Exhibit 99.2
Supplemental Information
June 30, 2011
(Unaudited)
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South San Francisco, CA |
| Sarasota, FL |
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Tiverton, RI |
| Elk Grove, CA |
Table of Contents
Company Information | 1 |
Summary | 2 |
Funds From Operations and Funds Available for Distribution | 3 |
Capitalization | 4 |
Indebtedness and Ratios | 5 |
Investments and Dispositions | 6 |
Development | 7 |
Owned Portfolio |
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Portfolio summary | 8 |
Portfolio concentrations | 9 |
Same property leased portfolio | 10 |
Lease expirations and debt investment maturities | 11 |
Owned Senior Housing Portfolio |
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Investments and operator concentration | 12 |
Trends | 13 |
Owned Post-Acute/Skilled Nursing Portfolio |
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Investments and operator concentration | 14 |
Trends and HCR ManorCare information | 15 |
Owned Life Science Portfolio |
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Investments, tenant concentration and trends | 16 |
Selected lease expirations and leasing activity | 17 |
Owned Medical Office Portfolio |
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Investments and trends | 18 |
Leasing activity | 19 |
Owned Hospital Portfolio |
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Investments and operator concentration | 20 |
Trends | 21 |
Investment Management Platform |
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Summary and balance sheets | 22 |
Statements of operations and funds from operations | 23 |
Net operating income | 24 |
Portfolio summary | 25 |
Reporting Definitions and Reconciliations of Non-GAAP Measures | 26-30 |
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this supplemental information which are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include among other things the Company’s estimate of (i) completion dates, stabilization dates, rentable square feet and total investment for development projects in progress, and (ii) rentable square feet for land held for development. These statements are made as of the date hereof and are subject to known and unknown risks, uncertainties, assumptions and other factors—many of which are out of the Company’s control and difficult to forecast—that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks and uncertainties include but are not limited to: national and local economic conditions; continued volatility in the capital markets, including changes in interest rates and the availability and cost of capital, which changes and volatility affect opportunities for profitable investment; the Company’s ability to access external sources of capital when desired and on reasonable terms; the Company’s ability to manage its indebtedness levels; changes in the terms of the Company’s indebtedness; the Company’s ability to maintain its credit ratings; the potential impact of existing and future litigation matters, including the possibility of larger than expected litigation costs and related developments; the Company’s ability to successfully integrate the operations of acquired companies; competition for lessees and mortgagors (including new leases and mortgages and the renewal or rollover of existing leases); the Company’s ability to reposition its properties on the same or better terms if existing leases are not renewed or the Company exercises its right to replace an existing operator or tenant upon default; continuing reimbursement uncertainty in the post-acute/skilled nursing segment; competition in the senior housing segment specifically and in the healthcare industry in general; the ability of the Company’s operators and tenants from its senior housing segment to maintain or increase their occupancy levels and revenues; the ability of the Company’s lessees and mortgagors to maintain the financial strength and liquidity necessary to satisfy their respective obligations to the Company and other third parties; the bankruptcy, insolvency or financial deterioration of the Company’s operators, lessees, borrowers or other obligors; changes in healthcare laws and regulations, including the impact of future or pending healthcare reform, and other changes in the healthcare industry which affect the operations of the Company’s lessees or obligors; the Company’s ability to recruit and retain key management personnel; costs of compliance with regulations and environmental laws affecting the Company’s properties; changes in tax laws and regulations; changes in the financial position or business strategies of HCR ManorCare; the Company’s ability and willingness to maintain its qualification as a REIT; changes in rules governing financial reporting, including new accounting pronouncements; and other risks 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.
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Company Information(1)
Board of Directors | ||
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James F. Flaherty III |
| Michael D. McKee |
Chairman and Chief Executive Officer |
| Chief Executive Officer |
HCP, Inc. |
| Bentall Kennedy U.S., L.P. |
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Christine N. Garvey |
| Peter L. Rhein |
Former Global Head of Corporate |
| Partner, Sarlot & Rhein |
Real Estate Services, Deutsche Bank AG |
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David B. Henry |
| Kenneth B. Roath |
Vice Chairman, President and Chief |
| Chairman Emeritus, HCP, Inc. |
Executive Officer, Kimco Realty Corporation |
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Lauralee E. Martin |
| Joseph P. Sullivan |
Chief Operating and Financial Officer |
| Chairman of the Board of Advisors |
Jones Lang LaSalle Incorporated |
| RAND Health |
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Senior Management | ||
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James F. Flaherty III |
| Thomas M. Klaritch |
Chairman and |
| Executive Vice President |
Chief Executive Officer |
| Medical Office Properties |
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Jonathan M. Bergschneider |
| James W. Mercer |
Executive Vice President |
| Executive Vice President, General Counsel |
Life Science Estates |
| and Corporate Secretary |
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Paul F. Gallagher |
| Timothy M. Schoen |
Executive Vice President and |
| Executive Vice President and |
Chief Investment Officer |
| Chief Financial Officer |
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Edward J. Henning |
| Susan M. Tate |
Executive Vice President |
| Executive Vice President |
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| Asset Management and Senior Housing |
Thomas D. Kirby |
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Executive Vice President |
| Kendall K. Young |
Acquisitions and Valuations |
| Executive Vice President |
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Other Information | ||
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Corporate Headquarters |
| San Francisco Office |
3760 Kilroy Airport Way, Suite 300 |
| 400 Oyster Point Boulevard, Suite 409 |
Long Beach, CA 90806-2473 |
| South San Francisco, CA 94080 |
(562) 733-5100 |
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Nashville Office |
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3000 Meridian Boulevard, Suite 200 |
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Franklin, TN 37067 |
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The information in this supplemental information package should be read in conjunction with the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other information filed with the Securities and Exchange Commission (“SEC”). The Reporting Definitions and Reconciliations of Non-GAAP Measures are an integral part of the information presented herein.
On the Company’s internet website, www.hcpi.com, you can access, free of charge, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. The information contained on its website is not incorporated by reference into, and should not be considered a part of, this supplemental information package. In addition, the SEC maintains an internet website that contains reports, proxy and information statements, and other information regarding issuers, including HCP, that file electronically with the SEC at www.sec.gov.
For more information, contact Timothy M. Schoen, Executive Vice President - Chief Financial Officer at (562) 733-5309.
(1) As of July 29, 2011.
Summary
Dollars in thousands, except per share data
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| Three Months Ended |
| Six Months Ended |
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| 2011 |
| 2010 |
| 2011 |
| 2010 |
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Revenues |
| $ | 488,706 |
| $ | 301,877 |
| $ | 820,411 |
| $ | 596,697 |
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NOI |
| 381,055 |
| 219,015 |
| 627,211 |
| 431,174 |
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Adjusted EBITDA |
| 432,365 |
| 249,208 |
| 701,834 |
| 486,600 |
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FFO applicable to common shares |
| 317,911 |
| 161,875 |
| 467,658 |
| 320,552 |
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FFO as adjusted applicable to common shares |
| 312,199 |
| 161,875 |
| 494,254 |
| 308,652 |
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FAD applicable to common shares |
| 251,875 |
| 138,074 |
| 411,497 |
| 267,723 |
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Net income applicable to common shares |
| 222,993 |
| 79,465 |
| 286,939 |
| 154,301 |
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Diluted FFO per common share |
| $ | 0.78 |
| $ | 0.55 |
| $ | 1.19 |
| $ | 1.08 |
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Diluted FFO as adjusted per common share |
| 0.77 |
| 0.55 |
| 1.35 |
| 1.04 |
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Diluted FAD per common share |
| 0.62 |
| 0.47 |
| 1.12 |
| 0.91 |
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Diluted EPS |
| 0.55 |
| 0.27 |
| 0.73 |
| 0.52 |
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FFO as adjusted payout ratio |
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| 71% |
| 89% |
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Financial Leverage |
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| 40% |
| 41% |
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Adjusted fixed charge coverage |
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| 2.9x |
| 2.7x |
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| June 30, |
| December 31, |
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Leased properties: |
| 2011 |
| 2010 |
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Senior housing |
| 317 |
| 251 |
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Post-acute/skilled nursing |
| 313 |
| 45 |
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Life science |
| 108 |
| 102 |
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Medical office |
| 254 |
| 253 |
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Hospital |
| 21 |
| 21 |
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Total |
| 1,013 |
| 672 |
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Portfolio Income from Assets Under Management(1) |
| Assets Under Management: $18.6 billion(2) |
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(1) Represents the adjusted NOI from real estate owned by HCP, the interest income from debt investments and HCP’s pro rata share of the adjusted NOI from real estate owned by the Company’s Investment Management Platform, excluding assets under development and land held for development, for the six months ended June 30, 2011.
(2) Represents the historical cost of real estate owned by HCP, the carrying amount of debt investments and 100% of the cost of real estate owned by the Company’s Investment Management Platform, excluding assets held for sale and under development and land held for development, at June 30, 2011.
See Reporting Definitions and Reconciliations of Non-GAAP Measures
Funds From Operations and Funds Available for Distribution |
Dollars and shares in thousands, except per share data |
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| Three Months Ended |
| Six Months Ended |
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| 2011 |
| 2010 |
| 2011 |
| 2010 |
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Net income applicable to common shares |
| $ | 222,993 |
| $ | 79,465 |
| $ | 286,939 |
| $ | 154,301 |
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Depreciation and amortization of real estate, in-place lease and other intangibles |
| 90,052 |
| 77,912 |
| 181,472 |
| 156,883 |
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DFL depreciation |
| 2,633 |
| — |
| 3,005 |
| — |
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Gain on sales of real estate |
| — |
| (65 | ) | — |
| (65 | ) | ||||
Gain upon consolidation of joint venture |
| 270 |
| — |
| (7,769 | ) | — |
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FFO from unconsolidated joint ventures |
| 1,963 |
| 4,563 |
| 4,011 |
| 9,433 |
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FFO applicable to common shares |
| $ | 317,911 |
| $ | 161,875 |
| $ | 467,658 |
| $ | 320,552 |
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Distributions on dilutive convertible units |
| 2,964 |
| 1,637 |
| 6,018 |
| 3,244 |
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Diluted FFO applicable to common shares |
| $ | 320,875 |
| $ | 163,512 |
| $ | 473,676 |
| $ | 323,796 |
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Weighted average shares used for diluted FFO per share |
| 413,996 |
| 299,474 |
| 397,060 |
| 298,525 |
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Diluted FFO per common share |
| $ | 0.78 |
| $ | 0.55 |
| $ | 1.19 |
| $ | 1.08 |
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Dividends declared per common share |
| $ | 0.48 |
| $ | 0.465 |
| $ | 0.96 |
| $ | 0.93 |
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FFO payout ratio |
| 61.5% |
| 84.5% |
| 80.7% |
| 86.1% |
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Impact of adjustments to FFO: |
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Impairment recoveries |
| $ | — |
| $ | — |
| $ | — |
| $ | (11,900 | ) |
Merger-related items |
| (5,712 | ) | — |
| 26,596 | (1) | — |
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| $ | (5,712 | ) | $ | — |
| $ | 26,596 |
| $ | (11,900 | ) |
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FFO as adjusted applicable to common shares |
| $ | 312,199 |
| $ | 161,875 |
| $ | 494,254 |
| $ | 308,652 |
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Distributions on dilutive convertible units and other |
| 2,975 |
| 1,637 |
| 5,915 |
| 3,285 |
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Diluted FFO as adjusted applicable to common shares |
| $ | 315,174 |
| $ | 163,512 |
| $ | 500,169 |
| $ | 311,937 |
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Weighted average shares used for diluted FFO as adjusted per share(2) |
| 408,985 |
| 299,474 |
| 371,004 |
| 298,525 |
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Diluted FFO as adjusted per common share(2) |
| $ | 0.77 |
| $ | 0.55 |
| $ | 1.35 |
| $ | 1.04 |
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FFO as adjusted payout ratio |
| 62.3% |
| 84.5% |
| 71.1% |
| 89.4% |
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FFO as adjusted applicable to common shares |
| $ | 312,199 |
| $ | 161,875 |
| $ | 494,254 |
| $ | 308,652 |
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Amortization of above and below market lease intangibles, net |
| (1,187 | ) | (1,804 | ) | (2,093 | ) | (3,708 | ) | ||||
Stock-based compensation |
| 5,103 |
| 4,182 |
| 10,205 |
| 7,688 |
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Amortization of debt premiums, discounts and issuance costs, net(3) |
| 3,391 |
| 1,836 |
| 6,349 |
| 5,304 |
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Straight-line rents |
| (15,612 | ) | (8,419 | ) | (32,912 | ) | (21,695 | ) | ||||
DFL interest accretion(4) |
| (22,262 | ) | (2,569 | ) | (24,937 | ) | (5,408 | ) | ||||
DFL depreciation |
| (2,633 | ) | — |
| (3,005 | ) | — |
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Deferred revenues – tenant improvement related |
| (767 | ) | (929 | ) | (1,643 | ) | (1,857 | ) | ||||
Deferred revenues – additional rents (SAB 104) |
| (1,416 | ) | (1,668 | ) | 566 |
| (165 | ) | ||||
Leasing costs and tenant and capital improvements |
| (11,447 | ) | (11,925 | ) | (20,940 | ) | (16,545 | ) | ||||
Joint venture and other FAD adjustments(4)(5) |
| (13,494 | ) | (2,505 | ) | (14,347 | ) | (4,543 | ) | ||||
FAD applicable to common shares |
| $ | 251,875 |
| $ | 138,074 |
| $ | 411,497 |
| $ | 267,723 |
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Distributions on convertible units |
| 2,964 |
| 1,637 |
| 2,616 |
| — |
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Diluted FAD applicable to common shares |
| $ | 254,839 |
| $ | 139,711 |
| $ | 414,113 |
| $ | 267,723 |
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Weighted average shares used for diluted FAD per share |
| 408,985 |
| 299,474 |
| 368,704 |
| 295,067 |
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Diluted FAD per common share |
| $ | 0.62 |
| $ | 0.47 |
| $ | 1.12 |
| $ | 0.91 |
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(1) | $26.6 million of merger-related items attributable to the HCR ManorCare Acquisition (incurred from January 1st through April 6th 2011) include the following: (i) $26.8 million of direct transaction costs, (ii) $23.9 million of interest expense associated with the $2.4 billion senior unsecured notes issued on January 24, 2011, which proceeds of such offering were obtained to prefund the HCR ManorCare Acquisition, which increases were partially offset by (iii) $24.1 million of income related to gains upon the reinvestment of the Company’s debt investment in HCR ManorCare and other miscellaneous items. | |
(2) | $0.16 per share of merger-related items attributable to the HCR ManorCare Acquisition include the following: | |
| (i) | $0.07 per share of direct transaction costs that are discussed in footnote 1(i) above; |
| (ii) | ($0.07) per share of income related to gains upon the reinvestment of the Company’s debt investment in HCR ManorCare debt and other miscellaneous items that are discussed in footnote 1(iii) above; and |
| (iii) | $0.16 per share of negative carry related to prefunding activities consisting of: (a) 76 million shares from the Company’s December 2010 and March 2011 common stock offerings (excludes 4.5 million shares in March 2011 related to the underwriters’ overallotment option), which issuances increased our weighted average shares by 26 million shares for the six months ended June 30, 2011; and (b) $0.07 per share for the interest expense related to the $2.4 billion senior notes discussed in footnote 1(ii) above. Proceeds from these offerings were used to prefund a portion of the cash consideration for the HCR ManorCare Acquisition. |
(3) | Excludes $0.1 million related to the amortization of deferred issuance costs of the $2.4 billion senior notes issued in January 2011, which costs are included in merger-related items for the three months ended June 30, 2011. Excludes $11.3 million related to the write-off of unamortized loan fees for the Company’s bridge loan commitment and $0.8 million related to the amortization of deferred issuance costs of the senior notes discussed above, which costs are included in merger-related items for the six months ended June 30, 2011. | |
(4) | For both the three and six months ended June 30, 2011, DFL interest accretion includes a reduction of $13.3 million, and Joint venture and other FAD adjustments include a contribution of $14.5 million, as a result of HCP’s equity interest in the operations of HCR ManorCare, Inc. (“HCR ManorCare OpCo”). The Company’s joint venture interest in HCR ManorCare OpCo is accounted for using the equity method and results in an ongoing reduction of DFL income, proportional to HCP’s ownership in HCR ManorCare OpCo. Further, the Company’s share of earnings from HCR ManorCare OpCo (equity income) increases for the corresponding reduction of related lease expense recognized at the HCR ManorCare OpCo level. | |
(5) | Includes Investment Management Platform, HCP’s equity interest in HCR ManorCare OpCo and four other unconsolidated joint ventures. |
See Reporting Definitions and Reconciliations of Non-GAAP Measures
Capitalization
Dollars and shares in thousands, except price data |
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Total Debt |
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| June 30, |
| December 31, |
| June 30, |
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Senior unsecured notes |
| $ | 5,706,998 |
| $ | 3,318,379 |
| $ | 3,524,022 |
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Mortgage and other secured debt |
| 1,780,665 |
| 1,235,779 |
| 1,751,520 |
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Other debt |
| 89,466 |
| 92,187 |
| 94,956 |
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Consolidated debt |
| 7,577,129 |
| 4,646,345 |
| 5,370,498 |
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HCP’s share of unconsolidated debt(1) |
| 144,620 |
| 335,966 |
| 338,707 |
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Total debt |
| $ | 7,721,749 |
| $ | 4,982,311 |
| $ | 5,709,205 |
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Total Market Capitalization |
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| June 30, 2011 |
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| Shares/Units |
| Value/Units |
| Total Value |
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Common stock |
| 407,120 |
| $ | 36.69 |
| $ | 14,937,233 |
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Convertible partnership units |
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2 for 1(2) |
| 1,732 |
| 73.38 |
| 127,094 |
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1 for 1(3) |
| 2,480 |
| 36.69 |
| 90,991 |
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| 4,212 |
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| 218,085 |
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Preferred stock: |
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7.25% Series E (Callable at par) |
| 4,000 |
| 25.46 |
| 101,840 |
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7.10% Series F (Callable at par) |
| 7,820 |
| 25.06 |
| 195,969 |
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| 11,820 |
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| 297,809 |
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Consolidated market equity |
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| $ | 15,453,127 |
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Consolidated debt |
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| 7,577,129 |
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Consolidated market capitalization |
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| $ | 23,030,256 |
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HCP’s share of unconsolidated debt(1) |
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| 144,620 |
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Total market capitalization |
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| $ | 23,174,876 |
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Common Stock and Equivalents |
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| Weighted Average Shares |
| Weighted Average Shares |
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| Shares |
| Three Months Ended |
| Six Months Ended |
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| Outstanding |
| June 30, 2011 |
| June 30, 2011 |
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|
| June 30, 2011 |
| Diluted EPS |
| Diluted FFO |
| Diluted EPS |
| Diluted FFO |
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Common stock |
| 407,120 |
| 406,193 |
| 406,193 |
| 389,249 |
| 389,249 |
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Common equivalent securities: |
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Restricted stock and units |
| 1,807 |
| 249 |
| 249 |
| 231 |
| 231 |
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Dilutive impact of options |
| 1,609 |
| 1,609 |
| 1,609 |
| 1,620 |
| 1,620 |
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Convertible partnership units |
| 5,945 |
| 3,659 |
| 5,945 |
| — |
| 5,960 |
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Total common and equivalents |
| 416,481 |
| 411,710 |
| 413,996 |
| 391,100 |
| 397,060 |
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Other Information | ||||||
Trading Symbol |
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| Senior Unsecured Debt Ratings |
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HCP |
| Common Stock |
| Moody’s |
| Baa2 (stable outlook) |
HCP_pe |
| Series E Preferred Stock |
| Standard & Poor’s |
| BBB (stable outlook) |
HCP_pf |
| Series F Preferred Stock |
| Fitch |
| BBB+ (stable outlook) |
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Stock Exchange Listing |
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NYSE |
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(1) Reflects the Company’s pro rata share of amounts in the Investment Management Platform and HCR ManorCare OpCo.
