Investor Relations

HCP Announces Results for the Quarter and Year Ended December 31, 2016

IRVINE, Calif., Feb. 13, 2017 /PRNewswire/ --

FOURTH QUARTER 2016 AND RECENT HIGHLIGHTS

--    EPS, FFO and FFO as adjusted per share, were $0.12, $0.35 and $0.59, respectively

--    Achieved year-over-year three-month SPP Cash NOI and SPP NOI growth of 2.6% and 2.4%, respectively

--    Completed the spin-off of Quality Care Properties, Inc. ("QCP") (NYSE:QCP) on October 31, 2016

--    Completed $345 million of acquisitions and loan fundings and $472 million of dispositions in the fourth quarter; in January, we completed the previously announced sale and related financing of a 40% interest in our RIDEA II joint venture generating $480 million in proceeds  

--    Signed a 115,000 sq. ft. lease at Phase II of The Cove development in South San Francisco, bringing Phases I and II to 86% leased

--    Commenced the $211 million development of Phase III of The Cove, representing up to 336,000 sq. ft.

--    Repaid $1.7 billion of debt during the fourth quarter and an additional $440 million through February 13, 2017, using proceeds generated primarily from QCP financing and our RIDEA II transaction; on track with previously disclosed deleveraging plan and targeted credit metrics

--    Appointed Tom Herzog as Chief Executive Officer and as a member of the Board of Directors, Justin Hutchens as President, and Peter Scott as EVP and Chief Financial Officer

--    Reset the quarterly dividend to $0.37 per share, as previously announced

FULL YEAR 2016 HIGHLIGHTS

--    EPS, FFO and FFO as adjusted per share were $1.34, $2.39 and $2.74, respectively

--    Achieved year-over-year SPP Cash NOI and SPP NOI growth of 3.7% and 2.6%, respectively

--    Entered into definitive agreements to sell 64 communities triple-net leased to Brookdale Senior Living, Inc. ("Brookdale") for $1.125 billion and announced other planned transactions, resulting in improved lease coverage, reduced tenant concentration, and a stronger balance sheet                                                                                                                                                                  

--    Completed $723 million of acquisitions and loan fundings and $770 million of dispositions, excluding the spin-off of QCP

--    Placed $271 million of development and redevelopment projects in service, and commenced $580 million of new development and redevelopment projects

--    Executed 4.1 million sq. ft. of leasing in our life science and MOB portfolios

2017 GUIDANCE

--    Full year guidance for EPS of $1.32$1.38, FFO per share of $1.88$1.94 and FFO as adjusted per share of $1.89$1.95, in-line with preliminary Outlook provided on November 1, 2016

--    Full year guidance for SPP Cash NOI growth of 2.5% – 3.5%, in-line with preliminary Outlook provided on November 1, 2016

IRVINE, CA, February 13, 2017 -- HCP (NYSE:HCP) announced results for the quarter and year ended December 31, 2016.

FOURTH QUARTER COMPARISON

   

Three Months Ended

December 31, 2016

 

Three Months Ended

December 31, 2015

 

Per Share

 

(in thousands, except per share amounts)

 

Amount

 

Per Share

 

Amount

 

Per Share

 

Change

 

Net income (loss)

 

$

58,440

 

$

0.12

 

$

(599,164)

 

$

(1.29)

 

$

1.41

 

FFO

 

$

162,265

 

$

0.35

 

$

(458,678)

 

$

(0.99)

 

$

1.34

 

   Other impairments, net(1)

   

   

   

829,593

   

1.78

   

(1.78)

 

   Transaction-related items(2)

   

62,016

   

0.13

   

3,959

   

0.01

   

0.12

 

   Loss on debt extinguishments(3)

   

46,020

   

0.10

   

   

   

0.10

 

   Other(4)

   

5,899

   

0.01

   

60

   

   

0.01

 

FFO as adjusted

 

$

276,200

 

$

0.59

 

$

374,934

 

$

0.80

 

$

(0.21)

 

   FFO as adjusted from QCP

   

(26,948)

   

(0.06)

   

(138,875)

   

(0.29)

   

0.23

 

Comparable FFO as adjusted(5)

 

$

249,252

 

$

0.53

 

$

236,059

 

$

0.51

 

$

0.02

 

FAD

 

$

251,251

       

$

313,588

             

________________________________________

(1)

Other impairments, net in the prior period include: (i) $817 million related to our previous HCR ManorCare, Inc. ("HCRMC") direct financing lease ("DFL") investments and (ii) $19 million related to our previous equity investment in HCRMC, partially offset by an impairment recovery of $6 million related to a loan payoff.

(2)

Transaction-related items for the three months ended December 31, 2016 primarily consist of costs incurred for the QCP spin-off.

(3)

Represents penalties of $46 million from the prepayment of $1.1 billion of senior unsecured notes and $108 million of mortgage debt using proceeds from the QCP spin-off.

(4)

For the three months ended December 31, 2016, Other includes: (i) $3 million of severance-related charges, (ii) $3 million of litigation expense related to shareholder lawsuits and (iii) $0.3 million of foreign currency remeasurement losses. For the three months ended December 31, 2015, Other includes $60,000 of foreign currency remeasurement losses.

(5)

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 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.

In addition to the items discussed above, fourth quarter 2016 net income included net gain on sales of real estate of $0.14 per share (of which $0.04 per share is reflected in equity income from unconsolidated joint ventures). During the fourth quarter 2015, operating results included non-cash HCRMC income of $0.08 per share. Additionally, fourth quarter 2015 net income included: (i) $0.01 per share of interest income from monetizing a senior housing development loan and (ii) $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.

