Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 29, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | HCP, INC. | |
Entity Central Index Key | 765,880 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 467,087,589 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | |
Real estate: | |||
Buildings and improvements | $ 12,314,826 | $ 12,198,704 | |
Development costs and construction in progress | 430,104 | 388,576 | |
Land | 1,956,841 | 1,948,757 | |
Accumulated depreciation and amortization | (2,636,636) | (2,541,334) | |
Net real estate | 12,065,135 | 11,994,703 | |
Net investment in direct financing leases | 5,857,210 | 5,905,009 | |
Loans receivable, net | 768,896 | 768,743 | |
Investments in and advances to unconsolidated joint ventures | 608,665 | 605,244 | |
Accounts receivable, net of allowance of $4,161 and $3,261, respectively | 45,224 | 48,929 | |
Cash and cash equivalents | 94,665 | 346,500 | |
Restricted cash | 46,280 | 60,616 | |
Intangible assets, net | 585,330 | 603,706 | |
Other assets, net | 817,279 | 802,273 | |
Real estate assets held for sale, net | 311,243 | 314,126 | |
Total assets | [1] | 21,199,927 | 21,449,849 |
LIABILITIES AND EQUITY | |||
Bank line of credit | 810,313 | 397,432 | |
Term loans | 511,737 | 524,807 | |
Senior unsecured notes | 8,623,376 | 9,120,107 | |
Mortgage debt | 895,289 | 932,212 | |
Other debt | 95,229 | 94,445 | |
Intangible liabilities, net | 52,794 | 56,147 | |
Intangible liabilities on assets held for sale, net | 18,064 | 19,126 | |
Accounts payable and accrued liabilities | 433,144 | 436,239 | |
Deferred revenue | 129,656 | 123,017 | |
Total liabilities | [1] | $ 11,569,602 | $ 11,703,532 |
Commitments and contingencies | |||
Common stock, $1.00 par value: 750,000,000 shares authorized; 466,924,935 and 465,488,492 shares issued and outstanding, respectively | $ 466,925 | $ 465,488 | |
Additional paid-in capital | 11,685,541 | 11,647,039 | |
Cumulative dividends in excess of earnings | (2,890,046) | (2,738,414) | |
Accumulated other comprehensive loss | (31,673) | (30,470) | |
Total stockholders' equity | 9,230,747 | 9,343,643 | |
Joint venture partners | 218,110 | 217,066 | |
Non-managing member unitholders | 181,468 | 185,608 | |
Total noncontrolling interests | 399,578 | 402,674 | |
Total equity | 9,630,325 | 9,746,317 | |
Total liabilities and equity | $ 21,199,927 | $ 21,449,849 | |
[1] | HCP, Inc.’s consolidated total assets and total liabilities at March 31, 2016 and December 31, 2015 include certain assets of variable interest entities (“VIEs”) that can only be used to settle the liabilities of the related VIE. The VIE creditors do not have recourse to HCP, Inc. Total assets at March 31, 2016 include VIE assets as follows: buildings and improvements $3.4 billion; development costs $60 million; land $327 million; accumulated depreciation and amortization $567 million; investments in unconsolidated joint ventures $14 million; accounts receivable $18 million; cash $60 million; restricted cash $23 million; intangible assets, net $197 million; and other assets, net $66 million. Total assets at December 31, 2015 include VIE assets as follows: buildings and improvements $3.4 billion; development costs $54 million; land $327 million; accumulated depreciation and amortization $537 million; investments in unconsolidated joint ventures $14 million; accounts receivable $19 million; cash $61 million; restricted cash $21 million; intangible assets, net $204 million; and other assets, net $63 million. Total liabilities at March 31, 2016 include VIE liabilities as follows: mortgage debt $573 million; intangible liabilities, net $10 million; accounts payable and accrued liabilities of $107 million and deferred revenue of $23 million from VIEs. Total liabilities at December 31, 2015 include VIE liabilities as follows: mortgage debt $589 million; intangible liabilities, net $10 million; accounts payable and accrued liabilities of $107 million and deferred revenue of $19 million. See Note 16 to the Consolidated Financial Statements for additional information. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Company's involvement with VIEs: | ||
Development costs | $ 430,104 | $ 388,576 |
Land | 1,956,841 | 1,948,757 |
Accumulated depreciation and amortization | 2,636,636 | 2,541,334 |
Investments in unconsolidated joint ventures | 608,665 | 605,244 |
Accounts Receivable | 45,224 | 48,929 |
Cash | 94,665 | 346,500 |
Restricted cash | 46,280 | 60,616 |
Intangible assets, net | 585,330 | 603,706 |
Other assets, net | 817,279 | 802,273 |
Mortgage debt | 895,289 | 932,212 |
Intangible liabilities, net | 52,794 | 56,147 |
