HCP Reports Modest Q4

Feb.16.10 | About: HCP, Inc. (HCP)

HCP Inc. (NYSE:HCP), a healthcare real estate investment trust (REIT), reported fourth quarter 2009 FFO (funds from operations) of $106.0 million or 36 cents per share, compared to $121.0 million or 48 cents per share in the year-earlier quarter (see conference call transcript here). Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

The year-over-year decrease in FFO was primarily due to impairment charges and litigation costs. Excluding the one-time charges, FFO for the fourth quarter of 2009 was $160.5 million or 55 cents per share compared to $136.2 million or 54 cents per share in the year-ago period.

For full year 2009, HCP reported FFO of $412.5 million or $1.50 per share compared to $535.8 million or $2.24 per share in the previous year. Excluding the non-recurring items, FFO for full year 2009 was $590.0 million or $2.14 per share compared to $567.5 million or $2.37 per share for full year 2008.

During the quarter, HCP invested $33 million for construction and other capital projects, primarily in the life science segment. The company sold $38 million marketable debt securities during the quarter, realizing aggregate gains of $2.5 million. In addition, HCP also sold three senior housing facilities for $14 million, recognizing a profit of $3 million.

For full year 2009, HCP invested $724 million, including the purchase of a $720 million participation in first mortgage debt of HCR ManorCare at a discount of $130 million. The company also sold investments worth $229 million during the year. This included the sale of HCA bonds for $157 million for a profit of $9 million, and asset sale of $72 million for a profit of $37 million.

During 2009, HCP reduced its financial leverage from 48% to 43%. The company raised $881 million of equity capital through the issuance of common stock and ended the year with $1.4 billion available on its line of credit and $289 million of unrestricted cash and marketable securities.

The company increased its quarterly cash dividend from 46 cents per share to approximately 47 cents. For full year 2010, HCP expects FFO in the range of $2.11 to $2.17 per share.