(2) Each convertible partnership unit is exchangeable for an amount of cash approximating the then-current market value of two shares of the Company’s common stock at the time of conversion or, at the Company’s election, two shares of the Company’s common stock.
(3) Each convertible partnership unit is exchangeable for an amount of cash approximating the then-current market value of one share of the Company’s common stock at the time of conversion or, at the Company’s election, one share of the Company’s common stock.
See Reporting Definitions and Reconciliations of Non-GAAP Measures
Indebtedness and Ratios
Dollars in thousands
Debt Maturities and Scheduled Principal Repayments (Amortization) |
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| Bank Line |
| Senior |
| Rates(2) |
| Mortgage |
| Rates(2) |
| Consolidated |
| HCP’s Share of |
| Rates(2) |
| Total Debt |
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2011 (6 months) |
| $ | — |
| $ | 292,265 |
| 4.79 | % | $ | 19,291 |
| 6.02 | % | $ | 311,556 |
| $ | 1,282 |
| N/A | % | $ | 312,838 |
|
2012 |
| — |
| 250,000 |
| 6.67 |
| 73,515 |
| 5.08 |
| 323,515 |
| 9,621 |
| 5.31 |
| 333,136 |
| ||||||
2013 |
| — |
| 550,000 |
| 5.81 |
| 366,895 |
| 6.03 |
| 916,895 |
| 3,165 |
| 7.04 |
| 920,060 |
| ||||||
2014 |
| — |
| 487,000 |
| 3.27 |
| 183,234 |
| 5.74 |
| 670,234 |
| 738 |
| N/A |
| 670,972 |
| ||||||
2015 |
| — |
| 400,000 |
| 6.64 |
| 301,530 |
| 6.01 |
| 701,530 |
| 11,231 |
| 5.82 |
| 712,761 |
| ||||||
2016 |
| — |
| 900,000 |
| 5.07 |
| 284,963 |
| 6.92 |
| 1,184,963 |
| 46,936 |
| 6.05 |
| 1,231,899 |
| ||||||
2017 |
| — |
| 750,000 |
| 6.04 |
| 511,785 |
| 6.07 |
| 1,261,785 |
| 34,780 |
| 5.91 |
| 1,296,565 |
| ||||||
2018 |
| — |
| 600,000 |
| 6.83 |
| 5,015 |
| 5.90 |
| 605,015 |
| — |
| — |
| 605,015 |
| ||||||
2019 |
| — |
| — |
| — |
| 392 |
| — |
| 392 |
| — |
| — |
| 392 |
| ||||||
2020 |
| — |
| — |
| — |
| 420 |
| — |
| 420 |
| — |
| — |
| 420 |
| ||||||
Thereafter |
| — |
| 1,500,000 |
| 5.75 |
| 48,229 |
| 5.23 |
| 1,548,229 |
| 37,107 |
| 5.00 |
| 1,585,336 |
| ||||||
Subtotal |
|
|
| 5,729,265 |
|
|
| 1,795,269 |
|
|
| 7,524,534 |
| 144,860 |
|
|
| 7,669,394 |
| ||||||
Other debt(5) |
| — |
| — |
|
|
| — |
|
|
| 89,466 |
| — |
|
|
| 89,466 |
| ||||||
(Discounts) and premiums, net |
| — |
| (22,267 | ) |
|
| (14,604 | ) |
|
| (36,871 | ) | (240 | ) |
|
| (37,111 | ) | ||||||
Total debt |
| $ | — |
| $ | 5,706,998 |
|
|
| $ | 1,780,665 |
|
|
| $ | 7,577,129 |
| $ | 144,620 |
|
|
| $ | 7,721,749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Weighted average interest rate |
| N/A |
| 5.64% |
|
|
| 6.11% |
|
|
| 5.75% |
| 5.84% |
|
|
| 5.75% |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Weighted average maturity in years |
| 3.75 |
| 6.51 |
|
|
| 5.07 |
|
|
| 6.17 |
| 5.30 |
|
|
| 6.15 |
|
Ratios |
| Covenants |
| ||||||||
|
| June 30, |
| December 31, |
| The following is a summary of the financial covenants under the revolving line of credit facility at June 30, 2011. |
| ||||
|
| 2011 |
| 2010 |
|
| |||||
Consolidated Debt/Consolidated Gross Assets |
| 39.8% |
| 31.9% |
|
|
| ||||
Financial Leverage (Total Debt/Total Gross Assets) |
| 39.9% |
| 32.8% |
|
|
| Bank Line of Credit |
| ||
|
|
|
|
|
| Financial Covenants(7) |
| Requirement |
| Actual Compliance |
|
Consolidated Secured Debt/Consolidated Gross Assets |
| 9.3% |
| 8.5% |
| Leverage Ratio |
| No greater than 60% |
| 41% |
|
Total Secured Debt/Total Gross Assets |
| 9.9% |
| 10.4% |
| Secured Debt Ratio |
| No greater than 30% |
| 11% |
|
|
|
|
|
|
| Unsecured Leverage Ratio |
| No greater than 60% |
| 39% |
|
Fixed and variable rate ratios(6): |
|
|
|
|
| Fixed Charge Coverage Ratio (12 months) |
| No less than 1.50x |
| 2.89x |
|
Fixed rate Total Debt |
| 96.1% |
| 93.8% |
|
|
|
|
|
|
|
Variable rate Total Debt |
| 3.9% |
| 6.2% |
|
|
|
|
|
|
|
|
| 100.0% |
| 100.0% |
|
|
|
|
|
|
|
(1) At June 30, 2011, the Company had $113 million of aggregate letters of credit pledged against the revolving line of credit facility, including a $103 million letter of credit as a result of the Ventas, Inc. (“Ventas”) litigation. For further information regarding the Ventas litigation see Note 12 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC.
(2) Senior unsecured notes and mortgage and other secured debt weighted-average effective rates relate to maturing amounts.
(3) Mortgage debt attributable to non-controlling interests at June 30, 2011was $2.5 million.
(4) Includes pro-rata share of mortgage and other debt in the Company’s Investment Management Platform and HCR ManorCare OpCo. At June 30, 2011, 100% of the Company’s Investment Management Platform’s mortgage debt accrues interest at fixed rates. HCR ManorCare OpCo’s debt accrues interest at LIBOR (subject to a floor of 150bps) plus 350bps.
(5) Represents non-interest bearing life care bonds and occupancy fee deposits at three of the Company’s senior housing facilities that have no scheduled maturities.
(6) $250 million of fixed-rate senior unsecured notes are presented as variable-rate debt as the interest payments under such debt have been swapped (pay float and receive fixed) and $88 million of variable-rate mortgages are presented as fixed-rate debt as the interest payments under such debt have been swapped (pay fixed and receive float).
(7) Financial covenants for the revolving line of credit facility are calculated based on the definitions contained within the agreement and may be different than similar terms in the Company’s Consolidated Financial Statements as provided in its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Compliance with certain of these financial covenants requires the inclusion of the Company’s consolidated amounts and its proportionate share of unconsolidated investees.
See Reporting Definitions and Reconciliations of Non-GAAP Measures
|
|
|
Investments and Dispositions
Dollars in thousands
Investments |
| ||||||||||||||||||
|
| June 30, 2011 |
| ||||||||||||||||
Description |
| Three Months |
| Six Months |
| ||||||||||||||
HCR ManorCare real estate acquisition(1) |
| $ | 6,016,962 |
| $ | 6,016,962 |
| ||||||||||||
HCR ManorCare OpCo investment(1) |
| 95,000 |
| 95,000 |
| ||||||||||||||
HCP Ventures II acquisition(3) |
| — |
| 546,979 |
| ||||||||||||||
Acquisitions of other real estate |
| 64,900 |
| 163,542 |
| ||||||||||||||
Total fundings for development, tenant and capital improvements(4) |
| 31,991 |
| 53,833 |
| ||||||||||||||
Total investments |
| $ | 6,208,853 |
| $ | 6,876,316 |
| ||||||||||||
|
|
|
|
|
| ||||||||||||||
|
|
|
|
| |||||||||||||||
|
|
|
|
| |||||||||||||||
|
|
|
|
| |||||||||||||||
Acquisitions of other real estate for the three months ended June 30, 2011 |
|
|
|
| |||||||||||||||
|
|
|
|
|
| ||||||||||||||
Location |
| Date |
| Capacity |
|
|
| Segment |
| Investment |
| ||||||||
South San Francisco, CA |
| April 15, 2011 |
| 20 acres |
|
|
| Life science |
| $ | 64,900 |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Dispositions for the three months ended June 30, 2011 |
| ||||||||||||||||||
Description |
|
|
|
| Segment |
| Payoff/ |
| |||||||||||
Mezzanine and Mortgage Participations |
| Date |
|
|
|
|
|
|
|
|
| ||||||||
Genesis |
| April 1, 2011 |
|
|
|
| Post-acute/skilled |
| $ | 330,396 |
| ||||||||
HCR ManorCare(2) |
| April 7, 2011 |
|
|
|
| Post-acute/skilled |
|
| 1,630,720 |
| ||||||||
Total |
|
|
|
|
|
|
|
|
| $ | 1,961,116 |
| |||||||
(1) On April 7, 2011, the Company acquired the real estate assets of privately-owned HCR ManorCare, Inc. for $6.1 billion. After reducing the purchase price by $88 million, which represents the difference between the fair value and the par value of our HCR ManorCare debt investments (at closing) that were settled as part of this acquisition, the adjusted purchase price is $6.0 billion. The adjusted purchase price of the HCR ManorCare real estate acquisition is comprised of the following: (i) $4.0 billion of cash consideration; and (ii) $2.0 billion representing the fair value of our HCR ManorCare debt investments. In conjunction with the acquisition of the real estate assets of HCR ManorCare, the Company exercised its option to purchase an equity interest in the operations of HCR ManorCare for $95 million that represented a 9.9% equity interest at closing.
(2) Settlement value of the debt investments in HCR ManorCare presented excludes the $360 million participation in the first mortgage debt that the Company purchased on January 31, 2011 as this purchase was for the sole purpose of prefunding the HCR ManorCare Acquisition.
(3) Represents 65% of the HCP Ventures II investments. On January 14, 2011, the Company acquired its partner’s 65% interest in a joint venture that owns 25 senior housing facilities with 5,621 units, becoming the sole owner of the portfolio. At closing, the Company paid approximately $136 million for the interest and assumed its partner’s share of $650 million (fair value of $635 million) of Fannie Mae secured debt with a weighted average fixed-rate of 5.66% and weighted average term to maturity of 5.3 years. At closing, the Company valued the HCP Ventures II investment at approximately $842 million.
(4) The three months ended June 30, 2011, includes the following: (i) $15.2 million of development, (ii) $7.1 million of first generation tenant and capital improvements, and (iii) $9.7 million of second generation tenant and capital improvements (excludes $1.8 million of leasing costs). The six months ended June 30, 2011, includes the following: (i) $27.1 million of development, (ii) $12.1 million of first generation tenant and capital improvements, and (iii) $14.6 million of second generation tenant and capital improvements (excludes $6.4 million of leasing costs). Investments for development include capitalized interest for the three and six months ended June 30, 2011 of $6.5 million and $12.5 million, respectively.
Development
As of June 30, 2011, dollars and square feet in thousands
Redevelopment Projects in Process |
|
|
|
|
|
|
| Estimated/ |
| Estimated |
|
|
|
|
| ||
|
|
|
|
|
| Actual |
| Rentable |
|
|
| Estimated |
| ||
|
|
|
|
|
| Completion |
| Square |
| Investment |
| Total |
| ||
Name of Project |
| Location |
| Segment |
| Date |
| Feet |
| to Date(1)(3) |
| Investment |
| ||
Modular Labs IV |
| So. San Francisco, CA |
| Life science |
| 4Q 2010 |
| 110 |
| $ | 53,852 |
| $ | 57,069 |
|
Soledad(4) |
| San Diego, CA |
| Life science |
| 3Q 2011 |
| 28 |
| 12,135 |
| 14,932 |
| ||
1030 Massachusetts Avenue |
| Cambridge, MA |
| Life science |
| 1Q 2012 |
| 66 |
| 21,373 |
| 39,992 |
| ||
Knoxville |
| Knoxville, TN |
| Medical office |
| 3Q 2011 |
| 38 |
| 6,707 |
| 8,740 |
| ||
Westpark Plaza |
| Plano, TX |
| Medical office |
| 1Q 2012 |
| 70 |
| 11,156 |
| 16,959 |
| ||
Folsom |
| Sacramento, CA |
| Medical office |
| 1Q 2012 |
| 92 |
| 29,363 |
| 37,751 |
| ||
Innovation Drive |
| San Diego, CA |
| Medical office |
| 1Q 2012 |
| 84 |
| 24,047 |
| 37,100 |
| ||
Fresno(5) |
| Fresno, CA |
| Hospital |
| 4Q 2012 |
| N/A |
| 3,306 |
| 20,554 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| Total |
|
|
|
|
|
|
| $ | 161,939 |
| $ | 233,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land Held for Development |
|
|
|
|
|
|
| Estimated |
| |
|
|
|
| Gross |
| Rentable |
| |
|
|
|
| Site |
| Square |
| |
Location |
| Segment |
| Acreage |
| Feet |
| |
So. San Francisco, CA |
| Life science |
| 50 |
| 1,666 |
| |
Carlsbad, CA |
| Life science |
| 41 |
| 697 |
| |
Poway, CA |
| Life science |
| 72 |
| 1,261 |
| |
Torrey Pines, CA |
| Life science |
| 6 |
| 93 |
| |
|
|
|
| 169 |
| 3,717 |
| |
|
|
|
|
|
|
|
| |
Investment-to-date(2)(3) |
|
|
|
|
| $ | 359,019 |
|
|
|
|
|
|
|
|
| |
Projects Placed in Service |
|
|
|
|
|
|
| Date |
| Rentable |
|
|
|
|
| |
|
|
|
|
|
| Placed in |
| Square |
|
|
| Percentage |
| |
Name of Project |
| Location |
| Segment |
| Service |
| Feet |
| Investment(6) |
| Leased |
| |
500/600 Saginaw |
| Redwood City, CA |
| Life science |
| March 2011 |
| 88 |
| $ | 43,030 |
| — |
|
(1) Investment-to-date of $162 million includes the following: (i) $48 million in development costs and construction in progress, (ii) $69 million of buildings and (iii) $45 million of land.
(2) Investment-to-date of $359 million includes the following: (i) $286 million in land and (ii) $73 million in development costs and construction in progress.
(3) Development costs and construction in progress of $156 million presented on the Company’s consolidated balance sheet at June 30, 2011, includes the following: (i) $48 million of costs for development projects in process; (ii) $73 million of costs for land held for development; and (iii) $35 million for tenant and other facility related improvement projects in process.
(4) Represents approximately half of the Soledad project remaining in redevelopment. The balance of the project was placed in service during the quarter ended September 30, 2010.
(5) Represents approximately 25% of the Fresno hospital placed in redevelopment in March 2011. The balance of the hospital remains in operations.
(6) Represents the investment as of the date the respective property was placed in service.
