment transactions
-- Leased 911,000 sq. ft. in our life science and medical office ("MOB") portfolios, bringing occupancy to 98.2% and 91.9%, respectively
-- Pre-leased half of Phase I of The Cove life science development, and commenced $185 million development of Phase II, adding two Class A life science buildings representing 230,000 sq. ft.
-- Jim Mercer retired from HCP as General Counsel on February 5, 2016; we thank Jim for his five years of contributions and commitment to HCP; named Troy McHenry as HCP's new General Counsel
-- Named NAREIT's 2015 Healthcare Leader in the Light Award winner for sustainability achievements
FULL YEAR 2015 HIGHLIGHTS
-- FFO as adjusted and FAD per share increased year-over-year by 4% to $3.16 and 6% to $2.72, respectively; FFO per share and EPS were ($0.02) and ($1.21), respectively
-- Completed $2.1 billion of accretive investments, including:
-- $1.1 billion in private pay senior housing, led by the $847 million acquisition of Chartwell's portfolio
-- $700 million expansion in our life science and MOB office platform, including a new $225 million institutional joint venture with Morgan Stanley owning an on-campus MOB portfolio, and $177 million Class A life science development of The Cove Phase I
-- $278 million increase in our international investments, expanding our U.K. care home portfolio
-- Raised $3 billion from financing and capital recycling activities, including $2.3 billion of debt at a blended rate of 3.5%
-- Selling 50 HCR ManorCare ("HCRMC") non-strategic assets with expected proceeds of $350 million (80% received to date)
-- Executed 3.2 million sq. ft. of leasing in our life science and MOB portfolios
-- Welcomed Justin Hutchens as Chief Investment Officer - Senior Housing and Care
-- Named to the Dow Jones Sustainability North America Index for the third consecutive year and the Dow Jones Sustainability World Index for the first time
2016 OUTLOOK AND DIVIDEND
-- Full year guidance, not including the impact from unannounced future transactions, for FFO per share of $2.74 - $2.80; FAD per share of $2.62 - $2.68; and EPS of $1.49 - $1.55
-- Full year guidance for Same Property Performance Cash Net Operating Income ("SPP Cash NOI") growth of 1.5% - 2.5%; excluding HCRMC, SPP Cash NOI growth of 2.3% - 3.3%, led by our life science portfolio
-- Increased quarterly cash dividend to $0.575 per share, which represents our 31(st) consecutive year with a dividend increase
-- HCP continues its representation as the first REIT included in the S&P 500 Dividend Aristocrats index
IRVINE, CA, February 9, 2016 - HCP (NYSE:HCP) announced results for the quarter and year ended December 31, 2015.
FOURTH QUARTER COMPARISON
Three Months Ended Three Months Ended Per Share
December 31, 2015 December 31, 2014
----------------- -----------------
(in thousands, except
per share amounts) Amount Per Share Amount Per Share Change
------ --------- ------ --------- ------
FFO $(458,678) $(0.99) $324,734 $0.70 $(1.69)
Other impairments,
net(1) 829,593 1.78 35,913 0.08 1.70
Transaction-related
items 3,959 0.01 4,269 0.01 -
Foreign currency
remeasurement losses 60 - - - -
--- --- --- --- ---
FFO as adjusted $374,934 $0.80 $364,916 $0.79 $0.01
======== ===== ======== ===== =====
FAD $313,588 $0.67 $304,963 $0.66 $0.01
======== ===== ======== ===== =====
Net (loss) income $(599,164) $(1.29) $196,145 $0.43 $(1.72)
========= ====== ======== ===== ======
________________________________________
(1) For the three months ended December 31, 2015, other impairments, net include impairment
charges of: (i) $817 million related to our HCRMC direct financing lease ("DFL") investments
and (ii) $19 million related to our equity investment in HCRMC, partially offset by
impairment recovery of $6 million related to a loan payoff in our hospital segment.
In addition to the items discussed above, operating results for the quarter ended December 31, 2015 included $0.01 per share of interest income from monetizing a senior housing development loan. Additionally, fourth quarter 2015 net loss included $0.03 per share of net gain on sales of real estate from HCP Ventures III and IV, which is reflected in equity income from unconsolidated joint ventures. Net income for the quarter ended December 31, 2014 included net gain on sales of real estate of $0.01 per share.
FULL YEAR COMPARISON
Year Ended Year Ended Per Share
December 31, 2015 December 31, 2014
----------------- -----------------
(in thousands, except
per share amounts) Amount Per Share Amount Per Share Change
------ --------- ------ --------- ------
FFO $(10,841) $(0.02) $1,381,634 $3.00 $(3.02)
Other impairments,
net(1) 1,446,800 3.11 35,913 0.08 3.03
Transaction-related
items 32,932 0.07 (18,856) (0.04) 0.11
Severance-related
charges 6,713 0.01 - - 0.01
Foreign currency
remeasurement gains (5,437) (0.01) - - (0.01)
------ ----- --- --- -----
FFO as adjusted(2) $1,470,167 $3.16 $1,398,691 $3.04 $0.12
========== ===== ========== ===== =====
FAD $1,261,849 $2.72 $1,178,822 $2.57 $0.15
========== ===== ========== ===== =====
Net (loss) income $(560,552) $(1.21) $919,796 $2.00 $(3.21)
========= ====== ======== ===== ======
________________________________________
(1) For the year ended December 31, 2015, other impairments, net include impairment charges of:
(i) $1.3 billion related to our HCRMC DFL investments, (ii) $112 million related to our Four
Seasons Notes and (iii) $46 million related to our equity investment in HCRMC, partially
offset by impairment recovery of $6 million related to a loan payoff in our hospital segment.
(2) See the "Funds From Operations" section of this release for additional information.
In addition to the items above, 2015 operating results included $0.04 per share of interest income from monetizing three senior housing development loans. Net (loss) income for the years ended December 31, 2015 and 2014 also included net gain on sales of real estate of $0.01 per share and $0.07 per share, respectively. Additionally, 2015 net loss included $0.03 per share of net gain on sales of real estate from HCP Ventures III and IV, which is reflected in equity income from unconsolidated joint ventures.
FFO, FFO as adjusted and FAD are supplemental non-GAAP financial measures that we believe are useful in evaluating the operating performance of real estate investment trusts. See the "Funds From Operations" and "Funds Available for Distribution" sections of this release for additional information regarding these non-GAAP financial measures.