FULL YEAR COMPARISON

   

Year Ended

December 31, 2016

 

Year Ended

December 31, 2015

 

Per Share

 

(in thousands, except per share amounts)

 

Amount

 

Per Share

 

Amount

 

Per Share

 

Change

 

Net income (loss)

 

$

626,549

 

$

1.34

 

$

(560,552)

 

$

(1.21)

 

$

2.55

 

FFO

 

$

1,119,153

 

$

2.39

 

$

(10,841)

 

$

(0.02)

 

$

2.41

 

   Other impairments, net(1)

   

   

   

1,446,800

   

3.11

   

(3.11)

 

   Transaction-related items(2)

   

96,586

   

0.20

   

32,932

   

0.07

   

0.13

 

   Loss on debt extinguishments(3)

   

46,020

   

0.10

   

   

   

0.10

 

   Severance-related charges(4)

   

16,965

   

0.04

   

6,713

   

0.01

   

0.03

 

   Other(5)

   

3,666

   

0.01

   

(5,437)

   

(0.01)

   

0.02

 

FFO as adjusted

 

$

1,282,390

 

$

2.74

 

$

1,470,167

 

$

3.16

 

$

(0.42)

 

   FFO as adjusted from QCP

   

(328,341)

   

(0.70)

   

(575,471)

   

(1.22)

   

0.52

 

Comparable FFO as adjusted(6)

 

$

954,049

 

$

2.04

 

$

894,696

 

$

1.94

 

$

0.10

 

FAD

 

$

1,215,696

       

$

1,261,849

             

________________________________________

(1)

Other impairments, net in the prior period include: (i) $1.3 billion related to our previous HCRMC DFL investments, (ii) $112 million related to our Four Seasons Health Care senior notes ("Four Seasons Notes") and (iii) $46 million related to our previous equity investment in HCRMC, partially offset by an impairment recovery of $6 million related to a loan payoff.

(2)

Transaction-related items for the year ended December 31, 2016 primarily consist of costs incurred for the QCP spin-off.

(3)

Represents penalties of $46 million from the prepayment of $1.1 billion of senior unsecured notes and $108 million of mortgage debt using proceeds from the QCP spin-off.

(4)

Severance-related charges for the year ended December 31, 2016 primarily relate to the departure of our former President and Chief Executive Officer. Severance-related charges for the year ended December 31, 2015 relate to the departure of our former Executive Vice President and Chief Investment Officer.

(5)

For the year ended December 31, 2016, Other includes: (i) $3 million of litigation expense related to shareholder lawsuits and (ii) $0.6 million of foreign currency remeasurement losses. For the year ended December 31, 2015, Other includes $5 million of foreign currency remeasurement gains.

(6)

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 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.

In addition to the items discussed above, 2016 net income includes: (i) net gain on sales of real estate of $0.39 per share (of which $0.04 per share is reflected in equity income from unconsolidated joint ventures) and (ii) $0.04 per share of interest income from monetizing three senior housing development loans. In 2015, operating results included non-cash HCRMC income of $0.30 per share. Additionally, 2015 net income included: (i) $0.04 per share of interest income from monetizing three senior housing development loans and (ii) $0.04 per share of net gain on sales of real estate (of which $0.03 per share is reflected in equity income from unconsolidated joint ventures).

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 the "Funds From Operations", "Funds Available for Distribution" and "Net Operating Income and Same Property Performance" sections of this release for additional information regarding these non-GAAP financial measures.

BROOKDALE TRANSACTIONS AND OTHER DISPOSITIONS & TRANSITIONS

BROOKDALE ASSET SALES & TRANSITIONS

During the fourth quarter, we transitioned seven of the eight previously announced expiring Brookdale triple-net leases to RIDEA structures; four remain with Brookdale and three were transferred to Sonata Senior Living.

In January 2017, we completed the previously announced sale of a 40% interest in our RIDEA II senior housing joint venture and the related financing of the venture, generating $480 million of proceeds which were used to pay down our revolving credit facility.

Our previously disclosed transaction to sell 64 communities triple-net leased to Brookdale for $1.125 billion is scheduled to close in the first quarter of 2017. In addition, we continue to market an additional 25 communities triple-net leased to Brookdale and expect to sell or transition these assets during 2017. 

Combined, these transactions reduce Brookdale concentration while improving lease coverage and strengthening our balance sheet and credit profile.

OTHER DISPOSITIONS & TRANSITIONS

Dispositions

During the fourth quarter, we completed $472 million of dispositions, bringing our year-to-date total dispositions to $770 million. Significant transactions in the quarter included:

  • As previously disclosed, in November, we sold four life science facilities in South San Francisco, CA encompassing 457,000 sq. ft. for $311 million to the current tenant.
  • As previously disclosed, in October, we sold seven of ten properties subject to a master lease to the current operator for an aggregate purchase price of $88 million. Concurrently, we modified the in-place master lease to transition the operations of the remaining three properties to a new regional operator.

In January 2017, we sold four life science facilities in Salt Lake City, UT encompassing 324,000 sq. ft. for $76 million to the current tenant.

Transitions

  • In October, we transitioned four triple-net leased assets to RIDEA structures, three managed by Elmcroft Senior Living and one managed by Frontier Management.

INVESTMENT TRANSACTIONS

During the fourth quarter, we completed $345 million of acquisitions and loan fundings, bringing our year-to-date total acquisitions and loan fundings to $723 million. Significant transactions in the quarter included:

  • In November, we entered into agreements with Maria Mallaband Care Group ("Maria Mallaband") to acquire a portfolio of predominantly private pay prime care homes located in London/South-East England for $131 million (£105 million). In mid-2017, through the exercise of a call option, we intend to convert our bridge loan provided to Maria Mallaband in November into fee ownership and enter into a Master Lease with Maria Mallaband.
  • In December, we acquired a 10-asset portfolio of MOBs, including nine on-campus, leased to affiliates of Community Health Systems for an aggregate purchase price of $163 million. The nine on-campus MOBs are affiliated with seven hospitals, each of which is a leader in its respective market.

