HEALTHPEAK PROPERTIES, INC. In the news release, HCP Announces Results for the Quarter Ended
HCP Announces Results for the Quarter Ended June 30, 2017
IRVINE, Calif., Aug. 1, 2017 /PRNewswire/ --
SECOND QUARTER 2017 AND RECENT HIGHLIGHTS
- EPS, FFO and FFO as adjusted per share, were $0.04, $0.35 and $0.48, respectively
- Achieved year-over-year three- and six-month SPP Cash NOI growth of 2.1% and 3.1%, respectively
- Completed or under contract on $75 million of acquisitions and generated $399 million of proceeds from dispositions and loan repayments through August 1(st)
- Announced $116 million of new development and redevelopment projects
- Repurchased $500 million of our 5.375% senior notes due 2021 and remain on-track to meeting our previously disclosed leverage targets
- Entered into a definitive agreement to sell our Tandem debt investment for $197 million
- Enhanced corporate governance by opting out of the Maryland Unsolicited Takeovers Act (MUTA) and adopting majority standard voting
- Announced Scott Brinker will join as EVP Chief Investment Officer, effective January 2018
- Reaffirmed full-year 2017 FFO as adjusted and SPP Cash NOI guidance ranges
HCP (NYSE:HCP) announced results for the quarter ended June 30, 2017.
Three Months Ended Three Months Ended
June 30, 2017 June 30, 2016
(in thousands, except per share amounts) Amount Diluted Amount Diluted Per Share
Per Share Per Share Change
--------- --------- ------
Net income $19,283 $0.04 $301,375 $0.64 $(0.60)
======= ===== ======== ===== ======
FFO $164,650 $0.35 $333,218 $0.71 $(0.36)
Other impairment(1) 56,682 0.12 - - 0.12
Transaction-related items 840 - 14,658 0.03 (0.03)
Other(2) 2,598 0.01 - - 0.01
----- ---- --- --- ----
FFO as adjusted $224,770 $0.48 $347,876 $0.74 $(0.26)
======== ===== ======== ===== ======
FFO as adjusted from QCP - - (101,637) (0.21) 0.21
--- --- -------- ----- ----
Comparable FFO as adjusted(3) $224,770 $0.48 $246,239 $0.53 $(0.05)
======== ===== ======== ===== ======
FAD $200,157 $337,866
======== ========
_______________________________________
(1) Relates to the impairment of our
Tandem Health Care Loan.
(2) Includes: (i) $3.4 million of
litigation costs and (ii) $0.8
million of foreign currency
remeasurement gains.
(3) Represents FFO as adjusted excluding
FFO as adjusted from QCP and
interest expense related to debt
repaid using proceeds from the spin-
off, assuming these transactions
occurred at the beginning of the
earliest period presented.
Comparable FFO as adjusted allows
management to evaluate the
performance of our remaining real
estate portfolio following the
completion of the QCP spin-off.
FFO, FFO as adjusted, FAD, Comparable FFO as adjusted, SPP Cash NOI and SPP NOI are supplemental non-GAAP financial measures that we believe are useful in evaluating the operating performance of real estate investment trusts. See "Discussion and Reconciliation of Non-GAAP Financial Measures" for the quarter ended June 30, 2017 for definitions, discussions of their uses and inherent limitations, and reconciliations to the most directly comparable financial measures calculated and presented in accordance with GAAP on the Investor Relations section of our website at http://ir.hcpi.com/financial-reconciliation.
SAME PROPERTY PORTFOLIO OPERATING SUMMARY
The table below outlines the three-month same property portfolio operating results for the second quarter:
Year-Over-Year
Occupancy SPP Growth
2Q17 2Q16 NOI Cash NOI
Senior
housing
triple-
net 86.1% 86.6% 1.6% 2.6%
Senior
housing
operating
portfolio
("SHOP")(1) 86.8% 88.7% (3.8)% (1.6)%
Life
science 96.5% 98.5% 2.1% 3.7%
Medical
office 92.0% 92.0% 1.8% 2.6%
Other non-
reportable
segments
("Other")(2) N/A N/A 3.8% 1.5%
Total
Portfolio 1.0% 2.1%
_______________________________________
(1) SHOP SPP Cash NOI growth consists
of the following components:
Assisted Living /Independent
Living (0.5%) and CCRC JV
(9.1%).