HCR MANORCARE UPDATE
The post-acute/skilled nursing ("SNF") industry and HCRMC continued to experience a challenging operating environment in 2015, due to the ongoing change in reimbursement models which reduces rates and lowers census, the result of shorter lengths of stay. While HCRMC's operating performance was essentially in-line with expectations during the first half of 2015, performance declined during the second half of 2015. HCRMC's normalized Fixed Charge Coverage ("FCC") for the 12-month period ending December 31, 2015 was 1.07x, trending from 1.17x for the six-month period ended June 30, 2015, to 0.97x for the six-month period ended December 31, 2015. The decline in operating performance began in the third quarter 2015, with further deterioration in the fourth quarter 2015.
For the fourth quarter 2015, HCRMC reported normalized EBITDAR of $110 million, which decreased $36 million on a year-over-year basis compared to the fourth quarter 2014, and decreased $17 million sequentially compared to the third quarter 2015. The results were impacted by core operating performance weakness and unfavorable non-routine items discussed below. The level of performance was below expectations and uncharacteristic for the fourth quarter, which has historically been strong due in large part to increased census and the annual Medicare rate increases on October 1.
HCRMC ended 2015 with $125 million of cash and cash equivalents and continues to be current on its obligations under the amended master lease (the "Master Lease").
CORE OPERATING PERFORMANCE
Before the impact from non-routine items described below, HCRMC's fourth quarter EBITDAR was below its forecast, primarily due to the continued change in payor mix from traditional Medicare to Managed Care plans, which reduced reimbursement rates and lowered census. As a result, HCRMC reported a decline in its core SNF operating metrics (which excludes the 50 non-strategic disposition assets), with fourth quarter census decreasing 175 basis points from the prior year to 82.6%.
NON-ROUTINE ITEMS
As previously disclosed, HCRMC is in the process of exiting 50 non-strategic assets, of which 21 sales were completed in the fourth quarter and an additional 11 closed in the first quarter 2016. As such, disruption resulting from transitioning operations to new owners and closing costs led to additional underperformance from this pool of assets. EBITDAR losses from the sale of non-strategic assets totaled $11 million in the fourth quarter 2015, and $22 million for full year 2015. HCP continues to expect total proceeds of $350 million from the sales of the non-strategic assets, of which $280 million have closed to-date with the remaining $70 million expected to close in mid-2016.
In addition, HCRMC continues to defend against the Department of Justice ("DOJ") civil complaint previously disclosed in April 2015. HCRMC incurred legal and regulatory defense costs of $3 million during the fourth quarter 2015 and $9 million for the full year 2015. The outcome of the DOJ civil complaint remains uncertain, and HCRMC expects to incur additional legal and regulatory defense costs in 2016.
HCRMC 2016 FORECAST
HCRMC's 2016 forecast anticipates their normalized EBITDAR at $577 million before the temporary impact from the pending asset sales and legal and regulatory defense costs, which adjusted for the impact of these items is estimated to be $555 million. Furthermore, HCP reviewed sensitivities regarding certain key assumptions in HCRMC's forecast, which primarily affected census, to arrive at a potential range of projected outcomes for HCRMC's 2016 EBITDAR. HCP's forecast of HCRMC's 2016 EBITDAR ranges from $505 million to $555 million, resulting in a 2016 FCC range of 1.06x to 1.16x. HCP's estimated FCC range reflects the contractual rent under the Master Lease, including the 3.0% increase in April, and interest payments in 2016. HCP's sensitivities of HCRMC's 2016 performance reflect:
-- reduced growth outlook facing the broader post-acute/SNF industry and
HCRMC, from the challenge associated with the continued reduction in
revenue per admission related to the shift of patients from traditional
fee-for-service to managed care and shorter length of patient stays; and
-- HCRMC's performance deterioration in the fourth quarter 2015 (described
above), resulting in a lower starting point in January 2016.
HCP has engaged advisors and continues to work closely with HCRMC to jointly explore all opportunities that reduce our concentration, improve the credit quality and coverage of our Master Lease, and ensure HCRMC can continue to deliver high quality care and services.
ACCOUNTING UPDATE FOR HCRMC PORTFOLIO AND IMPAIRMENT CHARGE
As a result of HCRMC's fourth quarter performance deterioration and the related decline in its FCC, we placed our real estate portfolio operated by HCRMC on "Watch List" status at year end 2015, and changed our accounting treatment to recognize rental income on a cash basis beginning January 2016. As such, we will no longer recognize non-cash accretion income under the HCRMC DFLs, as reflected in our full year 2016 earnings and FFO guidance provided herein.
The reduced growth outlook for the broader post-acute/SNF industry indicates challenges to the improvement in HCRMC's financial performance over the next few years. At year end 2015, we assessed the value of our HCRMC real estate portfolio, including obtaining a third-party, independent valuation appraisal of our HCRMC post-acute/SNF and senior housing portfolio. We reduced the carrying value of our HCRMC DFL investments to $5.2 billion, which approximates its estimated market value at year end 2015, which resulted in an impairment charge of $817 million recorded in the fourth quarter 2015. We also recorded a fourth quarter impairment charge of $19 million related to our 9% equity investment in HCRMC OpCo.
FOURTH QUARTER 2015 HIGHLIGHTS
CAPITAL RECYCLING AND FINANCING ACTIVITIES
During the fourth quarter, we generated $1.1 billion from capital recycling and financing activities, led by the following:
-- We completed sales of 21 HCRMC non-strategic assets for $208 million.
-- In December, we sold a portfolio of 61 MOBs and three hospitals owned by
HCP Ventures III and IV for $634 million, generating net proceeds to HCP
of $45 million after debt repayments. Formed in 2006 and 2007,
respectively, HCP Ventures III and IV invested in an MOB portfolio split
evenly between on- and off-campus buildings.
-- As previously disclosed, we raised $110 million from creating a new
institutional joint venture with Morgan Stanley on our Memorial Hermann
on-campus portfolio in Houston, TX.
-- In December, we issued $600 million of 4.0% senior unsecured notes due
2022. The notes were priced at 99.577% of the principal amount with a
yield-to-maturity of 4.07%. Proceeds were used to repay our $500 million
3.75% senior unsecured notes due this month and to fund our investments.
Proceeds from capital recycling and other financing activities were primarily used to pay down our revolving line of credit, which was drawn to fund our 2015 investments.
INVESTMENT TRANSACTIONS
We completed $208 million of investment transactions during the fourth quarter, bringing our full year 2015 total investments to $2.1 billion, including:
-- $83 million acquisition of Edgewater Science and Technology Park, a
six-building life science portfolio representing 170,000 sq. ft.