BALANCE SHEET AND FINANCING ACTIVITIES

Repaid $1.7 billion of debt during the fourth quarter and an additional $440 million through February 13, 2017, using proceeds generated from QCP financing, RIDEA II transaction and other dispositions. We remain on track with our previously disclosed deleveraging plan and continue to target net debt to EBITDA in the low to mid six-times range and a target financial leverage in the 43% to 44% range by the end of 2017.

  • In November, we repaid $500 million of 6.0% senior notes scheduled to mature in January 2017 and $600 million of 6.7% senior notes scheduled to mature in January 2018. In addition, during the fourth quarter we paid down $454 million on our revolving credit facility and $135 million of mortgage debt with maturity dates ranging from the fourth quarter of 2016 to 2018.
  • In January, we paid down $440 million on our revolving credit facility primarily using proceeds from our RIDEA II joint venture disposition.

As of February 13, 2017, we had $1.6 billion of liquidity from a combination of cash and availability under our credit facility.

In October, S&P reaffirmed our BBB credit rating, while Fitch reaffirmed our BBB credit rating and improved our outlook to stable.

LIFE SCIENCE AND MEDICAL OFFICE LEASING

During the fourth quarter, we completed 1.1 million sq. ft. of leasing in our life science and medical office portfolios, consisting of 450,000 sq. ft. of new leases and 668,000 sq. ft. of renewals.

Significant leasing transactions were primarily in our life science portfolio, including a 10-year lease with Five Prime Therapeutics, Inc., a biotechnology company, for 115,000 sq. ft. at Phase II of The Cove, projected to commence in January 2018. This brings Phases I and II to 86% leased.

We commenced the $211 million development of Phase III, which adds two Class A buildings representing up to 336,000 sq. ft., and expect it to be delivered by the fourth quarter of 2018. Visit our website for additional information, including a link to view our development progress at The Cove, at www.hcpi.com/portfolio-diversification/life-science.

QCP SPIN TRANSACTION

On October 31, 2016, we completed the spin-off of QCP into an independent publicly-traded REIT. A copy of the press release is available in the Investor Relations section of our website at http://ir.hcpi.com.

EXECUTIVE LEADERSHIP

Our Board of Directors elected Tom Herzog as CEO and to serve as a member of the Board and also elected Justin Hutchens as President. Both elections were effective January 1, 2017.

Peter Scott joined the company as Executive Vice President and Chief Financial Officer, effective February 13, 2017.

Copies of both press releases are available in the Investor Relations section of our website at http://ir.hcpi.com.

DIVIDEND

On February 2, 2017, our Board declared a quarterly cash dividend of $0.37 per common share. The dividend will be paid on March 2, 2017 to stockholders of record as of the close of business on February 15, 2017. A copy of the press release is available in the Investor Relations section of our website at http://ir.hcpi.com.  

SUSTAINABILITY

In November, HCP was named the 2016 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 eight of the past ten years for producing significant, measurable results through our sustainability programs. 

Additionally, we achieved constituency in the North America Dow Jones Sustainability Index (DJSI) for the fourth consecutive year, as well as the World DJSI for the second time. Accordingly, HCP was included in The Sustainability Yearbook, a listing of the world's most sustainable companies which includes only those companies in the top 15% of their industry, as scored by the DJSI assessment. More information about HCP's sustainability efforts can be found on our website at www.hcpi.com/sustainability.

FULL YEAR 2017 GUIDANCE 

For full year 2017, we expect: EPS to range between $1.32 and $1.38; FFO per share to range between $1.88 and $1.94; 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 "Projected Future Operations" and "Projected SPP Cash NOI" sections 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 Cash NOI

 

Projected Full Year 2017

SPP NOI

   

Low

 

High

 

Low

 

High

Senior housing triple-net

 

3.9%

 

4.9%

 

1.1%

 

2.1%

Senior housing operating portfolio (SHOP)(1)

 

2.0%

 

3.0%

 

2.0%

 

3.0%

Life science

 

2.5%

 

3.5%

 

0.4%

 

1.4%

Medical office

 

2.0%

 

3.0%

 

1.3%

 

2.3%

Other(2)

 

0.75%

 

1.75%

 

1.8%

 

2.8%

   SPP growth

 

2.5%

 

3.5%

 

1.2%

 

2.2%

________________________________________

(1)

The 2016 SHOP SPP Cash NOI growth rate was favorably impacted by 240 basis points due to year-end true-ups of group purchase rebates. The higher 2016 jumping-off point from these rebates contributed to a 200 basis point lower 2017 SHOP SPP Cash NOI growth rate versus what was provided in our November 1st preliminary Outlook. However, of note, the 2017 contribution from SHOP SPP Cash NOI is in line with our November 1st preliminary Outlook.

(2)

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 Monday, February 13, 2017 at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) to present its performance and operating results for the quarter and year ended December 31, 2016. The conference call is accessible by dialing (888) 317-6003 (U.S.) or (412) 317-6061 (International). The conference ID number is 6632291. 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 February 28, 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 10099205. 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 "Full Year 2017 Guidance," including without limitation with respect to expected EPS, FFO per share, FFO as adjusted per share, Comparable FFO per share, SPP Cash NOI and SPP NOI projections, and other financial projections and assumptions, including those in the "Projected Future Operations" and "Projected SPP NOI and SPP Cash NOI" sections of this release, as well as comparable statements included in other sections of this release; (ii) statements regarding the payment of the quarterly cash dividend; and (iii) statements regarding timing, outcomes and other details relating to the 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 "Strategic Brookdale Transactions and Other Dispositions." 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 HCP'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: 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, 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 HCP's Securities and Exchange Commission filings. The Company cautions investors not to place undue reliance on any forward-looking statements. HCP 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

Andrew Johns
Vice President – Finance and Investor Relations
949-407-0400

 

HCP, Inc.