See Reporting Definitions and Reconciliations of Non-GAAP Measures | |
|
|
|
Owned Portfolio Summary
As of and for the six months ended June 30, 2011, dollars and square feet in thousands, unless otherwise indicated
Portfolio Summary by Investment Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Leased |
| Property |
|
|
|
|
| Age |
|
|
| Occupancy |
| EBITDAR(1) |
| EBITDARM(1) |
| ||||||||||
Properties |
| Count |
| Investment |
| NOI |
| (Years) |
| Capacity |
| % |
| Amount |
| CFC |
| Amount |
| CFC |
| ||||||
Senior housing |
| 317 |
| $ | 5,899,283 |
| $ | 240,812 |
| 15 |
| 36,424 | Units |
| 86.3 |
| $ | 449,890 |
| 1.11 x |
| $ | 534,985 |
| 1.32 x |
| |
Post-acute/skilled |
| 313 |
| 5,480,734 |
| 132,911 |
| 32 |
| 41,773 | Beds |
| 87.5 |
| 61,545 |
| 1.69 x |
| 81,209 |
| 2.24 x |
| |||||
Life science |
| 104 |
| 3,251,372 |
| 118,524 |
| 16 |
| 6,798 | Sq. Ft. |
| 89.2 |
| N/A |
| N/A |
| N/A |
| N/A |
| |||||
Medical office |
| 188 |
| 2,272,818 |
| 95,889 |
| 19 |
| 13,097 | Sq. Ft. |
| 91.1 |
| N/A |
| N/A |
| N/A |
| N/A |
| |||||
Hospital |
| 17 |
| 648,386 |
| 39,075 |
| 25 |
| 2,361 | Beds |
| 54.5 |
| 305,868 |
| 4.62 x |
| 338,984 |
| 5.12 x |
| |||||
|
| 939 |
| $ | 17,552,593 |
| $ | 627,211 |
| 22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Secured |
|
|
|
| Interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Loans |
|
| Investment |
| Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Senior housing |
|
| $ | 1,250 |
| $ | 7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Post-acute/skilled(2) |
|
| 9,887 |
| 87,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Hospital |
|
| 14,099 |
| 735 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
| $ | 25,236 |
| $ | 87,949 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Mezzanine |
|
|
|
| Interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Loans |
|
| Investment |
| Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Post-acute/skilled(2) |
|
| $ | — |
| $ | 10,673 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Hospital(3) |
|
| 85,744 |
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
| $ | 85,744 |
| $ | 10,673 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
|
| $ | 17,663,573 |
| $ | 725,833 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Portfolio NOI, Adjusted NOI and Interest Income
|
| Three Months Ended June 30, 2011 |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| Adjusted NOI |
| ||||||
|
| Rental |
| Operating |
|
|
| Adjusted |
| Interest |
| and Interest |
| ||||||
Segment |
| Revenues |
| Expenses |
| NOI(4) |
| NOI |
| Income(5) |
| Income |
| ||||||
Senior housing |
| $ | 130,131 |
| $ | 775 |
| $ | 129,356 |
| $ | 114,093 |
| $ | 7 |
| $ | 114,100 |
|
Post-acute/skilled |
| 123,545 |
| 54 |
| 123,491 |
| 106,055 |
| 60,189 |
| 166,244 |
| ||||||
Life science |
| 71,527 |
| 12,590 |
| 58,937 |
| 53,137 |
| — |
| 53,137 |
| ||||||
Medical office |
| 80,184 |
| 31,980 |
| 48,204 |
| 46,678 |
| — |
| 46,678 |
| ||||||
Hospital |
| 22,289 |
| 1,222 |
| 21,067 |
| 20,442 |
| 330 |
| 20,772 |
| ||||||
|
| $ | 427,676 |
| $ | 46,621 |
| $ | 381,055 |
| $ | 340,405 |
| $ | 60,526 |
| $ | 400,931 |
|
|
|
|
| ||||||||||||||||
|
| Six Months Ended June 30, 2011 |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| Adjusted NOI |
| ||||||
|
| Rental |
| Operating |
|
|
| Adjusted |
| Interest |
| and Interest |
| ||||||
Segment |
| Revenues |
| Expenses |
| NOI(4) |
| NOI |
| Income(5) |
| Income |
| ||||||
Senior housing |
| $ | 242,577 |
| $ | 1,765 |
| $ | 240,812 |
| $ | 212,130 |
| $ | 7 |
| $ | 212,137 |
|
Post-acute/skilled |
| 132,985 |
| 74 |
| 132,911 |
| 115,153 |
| 97,880 |
| 213,033 |
| ||||||
Life science |
| 143,952 |
| 25,428 |
| 118,524 |
| 106,760 |
| — |
| 106,760 |
| ||||||
Medical office |
| 159,900 |
| 64,011 |
| 95,889 |
| 92,250 |
| — |
| 92,250 |
| ||||||
Hospital |
| 41,264 |
| 2,189 |
| 39,075 |
| 37,798 |
| 735 |
| 38,533 |
| ||||||
|
| $ | 720,678 |
| $ | 93,467 |
| $ | 627,211 |
| $ | 564,091 |
| $ | 98,622 |
| $ | 662,713 |
|
(1) EBITDAR, EBITDARM and their respective CFC are not presented for HCR ManorCare as these metrics for the disaggregated HCR ManorCare senior housing and post-acute/skilled nursing portfolios are not meaningful because the combined portfolio is cross-collaterized under a single master lease. See HCR ManorCare Leased Portfolio Summary on page 15 of this report.
(2) On April 7, 2011, the Company completed the acquisition of HCR ManorCare’s real estate assets. At closing of the HCR ManorCare Acquisition, the Company’s debt investments in HCR ManorCare were extinguished. For additional information regarding the HCR ManorCare Acquisition see Note 3 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC. Includes $43 million of interest income related to debt investments in Genesis HealthCare that were prepaid on April 1, 2011. For additional information regarding the Genesis HealthCare debt investments see Note 7 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC.
(3) Represents a secured loan to Cirrus Group, LLC that was placed on non-accrual status effective January 1, 2011. At June 30, 2011, the combined carrying value ($86 million) and related accrued interest ($6 million) of this loan was $92 million. For additional information regarding the senior loan to Cirrus Group, LLC see Note 7 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC.
(4) NOI attributable to non-controlling interests for the three and six months ended June 30, 2011 was $1.0 million and $2.1 million, respectively.
(5) Includes loan accretion for the three and six months ended June 30, 2011 of $1.2 million and $18.5 million, respectively.
Owned Portfolio Concentrations
As of and for the six months ended June 30, 2011, dollars in thousands
Geographic Diversification of Leased Properties
|
| Total |
| Senior |
| Post-Acute/ |
| Life |
| Medical |
|
|
|
|
| % of |
| ||||||
Investment by State |
| Properties |
| Housing |
| Skilled |
| Science |
| Office |
| Hospital |
| Total |
| Total |
| ||||||
CA |
| 149 |
| $ | 641,252 |
| $ | 262,107 |
| $ | 3,131,893 |
| $ | 212,191 |
| $ | 128,545 |
| $ | 4,375,988 |
| 25 |
|
TX |
| 97 |
| 695,853 |
| 101,459 |
| — |
| 685,153 |
| 227,241 |
| 1,709,706 |
| 10 |
| ||||||
FL |
| 95 |
| 816,877 |
| 523,770 |
| — |
| 151,150 |
| 62,450 |
| 1,554,247 |
| 9 |
| ||||||
PA |
| 54 |
| 256,408 |
| 1,163,925 |
| — |
| — |
| — |
| 1,420,333 |
| 8 |
| ||||||
IL |
| 51 |
| 495,790 |
| 675,637 |
| — |
| 13,481 |
| — |
| 1,184,908 |
| 7 |
| ||||||
OH |
| 72 |
| 211,397 |
| 659,887 |
| — |
| 9,101 |
| — |
| 880,385 |
| 5 |
| ||||||
MI |
| 38 |
| 174,809 |
| 557,284 |
| — |
| — |
| — |
| 732,093 |
| 4 |
| ||||||
MD |
| 34 |
| 295,442 |
| 222,753 |
| — |
| 29,428 |
| — |
| 547,623 |
| 3 |
| ||||||
VA |
| 29 |
| 318,362 |
| 171,463 |
| — |
| 40,769 |
| — |
| 530,594 |
| 3 |
| ||||||
NJ |
| 21 |
| 373,296 |
| 95,966 |
| — |
| — |
| — |
| 469,262 |
| 3 |
| ||||||
Other |
| 299 |
| 1,619,797 |
| 1,046,483 |
| 119,479 |
| 1,131,545 |
| 230,150 |
| 4,147,454 |
| 23 |
| ||||||
Total |
| 939 |
| $ | 5,899,283 |
| $ | 5,480,734 |
| $ | 3,251,372 |
| $ | 2,272,818 |
| $ | 648,386 |
| $ | 17,552,593 |
| 100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
| Total |
| Senior |
| Post-Acute/ |
| Life |
| Medical |
|
|
|
|
| % of |
| ||||||
NOI by State |
| Properties |
| Housing |
| Skilled |
| Science |
| Office |
| Hospital |
| Total |
| Total |
| ||||||
CA |
| 149 |
| $ | 33,549 |
| $ | 6,417 |
| $ | 112,037 |
| $ | 6,596 |
| $ | 8,353 |
| $ | 166,952 |
| 27 |
|
TX |
| 97 |
| 27,672 |
| 2,060 |
| — |
| 26,059 |
| 12,341 |
| 68,132 |
| 11 |
| ||||||
FL |
| 95 |
| 33,174 |
| 11,461 |
| — |
| 6,837 |
| 3,951 |
| 55,423 |
| 9 |
| ||||||
PA |
| 54 |
| 7,459 |
| 26,042 |
| — |
| — |
| — |
| 33,501 |
| 5 |
| ||||||
IL |
| 51 |
| 18,033 |
| 14,589 |
| — |
| 646 |
| — |
| 33,268 |
| 5 |
| ||||||
OH |
| 72 |
| 6,960 |
| 17,368 |
| — |
| 313 |
| — |
| 24,641 |
| 4 |
| ||||||
VA |
| 29 |
| 11,556 |
| 5,806 |
| — |
| 1,779 |
| — |
| 19,141 |
| 3 |
| ||||||
MI |
| 38 |
| 7,090 |
| 11,853 |
| — |
| — |
| — |
| 18,943 |
| 3 |
| ||||||
CO |
| 26 |
| 8,199 |
| 2,183 |
| — |
| 7,618 |
| 688 |
| 18,688 |
| 3 |
| ||||||
MD |
| 34 |
| 10,719 |
| 4,936 |
| — |
| 1,540 |
| — |
| 17,195 |
| 3 |
| ||||||
Other |
| 294 |
| 76,401 |
| 30,196 |
| 6,487 |
| 44,501 |
| 13,742 |
| 171,327 |
| 27 |
| ||||||
Total |
| 939 |
| $ | 240,812 |
| $ | 132,911 |
| $ | 118,524 |
| $ | 95,889 |
| $ | 39,075 |
| $ | 627,211 |
| 100 |
|
Operator/Tenant Diversification
|
| Primary |
| Annualized Revenues(1) |
| |||
Company |
| Segment |
| Amount |
| % |
| |
HCR ManorCare |
| Post-acute/skilled |
| $ | 472,500 |
| 33 |
|
Emeritus Corporation |
| Senior housing |
| 93,651 |
| 6 |
| |
Sunrise Senior Living |
| Senior housing |
| 84,093 |
| 6 |
| |
Horizon Bay(2) |
| Senior housing |
| 70,960 |
| 5 |
| |
Brookdale(2) |
| Senior housing |
| 65,891 |
| 5 |
| |
HCA |
| Hospital |
| 46,230 |
| 3 |
| |
Amgen |
| Life science |
| 40,936 |
| 3 |
| |
Genentech |
| Life science |
| 37,088 |
| 3 |
| |
Takeda |
| Life science |
| 17,164 |
| 1 |
| |
Tenet |
| Hospital |
| 16,018 |
| 1 |
| |
Other |
|
|
| 499,702 |
| 34 |
| |
|
|
|
| $ | 1,444,233 |
| 100 |
|
(1) The most recent monthly base rent (including additional rent floors), income from direct financing leases and/or interest income annualized for 12 months. For additional details regarding “annualized revenues,” see reporting definitions.
(2) On June 1, 2011, the Company announced it has entered into definitive agreements, subject to customary closing conditions, to form a strategic venture with Brookdale Senior Living, Inc. (“Brookdale”) that includes the operation of 37 HCP-owned senior living communities leased to or operated by Horizon Bay Retirement Living (“Horizon Bay”) to Brookdale. As part of this transaction, Brookdale will acquire Horizon Bay, assume an existing triple-net lease for 9 of these senior living communities and assume Horizon Bay’s management of 3 communities, one of which was recently developed by HCP.
Owned Same Property Leased Portfolio
As of June 30, 2011, dollars and square feet in thousands
|
|
|
| Senior |
| Post-Acute/ |
| Life |
| Medical |
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
| Total |
| Housing(1) |
| Skilled |
| Science |
| Office |
| Hospital |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Property count |
| 558 |
| 220 |
| 45 |
| 95 |
| 182 |
| 16 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Investment |
| $ | 10,188,438 |
| $ | 4,105,356 |
| $ | 244,738 |
| $ | 3,052,205 |
| $ | 2,177,498 |
| $ | 608,641 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Percent of leased portfolio (by investment) |
| 58.0% |
| 69.6% |
| 4.5% |
| 93.9% |
| 95.8% |
| 93.9% |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Capacity |
|
|
| 25,095 Units |
| 5,286 Beds |
| 6,320 Sq. Ft. |
| 12,708 Sq. Ft |
| 2,361 Beds |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Year-Over-Year Three-Month SPP | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Occupancy: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
June 30, 2011 |
|
|
| 86.0% |
| 85.5% |
| 92.0% |
| 90.8% |
| 56.2% |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
June 30, 2010 |
|
|
| 85.2% |
| 85.7% |
| 89.8% |
| 90.7% |
| 61.9% |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
% change |
|
|
| 0.8% |
| (0.2% | ) | 2.2% |
| 0.1% |
| (5.7% | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
NOI % change |
| 5.1% |
| 10.7% |
| 2.5% |
| 0.9% |
| 3.7% |
| (2.4% | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Adjusted NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
June 30, 2011 |
| $ | 210,946 |
| $ | 83,207 |
| $ | 9,219 |
| $ | 52,348 |
| $ | 46,315 |
| $ | 19,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
June 30, 2010 |
| $ | 205,502 |
| $ | 77,964 |
| $ | 8,971 |
| $ | 54,679 |
| $ | 44,589 |
| $ | 19,299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Adjusted NOI % change |
| 2.6% |
| 6.7% |
| 2.8% |
| (4.3% | ) | 3.9% |
| 2.9% |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Sequential Three-Month SPP | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Occupancy: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
June 30, 2011 |
|
|
| 86.0% |
| 85.5% |
| 92.0% |
| 90.8% |
| 56.2% |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
March 31, 2011 |
|
|
| 86.5% |
| 85.1% |
| 91.8% |
| 90.7% |
| 51.3% |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
% change |
|
|
| (0.5% | ) | 0.4% |
| 0.2% |
| 0.1% |
| 4.9% |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
NOI % change |
| 1.3% |
| (0.6% | ) | 0.6% |
| (0.4% | ) | 0.9% |
| 18.4% |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Adjusted NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
June 30, 2011 |
| $ | 210,946 |
| $ | 83,207 |
| $ | 9,219 |
| $ | 52,348 |
| $ | 46,315 |
| $ | 19,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
March 31, 2011 |
| $ | 206,474 |
| $ | 82,939 |
| $ | 9,102 |
| $ | 52,482 |
| $ | 45,273 |
| $ | 16,678 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Adjusted NOI % change |
| 2.2% |
| 0.3% |
| 1.3% |
| (0.3% | ) | 2.3% |
| 19.1% |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Year-Over-Year Six-Month SPP | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
NOI % change |
| 6.0% |
| 12.2% |
| 2.3% |
| 1.3% |
| 3.4% |
| 1.0% |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Adjusted NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
June 30, 2011 |
| $ | 417,016 |
| $ | 165,742 |
| $ | 18,321 |
| $ | 104,830 |
| $ | 91,588 |
| $ | 36,535 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
June 30, 2010 |
| $ | 398,455 |
| $ | 153,325 |
| $ | 17,856 |
| $ | 104,646 |
| $ | 89,053 |
| $ | 33,575 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Adjusted NOI % change |
| 4.7% |
| 8.1% |
| 2.6% |
| 0.2% |
| 2.8% |
| 8.8% |
|
(1) Senior housing three-month SPP includes one facility acquired in the quarter ended March 31, 2010 with an investment value of $8.9 million, 85 units and three month occupancy as of June 30, 2011 of 90.8% (one quarter in arrears). This facility is excluded from the six-month senior housing SPP metrics as its results of operations are not included for the full comparable period.