Strategically located in South San Francisco, CA, the multi-tenant
campus was recently renovated and is currently 100% occupied; and
-- $57 million expansion (HCP's pro rata share) of our relationship with
Brookdale and MBK Senior Living, by acquiring four senior housing
communities valued at $103 million in aggregate.
LIFE SCIENCE AND MEDICAL OFFICE LEASING
During the fourth quarter, we completed 911,000 sq. ft. of leasing in our life science and medical office portfolios, consisting of 619,000 sq. ft. of renewals and 292,000 sq. ft. of new leases, which increased our full year 2015 leasing activity to 3.2 million sq. ft. Significant leasing transactions included:
-- 10-year lease with CytomX Therapeutics, Inc., an oncology-focused
biopharmaceutical company, for 76,000 sq. ft. at The Cove Phase I
development in South San Francisco, CA, scheduled to commence in the
fourth quarter 2016;
-- 7-year renewal and expansion for 41,000 sq. ft. in San Diego, CA for a
life science tenant; and
-- Two renewals averaging 9.5 years for 50,000 sq. ft. at MOBs in Kentucky
and Indiana.
In January, we executed a 5-year life science tenant renewal for 66,000 sq. ft. in Mountain View, CA.
We have pre-leased approximately 50% of The Cove Phase I, which consists of two buildings totaling up to 250,000 sq. ft., expected to be completed in the third quarter of 2016. In response to Phase I leasing success and continued strong demand from life science users in South San Francisco, we recently commenced the $185 million development The Cove Phase II, which adds two Class A buildings totaling up to 230,000 sq. ft. expected to be delivered by the third quarter of 2017. Visit our website for more information, including a link to see the development progress at www.hcpi.com/portfolio/life-science.
At December 31, 2015, our life science occupancy achieved its sixth consecutive quarterly all-time high at 98.2%, representing an increase of 300 basis points over prior year. Our medical office occupancy was 91.9%, representing an increase of 110 basis points over prior year.
SUSTAINABILITY LEADERSHIP
In November, HCP was named the 2015 Healthcare Leader in the Light Award winner by the National Association of Real Estate Investment Trusts ("NAREIT"). HCP has received a Leader in the Light award seven of the past nine years for producing significant, measurable results through our sustainability programs. More information about HCP's sustainability efforts can be found on our website at www.hcpi.com/sustainability.
DIVIDEND ARISTOCRAT
On January 28, 2016, our Board of Directors declared a quarterly cash dividend of $0.575 per common share. The dividend will be paid on February 23, 2016 to stockholders of record as of the close of business on February 8, 2016. HCP has increased its dividend for 31 consecutive years and is the first REIT included in the S&P 500 Dividend Aristocrats index.
FULL YEAR 2016 OUTLOOK
Estimates of FFO and EPS reflect recognizing income from our HCRMC investments on a cash basis beginning January 2016. The impact of removing non-cash HCRMC income to our FFO run-rate is approximately $150 million, or $0.32 per share (no impact to FAD or SPP Cash NOI).
For full year 2016, we expect: FFO per share to range between $2.74 and $2.80; FAD per share to range between $2.62 and $2.68; and EPS to range between $1.49 and $1.55. In addition, we expect 2016 SPP Cash NOI to increase between 1.5% and 2.5%. Excluding HCRMC, we expect 2016 SPP Cash NOI to increase between 2.3% and 3.3%. These estimates do not reflect the potential impact from unannounced future transactions. Refer to the "Projected Future Operations" and "Projected SPP Cash NOI" sections of this release for additional information regarding these estimates.
Full Year 2016 SPP Cash
NOI
-----------------------
Low High
--- ----
Senior housing 1.25% 2.25%
Senior housing RIDEA (69 properties) 3.0% 4.0%
Post-acute/skilled nursing (1.1%) (0.1%)
Life science 6.2% 7.2%
Medical office 1.9% 2.9%
Hospital 1.7% 2.7%
--- ---
SPP Cash NOI growth 1.5% 2.5%
SPP Cash NOI growth, excluding HCRMC portfolio 2.3% 3.3%
COMPANY INFORMATION
HCP has scheduled a conference call and webcast for Tuesday, February 9, 2016 at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) in order to present the Company's performance and operating results for the quarter and year ended December 31, 2015. The conference call is accessible by dialing (888) 317-6003 (U.S.) or (412) 317-6061 (International). The participant passcode is 3638438. The webcast is accessible via the Company's website at www.hcpi.com. This link can be found on the "Event Calendar" page, which is under the "Investor Relations" tab. Through February 24, 2016, an archive of the webcast will be available on our website, and a telephonic replay can be accessed by calling (877) 344-7529 (U.S.) or (412) 317-0088 (International) and entering passcode 10078967. The Company's supplemental information package for the current period is available with this earnings release on the Company's website in the "Presentations" section of the "Investor Relations" tab.
ABOUT HCP
HCP, Inc. is a fully integrated real estate investment trust (REIT) that invests primarily in real estate serving the healthcare industry in the United States. HCP's portfolio of assets is diversified among five distinct sectors: senior housing, post-acute/skilled nursing, life science, medical office and hospital. A publicly traded company since 1985, HCP: (i) is the first healthcare REIT selected to the S&P 500 index; (ii) has increased its dividend per share for 31 consecutive years; (iii) is the first REIT included in the S&P 500 Dividend Aristocrats index; and (iv) is recognized as a global leader in sustainability as a member of the Dow Jones and FTSE4Good sustainability indices, as well as the recipient in three of the past four years of both of the GRESB Global Healthcare Sector Leader and the NAREIT Healthcare Leader in the Light Award. For more information regarding HCP, visit www.hcpi.com.