Consolidated Balance Sheets

In thousands, except share and per share data

 
   

December 31,

 

December 31,

   

2016

 

2015

Assets

       

Real estate:

           

Buildings and improvements

 

$

11,692,654

 

$

12,007,071

Development costs and construction in progress

   

400,619

   

388,576

Land

   

1,881,487

   

1,934,610

Accumulated depreciation and amortization

   

(2,648,930)

   

(2,476,015)

Net real estate

   

11,325,830

   

11,854,242

             

Net investment in direct financing leases

   

752,589

   

750,693

Loans receivable, net

   

807,954

   

768,743

Investments in and advances to unconsolidated joint ventures

   

571,491

   

605,244

Accounts receivable, net of allowance of $4,459 and $3,261, respectively

   

45,116

   

48,929

Cash and cash equivalents

   

94,730

   

340,442

Restricted cash

   

42,260

   

46,090

Intangible assets, net

   

479,805

   

586,657

Assets held for sale and discontinued operations, net

   

927,866

   

5,654,326

Other assets, net

   

711,624

   

794,483

             

Total assets

 

$

15,759,265

 

$

21,449,849

             

Liabilities and equity

           

Bank line of credit

 

$

899,718

 

$

397,432

Term loans

   

440,062

   

524,807

Senior unsecured notes

   

7,133,538

   

9,120,107

Mortgage debt

   

623,792

   

932,212

Other debt

   

92,385

   

94,445

Intangible liabilities, net

   

58,145

   

56,147

Liabilities of assets held for sale and discontinued operations, net

   

3,776

   

25,266

Accounts payable and accrued liabilities

   

417,360

   

430,786

Deferred revenue

   

149,181

   

122,330

Total liabilities

   

9,817,957

   

11,703,532

             
             

Common stock, $1.00 par value: 750,000,000 shares authorized; 468,081,489 and 465,488,492 shares issued and outstanding, respectively

   

468,081

   

465,488

Additional paid-in capital

   

8,198,890

   

11,647,039

Cumulative dividends in excess of earnings

   

(3,089,734)

   

(2,738,414)

Accumulated other comprehensive loss

   

(29,642)

   

(30,470)

Total stockholders' equity

   

5,547,595

   

9,343,643

             

Joint venture partners

   

214,377

   

217,066

Non-managing member unitholders

   

179,336

   

185,608

Total noncontrolling interests

   

393,713

   

402,674

             

Total equity

   

5,941,308

   

9,746,317

             

Total liabilities and equity

 

$

15,759,265

 

$

21,449,849

 

HCP, Inc.

Consolidated Statements of Operations

In thousands, except per share data

 
   

Three Months Ended

December 31,

 

Year Ended

December 31,

   

2016

 

2015

 

2016

 

2015

   

(Unaudited)

   
                         

Revenues:

                       

Rental and related revenues

 

$

286,968

 

$

292,083

 

$

1,159,791

 

$

1,116,830

Tenant recoveries

   

34,565

   

31,785

   

134,280

   

125,022

Resident fees and services

   

186,118

   

158,312

   

686,835

   

525,453

Income from direct financing leases

   

14,789

   

15,010

   

59,580

   

61,000

Interest income

   

17,510

   

23,135

   

88,808

   

112,184

Total revenues

   

539,950

   

520,325

   

2,129,294

   

1,940,489

                         

Costs and expenses:

                       

Interest expense

   

103,148

   

122,027

   

464,403

   

479,596

Depreciation and amortization

   

146,927

   

139,686

   

568,108

   

504,905

Operating

   

195,648

   

171,665

   

738,399

   

610,679

General and administrative

   

20,600

   

21,835

   

103,611

   

95,965

Acquisition and pursuit costs

   

3,760

   

3,959

   

9,821

   

27,309

(Recoveries) impairments, net

   

   

(6,108)

   

   

108,349

Total costs and expenses

   

470,083

   

453,064

   

1,884,342

   

1,826,803

                         

Other income (expense):

                       

Gain on sales of real estate, net

   

45,093

   

   

164,698

   

6,377

Loss on debt extinguishments

   

(46,020)

   

   

(46,020)

   

Other (loss) income, net

   

(1,410)

   

3,147

   

3,654

   

16,208

Total other (loss) income, net

   

(2,337)

   

3,147

   

122,332

   

22,585

                         

Income before income taxes and equity income from unconsolidated joint ventures

   

67,530

   

70,408

   

367,284

   

136,271

Income tax (expense) benefit

   

(3,372)

   

2,596

   

(4,473)

   

9,807

Equity income from unconsolidated joint ventures

   

15,388

   

12,144

   

11,360

   

6,590

Income from continuing operations

   

79,546

   

85,148

   

374,171

   

152,668

                         

Discontinued operations:

                       

Income before impairments, transaction costs and income taxes

   

40,470

   

156,141

   

400,701

   

643,109

Impairments, net

   

   

(835,701)

   

   

(1,341,399)

Transaction costs

   

(58,256)

   

   

(86,765)

   

Income tax expense

   

(460)

   

(205)

   

(48,181)

   

(796)

Total discontinued operations

   

(18,246)

   

(679,765)

   

265,755

   

(699,086)

                         

Net income (loss)

   

61,300

   

(594,617)

   

639,926

   

(546,418)

Noncontrolling interests' share in earnings 

   

(2,639)

   

(4,251)

   

(12,179)

   

(12,817)

                         

Net income (loss) attributable to HCP, Inc.