(2) Other primarily includes our
hospitals and U.K. real estate
investments. See our
Supplemental Report for
additional details.
TRANSACTION ACTIVITY
ACQUISITIONS
During the second quarter and through August 1, 2017, we announced $75 million of acquisitions.
-- In June, we acquired Wateridge, a 124,000 square foot campus in the
Sorrento Mesa submarket of San Diego for $26 million. Upon acquisition,
we commenced repositioning one of the buildings into class-A lab space
following an office-to-lab conversion strategy.
-- In July, we acquired a portfolio of three medical office buildings in
Texas for $49 million.
LOAN REPAYMENTS AND DISPOSITIONS
During the second quarter we received $399 million of proceeds from loan repayments and dispositions. Significant transactions included:
-- In June, the HC-One mezzanine loan was repaid generating $367 million of
proceeds. We have now exited substantially all of our U.K. debt
investments.
-- As previously disclosed, in April, we sold a land parcel in San Diego,
California for $27 million.
DEVELOPMENT AND REDEVELOPMENT
At quarter end, our development pipeline totaled $640 million and is expected to produce a weighted average stabilized yield 150-200 basis points over respective market cap rates. During the quarter we placed $65 million of development in service, including $41 million at Phase I of The Cove, our premier $720 million, class-A life science development project in South San Francisco.
Our redevelopment pipeline totals $109 million and is expected to produce a weighted average return on incremental capital of 9-12%.
During the second quarter and through July, we added $116 million of new projects to our development and redevelopment pipelines including:
-- Commenced $22 million of redevelopment projects at two recently-acquired
life science assets in the Sorrento Mesa submarket of San Diego.
-- Commenced a $40 million redevelopment of a medical office building
located in the University City submarket in Philadelphia near the
University of Pennsylvania.
-- Entered into a joint venture agreement and commenced development on a
111 unit senior housing facility in Otay Ranch, California (San Diego
MSA) for $31 million. Our share of the total construction cost is
approximately $28 million with an estimated completion in the second
half of 2018.
-- In July, commenced development on a 79 unit senior housing facility in
Waldwick, New Jersey (New York MSA) for $31 million. Our share of the
total construction costs is approximately $26 million with an estimated
completion in late 2018.
BALANCE SHEET AND DEBT TENDER
During the quarter, we made tangible progress towards meeting our balance sheet targets of net debt to adjusted EBITDA in the low-to-mid six-times range and financial leverage in the 43% to 44% range by the end of 2017. As previously disclosed, we repaid $131 million on our credit facility and $250 million of senior notes upon maturity using proceeds from the Brookdale 64 disposition.
As of June 30, 2017, we had $2.3 billion of liquidity from a combination of cash and availability under our $2.0 billion credit facility and no major senior notes or secured debt maturities until early 2019.
As previously announced, in July, we repurchased $500 million of our 5.375% senior notes due 2021 using capital-recycling proceeds from the HC-One loan repayment and Brookdale 64 disposition.
In connection with the tender offer, we expect to incur an extinguishment of debt charge of approximately $54 million in the third quarter. A copy of the tender offer press release is available in the Investor Relations section of our website at http://ir.hcpi.com.
TANDEM DEBT INVESTMENT UPDATE
During the second quarter, continued challenges in the post-acute/skilled nursing operating environment and tenant-specific headwinds contributed to a decline in the financial performance of the assets underlying our Tandem debt investment. As a result, the fair value of our collateral, net of the senior mortgage debt, fell below the carrying value of our investment. As part of our quarterly review process, we recorded a $57 million impairment write-down during the second quarter and reduced the carrying value of our Tandem debt investment to $200 million.
On July 31, subsequent to the aforementioned impairment, we entered into a definitive agreement to sell our Tandem debt investment for $197 million, subject to customary closing conditions. This investment represents our last meaningful exposure to both post-acute/skilled-nursing assets and highly-leveraged mezzanine investments. The transaction is expected to close during 2017.