FORWARD-LOOKING STATEMENTS
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this release which are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, among other things, the Company's expectations with respect to (i) earnings, FFO and FAD applicable to common shares on a diluted basis, SPP Cash NOI growth projections, and other financial projections and assumptions for the full year of 2016; (ii) the payment of the quarterly cash dividend; (iii) outcomes relating to the acquisitions, dispositions, developments and financing activities discussed above; (iv) proceeds from HCRMC sales of non-strategic assets; and (v) HCRMC's forecast and outlook. These statements are made as of the date hereof, are not guarantees of future performance and are subject to known and unknown risks, uncertainties, assumptions and other factors--many of which are out of the Company's and its management's control and difficult to forecast--that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. These risks and uncertainties include but are not limited to: HCRMC's ability to meet its contractual obligations under the HCRMC lease amendment and risks related to the impact of the U.S. Department of Justice lawsuit against HCRMC, including the possibility of larger than expected litigation costs, adverse results and related developments; our reliance on a concentration of a small number of tenants and operators, for a significant portion of our revenues; the financial weakness of tenants, operators and borrowers, including potential bankruptcies and downturns in their businesses, and their legal and regulatory proceedings, which results in uncertainties regarding our ability to continue to realize the full benefit of such tenants' and operators' leases and borrowers' loans; the ability of our tenants, operators and borrowers to conduct their respective businesses in a manner sufficient to maintain or increase their revenues and to generate sufficient income to make rent and loan payments to us and our ability to recover investments made, if applicable, in their operations; competition for tenants and operators, including with respect to new leases and mortgages and the renewal or rollover of existing leases; competition for skilled management, nurses and other trained personnel; availability of suitable properties to acquire at favorable prices and the competition for the acquisition and financing of those properties; the ability of our own tenants and operators to maintain costs and to compete for skilled management and nurses; our ability to negotiate the same or better terms with new tenants or operators if existing leases are not renewed or we exercise our right to replace an existing tenant or operator upon default; the risks associated with our investments in joint ventures and unconsolidated entities, including our lack of sole decision making authority and our reliance on our partners' financial condition and continued cooperation; our ability to achieve the benefits of investments, including those investments discussed above, within expected time frames or at all, or within expected cost projections; the potential impact on us and our tenants, operators and borrowers from current and future litigation matters, including the possibility of larger than expected litigation costs, adverse results and related developments; the effect on healthcare providers of legislation addressing entitlement programs and related services, including Medicare and Medicaid, which may result in future reductions in reimbursements; changes in federal, state or local laws and regulations, including those affecting the healthcare industry that affect our costs of compliance or increase the costs, or otherwise affect the operations, of our tenants and operators; volatility or uncertainty in the capital markets, the availability and cost of capital as impacted by interest rates, changes in our credit ratings, and the value of our common stock, and other conditions that may adversely impact our ability to fund our obligations or consummate transactions, or reduce the earnings from potential transactions; changes in global, national and local economic conditions, and currency exchange rates; changes in the credit ratings on United States ("U.S.") government debt securities or default or delay in payment by the U.S. of its obligations; our ability to manage our indebtedness level and changes in the terms of such indebtedness; the ability to maintain our qualification as a real estate investment trust; and other risks and uncertainties described from time to time in the Company's Securities and Exchange Commission filings. The Company assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements as a result of new information or new or future developments, except as otherwise required by law.
CONTACT
Timothy M. Schoen
Executive Vice President and Chief Financial Officer
949-407-0400
HCP, Inc.
Consolidated Balance Sheets
In thousands, except share and per share data
(Unaudited)
December 31, December 31,
2015 2014
---- ----
Assets
Real estate:
Buildings and improvements $12,501,511 $10,972,973
Development costs and construction in
progress 390,584 275,233
Land 1,995,657 1,889,438
Accumulated depreciation and
amortization (2,605,036) (2,250,757)
----------
Net real estate 12,282,716 10,886,887
Net investment in direct financing
leases 5,905,009 7,280,334
Loans receivable, net 768,743 906,961
Investments in and advances to
unconsolidated joint ventures 605,244 605,448
Accounts receivable, net of allowance
of $3,261 and $3,785, respectively 48,929 36,339
Cash and cash equivalents 346,500 183,810
Restricted cash 60,616 48,976
Intangible assets, net 614,227 481,013
Other assets, net 817,865 901,668
------- -------
Total assets $21,449,849 $21,331,436
=========== ===========
Liabilities and equity
Bank line of credit $397,432 $838,516
Term loans 524,807 212,986
Senior unsecured notes 9,120,107 7,589,960
Mortgage debt 932,212 982,785
Other debt 94,445 97,022
Intangible liabilities, net 75,273 84,723
Accounts payable and accrued
liabilities 436,239 432,934
Deferred revenue 123,017 95,411
------- ------
Total liabilities 11,703,532 10,334,337
---------- ----------
Common stock, $1.00 par value:
750,000,000 shares authorized;
465,488,492 and 459,746,267 shares
issued and outstanding, respectively 465,488 459,746
Additional paid-in capital 11,647,039 11,431,987
Cumulative dividends in excess of
earnings (2,738,414) (1,132,541)
Accumulated other comprehensive loss (30,470) (23,895)
------- -------
Total stockholders' equity 9,343,643 10,735,297
--------- ----------
Joint venture partners 217,066 73,214
Non-managing member unitholders 185,608 188,588
------- -------
Total noncontrolling interests 402,674 261,802
------- -------
Total equity 9,746,317 10,997,099
--------- ----------
Total liabilities and
equity $21,449,849 $21,331,436
=========== ===========
HCP, Inc.
Consolidated Statements of Operations
In thousands, except per share data
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
Revenues:
Rental and related revenues $299,100 $279,791 $1,144,482 $1,174,256
Tenant recoveries 32,129 28,821 126,485 110,688
Resident fees and services 158,312 103,760 525,453 241,965
Income from direct financing leases 154,859 167,346 633,835 663,070
Interest income 23,135 23,341 112,184 74,491
Investment management fee income 501 469 1,873 1,809
--- --- ----- -----
Total revenues 668,036 603,528 2,544,312 2,266,279
------- ------- --------- ---------
Costs and expenses:
Interest expense 122,027 114,987 479,596 439,742
Depreciation and amortization 141,156 116,499 510,785 459,995
Operating 172,487 130,430 614,375 384,603
General and administrative 21,870 20,141 96,022 82,175
Acquisition and pursuit costs 3,959 3,766 27,309 17,142
Impairments, net 810,932 - 1,403,853 -
--------- ---
Total costs and expenses 1,272,431 385,823 3,131,940 1,383,657
--------- ------- --------- ---------
Other income:
Gain on sales of real estate - 3,288 6,377 3,288
Other income, net 2,651 1,778 14,404 7,528
----- ----- ------ -----
Total other income, net 2,651 5,066 20,781 10,816
----- ----- ------ ------
(Loss) income before income taxes and
equity income from and impairment of
unconsolidated joint ventures (601,744) 222,771 (566,847) 893,438
Income tax benefit (expense) 2,391 2,590 9,011 (250)
Equity income from unconsolidated joint
ventures 23,397 10,182 57,313 49,570
Impairments of investments in
unconsolidated joint ventures (18,661) (35,913) (45,895) (35,913)
------- -------
(Loss) income from continuing operations (594,617) 199,630 (546,418) 906,845
-------- -------
Discontinued operations:
Income before gain on sales of real
estate, net of income taxes - - - 1,736
Gain on sales of real estate, net of
income taxes - - - 28,010
--- --- --- ------
Total discontinued operations - - - 29,746
--- ------
Net (loss) income (594,617) 199,630 (546,418) 936,591
Noncontrolling interests' share in
earnings (4,251) (3,047) (12,817) (14,358)
------ ------ ------- -------
Net (loss) income attributable to HCP,
Inc. (598,868) 196,583 (559,235) 922,233
Participating securities' share in
earnings (296) (438) (1,317) (2,437)
------ ------
Net (loss) income applicable to
common shares $(599,164) $196,145 $(560,552) $919,796
========= ======== ========= ========
Basic earnings per common share:
Continuing operations $(1.29) $0.43 $(1.21) $1.94
Discontinued operations - - - 0.07
--- --- --- ----
Net (loss) income applicable to
common shares $(1.29) $0.43 $(1.21) $2.01
====== ===== ====== =====
Diluted earnings per common share:
Continuing operations $(1.29) $0.43 $(1.21) $1.94
Discontinued operations - - - 0.06
--- --- --- ----
Net (loss) income applicable to
common shares $(1.29) $0.43 $(1.21) $2.00
====== ===== ====== =====
Weighted average shares used to calculate
earnings per common share:
Basic 465,036 459,333 462,795 458,425
======= ======= ======= =======
Diluted 465,036 459,752 462,795 458,796
======= ======= ======= =======
HCP, Inc.