   

58,661

   

(598,868)

   

627,747

   

(559,235)

Participating securities' share in earnings

   

(221)

   

(296)

   

(1,198)

   

(1,317)

                         

Net income (loss) applicable to common shares

 

$

58,440

 

$

(599,164)

 

$

626,549

 

$

(560,552)

                         

Earnings per common share:

                       

Basic

 

$

0.12

 

$

(1.29)

 

$

1.34

 

$

(1.21)

                         

Diluted

 

$

0.12

 

$

(1.29)

 

$

1.34

 

$

(1.21)

                         

Weighted average shares used to calculate earnings per common share:

                       

Basic

   

467,979

   

465,036

   

467,195

   

462,795

                         

Diluted

   

468,210

   

465,036

   

467,403

   

462,795

 

HCP, Inc.

Consolidated Statements of Cash Flows

In thousands

 
   

Year Ended December 31,

   

2016

 

2015

Cash flows from operating activities:

       

Net income (loss)

 

$

639,926

 

$

(546,418)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

       

Depreciation and amortization of real estate, in-place lease and other intangibles:

       

Continuing operations

 

568,108

 

504,905

Discontinued operations

 

4,890

 

5,880

Amortization of market lease intangibles, net

 

(1,197)

 

(1,295)

Amortization of deferred compensation

 

22,884

 

26,127

Amortization of deferred financing costs

 

20,014

 

20,222

Straight-line rents

 

(18,003)

 

(28,859)

Loan and direct financing lease non-cash interest:

       

Continuing operations

 

599

 

(5,648)

Discontinued operations

 

 

(90,065)

Deferred rental revenues

 

(1,959)

 

(2,813)

Equity income from unconsolidated joint ventures

 

(11,360)

 

(57,313)

Distributions of earnings from unconsolidated joint ventures

 

26,492

 

15,111

Lease termination income, net

 

 

(1,103)

Gain on sales of real estate, net

 

(164,698)

 

(6,377)

Deferred income tax expense

 

47,195

 

Loss on debt extinguishments

 

46,020

 

Foreign exchange and other losses (gains), net

 

188

 

(7,178)

Impairments, net

 

 

1,449,748

Changes in:

       

Accounts receivable, net

 

3,813

 

(9,569)

Other assets, net

 

(10,805)

 

(19,453)

Accounts payable and accrued liabilities

 

42,024

 

(23,757)

Net cash provided by operating activities

 

1,214,131

 

1,222,145

Cash flows from investing activities:

       

Acquisitions of RIDEA III, net

 

 

(770,325)

Acquisitions of other real estate

 

(467,162)

 

(613,252)

Development of real estate

 

(421,322)

 

(281,017)

Leasing costs and tenant and capital improvements

 

(91,442)

 

(84,282)

Proceeds from sales of real estate, net

 

647,754

 

58,623

Contributions to unconsolidated joint ventures

 

(10,186)

 

(69,936)

Distributions in excess of earnings from unconsolidated joint ventures

 

28,366

 

30,989

Proceeds from the sales of marketable securities

 

 

2,348

Principal repayments on loans receivable, DFLs and other

 

231,990

 

625,701

Investments in loans receivable and other

 

(273,693)

 

(575,652)

Purchase of securities for debt defeasance

 

(73,278)

 

Decrease in restricted cash

 

18,356

 

4,798

Net cash used in investing activities

 

(410,617)

 

(1,672,005)

Cash flows from financing activities:

       

Net borrowings under bank line of credit

 

1,108,417

 

98,743

Repayments under bank line of credit

 

(540,000)

 

(511,521)

Proceeds related to QCP spin-off, net

 

1,691,268

 

Cash impact of QCP spin-off

 

(6,096)

 

Borrowings under term loan

 

 

333,014

Issuance of senior unsecured notes

 

 

1,936,017

Repayments of senior unsecured notes

 

(2,000,000)

 

(400,000)

Debt extinguishment costs

 

(45,406)

 

Repayments of mortgage and other debt

 

(316,774)

 

(57,845)

Deferred financing costs

 

(9,450)

 

(19,995)

Issuance of common stock and exercise of options

 

67,650

 

206,471

Repurchase of common stock

 

(8,685)

 

(8,738)

Dividends paid on common stock

 

(979,542)

 

(1,046,638)

Issuance of noncontrolling interests

 

11,834

 

110,775

Purchase of noncontrolling interests

 

(1,300)

 

(7,049)

Distributions to noncontrolling interests

 

(26,181)

 

(19,147)

Net cash (used in) provided by financing activities

 

(1,054,265)

 

614,087

Effect of foreign exchange on cash and cash equivalents

 

(1,019)

 

(1,537)

Net (decrease) increase in cash and cash equivalents

 

(251,770)

 

162,690

Cash and cash equivalents, beginning of year

 

346,500

 

183,810

Cash and cash equivalents, end of year

 

$

94,730

 

$

346,500

Less: cash and cash equivalents of discontinued operations

   

   

(6,058)

Cash and cash equivalents of continuing operations, end of year

 

$

94,730

 

$

340,442

 

 

HCP, Inc.