Accounts payable and accrued liabilities | 433,144 | 436,239 |
Deferred Revenue | 129,656 | 123,017 |
Balance Sheet Parenthetical Disclosures | ||
Accounts receivable, allowance (in dollars) | $ 4,161 | $ 3,261 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized | 750,000,000 | 750,000,000 |
Common stock, shares issued | 466,924,935 | 465,488,492 |
Common stock, shares outstanding | 466,924,935 | 465,488,492 |
VIEs | ||
Company's involvement with VIEs: | ||
Buildings and improvements | $ 3,400,000 | $ 3,400,000 |
Development costs | 60,000 | 54,000 |
Land | 327,000 | 327,000 |
Accumulated depreciation and amortization | 567,000 | 537,000 |
Investments in unconsolidated joint ventures | 14,000 | 14,000 |
Accounts Receivable | 18,000 | 19,000 |
Cash | 60,000 | 61,000 |
Restricted cash | 23,000 | 21,000 |
Intangible assets, net | 197,000 | 204,000 |
Other assets, net | 66,000 | 63,000 |
Mortgage debt | 573,000 | 589,000 |
Intangible liabilities, net | 10,000 | 10,000 |
Accounts payable and accrued liabilities | 107,000 | 107,000 |
Deferred Revenue | $ 23,000 | $ 19,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues: | ||
Rental and related revenues | $ 297,194 | $ 275,082 |
Tenant recoveries | 31,737 | 29,896 |
Resident fees and services | 165,763 | 105,013 |
Income from direct financing leases | 127,968 | 167,078 |
Interest income | 18,029 | 33,262 |
Investment management fee income | 91 | 460 |
Total revenues | 640,782 | 610,791 |
Costs and expenses: | ||
Interest expense | 122,062 | 116,780 |
Depreciation and amortization | 141,322 | 114,522 |
Operating | 176,955 | 132,031 |
General and administrative | 25,499 | 24,773 |
Acquisition and pursuit costs | 2,475 | 3,390 |
Impairment | 478,464 | |
Total costs and expenses | 468,313 | 869,960 |
Other income: | ||
Gain on sales of real estate | 6,264 | |
Other income, net | 1,222 | 1,724 |
Total other income, net | 1,222 | 7,988 |
Income (loss) before income taxes and equity (loss) income from unconsolidated joint ventures | 173,691 | (251,181) |
Income tax (expense) benefit | (53,038) | 77 |
Equity (loss) income from unconsolidated joint ventures | (908) | 13,601 |
Net income (loss) | 119,745 | (237,503) |
Noncontrolling interests' share in earnings | (3,626) | (3,111) |
Net income (loss) attributable to HCP, Inc. | 116,119 | (240,614) |
Participating securities' share in earnings | (357) | (335) |
Net income (loss) applicable to common shares | $ 115,762 | $ (240,949) |
Earnings per common share: | ||
Basic (in dollars per share) | $ 0.25 | $ (0.52) |
Diluted (in dollars per share) | $ 0.25 | $ (0.52) |
Weighted average shares used to calculate earnings per common share: | ||
Basic (in shares) | 466,074 | 460,880 |
Diluted (in shares) | 466,262 | 460,880 |
Dividends declared per common share (in dollars per share) | $ 0.575 | $ 0.565 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income (loss) | $ 119,745 | $ (237,503) |
Other comprehensive loss: | ||
Change in net unrealized losses on securities | (15) | (5) |
Change in net unrealized (losses) gains on cash flow hedges: | ||
Unrealized (losses) gains | (690) | 2,339 |
Reclassification adjustment realized in net income | 169 | (6) |
Change in Supplemental Executive Retirement Plan obligation | 70 | 69 |
Foreign currency translation adjustment | (737) | (6,963) |
Total other comprehensive loss | (1,203) | (4,566) |
Total comprehensive income (loss) | 118,542 | (242,069) |
Total comprehensive income attributable to noncontrolling interests | (3,626) | (3,111) |
Total comprehensive (loss) income attributable to HCP, Inc. | $ 114,916 | $ (245,180) |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands | Total Stockholders' Equity | Common Stock | Additional Paid-In Capital | Cumulative Dividends In Excess Of Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total |
Balance at Dec. 31, 2014 | $ 10,735,297 | $ 459,746 | $ 11,431,987 | $ (1,132,541) | $ (23,895) | $ 261,802 | $ 10,997,099 |
Balance (in shares) at Dec. 31, 2014 | 459,746 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | (240,614) | (240,614) | 3,111 | (237,503) | |||
Other comprehensive income | (4,566) | (4,566) | (4,566) | ||||
Issuance of common stock, net | 36,812 | $ 1,155 | 35,657 | (1,608) | 35,204 | ||
Issuance of common stock, net (in shares) | 1,155 | ||||||
Conversion of DownREIT units to common stock | (1,608) | ||||||
Repurchase of common stock | (6,096) | $ (128) | (5,968) | (6,096) | |||
Repurchase of common stock (in shares) | (128) | ||||||
Exercise of stock options | 27,221 | $ 811 | 26,410 | 27,221 | |||
Exercise of stock options (in shares) | 811 | ||||||