Consolidated Statements of Cash Flows
In thousands
(Unaudited)
Year Ended December 31,
-----------------------
2015 2014
---- ----
Cash flows from operating
activities:
Net (loss)
income $(546,418) $936,591
Adjustments to reconcile net
(loss) income to net cash
provided by operating
activities:
Depreciation and
amortization 510,785 459,995
Amortization of
market lease
intangibles,
net (1,295) (949)
Amortization of
deferred
compensation 26,127 21,885
Amortization of
deferred
financing
costs, net 20,222 19,260
Straight-line
rents (28,859) (41,032)
Loan and direct
financing lease
interest
accretion (95,713) (78,286)
Deferred rental
revenues (2,813) (1,884)
Equity income
from
unconsolidated
joint ventures (57,313) (49,570)
Distributions of
earnings from
unconsolidated
joint ventures 15,111 5,045
Lease
termination
income, net (1,103) (38,001)
Gain on sales of
real estate (6,377) (31,298)
Foreign exchange
and other
gains, net (7,178) (2,270)
Impairments, net 1,449,748 35,913
Changes in:
Accounts
receivable, net (9,569) (8,845)
Other assets (19,453) (6,287)
Accounts payable
and accrued
liabilities (23,757) 28,354
------- ------
Net cash
provided by
operating
activities 1,222,145 1,248,621
--------- ---------
Cash flows from investing
activities:
Acquisition of
RIDEA III, net (770,325) -
Acquisition of
the CCRC
unconsolidated
joint venture
interest, net - (370,186)
Acquisitions of
other real
estate (613,252) (503,470)
Development of
real estate (281,017) (178,513)
Leasing costs
and tenant and
capital
improvements (84,282) (71,734)
Proceeds from
sales and
pending sales
of real estate,
net 58,623 104,557
Contributions to
unconsolidated
joint ventures (69,936) (2,935)
Distributions in
excess of
earnings from
unconsolidated
joint ventures 30,989 2,657
Proceeds from
sales of
marketable
securities 2,348 -
Principal
repayments on
loans
receivable,
DFLs and other 625,701 119,511
Investments in
loans
receivable,
DFLs and other (575,652) (600,019)
Decrease
(increase) in
restricted cash 4,798 (11,747)
Net cash used in
investing
activities (1,672,005) (1,511,879)
---------- ----------
Cash flows from financing
activities:
Net borrowings
under bank line
of credit 98,743 845,190
Repayments under
bank line of
credit (511,521) -
Borrowings under
term loan 333,014 -
Issuance of
senior
unsecured notes 1,936,017 1,150,000
Repayments of
senior
unsecured notes (400,000) (487,000)
Issuance of
mortgage and
other debt - 35,445
Repayments of
mortgage and
other debt (57,845) (447,784)
Deferred
financing costs (19,995) (16,550)
Issuance of
common stock
and exercise of
options 206,471 96,592
Repurchase of
common stock (8,738) (12,703)
Dividends paid
on common stock (1,046,638) (1,001,559)
Issuance of
noncontrolling
interests 110,775 4,674
Purchase of
noncontrolling
interests (7,049) (5,897)
Distributions to
noncontrolling
interests (19,147) (15,611)
Net cash
provided by
financing
activities 614,087 144,797
------- -------
Effect of
foreign
exchange on
cash and cash
equivalents (1,537) 1,715
Net increase
(decrease) in
cash and cash
equivalents 162,690 (116,746)
Cash and cash
equivalents,
beginning of
year 183,810 300,556
------- -------
Cash and cash
equivalents,
end of year $346,500 $183,810
======== ========
HCP, Inc.