Funds From Operations(1)

In thousands, except per share data

(Unaudited)

 
   

Three Months Ended

December 31,

 

Year Ended

December 31,

 
   

2016

 

2015

 

2016

 

2015

 
                           

Net income (loss) applicable to common shares

 

$

58,440

 

$

(599,164)

 

$

626,549

 

$

(560,552)

 

Depreciation and amortization

   

147,416

   

141,156

   

572,998

   

510,785

 

Other depreciation and amortization(2)

   

2,998

   

5,207

   

11,919

   

22,223

 

Gain on sales of real estate, net

   

(45,093)

   

   

(164,698)

   

(6,377)

 

Taxes associated with real estate disposition(3)

   

7,017

   

   

60,451

   

 

Impairment of real estate

   

   

   

   

2,948

 

Equity income from unconsolidated joint ventures

   

(15,388)

   

(23,397)

   

(11,360)

   

(57,313)

 

FFO from unconsolidated joint ventures

   

11,967

   

21,176

   

44,071

   

90,498

 

Noncontrolling interests' and participating securities' share in earnings

   

2,860

   

4,547

   

13,377

   

14,134

 

Noncontrolling interests' and participating securities' share in FFO

   

(7,952)

   

(8,203)

   

(34,154)

   

(27,187)

 

FFO applicable to common shares

 

$

162,265

 

$

(458,678)

 

$

1,119,153

 

$

(10,841)

 

Distributions on dilutive convertible units

   

   

   

8,732

   

 

Diluted FFO applicable to common shares

 

$

162,265

 

$

(458,678)

 

$

1,127,885

 

$

(10,841)

 
                           

Diluted FFO per common share

 

$

0.35

 

$

(0.99)

 

$

2.39

 

$

(0.02)

 
                           

Weighted average shares used to calculate diluted FFO per share

   

468,210

   

465,036

   

471,566

   

462,795

 
                           

Impact of adjustments to FFO:

                         

Other impairments, net(4)

 

$

 

$

829,593

 

$

 

$

1,446,800

 

Transaction-related items

   

62,016

   

3,959

   

96,586

   

32,932

 

Loss on debt extinguishments(5)

   

46,020

   

   

46,020

   

 

Severance-related charges(6)

   

2,501

   

   

16,965

   

6,713

 

Litigation provision

   

3,081

   

   

3,081

   

 

Foreign currency remeasurement losses (gains)

   

317

   

60

   

585

   

(5,437)

 
   

$

113,935

 

$

833,612

 

$

163,237

 

$

1,481,008

 
                           

FFO as adjusted applicable to common shares

 

$

276,200

 

$

374,934

 

$

1,282,390

 

$

1,470,167

 

Distributions on dilutive convertible units and other

   

2,315

   

3,397

   

12,849

   

13,597

 

Diluted FFO as adjusted applicable to common shares

 

$

278,515

 

$

378,331

 

$

1,295,239

 

$

1,483,764

 

Per common share impact of adjustments on diluted FFO

 

$

0.24

 

$

1.79

 

$

0.35

 

$

3.18

 
                           

Diluted FFO as adjusted per common share

 

$

0.59

 

$

0.80

 

$

2.74

 

$

3.16

 
                           

Weighted average shares used to calculate diluted FFO as adjusted per share

   

474,318

   

471,273

   

473,340

   

469,064

 
                           

FFO as adjusted from QCP

 

$

26,948

 

$

138,875

 

$

328,341

 

$

575,471

 

Diluted Comparable FFO as adjusted applicable to common shares(7)

 

$

251,567

 

$

239,456

 

$

966,898

 

$

908,293

 

FFO as adjusted from QCP per common share

 

$

0.06

 

$

0.29

 

$

0.70

 

$

1.22

 
                           

Diluted Comparable FFO as adjusted per common share(7)

 

$

0.53

 

$

0.51

 

$

2.04

 

$

1.94

 
                           

_______________________________________

(1) 

See "Results of Operations-Non-GAAP Financial Measures" and "Non-GAAP Financial Measure Reconciliations" included in our Annual Report on Form 10-K for the year ended December 31, 2016 for definitions of FFO and FFO as adjusted and an important discussion of their uses and inherent limitations.

(2)  

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. Beginning January 2016, we changed our accounting treatment for our previous HCRMC DFL investments to recognize rental income on a cash basis and no longer recognize non-cash depreciation.

(3)  

Represents income tax expense associated with state built-in gain tax payable upon the disposition of specific real estate assets, of which $47 million relates to our previous HCRMC real estate portfolio. See Note 5 to the Consolidated Financial Statements for the year ended December 31, 2016 included in our Annual Report on Form 10-K.

(4) 

For the three months ended December 31, 2015, other impairments, net include: (i) $817 million related to our previous HCRMC DFL investments and (ii) $19 million related to our previous equity investment in HCRMC, partially offset by an impairment recovery of $6 million related to a loan payoff. For the year ended December 31, 2015, other impairments, net include: (i) $1.3 billion related to our previous HCRMC DFL investments, (ii) $112 million related to our Four Seasons Notes and (iii) $46 million related to our previous equity investment in HCRMC, partially offset by an impairment recovery of $6 million related to a loan payoff.  

(5) 

Represents penalties of $46 million from the prepayment of $1.1 billion of senior unsecured notes and $108 million of mortgage debt using proceeds from the QCP spin-off.

(6) 

Severance-related charges for the year ended December 31, 2016 primarily relate to the departure of our former President and Chief Executive Officer. Severance-related charges for the year ended December 31, 2015 relate to the departure of our former Executive Vice President and Chief Investment Officer.