See Reporting Definitions and Reconciliations of Non-GAAP Measures | |
| |
|
|
|
Owned Portfolio Lease Expirations and Debt Investment Maturities
|
|
|
At June 30, 2011, dollars and square feet in thousands
|
|
|
| Expiration Year(1) |
| ||||||||||||||||||||||||||||||||
Segment |
| Total |
| 2011(2) |
| 2012 |
| 2013 |
| 2014 |
| 2015 |
| 2016 |
| 2017 |
| 2018 |
| 2019 |
| 2020 |
| Thereafter |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Lease Expirations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Senior housing: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Properties |
| 317 |
| — |
| 1 |
| 2 |
| 5 |
| 1 |
| 17 |
| 12 |
| 49 |
| 37 |
| 33 |
| 160 |
| ||||||||||||
Annualized revenues |
| $ | 452,955 |
| $ | — |
| $ | 331 |
| $ | 11,257 |
| $ | 4,925 |
| $ | 199 |
| $ | 24,195 |
| $ | 19,657 |
| $ | 91,233 |
| $ | 73,336 |
| $ | 49,603 |
| $ | 178,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Post-acute/skilled: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Properties |
| 313 |
| — |
| — |
| — |
| 9 |
| 1 |
| 6 |
| 9 |
| 3 |
| 12 |
| 4 |
| 269 |
| ||||||||||||
Annualized revenues |
| $ | 452,255 |
| $ | — |
| $ | — |
| $ | — |
| $ | 7,062 |
| $ | 429 |
| $ | 5,742 |
| $ | 8,193 |
| $ | 1,650 |
| $ | 9,838 |
| $ | 2,996 |
| $ | 416,345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Life science: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Square feet |
| 6,066 |
| 299 |
| 160 |
| 364 |
| 381 |
| 1,004 |
| 277 |
| 748 |
| 486 |
| 58 |
| 881 |
| 1,408 |
| ||||||||||||
Annualized revenues |
| $ | 220,713 |
| $ | 10,579 |
| $ | 3,629 |
| $ | 10,103 |
| $ | 9,741 |
| $ | 29,058 |
| $ | 7,876 |
| $ | 25,684 |
| $ | 24,511 |
| $ | 2,649 |
| $ | 40,131 |
| $ | 56,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Medical office: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Square feet |
| 11,927 |
| 988 |
| 1,467 |
| 1,719 |
| 1,482 |
| 1,344 |
| 937 |
| 691 |
| 875 |
| 670 |
| 829 |
| 925 |
| ||||||||||||
Annualized revenues |
| $ | 252,030 |
| $ | 22,087 |
| $ | 32,461 |
| $ | 31,842 |
| $ | 33,260 |
| $ | 29,991 |
| $ | 18,189 |
| $ | 14,715 |
| $ | 17,452 |
| $ | 13,609 |
| $ | 18,684 |
| $ | 19,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Hospital: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Properties |
| 17 |
| — |
| — |
| 1 |
| 3 |
| — |
| — |
| 2 |
| — |
| 4 |
| — |
| 7 |
| ||||||||||||
Annualized revenues |
| $ | 65,070 |
| $ | — |
| $ | — |
| $ | 2,553 |
| $ | 16,018 |
| $ | — |
| $ | — |
| $ | 4,547 |
| $ | — |
| $ | 6,273 |
| $ | — |
| $ | 35,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Total annualized revenues |
| $ | 1,443,023 |
| $ | 32,666 |
| $ | 36,421 |
| $ | 55,755 |
| $ | 71,006 |
| $ | 59,677 |
| $ | 56,002 |
| $ | 72,796 |
| $ | 134,846 |
| $ | 105,705 |
| $ | 111,414 |
| $ | 706,735 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| ||||||||||||
|
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|
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|
|
|
|
|
|
|
|
| ||||||||||||
Debt Investment Maturities |
|
|
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|
|
|
|
|
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|
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| ||||||||||||
|
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|
|
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|
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|
|
| ||||||||||||
Senior housing: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Annualized revenues |
| $ | 81 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 81 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Post-acute/skilled: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Annualized revenues |
| $ | 1,129 |
| $ | — |
| $ | — |
| $ | 958 |
| $ | 171 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Hospital(3): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Annualized revenues |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Total annualized revenues |
| $ | 1,210 |
| $ | — |
| $ | — |
| $ | 958 |
| $ | 171 |
| $ | — |
| $ | 81 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
|
(1) The most recent monthly base rent (including additional rent floors), income from direct financing leases and/or interest income annualized for 12 months. For additional details regarding “annualized revenues,” see reporting definitions.
(2) Includes month-to-month and holdover leases.
(3) Effective January 1, 2011, a secured loan to Cirrus Group, LLC was placed on non-accrual status. During the three and six months ended June 30, 2011, no revenues were recognized for this loan; consequently, no annualized revenue amounts for this loan are presented. For additional information regarding the senior loan to Cirrus Group, LLC see Note 7 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC.
See Reporting Definitions and Reconciliations of Non-GAAP Measures | |
|
|
Owned Senior Housing Portfolio
As of and for the six months ended June 30, 2011, dollars in thousands
Investments
Operating |
| Property |
|
|
|
|
| Average |
|
|
| Occupancy |
| EBITDAR |
| EBITDARM |
| ||||||||
Leases |
| Count |
| Investment |
| NOI |
| Age (Years) |
| Units |
| % |
| Amount |
| CFC |
| Amount |
| CFC |
| ||||
Assisted living |
| 167 |
| $ | 2,454,596 |
| $ | 114,586 |
| 13 |
| 14,969 |
| 86.0 |
| $ | 220,038 |
| 1.19 x |
| $ | 264,270 |
| 1.43 x |
|
Independent living |
| 45 |
| 1,409,487 |
| 55,701 |
| 20 |
| 9,591 |
| 87.5 |
| 113,675 |
| 0.90 x |
| 129,319 |
| 1.03 x |
| ||||
CCRCs |
| 12 |
| 606,449 |
| 27,571 |
| 22 |
| 3,770 |
| 89.0 |
| 69,000 |
| 1.26 x |
| 82,057 |
| 1.50 x |
| ||||
|
| 224 |
| $ | 4,470,532 |
| $ | 197,858 |
| 15 |
| 28,330 |
| 86.9 |
| $ | 402,713 |
| 1.10 x |
| $ | 475,646 |
| 1.30 x |
|
Direct Financing |
| Property |
|
|
|
|
| Average |
|
|
| Occupancy |
| EBITDAR(1) |
| EBITDARM(1) |
| ||||||||
Leases |
| Count |
| Investment |
| NOI |
| Age (Years) |
| Units |
| % |
| Amount |
| CFC |
| Amount |
| CFC |
| ||||
Assisted living |
| 27 |
| $ | 614,522 |
| $ | 26,862 |
| 14 |
| 3,141 |
| 85.8 |
| $ | 47,177 |
| 1.17 x |
| $ | 59,339 |
| 1.48 x |
|
HCR ManorCare(1) |
| 66 |
| 814,229 |
| 16,092 |
| 15 |
| 4,953 |
| 83.0 |
| N/A |
| N/A |
| N/A |
| N/A |
| ||||
|
| 93 |
| 1,428,751 |
| 42,954 |
| 15 |
| 8,094 |
| 84.1 |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Leased Properties |
| 317 |
| $ | 5,899,283 |
| $ | 240,812 |
| 15 |
| 36,424 |
| 86.3 |
| $ | 449,890 |
| 1.11 x |
| $ | 534,985 |
| 1.32 x |
|
Secured |
|
|
|
|
| Interest |
|
|
|
|
|
|
|
|
|
|
| ||||||||
Loans |
|
|
| Investment |
| Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Assisted living |
|
|
| $ | 1,250 |
| $ | 7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
|
|
| $ | 5,900,533 |
| $ | 240,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Operator Concentration(2)
|
|
|
|
|
|
|
|
|
| NOI and |
|
|
|
|
|
|
|
|
| ||||
|
| Properties |
| Investment |
| Interest Income |
|
|
| Occupancy |
| EBITDAR |
| EBITDARM |
| ||||||||
Operator |
| Count |
| % Pooled |
| Amount |
| % |
| Amount |
| % |
| Units |
| % |
| CFC(1) |
| CFC(1) |
| ||
Sunrise Senior Living(3)(4) |
| 48 |
| 98 |
| $ | 1,312,331 |
| 22 |
| $ | 48,694 |
| 20 |
| 5,568 |
| 87.7 |
| 1.24 x |
| 1.50 x |
|
Emeritus Corporation(3) |
| 69 |
| 96 |
| 1,134,711 |
| 19 |
| 64,496 |
| 27 |
| 7,742 |
| 87.4 |
| 1.18 x |
| 1.38 x |
| ||
Horizon Bay Senior Communities |
| 36 |
| 97 |
| 1,002,778 |
| 17 |
| 35,956 |
| 15 |
| 6,906 |
| 90.8 |
| 0.83 x |
| 0.95 x |
| ||
HCR ManorCare(1) |
| 66 |
| 100 |
| 814,229 |
| 14 |
| 16,092 |
| 7 |
| 4,953 |
| 83.0 |
| N/A |
| N/A |
| ||
Brookdale |
| 24 |
| 92 |
| 675,813 |
| 11 |
| 34,700 |
| 14 |
| 4,809 |
| 87.2 |
| 1.31 x |
| 1.54 x |
| ||
Harbor Retirement Associates |
| 14 |
| 100 |
| 210,849 |
| 4 |
| 8,091 |
| 3 |
| 1,346 |
| 84.6 |
| 1.13 x |
| 1.43 x |
| ||
Aegis Senior Living | 10 |
| 80 |
| 182,152 |
| 3 |
| 7,864 |
| 3 |
| 702 |
| 86.0 |
| 1.00 x |
| 1.17 x |
| |||
Other(3) |
| 50 |
| 94 |
| 567,670 |
| 10 |
| 24,926 |
| 11 |
| 4,398 |
| 82.4 |
| 1.10 x |
| 1.35 x |
| ||
|
| 317 |
| 96 |
| $ | 5,900,533 |
| 100 |
| $ | 240,819 |
| 100 |
| 36,424 |
| 86.3 |
| 1.11 x |
| 1.32 x |
|
(1) EBITDAR, EBITDARM and their respective CFC are not presented for HCR ManorCare as these metrics for the disaggregated HCR ManorCare senior housing and post-acute/skilled nursing portfolios are not meaningful because the combined portfolio is cross-collaterized under a single master lease. See HCR ManorCare Leased Portfolio Summary on page 15 of this report.
(2) Property count, units and occupancy are presented for leased properties and excludes secured loans.
(3) On November 1, 2010, the Company transitioned 27 assets formerly operated by Sunrise Senior Living to Emeritus Corporation. For these transitioned assets, occupancy and CFC are disclosed under “other” until the requisite periods have elapsed to allow us to report such measures completely under the new operator.
(4) Sunrise Senior Living percentage pooled consists of 47 assets under 6 separate pools.
See Reporting Definitions and Reconciliations of Non-GAAP Measures | |
|
|
|
Owned Senior Housing Portfolio
Dollars in thousands
Portfolio Trends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
| Same Property Leased Portfolio |
|
| Total Leased Portfolio |
| ||||||||||||||||||||
|
|
|
|
|
|
|
| As of and for the |
|
|
|
|
|
|
|
| ||||||||||
|
| As of and for the Quarter Ended |
| YTD Period Ended |
|
| As of and for the Twelve Months Ended |
| ||||||||||||||||||
|
| 06/30/11 |
| 03/31/11 |
| 06/30/10(1) |
| 06/30/11 |
| 06/30/10 |
|
| 06/30/11(2) |
| 03/31/11(3) |
| 06/30/10(3) |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Property count |
| 220 |
| 220 |
| 220 |
| 219 |
| 219 |
|
| 317 |
| 251 |
| 233 |
| ||||||||
Investment |
| $ | 4,105,356 |
| $ | 4,100,266 |
| $ | 4,079,993 |
| $ | 4,096,419 |
| $ | 4,071,056 |
|
| $ | 5,899,283 |
| $ | 5,079,835 |
| $ | 4,201,684 |
|
Units |
| 25,095 |
| 25,101 |
| 25,037 |
| 25,010 |
| 24,952 |
|
| 36,424 |
| 31,465 |
| 25,965 |
| ||||||||
3-Month Occupancy % |
| 86.0 |
| 86.5 |
| 85.2 |
| 86.0 |
| 85.2 |
|
| 85.9 |
| 87.2 |
| 84.9 |
| ||||||||
12-Month Occupancy % |
| 86.1 |
| 85.9 |
| 85.7 |
| 86.0 |
| 85.7 |
|
| 86.3 |
| 86.8 |
| 85.3 |
| ||||||||
EBITDAR |
| $ | 380,586 |
| $ | 374,124 |
| 354,356 |
| $ | 379,436 |
| $ | 354,356 |
|
| $ | 449,890 |
| $ | 443,130 |
| $ | 356,238 |
| |
EBITDAR CFC |
| 1.20 x |
| 1.19 x |
| 1.15 x |
| 1.20 x |
| 1.15 x |
|
| 1.11 x |
| 1.11 x |
| 1.15 x |
| ||||||||
EBITDARM |
| $ | 455,479 |
| $ | 448,800 |
| 426,710 |
| $ | 454,122 |
| $ | 426,710 |
|
| $ | 534,985 |
| $ | 527,629 |
| $ | 429,188 |
| |
EBITDARM CFC |
| 1.43 x |
| 1.43 x |
| 1.39 x |
| 1.43 x |
| 1.39 x |
|
| 1.32 x |
| 1.32 x |
| 1.38 x |
| ||||||||
NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Rental and related revenues |
| $ | 81,864 |
| $ | 82,915 |
| $ | 74,194 |
| $ | 164,334 |
| $ | 146,203 |
|
|
|
|
|
|
|
| |||
DFL income |
| 13,499 |
| 13,395 |
| 11,995 |
| 26,893 |
| 24,210 |
|
|
|
|
|
|
|
| ||||||||
Operating expenses(4) |
| (100 | ) | (516 | ) | (118 | ) | (613 | ) | (496 | ) |
|
|
|
|
|
|
| ||||||||
|
| $ | 95,263 |
| $ | 95,794 |
| $ | 86,071 |
| $ | 190,614 |
| $ | 169,917 |
|
|
|
|
|
|
|
| |||
Adjusted NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Straight-line rents |
| (9,077 | ) | (9,549 | ) | (4,753 | ) | (18,586 | ) | (9,613 | ) |
|
|
|
|
|
|
| ||||||||
Below market lease intangibles, net |
| (631 | ) | (631 | ) | (785 | ) | (1,262 | ) | (1,571 | ) |
|
|
|
|
|
|
| ||||||||
DFL interest accretion |
| (2,348 | ) | (2,675 | ) | (2,569 | ) | (5,024 | ) | (5,408 | ) |
|
|
|
|
|
|
| ||||||||
|
| $ | 83,207 |
| $ | 82,939 |
| $ | 77,964 |
| $ | 165,742 |
| $ | 153,325 |
|
|
|
|
|
|
|
|
(1) Occupancy, EBITDAR and EBITDARM exclude one facility acquired in the quarter ended March 31, 2010 as those metrics are reported one quarter in arrears, and therefore are not applicable for this facility.
(2) EBITDAR, EBITDARM and their respective CFC are not presented for HCR ManorCare as these metrics for the disaggregated HCR ManorCare senior housing and post-acute/skilled nursing portfolios are not meaningful because the combined portfolio is cross-collaterized under a single master lease. See HCR ManorCare Leased Portfolio Summary on page 15 of this report.
(3) Amounts presented conform to current presentation without giving effect to discontinued operations.
(4) Excludes certain non-property specific operating expenses allocated to certain segments.
See Reporting Definitions and Reconciliations of Non-GAAP Measures
|
Owned Post-Acute/Skilled Nursing Portfolio
As of and for the six months ended June 30, 2011, dollars in thousands, unless otherwise indicated |
Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
| Average |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Leased |
| Property |
|
|
|
|
| Age |
|
|
| Occupancy |
| EBITDAR |
| EBITDARM |
| ||||||||
Properties |
| Count |
| Investment |
| NOI |
| (Years) |
| Beds |
| % |
| Amount |
| CFC |
| Amount |
| CFC |
| ||||
Operating leases |
| 45 |
| $ | 244,738 |
| $ | 18,890 |
| 27 |
| 5,286 |
| 85.3 |
| $ | 61,545 |
| 1.69 x |
| $ | 81,209 |
| 2.24 x |
|
HCR ManorCare DFLs(1) |
| 268 |
| 5,235,996 |
| 114,021 |
| 33 |
| 36,487 |
| 87.9 |
| N/A |
| N/A |
| N/A |
| N/A |
| ||||
Leased properties |
| 313 |
| $ | 5,480,734 |
| $ | 132,911 |
| 32 |
| 41,773 |
| 87.5 |
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Secured and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Mezzanine |
|
|
|
|
| Interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Loans |
|
|
| Investment |
| Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
HCR ManorCare(2) |
|
|
| $ | — |
| $ | 54,303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Genesis HealthCare(3) |
|
|
| — |
| 43,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other |
|
|
| 9,887 |
| 570 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
| $ | 9,887 |
| $ | 97,880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Total |
|
|
| $ | 5,490,621 |
| $ | 230,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Operator Concentration(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
| NOI and |
|
|
|
|
|
|
|
|
| ||||||||
|
| Properties |
| Investment |
| Interest Income |
|
|
| Occupancy |
| EBITDAR |
| EBITDARM |
| ||||||||
Operator |
| Count |
| % Pooled |
| Amount |
| % |
| Amount |
| % |
| Beds |
| % |
| CFC(1) |
| CFC(1) |
| ||
HCR ManorCare(1)(2) |
| 268 |
| 100 |
| $ | 5,235,996 |
| 95 |
| $ | 168,324 |
| 73 |
| 36,487 |
| 87.9 |
| N/A |
| N/A |
|
Formation Capital |
| 9 |
| 100 |
| 63,102 |
| 1 |
| 3,428 |
| 1 |
| 934 |
| 94.6 |
| 2.20 x |
| 2.71 x |
| ||
Covenant Care |
| 12 |
| 100 |
| 62,318 |
| 1 |
| 5,319 |
| 2 |
| 1,328 |
| 83.3 |
| 1.77 x |
| 2.33 x |
| ||
Kindred |
| 9 |
| 100 |
| 38,117 |
| 1 |
| 4,071 |
| 2 |
| 1,288 |
| 85.8 |
| 1.34 x |
| 1.96 x |
| ||
Trilogy Health Services |
| 5 |
| 100 |
| 33,351 |
| 1 |
| 2,757 |
| 1 |
| 546 |
| 89.8 |
| 1.62 x |
| 2.03 x |
| ||
Other(5) |
| 10 |
| 60 |
| 57,737 |
| 1 |
| 46,892 |
| 21 |
| 1,190 |
| 77.7 |
| 1.57 x |
| 2.17 x |
| ||
|
| 313 |
| 99 |
| $ | 5,490,621 |
| 100 |
| $ | 230,791 |
| 100 |
| 41,773 |
| 87.5 |
| 1.69 x |
| 2.24 x |
|
(1) EBITDAR, EBITDARM and their respective CFC are not presented for HCR ManorCare as these metrics for the disaggregated HCR ManorCare senior housing and post-acute/skilled nursing portfolios are not meaningful because the combined portfolio is cross-collaterized under a single master lease. See HCR ManorCare Leased Portfolio Summary on page 15 of this report.
(2) On April 7, 2011, the Company completed the acquisition of HCR ManorCare’s real estate assets. At closing of the HCR ManorCare Acquisition, the Company’s debt investments in HCR ManorCare were extinguished. For additional information regarding the HCR ManorCare Acquisition see Note 3 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC.