Funds From Operations(1)
In thousands, except per share data
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
Net (loss) income applicable to common shares $(599,164) $196,145 $(560,552) $919,796
Depreciation and amortization 141,156 116,499 510,785 459,995
Other depreciation and amortization(2) 5,207 6,293 22,223 18,864
Impairment of real estate - - 2,948 -
Gain on sales of real estate - (3,288) (6,377) (31,298)
Equity income from unconsolidated joint ventures (23,397) (10,182) (57,313) (49,570)
FFO from unconsolidated joint ventures 21,176 22,190 90,498 70,873
Noncontrolling interests' and participating securities' share in earnings 4,547 3,485 14,134 16,795
Noncontrolling interests' and participating securities' share in FFO (8,203) (6,408) (27,187) (23,821)
------ ------ ------- -------
FFO applicable to common shares $(458,678) $324,734 $(10,841) $1,381,634
Distributions on dilutive convertible units - 3,472 - 13,799
--- ----- --- ------
Diluted FFO applicable to common shares $(458,678) $328,206 $(10,841) $1,395,433
========= ======== ======== ==========
Diluted FFO per common share $(0.99) $0.70 $(0.02) $3.00
====== ===== ====== =====
Weighted average shares used to calculate diluted FFO per share 465,036 465,832 462,795 464,845
======= ======= ======= =======
Impact of adjustments to FFO:
$
$
Other impairments, net(3) $829,593 $35,913 1,446,800 35,913
Transaction-related items(4) 3,959 4,269 32,932 (18,856)
Severance-related charge - - 6,713 -
Foreign currency remeasurement losses (gains) 60 - (5,437) -
--- --- ------ ---
$
$
$833,612 $40,182 1,481,008 17,057
======== ======= ========= ======
$
FFO as adjusted applicable to common shares $374,934 $364,916 $1,470,167 1,398,691
Distributions on dilutive convertible units and other 3,397 3,388 13,597 13,766
----- ----- ------ ------
$
$
Diluted FFO as adjusted applicable to common shares $378,331 $368,304 1,483,764 1,412,457
======== ======== ========= =========
$
$
Per common share impact of adjustments on diluted FFO $1.79 $0.09 3.18 0.04
===== ===== ==== ====
$
$
Diluted FFO as adjusted per common share $0.80 $0.79 3.16 3.04
===== ===== ==== ====
Weighted average shares used to calculate diluted FFO as adjusted per share 471,273 465,832 469,064 464,845
======= ======= ======= =======
_______________________________________
(1) We believe Funds From Operations ("FFO") is an important supplemental measure of operating
performance for a REIT. Because the historical cost accounting convention used for real
estate assets utilizes straight-line depreciation (except on land), such accounting
presentation implies that the value of real estate assets diminishes predictably over
time. Since real estate values instead have historically risen and fallen with market
conditions, presentations of operating results for a REIT that use historical cost
accounting for depreciation could be less informative. The term FFO was developed by the
REIT industry to address this issue. FFO as defined by the NAREIT is net income (loss)
applicable to common shares (computed in accordance with U.S. generally accepted
accounting principles or "GAAP"), excluding gains or losses from sales of property,
impairments of, or related to, depreciable real estate, plus real estate and other
depreciation and amortization, and after adjustments for joint ventures. Adjustments for
joint ventures are calculated to reflect FFO on the same basis. FFO does not represent
cash generated from operating activities in accordance with GAAP, is not necessarily
indicative of cash available to fund cash needs and should not be considered an
alternative to net income (loss). We compute FFO in accordance with the current NAREIT
definition; however, other REITs may report FFO differently or have a different
interpretation of the current NAREIT definition from ours. FFO as adjusted represents FFO
before the impact of severance-related charges, impairments (recoveries) of non-
depreciable assets, foreign currency remeasurement losses (gains) and transaction-related
items (defined below). Transaction-related items include acquisition and pursuit costs
(e.g., due diligence and closing) and gains/charges incurred as a result of mergers and
acquisitions and lease amendment or termination activities. Management believes that FFO
as adjusted provides a meaningful supplemental measurement of our FFO run-rate. This
measure is a modification of the NAREIT definition of FFO and should not be used as an
alternative to net income (loss) (determined in accordance with GAAP) or NAREIT FFO.
(2) For the three months ended December 31, 2015, other depreciation and amortization includes:
(i) $3 million of DFL depreciation and (ii) $2 million of lease incentive amortization
(reduction of straight-line rents) for the consideration given to terminate the 30
purchase options of the 153-property amended lease portfolio in the 2014 Brookdale
Transaction. For the year ended December 31, 2015, other depreciation and amortization
includes: (i) $13 million of DFL depreciation and (ii) $9 million of lease incentive
amortization (reduction of straight-line rents) related to the 2014 Brookdale
Transaction.
(3) For the three months ended December 31, 2015, other impairments, net include impairment
charges of: (i) $817 million related to our HCRMC DFL investments and (ii) $19 million
related to our equity investment in HCRMC, partially offset by impairment recovery of $6
million related to a loan payoff in our hospital segment. For the year ended December 31,
2015, other impairments, net include: (i) $1.3 billion related to our HCRMC DFL
investments, (ii) $112 million related to our Four Seasons unsecured notes, (iii) $46
million related to our equity investment in HCRMC, partially offset by (iv) impairment
recovery of $6 million related to a loan payoff in our hospital segment. For the three
months and year ended December 31, 2014, other impairment relates to our equity investment
in HCRMC. See Note 17 to the Consolidated Financial Statements for the year ended December
31, 2015 included in our Annual Report on Form 10-K.
(4) 2014 transaction-related items primarily relate to the Brookdale Transaction that closed
in August 2014. See the "Non-GAAP Financial Measures Reconciliations" section of the
Management Discussion and Analysis for the year ended December 31, 2015 included in our
Annual Report on Form 10-K.
HCP, Inc.
Funds Available for Distribution(1)
In thousands, except per share data
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
FFO as adjusted
applicable to
common shares $374,934 $364,916 $1,470,167 $1,398,691
Amortization of market lease
intangibles, net (315) (330) (1,295) (949)
Amortization of deferred
compensation(2) 5,059 5,418 23,233 21,885
Amortization of deferred
financing costs, net 5,272 5,138 20,222 19,260
Straight-line rents (4,042) (5,950) (28,859) (41,032)
DFL accretion(3) (23,685) (19,573) (87,861) (77,568)
Other depreciation and
amortization (5,207) (6,293) (22,223) (18,864)
Deferred revenues - tenant
improvement related (457) (633) (2,594) (2,306)
Deferred revenues -
additional rents (860) (831) (219) 422
Leasing costs and tenant and
capital improvements (31,193) (29,962) (82,072) (74,464)
Lease restructure payments(4) 6,289 5,136 22,657 9,425
Joint venture adjustments -
CCRC entrance fees(5) 8,870 7,414 30,918 11,443
Joint venture and other FAD
adjustments(3) (21,077) (19,487) (80,225) (67,121)
------- ------- ------- -------
FAD applicable to
common shares $313,588 $304,963 $1,261,849 $1,178,822
Distributions on dilutive
convertible units 3,547 3,472 14,230 13,799
----- ----- ------ ------
Diluted FAD
applicable to
common shares $317,135 $308,435 $1,276,079 $1,192,621
======== ======== ========== ==========
Diluted FAD per
common share $0.67 $0.66 $2.72 $2.57
===== ===== ===== =====
Weighted average shares used
to calculate diluted FAD per
common share 471,273 465,832 469,064 464,845
======= ======= ======= =======
________________________________________
(1) Funds Available for Distribution ("FAD") is defined as FFO as adjusted after excluding the
impact of the following: (i) amortization of acquired market lease intangibles, net; (ii)
amortization of deferred compensation expense; (iii) amortization of deferred financing
costs, net; (iv) straight-line rents; (v) accretion and depreciation related to DFLs and
lease incentive amortization (reduction of straight-line rents); and (vi) deferred revenues,
excluding amounts amortized into rental income that are associated with tenant funded
improvements owned/recognized by us and up-front cash payments made by tenants to reduce
their contractual rents. Also, FAD is: (i) computed after deducting recurring capital
expenditures, including leasing costs and second generation tenant and capital improvements;
and (ii) includes lease restructure payments and adjustments to compute our share of FAD from
our unconsolidated joint ventures and those related to CCRC non-refundable entrance fees.