Amortization of deferred compensation | 6,165 | 6,165 | 6,165 | ||||
Common dividends ($2.26, $2.18 and $2.10 per share for the year ended 2015, 2014 and 2013, respectively) | (260,686) | (260,686) | (260,686) | ||||
Distributions to noncontrolling interests | (263) | (263) | (3,861) | (4,124) | |||
Issuance of noncontrolling interests | 2,932 | 2,932 | |||||
Balance at Mar. 31, 2015 | 10,293,270 | $ 461,584 | 11,493,988 | (1,633,841) | (28,461) | 262,376 | 10,555,646 |
Balance (in shares) at Mar. 31, 2015 | 461,584 | ||||||
Balance at Dec. 31, 2015 | 9,343,643 | $ 465,488 | 11,647,039 | (2,738,414) | (30,470) | 402,674 | 9,746,317 |
Balance (in shares) at Dec. 31, 2015 | 465,488 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 116,119 | 116,119 | 3,626 | 119,745 | |||
Other comprehensive income | (1,203) | (1,203) | (1,203) | ||||
Issuance of common stock, net | 35,406 | $ 1,428 | 33,978 | 35,406 | |||
Issuance of common stock, net (in shares) | 1,428 | ||||||
Conversion of DownREIT units to common stock | (4,136) | (4,136) | |||||
Repurchase of common stock | (3,628) | $ (102) | (3,526) | (3,628) | |||
Repurchase of common stock (in shares) | (102) | ||||||
Exercise of stock options | 2,852 | $ 111 | 2,741 | 2,852 | |||
Exercise of stock options (in shares) | 111 | ||||||
Amortization of deferred compensation | 5,345 | 5,345 | 5,345 | ||||
Common dividends ($2.26, $2.18 and $2.10 per share for the year ended 2015, 2014 and 2013, respectively) | (268,186) | (268,186) | (268,186) | ||||
Distributions to noncontrolling interests | (36) | (36) | (4,853) | (4,889) | |||
Issuance of noncontrolling interests | 2,200 | 2,200 | |||||
Deconsolidation of noncontrolling interests | 435 | 435 | 67 | 502 | |||
Balance at Mar. 31, 2016 | $ 9,230,747 | $ 466,925 | $ 11,685,541 | $ (2,890,046) | $ (31,673) | $ 399,578 | $ 9,630,325 |
Balance (in shares) at Mar. 31, 2016 | 466,925 |
CONSOLIDATED STATEMENTS OF EQU7
CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares | Apr. 27, 2016 | Jan. 28, 2016 | Mar. 31, 2016 | Mar. 31, 2015 |
CONSOLIDATED STATEMENTS OF EQUITY | ||||
Common dividends, per share (in dollars per share) | $ 0.575 | $ 0.575 | $ 0.575 | $ 0.565 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 119,745 | $ (237,503) |
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract] | ||
Depreciation and amortization | 141,322 | 114,522 |
Amortization of market lease intangibles, net | (468) | (378) |
Amortization of deferred compensation | 5,345 | 6,165 |
Amortization of deferred financing costs, net | 5,280 | 4,752 |
Straight-line rents | (7,576) | (9,546) |
Loan and direct financing lease non-cash interest | 165 | (21,032) |
Deferred rental revenues | (619) | (902) |
Equity loss (income) from unconsolidated joint ventures | 908 | (13,601) |
Distributions of earnings from unconsolidated joint ventures | 1,589 | 1,159 |
Lease termination income, net | (1,103) | |
Gain on sales of real estate | (6,264) | |
Deferred income tax expense | 49,156 | |
Foreign exchange and other (gains) losses, net | (89) | 134 |
Impairment | 478,464 | |
Changes in: | ||
Accounts receivable, net | 3,705 | (3,814) |
Other assets | (6,847) | (5,839) |
Accounts payable and other accrued liabilities | (42,999) | (75,146) |
Net cash provided by operating activities | 268,617 | 230,068 |
Cash flows from investing activities: | ||
Acquisitions of real estate | (94,271) | (71,373) |
Development of real estate | (99,096) | (61,805) |
Leasing costs and tenant and capital improvements | (19,964) | (11,540) |
Contributions to unconsolidated joint ventures | (10,136) | (27,279) |
Distributions in excess of earnings from unconsolidated joint ventures | 5,336 | 1,022 |
Principal repayments on loans receivable, direct financing leases and other | 155,320 | 17,496 |
Investments in loans receivable and other | (117,282) | (176,504) |
Decrease in restricted cash | 14,336 | 1,697 |
Net cash used in investing activities | (165,757) | (328,286) |
Cash flows from financing activities: | ||
Net borrowings under bank line of credit | 422,897 | |
Repayments under bank line of credit | (455,506) | |
Borrowings under term loan | 333,014 | |
Issuance of senior unsecured notes | 595,110 | |
Repayments of senior unsecured notes | (500,000) | (200,000) |
Repayments of mortgage and other debt | (36,918) | (6,354) |
Deferred financing costs | (7,687) | |
Issuance of common stock and exercise of options | 34,122 | 62,425 |
Repurchase of common stock | (3,628) | (6,096) |
Dividends paid on common stock | (268,186) | (260,686) |
Issuance of noncontrolling interests | 2,200 | 1,626 |
Distributions to noncontrolling interest | (4,889) | (4,124) |