CORPORATE GOVERNANCE ENHANCEMENTS
On July 27, our Board of Directors adopted corporate governance enhancements for our stockholders by opting out of the Maryland Unsolicited Takeovers Act (MUTA), and reduced the threshold for bylaw amendments to a majority voting standard. As a result of opting out of MUTA, any actions, including the election to classify the Board, requires the affirmative majority vote by stockholders. The Board's decision to authorize majority voting for bylaw amendments enables stockholders to amend our bylaws by an affirmative majority vote rather than the previous super-majority standard. These topics have been in focus with stockholders and our enhancements demonstrate HCP's commitment to good governance practices.
EXECUTIVE LEADERSHIP
In May 2017, we announced Scott Brinker will join the Company as Executive Vice President and Chief Investment Officer, with an effective date of January 4, 2018.
In July 2017, we announced Shawn Johnston will join the Company as Senior Vice President and Chief Accounting Officer effective August 15, 2017.
DIVIDEND
On July 27, 2017, our Board declared a quarterly cash dividend of $0.37 per common share. The dividend will be paid on August 22, 2017 to stockholders of record as of the close of business on August 7, 2017.
SUSTAINABILITY
For the sixth consecutive year, we were named as a constituent to the FTSE4Good Index Series, an equity index series designed to facilitate investment in companies that meet globally recognized environmental, social and governance criteria. More information about HCP's sustainability efforts can be found on our website at www.hcpi.com/sustainability.
OUTLOOK
For full-year 2017, we expect EPS to range between $1.18 and $1.24; FFO per share to range between $1.73 and $1.79; and FFO as adjusted per share to range between $1.89 and $1.95. In addition, we expect 2017 SPP Cash NOI to increase between 2.5% and 3.5%. These estimates do not reflect the potential impact from unannounced future transactions other than capital recycling activities. For additional detail and information regarding these estimates, refer to the "Projected SPP Cash NOI" section of this release, and the 2017 Guidance section of our corresponding Supplemental Report, available in the Investor Relations section of our website at http://ir.hcpi.com.
Projected Full Year 2017
SPP NOI SPP Cash NOI
Low High Low High
Senior
housing
triple-
net 2.0% 3.0% 5.0% 6.0%
SHOP (3.9)% (0.9)% (3.0)% -%
Life
science 2.0% 3.0% 3.5% 4.5%
Medical
office 1.8% 2.8% 2.5% 3.5%
Other(1) 2.0% 3.0% 0.8% 1.8%
SPP
Growth 1.2% 2.2% 2.5% 3.5%
_______________________________________
(1) Other primarily includes our
hospitals and U.K. real estate
investments. See our
Supplemental Report for
additional details.
COMPANY INFORMATION
HCP has scheduled a conference call and webcast for Tuesday, August 1, 2017 at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) to present its performance and operating results for the quarter ended June 30, 2017. The conference call is accessible by dialing (888) 317-6003 (U.S.) or (412) 317-6061 (International). The conference ID number is 8465819. You may also access the conference call via webcast at www.hcpi.com. This link can be found in the "News and Events" section, which is under "Investor Relations". Through August 17, 2017, an archive of the webcast will be available on our website, and a telephonic replay can be accessed by dialing (877) 344-7529 (U.S.) or (412) 317-0088 (International) and entering conference ID number 10110173. Our Supplemental Report for the current period is available, with this earnings release, on our website in the "Financial Information" section under "Investor Relations".