Other REITs or real estate companies may use different methodologies for calculating FAD, and
accordingly, our FAD may not be comparable to those reported by other REITs. Although our FAD
computation may not be comparable to that of other REITs, management believes FAD provides a
meaningful supplemental measure of our performance and is frequently used by analysts,
investors, and other interested parties in the evaluation of our performance as a REIT. FAD
does not represent cash generated from operating activities determined in accordance with
GAAP, is not necessarily indicative of cash available to fund cash needs and should not be
considered as an alternative to net income (loss) determined in accordance with GAAP.
(2) For the year ended December 31, 2015, excludes $3 million related to the acceleration of
deferred compensation for restricted stock units and stock options that vested upon the
resignation of our former Executive Vice President and Chief Investment Officer, which is
included in the severance-related charge for the year ended December 31, 2015.
(3) For the three months and year ended December 31, 2015, DFL accretion reflects an elimination
of $14 million and $58 million, respectively. Our equity investment in HCRMC is accounted for
using the equity method, which requires an ongoing elimination of DFL income that is
proportional to our ownership in HCRMC. Further, our share of earnings from HCRMC (equity
income) increases for the corresponding elimination of related lease expense recognized at
the HCRMC entity level, which we present as a non-cash joint venture FAD adjustment.
(4) Over a period of three years from the closing of the 2014 Brookdale Transaction, we will
receive installment payments valued at $55 million for terminating the leases on the HCP
owned 49-property portfolio; we include these installment payments in FAD as the payments are
collected.
(5) Represents our 49% share of non-refundable entrance fees included in FAD as the fees are
collected by our CCRC JV.
HCP, Inc.
Net Operating Income and Same Property Performance(1)(2)
Dollars in thousands
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
Net (loss) income $(594,617) $199,630 $(546,418) $936,591
Interest income (23,135) (23,341) (112,184) (74,491)
Investment management fee income (501) (469) (1,873) (1,809)
Interest expense 122,027 114,987 479,596 439,742
Depreciation and amortization 141,156 116,499 510,785 459,995
General and administrative 21,870 20,141 96,022 82,175
Acquisition and pursuit costs 3,959 3,766 27,309 17,142
Impairments, net 810,932 - 1,403,853 -
Gain on sales of real estate - (3,288) (6,377) (3,288)
Other income, net (2,651) (1,778) (14,404) (7,528)
Income tax (benefit) expense (2,391) (2,590) (9,011) 250
Equity income from unconsolidated
joint ventures (23,397) (10,182) (57,313) (49,570)
Impairment of investments in
unconsolidated joint ventures 18,661 35,913 45,895 35,913
Total discontinued operations - - - (29,746)
--- --- --- -------
NOI $471,913 $449,288 $1,815,880 $1,805,376
Non-cash adjustments to NOI (28,052) (25,877) (108,958) (158,376)
------- ------- -------- --------
Cash (adjusted) NOI $443,861 $423,411 $1,706,922 $1,647,000
Non-SPP cash (adjusted) NOI (30,509) (8,757) (178,549) (126,451)
------- ------ -------- --------
Same property
portfolio cash
(adjusted) NOI(2) $413,352 $414,654 $1,528,373 $1,520,549
======== ======== ========== ==========
Cash (adjusted) NOI % change -
SPP(2) (0.3%) 0.5%
===== ===
________________________________________
(1) We believe Net Operating Income from Continuing Operations ("NOI") provides investors relevant
and useful information because it reflects only income and operating expense items that are
incurred at the property level and presents them on an unleveraged basis. We use NOI and cash
NOI to make decisions about resource allocations, assess and compare property level
performance, and evaluate our same property portfolio ("SPP"). We believe that net income
(loss) is the most directly comparable GAAP measure to NOI. NOI should not be viewed as an
alternative measure of operating performance to net income (loss) as defined by GAAP since it
does not reflect various excluded items. Further, our definition of NOI may not be comparable
to the definition used by other REITs or real estate companies, as they may use different
methodologies for calculating NOI.
NOI is defined as rental and related revenues, including tenant recoveries, resident fees and
services, and income from DFLs, less property level operating expenses; NOI excludes all of
the other financial statement amounts itemized above. Cash NOI is calculated as NOI after
eliminating the effects of straight-line rents, DFL accretion, amortization of market lease
intangibles and lease termination fees. Cash NOI is oftentimes referred to as "adjusted NOI."
(2) SPP statistics allow management to evaluate the performance of our real estate portfolio under
a consistent population by eliminating changes in the composition of our portfolio of
properties. We identify our SPP as stabilized properties that remained in operations and were
consistently reported as leased properties or operating properties (RIDEA) for the duration
of the year-over-year comparison periods presented, excluding assets held for sale.
Accordingly, it takes a stabilized property a minimum of 12 months in operations under a
consistent reporting structure to be included in our SPP. Newly acquired operating assets are
generally considered stabilized at the earlier of lease up (typically when the tenant(s)
controls the physical use of at least 80% of the space) or 12 months from the acquisition
date. Newly completed developments and redevelopments are considered stabilized at the
earlier of lease up or 24 months from the date the property is placed in service. SPP NOI
excludes certain non-property specific operating expenses that are allocated to each
operating segment on a consolidated basis. SPP cash NOI excludes the effects of foreign
exchange rate movements by using the average current period exchange rate to translate from
British pound sterling into U.S. dollars for the comparison periods. A property is removed
from our SPP when it is sold, placed into redevelopment or changes its reporting structure.
HCP, Inc.