(3) On April 1, 2011, the Company’s debt investments in Genesis HealthCare were prepaid.
(4) Property count, beds and occupancy are presented for leased properties and exclude secured and mezzanine loans.
(5) Other includes $43 million in interest income related to debt investments in Genesis HealthCare that were prepaid April 1, 2011. For additional information regarding Genesis HealthCare see Note 7 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC.
See Reporting Definitions and Reconciliations of Non-GAAP Measures
|
|
|
|
Owned Post-Acute/Skilled Nursing Portfolio
Dollars in thousands, except HCR ManorCare information |
Portfolio Trends |
| |||||||||||||||||||||||||
|
| Same Property Leased Portfolio |
|
| Total Leased Portfolio |
| ||||||||||||||||||||
|
| As of and for the Quarter Ended |
| As of and for the |
|
| As of and for the Twelve Months Ended |
| ||||||||||||||||||
|
| 06/30/11 |
| 03/31/11 |
| 06/30/10 |
| 06/30/11 |
| 06/30/10 |
|
| 06/30/11(1) |
| 03/31/11(2) |
| 06/30/10(2) |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Property count |
| 45 |
| 45 |
| 45 |
| 45 |
| 45 |
|
| 313 |
| 45 |
| 48 |
| ||||||||
Investment |
| $ | 244,738 |
| $ | 244,738 |
| $ | 244,738 |
| $ | 244,738 |
| $ | 244,738 |
|
| $ | 5,480,734 |
| $ | 244,738 |
| $ | 255,084 |
|
Beds |
| 5,286 |
| 5,286 |
| 5,331 |
| 5,286 |
| 5,331 |
|
| 41,773 |
| 5,286 |
| 5,628 |
| ||||||||
3-Month Occupancy % |
| 85.5 |
| 85.1 |
| 85.7 |
| 85.5 |
| 85.7 |
|
| 88.2 |
| 85.1 |
| 85.6 |
| ||||||||
12-Month Occupancy % |
| 85.3 |
| 85.4 |
| 85.3 |
| 85.3 |
| 85.3 |
|
| 87.5 |
| 85.4 |
| 85.4 |
| ||||||||
EBITDAR |
| $ | 61,545 |
| $ | 58,173 |
| $ | 53,298 |
| $ | 61,545 |
| $ | 53,298 |
|
| 61,545 |
| 58,173 |
| 55,188 |
| |||
EBITDAR CFC |
| 1.69 x |
| 1.61 x |
| 1.49 x |
| 1.69 x |
| 1.49 x |
|
| 1.69 x |
| 1.61 x |
| 1.49 x |
| ||||||||
EBITDARM |
| $ | 81,209 |
| $ | 77,479 |
| $ | 72,929 |
| $ | 81,209 |
| $ | 72,929 |
|
| 81,209 |
| 77,479 |
| 75,863 |
| |||
EBITDARM CFC |
| 2.24 x |
| 2.14 x |
| 2.04 x |
| 2.24 x |
| 2.04 x |
|
| 2.24 x |
| 2.14 x |
| 2.05 x |
| ||||||||
Quality Mix |
| 63.8% |
| 62.2% |
| 61.5% |
| 63.8% |
| 61.5% |
|
| 68.1% |
| 62.2% |
| 61.5% |
| ||||||||
NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Rental revenues |
| $ | 9,507 |
| $ | 9,440 |
| $ | 9,299 |
| $ | 18,947 |
| $ | 18,569 |
|
|
|
|
|
|
|
| |||
Operating expenses(3) |
| (26 | ) | (15 | ) | (47 | ) | (41 | ) | (92 | ) |
|
|
|
|
|
|
| ||||||||
|
| 9,481 |
| 9,425 |
| 9,252 |
| 18,906 |
| 18,477 |
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Adjusted NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Straight-line rents |
| (262 | ) | (323 | ) | (281 | ) | (585 | ) | (621 | ) |
|
|
|
|
|
|
| ||||||||
|
| $ | 9,219 |
| $ | 9,102 |
| $ | 8,971 |
| $ | 18,321 |
| $ | 17,856 |
|
|
|
|
|
|
|
| |||
| ||||||||||||||||||||||||
HCR ManorCare Leased Portfolio Summary | ||||||||||||||||||||||||
As of and for the six months ended June 30, 2011, dollars in thousands | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Investment |
| Property |
|
|
|
|
| Adjusted |
|
|
| EBITDAR |
| EBITDARM |
| |||||||||
Summary |
| Count |
| Investment(4) |
| NOI(5) |
| NOI |
| Occupancy |
| Amount |
| CFC |
| Amount |
| CFC |
| |||||
Assisted living |
| 66 |
| $ | 814,229 |
| $ | 16,092 |
| $ | 13,397 |
| 83.0% |
| N/A |
| N/A |
| N/A |
| N/A |
| ||
Post-acute/skilled |
| 268 |
| 5,235,996 |
| 114,021 |
| 96,847 |
| 87.9% |
| N/A |
| N/A |
| N/A |
| N/A |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total |
| 334 |
| $ | 6,050,225 |
| $ | 130,113 |
| $ | 110,244 |
| 87.3% |
| $ | 604,307 |
| 1.28 x |
| $ | 781,373 |
| 1.65 x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
| 06/30/11 |
| 03/31/11 |
| 06/30/10 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Quality mix |
| 70.8% |
| 70.9% |
| 72.0% |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
HCR ManorCare OpCo (guarantor) fixed charge coverage(6) |
| 1.57 x |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(1) EBITDAR, EBITDARM, their respective CFC and quality mix are not presented for HCR ManorCare as these metrics for the disaggregated HCR ManorCare senior housing and post-acute/skilled nursing portfolios are not meaningful because the combined portfolio is cross-collaterized under a single master lease. For additional information see HCR ManorCare Leased Portfolio Summary.
(2) Amounts presented conform to current presentation, without giving effect to discontinued operations.
(3) Excludes certain non-property specific operating expenses allocated to certain segments.
(4) The Company’s total investment in HCR ManorCare includes aggregated accumulated accretion of $33.3 million as of June 30, 2011.
(5) Senior housing and post-acute/skilled NOI includes reductions of $1.6 million and $11.7 million, respectively, related to HCP’s equity interest in HCR ManorCare OpCo.
(6) HCR ManorCare OpCo (guarantor) fixed charge coverage is based on EBITDAR for the trailing 12 months, is one quarter in arrears from the date presented and includes home health and hospice EBITDAR and corporate general and administrative expenses, excluding HCR ManorCare’s non-recurring expenses associated with the sale of its real estate to HCP. The fixed charges include the most recent monthly cash rent annualized and cash interest expense based on the trailing 12 months and are one quarter in arrears from the date presented.
See Reporting Definitions and Reconciliations of Non-GAAP Measures
|
Owned Life Science Portfolio
As of and for the six months ended June 30, 2011, unless otherwise indicated, dollars and square feet in thousands | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| Property |
|
|
|
|
|
| Average |
| Square |
|
|
| |||
Leased Properties |
| Count |
| Investment |
| NOI |
| Age (Years) |
| Feet |
| Occupancy % |
| ||||
San Francisco |
|
| 74 |
| $ | 2,559,306 |
| $ | 89,602 |
| 17 |
|
| 4,576 |
| 89.4 |
|
San Diego |
|
| 20 |
|
| 572,587 |
|
| 22,435 |
| 18 |
|
| 1,553 |
| 86.5 |
|
Utah |
|
| 10 |
|
| 119,479 |
|
| 6,487 |
| 11 |
|
| 669 |
| 94.6 |
|
|
|
| 104 |
| $ | 3,251,372 |
| $ | 118,524 |
| 16 |
|
| 6,798 |
| 89.2 |
|
Tenant Concentration
|
| Annualized Revenues |
| Square Feet |
| ||||||||
Tenant |
| Amount |
| % |
| Amount |
| % |
| ||||
Amgen |
| $ | 40,936 |
|
| 19 |
|
| 684 |
|
| 11 |
|
Genentech |
|
| 37,088 |
|
| 17 |
|
| 794 |
|
| 13 |
|
Takeda |
|
| 17,164 |
|
| 8 |
|
| 324 |
|
| 5 |
|
Rigel Pharmaceuticals |
|
| 12,799 |
|
| 6 |
|
| 147 |
|
| 2 |
|
Exelixis, Inc. |
|
| 12,726 |
|
| 6 |
|
| 295 |
|
| 5 |
|
Myriad Genetics |
|
| 7,082 |
|
| 3 |
|
| 310 |
|
| 5 |
|
|
| 6,461 |
|
| 3 |
|
| 248 |
|
| 4 |
| |
General Atomics |
|
| 5,520 |
|
| 3 |
|
| 281 |
|
| 5 |
|
ARUP |
|
| 5,418 |
|
| 2 |
|
| 324 |
|
| 5 |
|
Alexza Pharmaceuticals, Inc. |
|
| 5,159 |
|
| 2 |
|
| 107 |
|
| 2 |
|
Other |
|
| 70,360 |
|
| 31 |
|
| 2,552 |
|
| 43 |
|
|
| $ | 220,713 |
|
| 100 |
|
| 6,066 |
|
| 100 |
|
Portfolio Trends
|
| Same Property Leased Portfolio |
|
| Total Leased Portfolio |
| ||||||||||||||||||||
|
|
|
|
|
|
|
| As of and for the |
|
|
|
|
|
|
|
| ||||||||||
|
| As of and for the Quarter Ended |
| YTD Period Ended |
|
| At the Period Ended |
| ||||||||||||||||||
|
| 06/30/11 |
| 03/31/11 |
| 06/30/10 |
| 06/30/11 |
| 06/30/10 |
|
| 06/30/11 |
| 03/31/11(1) |
| 06/30/10(1) |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Property count |
| 95 |
| 95 |
| 95 |
| 95 |
| 95 |
|
| 104 |
| 104 |
| 96 |
| ||||||||
Investment |
| $ | 3,052,205 |
| $ | 3,048,538 |
| $ | 3,034,633 |
| $ | 3,052,205 |
| $ | 3,034,633 |
|
| $ | 3,251,372 |
| $ | 3,247,606 |
| $ | 3,086,012 |
|
Square feet |
| 6,320 |
| 6,319 |
| 6,321 |
| 6,320 |
| 6,321 |
|
| 6,798 |
| 6,797 |
| 6,399 |
| ||||||||
Occupancy % |
| 92.0 |
| 91.8 |
| 89.8 |
| 92.0 |
| 89.8 |
|
| 89.2 |
| 89.0 |
| 88.7 |
| ||||||||
NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Rental and related revenues |
| $ | 59,421 |
| $ | 59,191 |
| $ | 59,092 |
| $ | 118,612 |
| $ | 117,668 |
|
|
|
|
|
|
|
| |||
Tenant recoveries |
| 9,320 |
| 10,049 |
| 9,596 |
| 19,369 |
| 19,236 |
|
|
|
|
|
|
|
| ||||||||
Operating expenses(2) |
| (10,728 | ) | (11,023 | ) | (11,195 | ) | (21,751 | ) | (22,208 | ) |
|
|
|
|
|
|
| ||||||||
|
| $ | 58,013 |
| $ | 58,217 |
| $ | 57,493 |
| $ | 116,230 |
| $ | 114,696 |
|
|
|
|
|
|
|
| |||
Adjusted NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Straight-line rents |
| (3,740 | ) | (4,109 | ) | (971 | ) | (7,849 | ) | (6,362 | ) |
|
|
|
|
|
|
| ||||||||
Below market lease intangibles, net |
| (336 | ) | (37 | ) | (254 | ) | (373 | ) | (510 | ) |
|
|
|
|
|
|
| ||||||||
Lease termination fees |
| (1,589 | ) | (1,589 | ) | (1,589 | ) | (3,178 | ) | (3,178 | ) |
|
|
|
|
|
|
| ||||||||
|
| $ | 52,348 |
| $ | 52,482 |
| $ | 54,679 |
| $ | 104,830 |
| $ | 104,646 |
|
|
|
|
|
|
|
| |||
(1) Amounts are presented as originally reported, without giving effect to discontinued operations.
(2) Excludes certain non-property specific operating expenses allocated to certain segments and activities of assets that have been placed in redevelopment.
See Reporting Definitions and Reconciliations of Non-GAAP Measures
|
Owned Life Science Portfolio
Dollars and square feet in thousands, except dollars per square foot
Selected Lease Expirations Data (next 3 years):
|
| Total |
| San Francisco |
| San Diego |
| Utah |
| ||||||||||||||||
|
| Square Feet |
| Annualized Revenues |
| Square |
| Annualized |
| Square |
| Annualized |
| Square |
| Annualized |
| ||||||||
Year |
| Amount |
| % |
| Amount |
| % |
| Feet |
| Revenues |
| Feet |
| Revenues |
| Feet |
| Revenues |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
2011(1) |
| 299 |
| 5 |
| $ | 10,579 |
| 5 |
| 256 |
| $ | 8,878 |
| 43 |
| $ | 1,701 |
| — |
| $ | — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
2012 |
| 160 |
| 3 |
| 3,629 |
| 2 |
| 80 |
| 1,227 |
| 80 |
| 2,402 |
| — |
| — |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
2013 |
| 364 |
| 6 |
| 10,103 |
| 5 |
| 304 |
| 8,909 |
| 60 |
| 1,194 |
| — |
| — |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Thereafter |
| 5,243 |
| 86 |
| 196,402 |
| 88 |
| 3,449 |
| 147,370 |
| 1,160 |
| 36,531 |
| 634 |
| 12,501 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 6,066 |
| 100 |
| $ | 220,713 |
| 100 |
| 4,089 |
| $ | 166,384 |
| 1,343 |
| $ | 41,828 |
| 634 |
| $ | 12,501 |
|
Leasing Activity |
| Leased |
| Annualized |
| % |
| HCP Tenant |
| Leasing |
| Average |
| Retention |
| |||
|
| Square |
| Base Rent Per |
| Change |
| Improvements |
| Costs Per |
| Lease Term |
| Rate |
| |||
|
| Feet |
| Square Foot(2) |
| In Rents |
| Per Square Foot |
| Square Foot |
| (Months) |
| YTD |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Leased Square Feet as of December 31, 2010 |
| 5,876 |
| $ | 36.20 |
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Acquisitions |
| 140 |
| 33.30 |
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Expirations |
| (197 | ) | 19.60 |
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Renewals, amendments and extensions |
| 112 |
| 18.83 |
| (1.5 | ) | $ | 6.70 |
| $ | 3.14 |
| 28 |
| 57.0 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
New leases and expansions |
| 120 |
| 19.62 |
|
|
| 12.86 |
| 10.29 |
| 74 |
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Leased Square Feet as of March 31, 2011 |
| 6,051 |
| $ | 36.23 |
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Expirations |
| (4 | ) | 24.00 |
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Renewals, amendments and extensions |
| 4 |
| 24.00 |
| — |
| $ | — |
| $ | — |
| 12 |
| 57.8 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
New leases and expansions |
| 15 |
| 12.93 |
|
|
| 25.47 |
| 7.17 |
| 59 |
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Leased Square Feet as of June 30, 2011 |
| 6,066 |
| $ | 36.39 |
|
|
|
|
|
|
|
|
|
|
|
(1) Includes month-to-month and holdover leases.
(2) Represents actual base rents.
See Reporting Definitions and Reconciliations of Non-GAAP Measures
|
Owned Medical Office Portfolio
As of and for the six months ended June 30, 2011, dollars and square feet in thousands
Investments
|
| Property |
|
|
|
|
| Average |
|
|
|
|
| ||
Leased Properties |
| Count |
| Investment |
| NOI |
| Age (Years) |
| Square Feet |
| Occupancy % |
| ||
On-Campus |
| 143 |
| $ | 1,818,327 |
| $ | 76,701 |
| 19 |
| 10,841 |
| 91.2 |
|
Off-Campus |
| 45 |
| 454,491 |
| 19,188 |
| 18 |
| 2,256 |
| 90.2 |
| ||
|
| 188 |
| $ | 2,272,818 |
| $ | 95,889 |
| 19 |
| 13,097 |
| 91.1 |
|
Portfolio Trends
|
| Same Property Leased Portfolio |
|
| Total Leased Portfolio |
| ||||||||||||||||||||
|
| As of and for the Quarter Ended |
| As of and for the |
|
| At the Period Ended |
| ||||||||||||||||||
|
| 06/30/11 |
| 03/31/11 |
| 06/30/10 |
| 06/30/11 |
| 06/30/10 |
|
| 06/30/11 |
| 03/31/11(1) |
| 06/30/10(1) |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Property count |
| 182 |
| 182 |
| 182 |
| 182 |
| 182 |
|
| 188 |
| 188 |
| 184 |
| ||||||||
Investment |
| $ | 2,177,498 |
| $ | 2,167,315 |
| $ | 2,137,639 |
| $ | 2,177,498 |
| $ | 2,137,639 |
|
| $ | 2,272,818 |
| $ | 2,262,456 |
| $ | 2,150,549 |
|
Square feet |
| 12,708 |
| 12,707 |
| 12,699 |
| 12,708 |
| 12,699 |
|
| 13,097 |
| 13,097 |
| 12,788 |
| ||||||||
Occupancy % |
| 90.8 |
| 90.7 |
| 90.7 |
| 90.8 |
| 90.7 |
|
| 91.1 |
| 91.0 |
| 90.8 |
| ||||||||
NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Rental and related revenues |
| $ | 66,108 |
| $ | 65,824 |
| $ | 64,882 |
| $ | 131,932 |
| $ | 129,370 |
|
|
|
|
|
|
|
| |||
Tenant recoveries |
| 11,300 |
| 11,512 |
| 11,902 |
| 22,812 |
| 23,484 |
|
|
|
|
|
|
|
| ||||||||
Operating expenses(2) |
| (29,717 | ) | (30,091 | ) | (30,783 | ) | (59,808 | ) | (61,000 | ) |
|
|
|
|
|
|
| ||||||||
|
| $ | 47,691 |
| $ | 47,245 |
| $ | 46,001 |
| $ | 94,936 |
| $ | 91,854 |
|
|
|
|
|
|
|
| |||
Adjusted NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Straight-line rents |
| (1,343 | ) | (1,976 | ) | (865 | ) | (3,319 | ) | (1,609 | ) |
|
|
|
|
|
|
| ||||||||
Above (below) market lease intangibles, net |
| (33 | ) | 4 |
| (547 | ) | (29 | ) | (1,192 | ) |
|
|
|
|
|
|
| ||||||||
|
| $ | 46,315 |
| $ | 45,273 |
| $ | 44,589 |
| $ | 91,588 |
| $ | 89,053 |
|
|
|
|
|
|
|
| |||
(1) Amounts are presented as originally reported, without giving effect to discontinued operations.