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 owns a large-scale portfolio diversified across multiple sectors, led by senior housing, life science and medical office. Recognized as a global leader in sustainability, HCP has been a publicly-traded company since 1985 and was the first healthcare REIT selected to the S&P 500 index. 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, (i) all statements under the heading "Outlook," including without limitation with respect to expected EPS, FFO per share, FFO as adjusted per share, Comparable FFO per share, SPP NOI, SPP Cash NOI and other financial projections and assumptions, including those in the "Projected SPP NOI and Cash NOI" sections of this release, as well as comparable statements included in other sections of this release; (ii) statements regarding the payment of a quarterly cash dividend; (iii) statements regarding timing, outcomes and other details relating to current, pending or contemplated acquisitions, dispositions, developments, joint venture transactions, capital recycling and financing activities, and other transactions discussed in this release, including without limitation those described under the heading "Development and Redevelopment,"'; (iv) the incurrence of debt extinguishment charges in connection with the tender offer; and (v) the executive leadership updates described under the heading "Executive Leadership." 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 our and our 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: our reliance on a concentration of a small number of tenants and operators for a significant percentage of our revenues, with our concentration in Brookdale increasing as a result of the consummation of the spin-off of QCP on October 31, 2016; the financial condition of our existing and future 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 existing and future 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; our concentration in the healthcare property sector, particularly in life sciences, senior housing, medical office buildings and hospitals, which makes our profitability more vulnerable to a downturn in a specific sector than if we were investing in multiple industries; availability of suitable properties to acquire at favorable prices, the competition for the acquisition and financing of those properties, and the costs of associated property development; 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 foreclose on loan collateral or 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 acquisitions and other investments, including those discussed above, within expected time frames or at all, or within expected cost projections; operational risks associated with third party management contracts, including the additional regulation and liabilities of our RIDEA lease structures; 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 our tenants and operators of legislation, executive orders and other legal requirements, including the Affordable Care Act and licensure, certification and inspection requirements, as well as laws 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 or other conditions, including currency exchange rates; our ability to manage our indebtedness level and changes in the terms of such indebtedness; competition for skilled management and other key personnel; the ability to maintain our qualification as a real estate investment trust; and other risks and uncertainties described from time to time in our Securities and Exchange Commission filings. You should not place undue reliance on any forward-looking statements. We assume no, and hereby disclaim 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
Andrew Johns
Vice President - Finance and Investor Relations
949-407-0400
HCP, Inc.
Consolidated Balance Sheets
In thousands, except share and per share data
(unaudited)
June 30, December 31,
2017 2016
---- ----
Assets
Real Estate:
Buildings and
improvements $11,114,139 $11,692,654
Development
costs and
construction
in progress 444,528 400,619
Land 1,765,305 1,881,487
Accumulated
depreciation
and
amortization (2,672,489) (2,648,930)
---------- ----------
Net real
estate 10,651,483 11,325,830
Net
investment
in direct
financing
leases 711,777 752,589
Loans
receivable,
net 393,575 807,954
Investments
in and
advances to
unconsolidated
joint
ventures 829,231 571,491
Accounts
receivable,
net of
allowance of
$4,104 and
$4,459,
respectively 36,969 45,116
Cash and cash
equivalents 391,965 94,730
Restricted
cash 61,481 42,260
Intangible
assets, net 414,404 479,805
Assets held
for sale,
net - 927,866
Other assets,
net 611,690 711,624
------- -------
Total assets $14,102,575 $15,759,265
=========== ===========
Liabilities and Equity
Bank line of
credit $136,311 $899,718
Term loans 218,832 440,062
Senior
unsecured
notes 6,889,045 7,133,538
Mortgage debt 146,337 623,792
Other debt 94,801 92,385
Intangible
liabilities,
net 51,463 58,145
Liabilities
of assets
held for
sale, net - 3,776
Accounts
payable and
accrued
liabilities 389,690 417,360
Deferred
revenue 147,155 149,181
------- -------
Total
liabilities 8,073,634 9,817,957
--------- ---------
Commitments and contingencies
Common stock,
$1.00 par outstanding,
value: respectively
750,000,000
shares
authorized;
468,879,344
and
468,081,489
shares
issued and 468,879 468,081
Additional
paid-in
capital 8,216,781 8,198,890
Cumulative
dividends in
excess of
earnings (2,956,324) (3,089,734)
Accumulated
other
comprehensive
loss (27,289) (29,642)
------- -------
Total
stockholders'
equity 5,702,047 5,547,595
--------- ---------
Joint venture
partners 149,456 214,377
Non-managing
member
unitholders 177,438 179,336
------- -------
Total
noncontrolling
interests 326,894 393,713
------- -------
Total equity 6,028,941 5,941,308
--------- ---------
Total
liabilities
and equity $14,102,575 $15,759,265
=========== ===========
HCP, Inc.