(7) 

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 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(1)

In thousands

(Unaudited)

 
   

Three Months Ended

December 31,

 

Year Ended

December 31,

   

2016

 

2015

 

2016

 

2015

                         

FFO as adjusted applicable to common shares

 

$

276,200

 

$

374,934

 

$

1,282,390

 

$

1,470,167

Amortization of market lease intangibles, net

   

196

   

(315)

   

(1,197)

   

(1,295)

Amortization of deferred compensation(2)

   

2,687

   

5,059

   

15,581

   

23,233

Amortization of deferred financing costs

   

4,416

   

5,272

   

20,014

   

20,222

Straight-line rents

   

(3,591)

   

(4,042)

   

(18,003)

   

(28,859)

DFL non-cash interest(3)

   

633

   

(23,685)

   

2,600

   

(87,861)

Other depreciation and amortization

   

(2,998)

   

(5,207)

   

(11,919)

   

(22,223)

Deferred revenues – tenant improvement related

   

(432)

   

(457)

   

(1,883)

   

(2,594)

Deferred revenues – additional rents

   

(500)

   

(860)

   

(76)

   

(219)

Leasing costs and tenant and capital improvements

   

(26,179)

   

(31,193)

   

(88,953)

   

(82,072)

Lease restructure payments

   

2,124

   

6,289

   

16,604

   

22,657

Joint venture adjustments – CCRC entrance fees(4)

   

7,574

   

8,870

   

29,998

   

30,918

Joint venture and other FAD adjustments(3)

   

(8,879)

   

(21,077)

   

(29,460)

   

(80,225)

FAD applicable to common shares

 

$

251,251

 

$

313,588

 

$

1,215,696

 

$

1,261,849

Distributions on dilutive convertible units

   

2,466

   

3,547

   

13,088

   

14,230

                         

Diluted FAD applicable to common shares 

 

$

253,717

 

$

317,135

 

$

1,228,784

 

$

1,276,079

                         
                         

________________________________________

(1)

See "Results of Operations-Non-GAAP Financial Measures" and "Non-GAAP Financial Measure Reconciliations" included in our Annual Report on Form 10-K for the year ended December 31, 2016 for the definition of FAD and an important discussion of its uses and inherent limitations.

(2)

Excludes $7 million primarily related to the acceleration of deferred compensation for restricted stock units that vested upon the departure of HCP's former President and Chief Executive Officer, which is included in the severance-related charges for the year ended December 31, 2016. Excludes $3 million related to the acceleration of deferred compensation for restricted stock units and stock options that vested upon the departure of HCP's former Executive Vice President and Chief Investment Officer, which is included in the severance-related charges for the year ended December 31, 2015.

(3)

For the three months and year ended December 31, 2015, DFL non-cash interest reflects an elimination of $14 million and $58 million, respectively. Our previous equity investment in HCRMC was accounted for using the equity method, which required an elimination of DFL income that was proportional to our ownership in HCRMC. Further, our share of earnings from HCRMC (equity income) increased for the corresponding elimination of related lease expense recognized at the HCRMC entity level, which we presented as a non-cash joint venture FAD adjustment. Beginning January 2016, as a result of placing our previous equity investment in HCRMC on a cash basis, we no longer eliminated our proportional ownership share of income from DFLs to equity income (loss) from unconsolidated joint ventures.

(4)

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)

Dollars in thousands

(Unaudited)

 
   

Three Months Ended

December 31,

 

Year Ended

December 31,

   

2016

 

2015

 

2016

 

2015

Net income (loss)

 

$

61,300

 

$

(594,617)

 

$

639,926

 

$

(546,418)

Interest income

   

(17,510)

   

(23,135)

   

(88,808)

   

(112,184)

Interest expense

   

103,148

   

122,027

   

464,403

   

479,596

Depreciation and amortization

   

146,927

   

139,686

   

568,108

   

504,905

General and administrative

   

20,600

   

21,835

   

103,611

   

95,965

Acquisition and pursuit costs

   

3,760

   

3,959

   

9,821

   

27,309

(Recoveries) impairments, net

   

   

(6,108)

   

   

108,349

Gain on sales of real estate, net

   

(45,093)

   

   

(164,698)

   

(6,377)

Loss on debt extinguishments

   

46,020

   

   

46,020

   

Other loss (income), net

   

1,410

   

(3,147)

   

(3,654)

   

(16,208)

Income tax expense (benefit)

   

3,372

   

(2,596)

   

4,473

   

(9,807)

Equity income from unconsolidated joint ventures

   

(15,388)

   

(12,144)

   

(11,360)

   

(6,590)

Discontinued operations

   

18,246

   

679,765

   

(265,755)

   

699,086

HCP's share of unconsolidated joint ventures revenues

   

55,024

   

50,095

   

215,804

   

191,986

HCP's share of unconsolidated joint ventures operating expenses

   

(42,137)

   

(40,169)

   

(169,035)

   

(154,259)

NOI

 

$

339,679

 

$

335,451

 

$

1,348,856

 

$

1,255,353

Non-SPP NOI

   

(46,498)

   

(49,088)

   

(308,951)

   

(241,775)

SPP NOI

 

$

293,181

 

$

286,363

 

$

1,039,905

 

$

1,013,578

Non-cash adjustment to SPP NOI

   

(1,603)

   

(2,111)

   

(6,152)

   

(16,789)

SPP cash (adjusted) NOI

 

$

291,578

 

$

284,252

 

$

1,033,753

 

$

996,789

SPP NOI % change

   

2.4%

         

2.6%

     

SPP Cash (adjusted) NOI % change

   

2.6%

         

3.7%

     

________________________________________

(1) 

See "Results of Operations-Non-GAAP Financial Measures," "Results of Operations-Segment Analysis" and "Note 14 to the Consolidated Financial Statements" included in our Annual Report on Form 10-K for the year ended December 31, 2016 for definitions of NOI, Cash (adjusted) NOI and SPP and an important discussion of their uses and inherent limitations.

 

HCP, Inc.