(2) Excludes certain non-property specific operating expenses allocated to certain segments and activities of assets that have been placed in redevelopment.
See Reporting Definitions and Reconciliations of Non-GAAP Measures
Owned Medical Office Portfolio
Square feet in thousands
Leasing Activity
|
| Leased |
| Annualized |
| % |
| HCP Tenant |
| Leasing |
| Average |
| Retention |
| |||
|
| Square |
| Base Rent Per |
| Change |
| Improvements |
| Costs Per |
| Lease Term |
| Rate |
| |||
|
| Feet |
| Square Foot(1) |
| In Rents(2) |
| Per Square Foot |
| Square Foot |
| (Months) |
| YTD |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Leased Square Feet as of December 31, 2010 |
| 11,798 |
| $ | 21.82 |
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Acquisitions |
| 132 |
| 18.74 |
|
|
|
|
|
|
|
|
|
|
| |||
Expirations |
| (569 | ) | 24.57 |
|
|
|
|
|
|
|
|
|
|
| |||
Renewals, amendments and extensions |
| 462 |
| 23.43 |
| 1.0 |
| $ | 6.16 |
| $ | 4.46 |
| 85 |
| 81.2 |
| |
New leases |
| 111 |
| 21.44 |
|
|
| 18.94 |
| 5.09 |
| 84 |
|
|
| |||
Terminations |
| (16 | ) | 13.91 |
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Leased Square Feet as of March 31, 2011 |
| 11,918 |
| $ | 21.86 |
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Expirations |
| (321 | ) | 21.97 |
|
|
|
|
|
|
|
|
|
|
| |||
Renewals, amendments and extensions |
| 254 |
| 22.06 |
| 1.1 |
| $ | 5.91 |
| $ | 2.32 |
| 50 |
| 80.4 |
| |
New leases |
| 82 |
| 20.68 |
|
|
| 20.36 |
| 4.12 |
| 59 |
|
|
| |||
Terminations |
| (6 | ) | 16.81 |
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Leased Square Feet as of June 30, 2011 |
| 11,927 |
| $ | 21.94 |
|
|
|
|
|
|
|
|
|
|
|
(1) Represents actual base rents.
(2) For comparative purposes, the calculation reflects adjustments for leases that converted to a different lease type upon renewal, amendment or extension of the original lease.
See Reporting Definitions and Reconciliations of Non-GAAP Measures | |
| |
|
Owned Hospital Portfolio
As of and for the six months ended June 30, 2011, dollars in thousands, unless otherwise indicated
Investments
Leased |
| Property |
|
|
|
|
| Average |
|
|
| Occupancy |
| EBITDAR(1) |
| EBITDARM(1) |
| ||||||||
Properties |
| Count |
| Investment |
| NOI |
| Age (Years) |
| Beds |
| %(1) |
| Amount |
| CFC |
| Amount |
| CFC |
| ||||
Acute care |
| 5 |
| $ | 452,672 |
| $ | 28,492 |
| 34 |
| 1,578 |
| 55.8 |
| $ | 251,826 |
| 5.54 x |
| $ | 275,593 |
| 6.07 x |
|
Rehab |
| 7 |
| 96,784 |
| 3,987 |
| 21 |
| 502 |
| 58.8 |
| 27,366 |
| 3.16 x |
| 31,232 |
| 3.61 x |
| ||||
Specialty |
| 2 |
| 63,725 |
| 2,565 |
| 27 |
| 37 |
| — |
| 21,335 |
| 4.16 x |
| 23,662 |
| 4.61 x |
| ||||
LTACH |
| 3 |
| 35,205 |
| 4,031 |
| 17 |
| 244 |
| 43.5 |
| 5,341 |
| 0.76 x |
| 8,497 |
| 1.20 x |
| ||||
|
| 17 |
| $ | 648,386 |
| $ | 39,075 |
| 25 |
| 2,361 |
| 54.5 |
| $ | 305,868 |
| 4.62 x |
| $ | 338,984 |
| 5.12 x |
|
Secured |
|
|
|
|
| Interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Loans |
|
|
| Investment |
| Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Acute care |
|
|
| $ | 14,099 |
| $ | 735 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Mezzanine |
|
|
|
|
| Interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Loans |
|
|
| Investment |
| Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Specialty(2) |
|
|
| $ | 85,744 |
| $ | — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Total |
|
|
| $ | 748,229 |
| $ | 39,810 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operator Concentration(3)
|
|
|
|
|
| NOI and |
|
|
|
|
|
|
| ||||||||
|
| Properties |
| Investment |
| Interest Income |
|
|
|
|
|
|
| ||||||||
Operator(1) |
| Count |
| % Pooled |
| Amount |
| % |
| Amount |
| % |
| Beds |
|
|
|
|
| ||
Tenet Healthcare Corp |
| 3 |
| — |
| $ | 196,709 |
| 26 |
| $ | 11,584 |
| 29 |
| 756 |
|
|
|
|
|
HCA |
| 1 |
| — |
| 167,164 |
| 22 |
| 10,184 |
| 26 |
| 668 |
|
|
|
|
| ||
Cirrus Health |
| 2 |
| — |
| 149,469 |
| 20 |
| 2,566 |
| 6 |
| 37 |
|
|
|
|
| ||
Hoag Memorial Hospital Presbyterian |
| 1 |
| — |
| 88,800 |
| 12 |
| 6,728 |
| 17 |
| 154 |
|
|
|
|
| ||
Other |
| 10 |
| 70 |
| 146,087 |
| 20 |
| 8,748 |
| 22 |
| 746 |
|
|
|
|
| ||
|
| 17 |
| 41 |
| $ | 748,229 |
| 100 |
| $ | 39,810 |
| 100 |
| 2,361 |
|
|
|
|
|
(1) Certain operators in HCP’s hospital portfolio are not required under their respective leases to provide operational data.
(2) Represents a secured loan to Cirrus Group, LLC that was placed on non-accrual status effective January 1, 2011. At June 30, 2011, the combined carrying value ($86 million) and related accrued interest ($6 million) of this loan was $92 million. For additional information regarding the senior loan to Cirrus Group, LLC see Note 7 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC.
(3) Property count and beds are presented for leased properties and exclude secured and mezzanine loans.
See Reporting Definitions and Reconciliations of Non-GAAP Measures
|
|
Owned Hospital Portfolio
Dollars in thousands |
Portfolio Trends |
| |||||||||||||||||||||||||
|
| Same Property Leased Portfolio |
|
| Total Leased Portfolio |
| ||||||||||||||||||||
|
| As of and for the Quarter Ended |
| As of and for the |
|
| As of and for the Twelve Months Ended |
| ||||||||||||||||||
|
| 06/30/11 |
| 03/31/11 |
| 06/30/10 |
| 06/30/11 |
| 06/30/10 |
|
| 06/30/11 |
| 03/31/11(1) |
| 06/30/10(1) |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Property count |
| 16 |
| 16 |
| 16 |
| 16 |
| 16 |
|
| 17 |
| 17 |
| 17 |
| ||||||||
Investment |
| $ | 608,641 |
| $ | 608,641 |
| $ | 606,747 |
| $ | 608,641 |
| $ | 606,747 |
|
| $ | 648,386 |
| $ | 648,386 |
| $ | 646,456 |
|
Beds |
| 2,361 |
| 2,361 |
| 2,338 |
| 2,361 |
| 2,338 |
|
| 2,361 |
| 2,361 |
| 2,345 |
| ||||||||
3-Month Occupancy % |
| 56.2 |
| 51.3 |
| 61.9 |
| 56.2 |
| 61.9 |
|
| 56.2 |
| 51.3 |
| 62.6 |
| ||||||||
12-Month Occupancy % |
| 54.5 |
| 55.7 |
| 58.9 |
| 54.5 |
| 58.9 |
|
| 54.5 |
| 55.7 |
| 59.0 |
| ||||||||
EBITDAR |
| $ | 296,542 |
| $ | 295,822 |
| $ | 309,926 |
| $ | 296,542 |
| $ | 309,926 |
|
| $ | 305,868 |
| $ | 307,286 |
| $ | 322,969 |
|
EBITDAR CFC |
| 4.68 x |
| 4.65 x |
| 4.95 x |
| 4.68 x |
| 4.95 x |
|
| 4.62 x |
| 4.62 x |
| 4.93 x |
| ||||||||
EBITDARM |
| $ | 328,263 |
| $ | 327,367 |
| $ | 341,719 |
| $ | 328,263 |
| $ | 341,719 |
|
| $ | 338,984 |
| $ | 340,306 |
| $ | 356,438 |
|
EBITDARM CFC |
| 5.18 x |
| 5.15 x |
| 5.46 x |
| 5.18 x |
| 5.46 x |
|
| 5.12 x |
| 5.12 x |
| 5.44 x |
| ||||||||
NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Rental and related revenues |
| $ | 21,524 |
| $ | 18,111 |
| $ | 21,376 |
| $ | 39,635 |
| $ | 39,870 |
|
|
|
|
|
|
|
| |||
Operating expenses |
| (1,221 | ) | (965 | ) | (576 | ) | (2,186 | ) | (2,786 | ) |
|
|
|
|
|
|
| ||||||||
|
| $ | 20,303 |
| $ | 17,146 |
| $ | 20,800 |
| $ | 37,449 |
| $ | 37,084 |
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Adjusted NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Straight-line rents |
| (254 | ) | (275 | ) | (1,308 | ) | (529 | ) | (3,124 | ) |
|
|
|
|
|
|
| ||||||||
Below market lease intangibles, net |
| (192 | ) | (193 | ) | (193 | ) | (385 | ) | (385 | ) |
|
|
|
|
|
|
| ||||||||
|
| $ | 19,857 |
| $ | 16,678 |
| $ | 19,299 |
| $ | 36,535 |
| $ | 33,575 |
|
|
|
|
|
|
|
|
(1) Amounts presented conform to current presentation without giving effect to discontinued operations.
See Reporting Definitions and Reconciliations of Non-GAAP Measures
|
Investment Management Platform
As of and for the six months ended June 30, 2011, dollars in thousands
|
|
|
|
|
|
|
|
|
|
|
| HCP’s |
|
|
| ||||
Unconsolidated |
|
|
| Date |
| HCP’s |
| Joint |
| HCP’s Net |
| Investment |
| Initial |
| ||||
Institutional |
| Primary |
| Established/ |
| Ownership |
| Venture’s |
| Equity |
| Management |
| Term |
| ||||
Joint Ventures |
| Segment |
| Acquired |
| Percentage |
| Investment |
| Investment(1) |
| Fee Income(2) |
| (in years) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
HCP Ventures III |
| Medical office |
| October-06 |
|
| 30%(3) |
| $ | 142,379 |
| $ | 9,359 |
| $ | 199 |
| 10 |
|
HCP Ventures IV |
| Medical office |
| April-07 |
|
| 20% |
| 649,107 |
| 36,793 |
| 840 |
| 10 |
| |||
HCP Life Science |
| Life science |
| August-07 |
| 50%-63% |
| 143,763 |
| 66,058 |
| 2 |
| 97-98 |
| ||||
|
|
|
|
|
|
|
| $ | 935,249 |
| $ | 112,210 |
| $ | 1,041 |
|
|
|
Balance Sheets(4) |
| ||||||||||||
|
| June 30, 2011 |
| December 31, 2010 |
| ||||||||
�� |
| Medical |
| Life Science |
| Medical |
| Life Science |
| ||||
ASSETS |
|
|
|
|
|
|
|
|
| ||||
Real estate: |
|
|
|
|
|
|
|
|
| ||||
Buildings and improvements |
| $ | 670,676 |
| $ | 28,535 |
| $ | 665,925 |
| $ | 37,489 |
|
Land |
| 67,968 |
| 8,271 |
| 67,897 |
| 8,271 |
| ||||
Accumulated depreciation and amortization |
| (104,851 | ) | (15,104 | ) | (94,901 | ) | (23,428 | ) | ||||
Net real estate |
| 633,793 |
| 21,702 |
| 638,921 |
| 22,332 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents and restricted cash |
| 14,545 |
| 2,519 |
| 15,275 |
| 1,876 |
| ||||
Intangible assets, net |
| 39,424 |
| — |
| 42,805 |
| — |
| ||||
Other assets, net |
| 21,193 |
| 1,615 |
| 20,112 |
| 1,684 |
| ||||
Total assets |
| $ | 708,955 |
| $ | 25,836 |
| $ | 717,113 |
| $ | 25,892 |
|
|
|
|
|
|
|
|
|
|
| ||||
LIABILITIES AND MEMBERS’ CAPITAL |
|
|
|
|
|
|
|
|
| ||||
Mortgage debt |
| $ | 468,057 |
| $ | 8,256 |
| $ | 469,061 |
| $ | 9,882 |
|
Intangible liabilities, net |
| 11,713 |
| — |
| 12,523 |
| — |
| ||||
Accounts payable, accrued liabilities and deferred revenue |
| 13,967 |
| 1,019 |
| 12,458 |
| 1,016 |
| ||||
Total liabilities |
| 493,737 |
| 9,275 |
| 494,042 |
| 10,898 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
HCP’s capital |
| 34,366 |
| 8,913 |
| 36,158 |
| 7,918 |
| ||||
Partners’ capital |
| 180,852 |
| 7,648 |
| 186,913 |
| 7,076 |
| ||||
Total liabilities and members’ capital |
| $ | 708,955 |
| $ | 25,836 |
| $ | 717,113 |
| $ | 25,892 |
|
(1) | The carrying value of investments in unconsolidated joint ventures is based on the amount we paid to purchase the joint venture interest, which is different from the Company’s capital balance as reflected at the joint venture level as the records of the unconsolidated joint venture are reflected at their historical cost. These differences in basis are generally amortized over the lives of the related assets and liabilities and included in the Company’s share of equity in earnings of the respective joint venture. |
(2) | Investment management fee income presented on the Company’s consolidated income statement for the six months ended June 30, 2011 of $1.1 million includes $70,000 from HCP Ventures II, an unconsolidated senior housing joint venture. On January 14, 2011, the Company acquired its partner’s 65% interest, becoming the sole owner of the portfolio. For additional information see Note 8 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC. |
(3) | The Company owns an 85% interest in HCP Birmingham Portfolio LLC, which owns a 30% interest in HCP Ventures III. |
(4) | Financial information is combined by primary segment of each joint venture (i.e., HCP Ventures III and HCP Ventures IV are combined under the medical office columns). |
See Reporting Definitions and Reconciliations of Non-GAAP Measures | |
| |
|
Investment Management Platform
In thousands
Statement of Operations and Funds From Operations(1) |
| ||||||||||||
|
| Three Months Ended June 30, 2011 |
| Three Months Ended June 30, 2010 |
| ||||||||
|
| Medical Office |
| Life Science |
| Medical Office |
| Life Science |
| ||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
| |
Rental and related revenues |
| $ | 15,413 |
| $ | 2,696 |
| $ | 17,130 |
| $ | 3,032 |
|
Tenant recoveries |
|
| 3,925 |
|
| 304 |
|
| 4,327 |
|
| 376 |
|
Total revenues |
|
| 19,338 |
|
| 3,000 |
|
| 21,457 |
|
| 3,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 7,121 |
|
| 379 |
|
| 7,612 |
|
| 612 |
|
Operating |
|
| 8,204 |
|
| 362 |
|
| 8,258 |
|
| 395 |
|
General and administrative |
|
| 710 |
|
| 24 |
|
| 1,042 |
|
| 12 |
|
Total costs and expenses |
|
| 16,035 |
|
| 765 |
|
| 16,912 |
|
| 1,019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net |
|
| — |
|
| — |
|
| 6 |
|
| — |
|
Interest expense |
|
| (6,743 | ) |
| (157 | ) |
| (6,858 | ) |
| (217 | ) |
Net income (loss) |
| $ | (3,440 | ) | $ | 2,078 |
| $ | (2,307 | ) | $ | 2,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 7,121 |
|
| 379 |
|
| 7,612 |
|
| 612 |
|
FFO |
| $ | 3,681 |
| $ | 2,457 |
| $ | 5,305 |
| $ | 2,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCP’s pro rata share of FFO |
| $ | 855 |
| $ | 1,433 |
| $ | 1,176 |
| $ | 1,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected supplemental cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of above and below market lease intangibles, net |
| $ | (141 | ) | $ | — |
| $ | (81 | ) | $ | — |
|
Amortization of debt issuance costs, net |
|
| 189 |
|
| 9 |
|
| 189 |
|
| 9 |
|
Straight-line rents |
|
| (248 | ) |
| 47 |
|
| (750 | ) |
| 92 |
|
Leasing costs and tenant and capital improvements |
|
| (2,718 | ) |
| (154 | ) |
| (1,986 | ) |
| (495 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Six Months Ended June 30, 2011 |
| Six Months Ended June 30, 2010 |
| ||||||||
|
| Medical Office |
| Life Science |
| Medical Office |
| Life Science |
| ||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and related revenues |
| $ | 31,725 |
| $ | 5,393 |
| $ | 34,396 |
| $ | 4,832 |
|
Tenant recoveries |
|
| 8,023 |
|
| 638 |
|
| 8,751 |
|
| 728 |
|
Total revenues |
|
| 39,748 |
|
| 6,031 |
|
| 43,147 |
|
| 5,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 14,138 |
|
| 902 |
|
| 16,877 |
|
| 1,223 |
|
Operating |
|
| 16,331 |
|
| 717 |
|
| 16,597 |
|
| 778 |
|
General and administrative |
|
| 1,577 |
|
| 39 |
|
| 1,991 |
|
| 42 |
|
Total costs and expenses |
|
| 32,046 |
|
| 1,658 |
|
| 35,465 |
|
| 2,043 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net |
|
| 2 |
|
| — |
|
| 8 |
|
| — |
|
Interest expense |
|
| (13,426 | ) |
| (326 | ) |
| (13,708 | ) |
| (441 | ) |
Net income (loss) |
| $ | (5,722 | ) | $ | 4,047 |
| $ | (6,018 | ) | $ | 3,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 14,138 |
|
| 902 |
|
| 16,877 |
|
| 1,223 |
|
FFO |
| $ | 8,416 |
| $ | 4,949 |
| $ | 10,859 |
| $ | 4,299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCP’s pro rata share of FFO |
| $ | 1,927 |
| $ | 2,883 |
| $ | 2,432 |
| $ | 2,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected supplemental cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of above and below market lease intangibles, net |
| $ | (266 | ) | $ | — |
| $ | (51 | ) | $ | — |
|
Amortization of debt issuance costs, net |
|
| 379 |
|
| 17 |
|
| 379 |
|
| 17 |
|
Straight-line rents |
|
| (556 | ) |
| 4 |
|
| (699 | ) |
| 151 |
|
Leasing costs and tenant and capital improvements |
|
| (4,035 | ) |
| (475 | ) |
| (3,115 | ) |
| (663 | ) |
(1) Financial information is combined by primary segment of each joint venture (i.e., HCP Ventures III and HCP Ventures IV are combined under the medical office columns).