Consolidated Statements of Operations
In thousands, except per share data
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Revenues:
Rental and related revenues $263,820 $292,168 $550,038 $582,548
Tenant recoveries 35,259 33,531 68,934 64,906
Resident fees and services 125,416 164,202 265,648 329,965
Income from direct
financing leases 13,564 15,647 27,276 30,557
Interest income 20,869 32,787 39,200 50,816
------ ------ ------ ------
Total revenues 458,928 538,335 951,096 1,058,792
------- ------- ------- ---------
Costs and expenses:
Interest expense 77,788 121,333 164,506 243,395
Depreciation and
amortization 130,751 139,919 267,305 279,774
Operating 153,163 179,080 312,244 355,037
General and administrative 21,286 22,779 43,764 48,230
Acquisition and pursuit
costs 867 823 1,924 3,298
Impairment 56,682 - 56,682 -
Total costs and expenses 440,537 463,934 846,425 929,734
------- ------- ------- -------
Other income:
Gain on sales of real
estate, net 412 119,614 317,670 119,614
Other income, net 71 2,340 51,279 3,632
--- ----- ------ -----
Total other income, net 483 121,954 368,949 123,246
--- ------- ------- -------
Income before income taxes
and equity income (loss)
from unconsolidated joint
ventures 18,874 196,355 473,620 252,304
Income tax benefit
(expense) 2,987 2,179 9,149 (1,525)
Equity income (loss) from
unconsolidated joint
ventures 240 (1,067) 3,509 (1,975)
Income from continuing
operations 22,101 197,467 486,278 248,804
------ ------- ------- -------
Discontinued operations:
Income before income taxes - 107,551 - 225,293
Income taxes - (176) - (49,510)
--- ---- --- -------
Total discontinued
operations - 107,375 - 175,783
--- ------- --- -------
Net income 22,101 304,842 486,278 424,587
Noncontrolling interests'
share in earnings (2,718) (3,125) (5,750) (6,751)
------ ------ ------ ------
Net income attributable to
HCP, Inc. 19,383 301,717 480,528 417,836
Participating securities'
share in earnings (100) (342) (674) (651)
---- ---- ---- ----
Net income applicable to
common shares $19,283 $301,375 $479,854 $417,185
======= ======== ======== ========
Earnings per common share:
Basic $0.04 $0.65 $1.02 $0.89
===== ===== ===== =====
Diluted $0.04 $0.64 $1.02 $0.89
===== ===== ===== =====
Weighted average shares used to
calculate earnings per common share:
Basic 468,646 467,084 468,474 466,579
======= ======= ======= =======
Diluted 468,839 471,425 473,366 466,777
======= ======= ======= =======
HCP, Inc.
Funds From Operations
In thousands, except per share data
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Net income applicable to common
shares $19,283 $301,375 $479,854 $417,185
Real estate related depreciation
and amortization 130,751 141,386 267,305 282,708
Other depreciation and
amortization(1) 2,347 2,974 5,358 5,936
Gain on sales of real estate, net (412) (119,614) (317,670) (119,614)
Taxes associated with real estate
dispositions(2) 1 - (5,498) 53,177
Equity (income) loss from
unconsolidated joint ventures (240) 1,067 (3,509) 1,975
FFO from unconsolidated joint
ventures 16,554 11,172 34,862 21,550
Noncontrolling interests' and
participating securities' share
in earnings 2,818 3,467 6,424 7,402
Noncontrolling interests' and
participating securities' share
in FFO (6,452) (8,609) (14,244) (17,836)
------ ------ ------- -------
FFO applicable to common shares $164,650 $333,218 $452,882 $652,483
Distributions on dilutive
convertible units and other - 3,525 3,654 7,109
--- ----- ----- -----
Diluted FFO applicable to common
shares $164,650 $336,743 $456,536 $659,592
======== ======== ======== ========
Diluted FFO per common share $0.35 $0.71 $0.96 $1.40
===== ===== ===== =====
Weighted average shares used to
calculate diluted FFO per common
share 468,839 473,149 473,366 472,667
======= ======= ======= =======
Impact of adjustments to FFO:
Transaction-related items(3) $840 $14,658 $1,896 $17,176
Other impairment, net(4) 56,682 - 5,787 -
Litigation costs 3,366 - 5,205 -
Foreign currency remeasurement
gains (768) - (845) -
---- --- ---- ---
$60,120 $14,658 $12,043 $17,176
======= ======= ======= =======
FFO as adjusted applicable to
common shares $224,770 $347,876 $464,925 $669,659
Distributions on dilutive
convertible units and other 1,738 3,503 3,632 7,083
----- ----- ----- -----
Diluted FFO as adjusted applicable
to common shares $226,508 $351,379 $468,557 $676,742
======== ======== ======== ========
Per common share impact of
adjustments on diluted FFO $0.13 $0.03 $0.03 $0.03
===== ===== ===== =====
Diluted FFO as adjusted per common
share $0.48 $0.74 $0.99 $1.43
===== ===== ===== =====
Weighted average shares used to
calculate diluted FFO as adjusted
per common share 473,528 473,149 473,366 472,667
======= ======= ======= =======
FFO as adjusted from QCP $ - $101,637 $ - $199,845
=== === ======== === === ========
Diluted Comparable FFO as adjusted
applicable to common shares(5) $226,508 $249,742 $468,557 $476,897
======== ======== ======== ========
FFO as adjusted from QCP per
common share $ - $(0.21) $ - $(0.42)
=== === ====== === === ======
Diluted Comparable FFO as adjusted
per common share $0.48 $0.53 $0.99 $1.01
===== ===== ===== =====
_______________________________________
(1) Other depreciation and
amortization includes DFL
depreciation and lease incentive
amortization (reduction of
straight-line rents) for the
consideration given to terminate
the 30 purchase options on the
153-property amended lease
portfolio in the 2014 Brookdale
transaction.