Projected Future Operations(1)

(Unaudited)

 
   

Full Year 2017

   

Low

 

High

         

Diluted earnings per common share

 

$     1.32

 

$     1.38

Depreciation and amortization

 

1.13

 

1.13

Other depreciation and amortization

 

0.02

 

0.02

Gain on sales of real estate, net

 

(0.70)

 

(0.70)

Joint venture FFO adjustments

 

0.11

 

0.11

Diluted FFO per common share

 

$     1.88

 

$     1.94

Transaction-related items and other

 

0.01

 

0.01

Diluted FFO as adjusted per common share

 

$     1.89

 

$     1.95

         

________________________________________

(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 unannounced future transactions, except as described herein, 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 larger than expected litigation settlements and related expenses related to existing or future litigation matters. 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 NOI and Cash NOI(1) 

Dollars in thousands

(Unaudited)

 

For the projected full year 2017 (low): 

 
   

Senior Housing
Triple-net

 

SHOP

 

Life Science

 

Medical

Office

 

Other

 

Total

NOI(2)

 

$

319,000

 

$

238,800

 

$

273,900

 

$

293,000

 

$

117,700

 

$

1,242,400

Non-SPP NOI

   

(35,200)

   

(48,250)

   

(34,700)

   

(41,300)

   

(7,800)

   

(167,250)

SPP NOI

   

283,800

   

190,550

   

239,200

   

251,700

   

109,900

   

1,075,150

Non-cash adjustments to SPP NOI(3)

   

5,500

   

   

5,100

   

1,000

   

(4,150)

   

7,450

SPP cash (adjusted) NOI

 

$

289,300

 

$

190,550

 

$

244,300

 

$

252,700

 

$

105,750

   

1,082,600

Addback adjustments(4)

                                 

159,800

Other income and expenses(5)

                                 

337,100

Costs and expenses(6)

                                 

(944,900)

   Net income

                               

$

634,600

                                     

For the projected full year 2017 (high): 

 
   

Senior Housing
Triple-net

 

SHOP

 

Life Science

 

Medical

Office

 

Other

 

Total

NOI(2)

 

$

323,200

 

$

241,300

 

$

276,800

 

$

295,700

 

$

118,900

 

$

1,255,900

Non-SPP NOI

   

(36,600)

   

(48,900)

   

(35,200)

   

(41,500)

   

(7,950)

   

(170,150)

SPP NOI

   

286,600

   

192,400

   

241,600

   

254,200

   

110,950

   

1,085,750

Non-cash adjustments to SPP NOI(3)

   

5,500

   

   

5,100

   

1,000

   

(4,150)

   

7,450

SPP cash (adjusted) NOI

 

$

292,100

 

$

192,400

 

$

246,700

 

$

255,200

 

$

106,800

   

1,093,200

Addback adjustments(4)

                                 

162,700

Other income and expenses(5)

                                 

344,100

Costs and expenses(6)

                                 

(937,900)

   Net income

                               

$

662,100

                                     

For the year ended December 31, 2016:

 
   

Senior Housing
Triple-net

 

SHOP

 

Life Science

 

Medical

Office

 

Other

 

Total

NOI(2)

 

$

416,408

 

$

243,752

 

$

292,057

 

$

273,994

 

$

122,645

 

$

1,348,856

Non-SPP NOI

   

(135,723)

   

(56,945)

   

(53,822)

   

(25,522)

   

(14,695)

   

(286,707)

SPP NOI

   

280,685

   

186,807

   

238,235

   

248,472

   

107,950

   

1,062,149

Non-cash adjustments to SPP NOI(3)

   

(2,252)

   

   

114

   

(733)

   

(2,985)

   

(5,856)

SPP cash (adjusted) NOI

 

$

278,433

 

$

186,807

 

$

238,349

 

$

247,739

 

$

104,965

   

1,056,293

Addback adjustments(4)

                                 

292,563

Other income and expenses(5)

                             

217,278

Costs and expenses(6)

                             

(1,191,963)

Discontinued operations

                       

265,755

   Net income

                               

$

639,926

 

Projected SPP NOI change for the full year 2017:

 
   

Senior Housing
Triple-net

 

SHOP

 

Life Science

 

Medical

Office

 

Other

 

Total

Low

 

1.1%

 

2.0%

 

0.4%

 

1.3%

 

1.8%

 

1.2%

High

 

2.1%

 

3.0%

 

1.4%

 

2.3%

 

2.8%

 

2.2%

                         

Projected SPP cash (adjusted) NOI change for the full year 2017:

 
   

Senior Housing
Triple-net

 

SHOP(7)

 

Life Science

 

Medical

Office

 

Other

 

Total

Low

 

3.9%

 

2.0%

 

2.5%

 

2.0%

 

0.75%

 

2.5%

High

 

4.9%

 

3.0%

 

3.5%

 

3.0%

 

1.75%

 

3.5%

________________________________________

(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 impact of unannounced future transactions, except as described herein, 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 larger than expected litigation settlements and related expenses related to existing or future litigation matters. 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, tenant recoveries, resident fees and services, and income from DFLs, less property level operating expenses, including our share of unconsolidated joint ventures.

(3)

Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net and lease termination fees.

(4)

Represents non-SPP NOI and non-cash adjustments to SPP NOI.

(5)

Represents interest income, gain on sales of real estate, other income, net, income taxes and equity income (loss) from unconsolidated joint ventures, excluding NOI.

(6)

Represents interest expense, depreciation and amortization, general and administrative expenses, acquisition and pursuit costs, and loss on debt extinguishments.

(7)

The 2016 SHOP SPP Cash NOI growth rate was favorably impacted by 240 basis points due to year-end true-ups of group purchase rebates. The higher 2016 jumping-off point from these rebates contributed to a 200 basis point lower 2017 SHOP SPP Cash NOI growth rate versus what was provided in our November 1st preliminary Outlook. However, of note, the 2017 contribution from SHOP SPP Cash NOI is in line with our November 1st preliminary Outlook.

   

 

 

SOURCE HCP, Inc.