Projected Future Operations(1)
(Unaudited)
Full Year 2016
--------------
Low High
--- ----
Diluted earnings per common share $1.49 $1.55
Depreciation and amortization 1.21 1.21
Other depreciation and amortization 0.03 0.03
Gain on sales of real estate (0.05) (0.05)
Joint venture FFO adjustments 0.06 0.06
---- ----
Diluted FFO per common share $2.74 $2.80
Amortization of net market lease intangibles and deferred revenues (0.01) (0.01)
Amortization of deferred compensation 0.04 0.04
Amortization of deferred financing costs, net 0.04 0.04
Straight-line rents (0.03) (0.03)
Other depreciation and amortization (0.03) (0.03)
Leasing costs and tenant and capital improvements (0.19) (0.19)
Lease restructure payments 0.04 0.04
Joint venture adjustments - CCRC entrance fees 0.07 0.07
Joint venture and other FAD adjustments (0.05) (0.05)
----- -----
Diluted FAD per common share $2.62 $2.68
===== =====
________________________________________
(1) The foregoing projections reflect management's view of current and future market conditions,
including assumptions with respect to rental rates, occupancy levels, development items and
the earnings impact of the events referenced in this release. These projections do not
reflect the potential impact of unannounced future acquisitions, dispositions, other
impairments or recoveries, the future bankruptcy or insolvency of our operators, lessees,
borrowers or other obligors, the effect of any future restructuring of our contractual
relationships with such entities, gains or losses on marketable securities, ineffectiveness
related to our cash flow hedges, or existing and future litigation matters including the
possibility of larger than expected litigation costs and related developments. Our actual
results may differ materially from the projections set forth above. The aforementioned ranges
represent management's best estimates based upon the underlying assumptions as of the date of
this press release. Except as otherwise required by law, management assumes no, and hereby
disclaims any, obligation to update any of the foregoing projections as a result of new
information or new or future developments.
HCP, Inc.
Projected SPP Cash NOI(1)
Dollars in thousands
(Unaudited)
For the projected full year 2016 (low):
Senior Post-acute/ Life Medical
Housing Skilled
nursing Science Office Hospital Total
------- -------- ------- ------ -------- -----
NOI(2) $703,800 $429,500 $280,900 $270,800 $85,600 $1,770,600
Non-cash adjustments
to NOI(3) (11,000) (600) (900) (2,600) 1,300 (13,800)
------- ---- ---- ------ ----- -------
Cash (adjusted) NOI 692,800 428,900 280,000 268,200 86,900 1,756,800
Non-SPP cash
(adjusted) NOI (71,000) (7,800) (25,600) (24,200) - (128,600)
------- ------ ------- ------- --- --------
SPP cash (adjusted) NOI $621,800 $421,100 $254,400 $244,000 $86,900 1,628,200
======== ======== ======== ======== =======
Addback adjustments(4) 142,400
Other income and expenses(5) 83,000
Costs and expenses(6) (1,145,600)
Net income $708,000
========
For the projected full year 2016 (high):
Senior Post-acute/ Life Medical
Housing Skilled
nursing Science Office Hospital Total
------- -------- ------- ------ -------- -----
NOI(2) $711,600 $434,200 $284,000 $273,800 $86,500 $1,790,100
Non-cash adjustments
to NOI(3) (11,900) (1,000) (1,100) (2,900) 1,275 (15,625)
------- ------ ------ ------ ----- -------
Cash (adjusted) NOI 699,700 433,200 282,900 270,900 87,775 1,774,475
Non-SPP cash
(adjusted) NOI (71,800) (7,900) (26,100) (24,500) - (130,300)
------- ------ ------- ------- --- --------
SPP cash (adjusted) NOI $627,900 $425,300 $256,800 $246,400 $87,775 1,644,175
======== ======== ======== ======== =======
Addback adjustments(4) 145,925
Other income and expenses(5) 87,000
Costs and expenses(6) (1,141,600)
Net income $735,550
========
For the year ended December 31, 2015:
Senior Post-acute/ Life Medical
Housing Skilled
nursing Science Office Hospital Total
------- -------- ------- ------ -------- -----
NOI(2) $669,938 $533,109 $272,767 $255,675 $84,391 $1,815,880
Non-cash adjustments
to NOI(3) (16,127) (78,738) (10,128) (5,025) 1,060 (108,958)
------- ------- ------- ------ ----- --------
Cash (adjusted) NOI 653,811 454,371 262,639 250,650 85,451 1,706,922
Non-SPP cash
(adjusted) NOI (39,713) (28,616) (23,090) (11,172) (4) (102,595)
------- ------- ------- ------- --- --------
SPP cash (adjusted) NOI $614,098 $425,755 $239,549 $239,478 $85,447 1,604,327
======== ======== ======== ======== =======
Addback adjustments(4) 211,553
Other income and expenses(5) 201,162
Costs and expenses(6) (1,113,712)
Impairments, net (1,403,853)
Impairment of investments in unconsolidated joint ventures (45,895)
-------
Net loss $(546,418)
=========
Projected SPP cash (adjusted) NOI growth for the full year 2016:
Senior Post-acute/ Life Medical
Housing Skilled
nursing Science Office Hospital Total
------- -------- ------- ------ -------- -----
Low 1.25% (1.1%) 6.2% 1.9% 1.7% 1.5%
High 2.25% (0.1%) 7.2% 2.9% 2.7% 2.5%
________________________________________
(1) The foregoing projections reflect management's view of current and future market conditions,
including assumptions with respect to rental rates, occupancy levels, development items and
the earnings impact of the events referenced in this release. These projections do not
reflect the potential impact of unannounced future acquisitions, dispositions, other
impairments or recoveries, the future bankruptcy or insolvency of our operators, lessees,
borrowers or other obligors, the effect of any future restructuring of our contractual
relationships with such entities, gains or losses on marketable securities, ineffectiveness
related to our cash flow hedges, or existing and future litigation matters including the
possibility of larger than expected litigation costs and related developments. Our actual
results may differ materially from the projections set forth above. The aforementioned ranges
represent management's best estimates based upon the underlying assumptions as of the date of
this press release. Except as otherwise required by law, management assumes no, and hereby
disclaims any, obligation to update any of the foregoing projections as a result of new
information or new or future developments.
(2) Represents rental and related revenues, including tenant recoveries, resident fees and
services, and income from DFLs, less property level operating expenses.
(3) Represents straight-line rents, DFL accretion, amortization of market lease intangibles and
lease termination fees.
(4) Represents non-cash adjustments to NOI and non-SPP cash (adjusted) NOI.
(5) Represents interest income, investment management fee income, gain on sales of real estate,
other income, net, income taxes and equity income from unconsolidated joint ventures.
(6) Represents interest expense, depreciation and amortization, general and administrative
expenses, and acquisition and pursuit costs.
No reconciliations of projected senior housing RIDEA portfolio SPP Cash NOI growth and consolidated SPP Cash NOI growth, excluding HCRMC are included in this release because we are unable to quantify certain amounts that would be required to be included in the comparable GAAP financial measures without unreasonable efforts, and we believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors.
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SOURCE HCP, Inc.