See Reporting Definitions and Reconciliations of Non-GAAP Measures |
|
Investment Management Platform
In thousands
Net Operating Income(1) | ||||||||||||
| Three Months Ended June 30, 2011 |
| Three Months Ended June 30, 2010 |
| ||||||||
| Medical Office |
| Life Science |
| Medical Office |
| Life Science |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) | $ | (3,440 | ) | $ | 2,078 |
| $ | (2,307 | ) | $ | 2,172 |
|
Depreciation and amortization |
| 7,121 |
|
| 379 |
|
| 7,612 |
|
| 612 |
|
General and administrative |
| 710 |
|
| 24 |
|
| 1,042 |
|
| 12 |
|
Other income, net |
| — |
|
| — |
|
| (6 | ) |
| — |
|
Interest expense |
| 6,743 |
|
| 157 |
|
| 6,858 |
|
| 217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI | $ | 11,134 |
| $ | 2,638 |
| $ | 13,199 |
| $ | 3,013 |
|
Straight-line rents |
| (248 | ) |
| 47 |
|
| (750 | ) |
| 92 |
|
Amortization of above (below) market lease intangibles, net |
| (141 | ) |
| — |
|
| (81 | ) |
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted NOI | $ | 10,745 |
| $ | 2,685 |
| $ | 12,368 |
| $ | 3,105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCP’s pro rata share of NOI | $ | 2,504 |
| $ | 1,537 |
| $ | 2,917 |
| $ | 1,772 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCP’s pro rata share of adjusted NOI | $ | 2,416 |
| $ | 1,563 |
| $ | 2,735 |
| $ | 1,818 |
|
|
|
|
|
| ||||||||
|
|
|
|
| ||||||||
| Six Months Ended June 30, 2011 |
| Six Months Ended June 30, 2010 |
| ||||||||
| Medical Office |
| Life Science |
| Medical Office |
| Life Science |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) | $ | (5,722 | ) | $ | 4,047 |
| $ | (6,018 | ) | $ | 3,076 |
|
Depreciation and amortization |
| 14,138 |
|
| 902 |
|
| 16,877 |
|
| 1,223 |
|
General and administrative |
| 1,577 |
|
| 39 |
|
| 1,991 |
|
| 42 |
|
Other income, net |
| (2 | ) |
| — |
|
| (8 | ) |
| — |
|
Interest expense |
| 13,426 |
|
| 326 |
|
| 13,708 |
|
| 441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI | $ | 23,417 |
| $ | 5,314 |
| $ | 26,550 |
| $ | 4,782 |
|
Straight-line rents |
| (556 | ) |
| 4 |
|
| (699 | ) |
| 151 |
|
Amortization of above (below) market lease intangibles, net |
| (266 | ) |
| — |
|
| (51 | ) |
| — |
|
Lease termination fees |
| (31 | ) |
| — |
|
| (429 | ) |
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted NOI | $ | 22,564 |
| $ | 5,318 |
| $ | 25,371 |
| $ | 4,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCP’s pro rata share of NOI | $ | 5,246 |
| $ | 3,093 |
| $ | 5,895 |
| $ | 2,766 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCP’s pro rata share of adjusted NOI | $ | 5,054 |
| $ | 3,100 |
| $ | 5,619 |
| $ | 2,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Financial information is combined by primary segment of each joint venture (i.e., HCP Ventures III and HCP Ventures IV are combined under the medical office columns).
See Reporting Definitions and Reconciliations of Non-GAAP Measures |
|
Investment Management Platform
As of and for the six months ended June 30, 2011, dollars and square feet in thousands
|
| Property |
|
|
|
|
| Adjusted |
| Average |
| Square |
|
|
| |||
HCP Ventures III |
| Count |
| Investment |
| NOI |
| NOI |
| Age (Years) |
| Feet |
| Occupancy% |
| |||
Medical office: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
On-Campus |
| 9 |
| $ | 109,282 |
| $ | 4,508 |
| $ | 4,323 |
| 11 |
| 619 |
| 98.7 |
|
Off-Campus |
| 4 |
| 33,097 |
| 1,115 |
| 1,082 |
| 10 |
| 183 |
| 84.1 |
| |||
|
| 13 |
| $ | 142,379 |
| $ | 5,623 |
| $ | 5,405 |
| 10 |
| 802 |
| 95.4 |
|
|
| Property |
|
|
|
|
| Adjusted |
| Average |
| Square |
|
|
| ||||
HCP Ventures IV |
| Count(1) |
| Investment |
| NOI |
| NOI |
| Age (Years) |
| Feet |
| Occupancy%(2) |
| ||||
Medical office: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
On-Campus |
| 22 |
| $ | 212,111 |
| $ | 5,295 |
| $ | 5,279 |
| 23 |
| 1,103 |
|
| 73.0 |
|
Off-Campus |
| 31 |
| 355,613 |
| 9,708 |
| 9,383 |
| 19 |
| 1,483 |
|
| 84.3 |
| |||
Hospital: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
LTACH |
| 1 |
| 12,193 |
| 195 |
| 195 |
| 5 |
| N/A |
|
|
|
| |||
Rehab |
| 1 |
| 13,965 |
| 625 |
| 552 |
| 5 |
| N/A |
|
|
|
| |||
Specialty |
| 2 |
| 55,225 |
| 1,971 |
| 1,750 |
| 7 |
| N/A |
|
|
|
| |||
|
| 57 |
| $ | 649,107 |
| $ | 17,794 |
| $ | 17,159 |
| 20 |
|
|
|
|
|
|
|
| Property |
|
|
|
|
| Adjusted |
| Average |
| Square |
|
|
| |||
HCP Life Science |
| Count |
| Investment |
| NOI |
| NOI |
| Age (Years) |
| Feet |
| Occupancy% |
| |||
San Francisco |
| 2 |
| $ | 74,523 |
| $ | 2,364 |
| $ | 2,453 |
| 14 |
| 147 |
| 100.0 |
|
San Diego |
| 2 |
| 69,240 |
| 2,950 |
| 2,865 |
| 15 |
| 131 |
| 90.3 |
| |||
|
| 4 |
| $ | 143,763 |
| $ | 5,314 |
| $ | 5,318 |
| 15 |
| 278 |
| 95.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Total |
| 74 |
| $ | 935,249 |
| $ | 28,731 |
| $ | 27,882 |
|
|
|
|
|
|
|
(1) During 2010, one medical office building was placed into redevelopment; its statistics are not included in the medical office information.
(2) Certain operators in the Investment Management Platform hospital portfolio are not required under their respective leases to provide operational data.
See Reporting Definitions and Reconciliations of Non-GAAP Measures
|
Reporting Definitions and Reconciliations of Non-GAAP Measures
Adjusted Fixed Charge Coverage. Adjusted EBITDA divided by Fixed Charges. The Company uses Adjusted Fixed Charge Coverage, a non-GAAP financial measure, as a measure of liquidity. The Company believes Adjusted Fixed Charge Coverage provides investors, particularly fixed income investors, relevant and useful information because it measures the Company’s ability to meet its interest payments on outstanding debt and pay dividends to its preferred stockholders. The Company’s various debt agreements contain covenants that require the Company to maintain ratios similar to Adjusted Fixed Charge Coverage and credit rating agencies utilize similar ratios in evaluating and determining the credit rating on certain debt instruments of the Company. However, since this ratio is derived from Adjusted EBITDA and Fixed Charges, its usefulness is limited by the same factors that limit the usefulness of Adjusted EBITDA and Fixed Charges. Further, the Company’s computation of Adjusted Fixed Charge Coverage may not be comparable to similar fixed charge coverage ratios reported by other companies.
The following table details the calculation of Adjusted Fixed Charge Coverage:
In thousands
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| 2011 |
| 2010 |
| 2011 |
| 2010 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Adjusted EBITDA |
| $ | 432,365 |
| $ | 249,208 |
| $ | 701,834 |
| $ | 486,600 |
|
Interest expense: |
|
|
|
|
|
|
|
|
| ||||
Continuing operations |
| 105,129 |
| 72,745 |
| 213,705 |
| 148,697 |
| ||||
Discontinued operations |
| — |
| 2 |
| — |
| 6 |
| ||||
HCP’s share of interest expense from the Investment Management Platform |
| 1,584 |
| 4,981 |
| 3,159 |
| 9,940 |
| ||||
Capitalized interest |
| 6,550 |
| 5,154 |
| 12,538 |
| 10,204 |
| ||||
Preferred stock dividends |
| 5,283 |
| 5,283 |
| 10,566 |
| 10,566 |
| ||||
Fixed charges |
| $ | 118,546 |
| $ | 88,165 |
| $ | 239,968 |
| $ | 179,413 |
|
|
|
|
|
|
|
|
|
|
| ||||
Adjusted fixed charge coverage |
| 3.6 x |
| 2.8 x |
| 2.9 x |
| 2.7 x |
|
Annualized Debt Service. The most recent monthly interest and principal amortization due to HCP as of period end annualized for 12 months. The Company uses Annualized Debt Service for purposes of determining Debt Service Coverage.
Annualized Revenues. The most recent monthly base rent (including additional rent floors), income from direct financing leases and/or interest income annualized for 12 months. Annualized Revenues do not include tenant recoveries, additional rents in excess of floors and non-cash revenue adjustments (i.e., straight-line rents, amortization of above and below market lease intangibles, interest accretion and deferred revenues). The Company uses Annualized Revenues for the purpose of determining Relationship Concentrations, Lease Expirations and Debt Investment Maturities.
Assets Held for Sale. Assets of discontinued operations in accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
Assisted Living Facility (“ALF”). A senior housing facility that predominantly consists of assisted living units is classified by the Company as an ALF.
Beds/Units/Square Feet. Senior housing facilities are measured in units (e.g., studio, one or two bedroom units). Life science facilities and medical office buildings are measured in square feet. Post-acute/skilled nursing facilities and hospitals are measured in licensed bed count.
Cash Flow Coverage (“CFC”). Facility EBITDAR or Facility EBITDARM for the most recent 12 months of available data divided by the Same Period Rent. Cash Flow Coverage is a supplemental measure of a property’s ability to generate cash flows for the operator/tenant (not the Company) to meet the operator’s/tenant’s related rent and other obligations to the Company. However, its usefulness is limited by, among other things, the same factors that limit the usefulness of Facility EBITDAR or Facility EBITDARM. The coverages shown exclude newly completed facilities under start-up, vacant facilities and facilities for which data is not available or meaningful.
Consolidated Assets. Total assets as reported in the Company’s consolidated financial statements.
Consolidated Debt. The carrying amount of bank line of credit, bridge and term loans (if applicable), senior unsecured notes, mortgage and other secured debt, and other debt as reported in the Company’s consolidated financial statements.
Consolidated Gross Assets. The carrying amount of total assets, excluding investments in and advances to unconsolidated joint ventures, after adding back accumulated depreciation and amortization, as reported in the Company’s consolidated financial statements.
Consolidated Market Capitalization. Consolidated Debt at Book Value plus Consolidated Market Equity.
Consolidated Market Equity. The total number of outstanding shares of the Company’s common stock multiplied by the closing price per share of its common stock on the New York Stock Exchange as of period end, plus the total number of convertible partnership units multiplied by the closing price per share of its common stock on the New York Stock Exchange as of period end (adjusted for stock splits), plus the total number of outstanding shares of the Company’s preferred stock multiplied by the closing price of its preferred stock on the New York Stock Exchange as of period end.
Consolidated Secured Debt. Mortgage and other secured debt secured by real estate excluding debt on assets held for sale as reported in the Company’s consolidated financial statements.
Continuing Care Retirement Community (“CCRC”). A senior housing facility which provides at least three levels of care (i.e., independent living, assisted living and skilled nursing) is classified by the Company as a CCRC.
Debt Investments. Loans secured by a direct interest in real estate and mezzanine loans.
Debt Service. The periodic payment of interest expense and principal amortization on secured loans.
Development. Includes ground-up construction and redevelopments.
Direct Financing Lease (“DFL”). The Company uses the direct finance method of accounting to record income from DFLs. For leases accounted for as DFLs, future minimum lease payments are recorded as a receivable. The difference between the future minimum lease payments and the estimated residual values less the cost of the properties is recorded as unearned income. Unearned income is deferred and amortized to income over the lease terms to provide a constant yield.
|
|
Reporting Definitions and Reconciliations of Non-GAAP Measures
Estimated Completion Date. For development projects, management’s estimate of the date the core and shell structure improvements are expected to be or have been completed. For redevelopment projects, management’s estimate of the time in which major construction activity in relation to the scope of the project has been substantially completed.
EBITDA and Adjusted EBITDA. The real estate industry uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP financial measure, as a measure of both operating performance and liquidity. Adjusted EBITDA is calculated as EBITDA excluding impairments and gains or losses from real estate dispositions. The Company uses EBITDA and Adjusted EBITDA to measure both its operating performance and liquidity. The Company considers Adjusted EBITDA to provide investors relevant and useful information because it permits investors to view income from its operations on an unleveraged basis before the effects of taxes, non-cash depreciation and amortization, impairments, impairment recoveries, and gains or losses from real estate dispositions. By excluding interest expense, Adjusted EBITDA allows investors to measure the Company’s operating performance independent of its capital structure and indebtedness and, therefore, allows for a more meaningful comparison of its operating performance between quarters as well as annual periods and to compare its operating performance to that of other companies, both in the real estate industry and in other industries. As a liquidity measure, the Company believes that EBITDA and Adjusted EBITDA help investors analyze the Company’s ability to meet its interest payments on outstanding debt and to make preferred dividend payments. The Company believes investors should consider EBITDA and Adjusted EBITDA, in conjunction with net income (the primary measure of the Company’s performance) and the other required GAAP measures of its performance and liquidity, to improve their understanding of the Company’s operating results and liquidity, and to make more meaningful comparisons of its performance between periods and as against other companies. EBITDA and Adjusted EBITDA have limitations as analytical tools and should be used in conjunction with the Company’s required GAAP presentations. EBITDA and Adjusted EBITDA do not reflect the Company’s historical cash expenditures or future cash requirements for capital expenditures or contractual commitments. While Adjusted EBITDA is a relevant and widely used measure of operating performance and liquidity, it does not represent net income or cash flow from operations as defined by GAAP and it should not be considered as an alternative to those indicators in evaluating operating performance or liquidity. Further, the Company’s computation of EBITDA and Adjusted EBITDA may not be comparable to similar measures reported by other companies.
The following table reconciles Adjusted EBITDA from net income:
In thousands
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| 2011 |
| 2010 |
| 2011 |
| 2010 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 234,252 |
| $ | 88,595 |
| $ | 308,236 |
| $ | 172,696 |
|
Interest expense: |
|
|
|
|
|
|
|
|
| ||||
Continuing operations |
| 105,129 |
| 72,745 |
| 213,705 |
| 148,697 |
| ||||
Discontinued operations |
| — |
| 2 |
| — |
| 6 |
| ||||
Income taxes: |
|
|
|
|
|
|
|
|
| ||||
Continuing operations |
| 248 |
| 571 |
| 285 |
| 943 |
| ||||
Discontinued operations |
| — |
| 6 |
| — |
| 21 |
| ||||
Depreciation and amortization of real estate, in-place lease and other intangibles: |
|
|
|
|
|
|
|
|
| ||||
Continuing operations |
| 90,052 |
| 77,700 |
| 181,472 |
| 155,634 |
| ||||
Discontinued operations |
| — |
| 212 |
| — |
| 1,249 |
| ||||
Equity income from unconsolidated joint ventures |
| (14,950 | ) | (2,486 | ) | (15,748 | ) | (3,869 | ) | ||||
HCP’s share of EBITDA from the Investment Management Platform |
| 3,872 |
| 11,388 |
| 7,969 |
| 22,098 |
| ||||
Other joint venture adjustments |
| 13,492 |
| 540 |
| 13,684 |
| 1,090 |
| ||||
EBITDA |
| $ | 432,095 |
| $ | 249,273 |
| $ | 709,603 |
| $ | 498,565 |
|
|
|
|
|
|
|
|
|
|
| ||||
Impairment recoveries |
| — |
| — |
| — |
| (11,900 | ) | ||||
Gain on sales of real estate |
| — |
| (65 | ) | — |
| (65 | ) | ||||
Gain upon consolidation of joint venture |
| 270 |
| — |
| (7,769 | ) | — |
| ||||
Adjusted EBITDA |
| $ | 432,365 |
| $ | 249,208 |
| $ | 701,834 |
| $ | 486,600 |
|
Facility EBITDAR (“EBITDAR”). Earnings before interest, taxes, depreciation, amortization and rent for a particular facility accruing to the operator/tenant of the property (not the Company), for the trailing 12 months and one quarter in arrears from the date presented. The Company uses Facility EBITDAR in determining Cash Flow Coverage and Debt Service Coverage. Facility EBITDAR has limitations as an analytical tool. Facility EBITDAR does not reflect historical cash expenditures or future cash requirements for facility capital expenditures or contractual commitments. In addition, Facility EBITDAR does not represent a property’s net income or cash flow from operations and should not be considered an alternative to those indicators. However, the Company receives periodic financial information from operators/tenants regarding the performance of the Company’s facilities under the operator’s/tenant’s management. The Company utilizes Facility EBITDAR as a supplemental measure of the ability of those properties to generate sufficient liquidity to meet related obligations to the Company. Facility EBITDAR includes the greater of (i) contractual management fees or (ii) an imputed management fee of 5% for senior housing facilities and post-acute/skilled nursing facilities and 2% for acute care hospitals which the Company believes represents typical management fees in their respective industries. All facility financial performance data was derived solely from information provided by operators/tenants and borrowers without independent verification by the Company.