(2) For the six months ended June 30,
2017, represents income tax
benefit associated with the
disposition of real estate assets
in our RIDEA II transaction. For
the six months ended June 30,
2016, represents income tax
expense associated with the state
built-in gain tax payable upon
the disposition of specific real
estate assets, of which $49
million relates to the HCR
ManorCare, Inc. real estate
portfolio.
(3) On January 1, 2017, we early
adopted the Financial Accounting
Standards Board Accounting
Standards Update No. 2017-01,
Clarifying the Definition of a
Business ("ASU 2017-01") which
prospectively results in
recognizing the majority of our
real estate acquisitions as asset
acquisitions rather than business
combinations. Acquisition and
pursuit costs relating to
completed asset acquisitions are
capitalized, including those costs
incurred prior to January 1, 2017.
Real estate acquisitions completed
prior to January 1, 2017 were
deemed business combinations and
the related acquisition and
pursuit costs were expensed as
incurred. For the three and six
months ended June 30, 2016,
primarily relates to the QCP spin-
off.
(4) For the three months ended June
30, 2017, relates to the
impairment of our Tandem Health
Care Loan. For the six months
ended June 30, 2017, relates to
the impairment of our Tandem
Health Care Loan, net of the
impairment recovery upon the sale
of our Four Seasons Notes in the
first quarter of 2017.
(5) Excludes FFO as adjusted from QCP
and interest expense related to
debt repaid using proceeds from
the spin-off, assuming these
transactions occurred at the
beginning of the earliest period
presented. Comparable FFO as
adjusted allows management to
evaluate the performance of our
remaining real estate portfolio
following the completion of the
QCP spin-off.
HCP, Inc.
Funds Available for Distribution
In thousands
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
FFO as adjusted
applicable to
common shares $224,770 $347,876 $464,925 $669,659
Amortization of
deferred
compensation 3,327 4,160 7,092 9,505
Amortization of
deferred financing
costs 3,843 5,281 7,702 10,561
Straight-line rents (3,168) (3,541) (8,176) (11,117)
Other depreciation
and amortization (2,347) (2,974) (5,358) (5,935)
Leasing costs and
tenant and capital
improvements(1) (27,834) (21,872) (51,121) (42,354)
Lease restructure
payments 314 6,318 854 12,612
CCRC entrance
fees(2) 4,713 6,046 8,362 11,549
Deferred income
taxes (4,342) (2,604) (6,716) (5,546)
Other FAD
adjustments 881 (824) 1,138 (2,028)
--- ---- ----- ------
FAD applicable to
common shares $200,157 $337,866 $418,702 $646,906
Distributions on
dilutive
convertible units
and other 1,738 3,525 - 7,109
----- ----- --- -----
Diluted FAD
applicable to
common shares $201,895 $341,391 $418,702 $654,015
======== ======== ======== ========
_______________________________________
(1) Includes our share of leasing costs
and tenant and capital improvements
from unconsolidated joint ventures.
(2) Represents our 49% share of non-
refundable entrance fees as the fees
are collected by our CCRC JV, net of
reserves and CCRC JV entrance fee
amortization.
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SOURCE HCP, Inc.