Facility EBITDARM (“EBITDARM”). Earnings before interest, taxes, depreciation, amortization, rent and management fees for a particular facility accruing to the operator/tenant of the property (not the Company), for the trailing 12 months and one quarter in arrears from the date presented. The Company uses Facility EBITDARM in determining Cash Flow Coverage and Debt Service Coverage. Facility EBITDARM has limitations as an analytical tool. Facility EBITDARM does not reflect historical cash expenditures or future cash requirements for facility capital expenditures or contractual commitments. In addition, Facility EBITDARM does not represent a property’s net income or cash flow from operations and should not be considered an alternative to those indicators. However, the Company receives periodic financial information from operators/tenants regarding the performance of the Company’s facilities under the operator’s/tenant’s management. The Company utilizes Facility EBITDARM as a supplemental measure of the ability of those properties to generate sufficient liquidity to meet related obligations to the Company. All facility financial performance data was derived solely from information provided by operators/tenants and borrowers without independent verification by the Company.
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|
Reporting Definitions and Reconciliations of Non-GAAP Measures
Financial Leverage. Total Debt divided by Total Gross Assets. The Company believes that its Financial Leverage is a meaningful supplemental measure of its financial position, which enables both management and investors to analyze its leverage and to compare its leverage to that of other companies. The Company believes that the ratio of consolidated debt to consolidated gross assets is the most directly comparable GAAP measure to Financial Leverage. The Company’s computation of its Financial Leverage may not be identical to the computations of financial leverage reported by other companies. The Company’s share of total debt is not intended to reflect its actual liability or ability to access assets should there be a default under any or all of such loans or a liquidation of the joint ventures.
Fixed Charges. Total interest expense plus capitalized interest plus preferred stock dividends. The Company uses Fixed Charges to measure its interest payments on outstanding debt and dividends to its preferred stockholders for purposes of presenting Fixed Charge Coverage and Adjusted Fixed Charge Coverage. However, the usefulness of Fixed Charges is limited as, among other things, it does not include all contractual obligations. The Company’s computation of Fixed Charges should not be considered an alternative to fixed charges as defined by Item 503(d) of Regulation S-K and may not be comparable to fixed charges reported by other companies.
Funds Available for Distribution (“FAD”). Funds Available for Distribution is defined as FFO as adjusted after excluding the impact of the following: (i) straight-line rents; (ii) amortization of acquired above/below market lease intangibles; (iii) amortization of debt premiums, discounts and issuance costs; (iv) amortization of stock—based compensation expense; (v) accretion and depreciation related to direct financing leases; and (vi) deferred revenues. Further, FAD is computed after deducting recurring capital expenditures, including leasing costs and second generation tenant and capital improvements and includes similar adjustments to compute the Company’s share of FAD from its unconsolidated joint ventures. Other REITs or real estate companies may use different methodologies for calculating FAD, and accordingly, HCP’s FAD may not be comparable to those reported by other REITs. Although HCP’s FAD computation may not be comparable to that of other REITs, management believes FAD provides a meaningful supplemental measure of the Company’s ability to fund its ongoing dividend payments. In addition, management believes that in order to further understand and analyze the Company’s liquidity, FAD should be compared with cash flows as determined in accordance with GAAP and presented in its consolidated financial statements. FAD does not represent cash generated from operating activities determined in accordance with GAAP, and FAD should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of the Company’s performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of the Company’s liquidity.
Funds From Operations (“FFO”). The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company also believes that Funds From Operations, or FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), FFO applicable to common shares, Diluted FFO applicable to common shares, and Basic and Diluted FFO per common share are important non-GAAP supplemental measures of operating performance for a real estate investment trust. 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. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a real estate investment trust that use historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for real estate investment trusts that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined as net income (computed in accordance with GAAP), excluding gains or losses from real estate dispositions and upon changes in control of joint ventures, plus real estate and DFL depreciation and amortization, with adjustments to derive the Company’s pro rata share of FFO from consolidated and unconsolidated joint ventures. Adjustments for joint ventures are calculated to reflect FFO on the same basis. The Company believes that the use of FFO, combined with the required GAAP presentations, improves the understanding of operating results of real estate investment trusts among investors and makes comparisons of operating results among such companies more meaningful. The Company considers FFO to be a useful measure for reviewing comparative operating and financial performance because, by excluding gains or losses related to sales of previously depreciated operating real estate assets and real estate and DFL depreciation and amortization, FFO can help investors compare the operating performance of a real estate investment trust between periods or as compared to other companies. While FFO is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. FFO also does not consider the costs associated with capital expenditures related to the Company’s real estate assets nor is FFO necessarily indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of FFO may not be comparable to FFO reported by other real estate investment trusts that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently from the Company. For a reconciliation of FFO to net income, please refer to the slide in this supplemental information package captioned “Consolidated Funds From Operations.”
FFO as adjusted represents FFO before the impact of impairments, impairment recoveries and merger-related items. Merger-related items include estimated acquisition pursuit costs that consist primarily of professional fees and the impact of common stock offering which increases the weighted average shares outstanding, when such proceeds will be used to fund a portion of the cash consideration of the Company’s pending acquisitions. Management believes FFO as adjusted is a useful alternative measurement. This measure is a modification of the NAREIT definition of FFO and should not be used as an alternative to net income.
FFO Payout Ratio. Dividends declared per common share divided by Diluted FFO per common share for a given period. The Company believes the FFO Payout Ratio per Common Share provides investors relevant and useful information because it measures the portion of FFO being declared as dividends to common stockholders. FFO Payout Ratio per Common Share is subject to the same limitations noted in the definition of FFO above.
HCP Life Science. Includes three unconsolidated joint ventures between the Company and an institutional capital partner for which the Company is the managing member. HCP Life Science includes the following partnerships: (i) Torrey Pines Science Center LP (50%), (ii) Britannia Biotech Gateway LP (55%) and (iii) LASDK LP (63%). The unconsolidated joint ventures were acquired as part of the Company’s purchase of Slough Estates USA Inc. on August 1, 2007.
HCP Ventures III. An unconsolidated joint venture formed on October 27, 2006 between the Company and an institutional capital partner, for which the Company is the managing member and has an effective 25.5% interest.
HCP Ventures IV. An unconsolidated joint venture formed on April 30, 2007 between the Company and an institutional capital partner, for which the Company is the managing member and has a 20% interest.
Independent Living Facility (“ILF”). A senior housing facility that predominantly consists of independent living units.
|
|
Reporting Definitions and Reconciliations of Non-GAAP Measures
Investment. Represents (i) the carrying amount of real estate assets, including intangibles, after adding back accumulated depreciation and amortization, excluding assets held for sale and classified as discontinued operations and (ii) the carrying amount of DFLs and debt investments.
Investment Management Platform. Includes the following unconsolidated joint ventures: (i) HCP Life Science, (ii) HCP Ventures III and (iii) HCP Ventures IV.
Life Science. Laboratory and office space primarily for biotechnology and pharmaceutical companies, scientific research institutions, government agencies and other entities involved in the life science industry.
Long-Term Acute Care Hospitals (“LTACHs”). LTACHs provide care for patients with complex medical conditions that require longer stays and more intensive care, monitoring or emergency back-up than that available in most skilled nursing-based programs.
Net Operating Income from Continuing Operations (“NOI”). A non-GAAP supplemental financial measure used to evaluate the operating performance of real estate properties and SPP. The Company defines NOI as rental revenues, including tenant reimbursements and income from direct financing leases, less property level operating expenses. NOI excludes interest income, investment management fee income, depreciation and amortization, interest expense, general and administrative expenses, impairments, impairment recoveries, other income, net, income taxes, equity income from unconsolidated joint ventures and discontinued operations. The Company believes NOI provides investors relevant and useful information because it measures the operating performance of the Company’s real estate at the property level on an unleveraged basis. NOI, as adjusted, is calculated as NOI eliminating the effects of straight-line rents, DFL interest accretion, amortization of above and below market lease intangibles, and lease termination fees. NOI, as adjusted, is sometimes referred to as “adjusted NOI” or “cash basis NOI.” The Company uses NOI and NOI, as adjusted, to make decisions about resource allocations, to assess and compare property level performance, and evaluate SPP. The Company believes that net income is the most directly comparable GAAP measure to NOI. NOI should not be viewed as an alternative measure of operating performance to net income as defined by GAAP since it does not reflect the aforementioned excluded items. Further, NOI may not be comparable to that of other real estate investment trusts, as they may use different methodologies for calculating NOI.
The following table reconciles NOI from net income:
In thousands
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| 2011 |
| 2010 |
| 2011 |
| 2010 |
| ||||
Net income |
| $ | 234,252 |
| $ | 88,595 |
| $ | 308,236 |
| $ | 172,696 |
|
Interest income |
| (60,526 | ) | (36,156 | ) | (98,622 | ) | (71,422 | ) | ||||
Investment management fee income |
| (504 | ) | (1,290 | ) | (1,111 | ) | (2,598 | ) | ||||
Depreciation and amortization |
| 90,052 |
| 77,700 |
| 181,472 |
| 155,634 |
| ||||
Interest expense |
| 105,129 |
| 72,745 |
| 213,705 |
| 148,697 |
| ||||
General and administrative |
| 34,872 |
| 20,525 |
| 56,824 |
| 45,449 |
| ||||
Impairment recoveries |
| — |
| — |
| — |
| (11,900 | ) | ||||
Other income, net |
| (7,518 | ) | (181 | ) | (17,830 | ) | (494 | ) | ||||
Income taxes |
| 248 |
| 571 |
| 285 |
| 943 |
| ||||
Equity income from unconsolidated joint ventures |
| (14,950 | ) | (2,486 | ) | (15,748 | ) | (3,869 | ) | ||||
Total discontinued operations, net of taxes |
| — |
| (1,008 | ) | — |
| (1,962 | ) | ||||
NOI |
| $ | 381,055 |
| $ | 219,015 |
| $ | 627,211 |
| $ | 431,174 |
|
|
|
|
|
|
|
|
|
|
| ||||
Straight-line rents |
| (15,612 | ) | (8,419 | ) | (32,912 | ) | (21,695 | ) | ||||
DFL interest accretion |
| (22,262 | ) | (2,569 | ) | (24,937 | ) | (5,408 | ) | ||||
Amortization of above and below market lease intangibles, net |
| (1,187 | ) | (1,804 | ) | (2,093 | ) | (3,708 | ) | ||||
Lease termination fees |
| (1,589 | ) | (1,589 | ) | (3,178 | ) | (3,573 | ) | ||||
NOI adjustments related to discontinued operations |
| — |
| 10 |
| — |
| 21 |
| ||||
Adjusted NOI |
| $ | 340,405 |
| $ | 204,644 |
| $ | 564,091 |
| $ | 396,811 |
|
Occupancy. For life science facilities and medical office buildings, occupancy represents the percentage of total rentable square feet leased where rental payments have commenced, including month-to-month leases, as of the end of the period reported. For senior housing facilities, post-acute/skilled nursing facilities and hospitals, occupancy represents the facilities’ average operating occupancy for the trailing 12 months and one quarter in arrears from the date reported. The percentages are calculated based on licensed beds, available beds and units for senior housing facilities, post-acute/skilled nursing facilities and hospitals, respectively. The percentages shown exclude newly completed facilities under lease-up, vacant facilities and facilities for which data is not available or meaningful. All facility financial performance data were derived solely from information provided by operators/tenants and borrowers without independent verification by the Company. For the same property portfolio, occupancy for senior housing facilities, post-acute/skilled nursing facilities and hospitals are presented based on the average operating occupancy for trailing three-month period one quarter in arrears from the date reported.
Owned Portfolio. Represents owned properties subject to operating leases and DFLs and debt investments, and excludes properties under development, including redevelopment, and land held for development.
Pooled Leases. Two or more leases to the same operator/tenant or their subsidiaries under which their obligations are combined by virtue of a master lease, or multiple master leases, a pooling agreement, or multiple pooling agreements, or cross-guaranties. Sunrise Senior Living percentage pooled consists of 47 assets under 6 separate pools.
Quality Mix. Represents non-medicaid revenues as a percent of total revenues for the trailing 12 months and is one quarter in arrears from the period presented.
Redevelopment Projects. Properties that require significant capital expenditures (generally more than 25% of acquisition cost or existing basis) to achieve stabilization or to change the use of the properties.
Rehabilitation Hospitals (“Rehab”). Rehabilitation hospitals provide inpatient and outpatient care for patients who have sustained traumatic injuries or illnesses, such as spinal cord injuries, strokes, head injuries, orthopedic problems, work-related disabilities and neurological diseases.
Rental Revenues. Represents rental and related revenues, tenant recoveries and income from direct financing leases.
|
|
Reporting Definitions and Reconciliations of Non-GAAP Measures
Retention Rate. The Company defines retention rate as the ratio of total square feet expiring and available for lease to total renewed square feet, excluding the square feet for tenant leases terminated for default or buy-out prior to the expiration of their lease.
Same Period Rent. The base rent plus additional rent due to the Company over the most recent trailing twelve-month period as of period end. The Company uses Same Period Rent for purposes of determining property-level Cash Flow Coverage.
Same Property Portfolio (“SPP”). Same property statistics allow management to evaluate the performance of the Company’s leased property portfolio under a consistent population, which eliminates the changes in the composition of the Company’s portfolio of properties. The Company identifies its same property portfolio as stabilized properties that are, and remained, in operations for the duration of the year-over-year comparison periods presented. Accordingly, it takes a stabilized property a minimum of 12 months in operations to be included in the Company’s same property portfolio. SPP NOI excludes certain non-property specific operating expenses that are allocated to each operating segment on a consolidated basis.
Senior Housing. ALFs, ILFs and CCRCs. For reporting purposes, the Company’s senior housing portfolio also includes a school formerly operated as an assisted living facility.
Specialty Hospitals. Specialty hospitals are licensed as acute care hospitals but focus on providing care in specific areas such as cardiac, orthopedic and women’s conditions, or specific procedures such as surgery and are less likely to provide emergency services.
Square Feet. The square footage for properties, excluding square footage for development or redevelopment properties prior to completion.
Stabilized. Newly acquired operating assets are generally considered stabilized at the earlier of lease up (typically when the tenant(s) controls the physical use of 80% of the space) or 12 months from the acquisition date. Newly completed developments, including redevelopments, are considered stabilized at the earlier of lease-up or 24 months from the date the property is placed in service.
Total Debt. Consolidated Debt at Book Value plus the Company’s pro rata share of debt from the Investment Management Platform.
Total Gross Assets. Consolidated Gross Assets plus the Company’s pro rata share of total assets from the Investment Management Platform, after adding back accumulated depreciation and amortization.
The following table details the calculation of Total Gross Assets:
In thousands
|
| June 30, |
| December 31, |
| June 30, |
| |||
Consolidated total assets |
| $ | 17,693,058 |
| $ | 13,331,923 |
| $ | 12,244,643 |
|
Investments in and advances to unconsolidated joint ventures |
| (224,625 | ) | (195,847 | ) | (265,436 | ) | |||
Accumulated depreciation and amortization |
| 1,578,111 |
| 1,446,134 |
| 1,356,697 |
| |||
Accumulated depreciation and amortization from assets held for sale |
| — |
| — |
| 12,592 |
| |||
Consolidated gross assets |
| $ | 19,046,544 |
| $ | 14,582,210 |
| $ | 13,348,496 |
|
HCP’s share of unconsolidated total assets(1) |
| 297,427 |
| 515,182 |
| 541,916 |
| |||
HCP’s share of unconsolidated accumulated depreciation and amortization(1) |
| 26,524 |
| 71,977 |
| 65,126 |
| |||
Total gross assets |
| $ | 19,370,495 |
| $ | 15,169,369 |
| $ | 13,955,538 |
|
Total Market Capitalization. Total Debt plus Consolidated Market Equity.
Total Secured Debt. Consolidated secured debt plus the Company’s pro rata share of mortgage debt from the Investment Management Platform.
Yield. Yield is calculated as Net Operating Income, as adjusted, divided by total investment. For acquisitions, initial yields are calculated as projected Net Operating Income, 12 months forward, as adjusted, as of the closing date divided by total acquisition cost. The total acquisition cost basis includes the initial purchase price, the effects of adjusting assumed debt to market, lease intangible adjustments and all transaction costs.
(1) Reflects the Company’s pro rata share of amounts from the Investment Management Platform and its equity interest in HCR ManorCare OpCo.
|
|