Net cash (used in) provided by financing activities | (354,402) | 51,722 |
Effect of foreign exchange on cash and cash equivalents | (293) | (144) |
Net decrease in cash and cash equivalents | (251,835) | (46,640) |
Cash and cash equivalents, beginning of year | 346,500 | 183,810 |
Cash and cash equivalents, end of year | $ 94,665 | $ 137,170 |
Business
Business | 3 Months Ended |
Mar. 31, 2016 | |
Business | |
Business | NOTE 1. Business HCP, Inc., a Standard & Poor’s (“S&P”) 500 company, together with its consolidated entities (collectively, “HCP” or the “Company”), invests primarily in real estate serving the healthcare industry in the United States (“U.S.”). The Company is a Maryland corporation organized in 1985 and qualifies as a self-administered real estate investment trust (“REIT”). The Company is headquartered in Irvine, California, with offices in Nashville, Los Angeles, San Francisco and London. The Company acquires, develops, leases, manages and disposes of healthcare real estate, and provides financing to healthcare providers. The Company’s diverse portfolio is comprised of investments in the following healthcare segments: (i) senior housing, (ii) post-acute/skilled nursing, (iii) life science, (iv) medical office and (v) hospital. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | NOTE 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Management is required to make estimates and assumptions in the preparation of financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from management’s estimates. The consolidated financial statements include the accounts of HCP, Inc., its wholly-owned subsidiaries, joint ventures and VIEs that it controls through voting rights or other means. Intercompany transactions and balances have been eliminated upon consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows have been included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 . The accompanying unaudited interim financial information should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”). Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 is intended to simplify accounting for share-based payment transactions. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statements of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within, beginning after December 15, 2016. Early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2016-09 on January 1, 2017 to its consolidated financial position, results of operations or cash flows. In March 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”). ASU 2016-08 is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. ASU 2016-08 is effective for fiscal years, and interim periods within, beginning after December 15, 2017. Early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2016-08 on January 1, 2018 to its consolidated financial position or results of operations. In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 amends the current accounting for leases to (i) require lessees to put most leases on their balance sheets, but continue recognizing expenses on their income statements in a manner similar to today’s accounting, (ii) eliminate current real estate specific lease provisions, and (iii) modify classification criteria and accounting for sales-type leases for lessors. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2016-02 on January 1, 2019 to its consolidated financial position or results of operations. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). This update requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. This update also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment at each reporting period. ASU 2016-01 is effective for fiscal years, and interim periods within, beginning after December 15, 2017. Early adoption is permitted only for certain disclosure requirements. The Company is evaluating the impact of the adoption of ASU 2016-01 on January 1, 2018 to its consolidated financial position or results of operations. In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). ASU 2015-16 simplifies the accounting for adjustments made to provisional amounts recognized in a business combination by requiring the acquirer to (i) recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amount is determined, (ii) record, in the same period, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date, and (iii) present separately or disclose the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for fiscal years, and interim periods within, beginning after December 15, 2015. Early adoption is permitted. The Company adopted ASU 2015-16 on January 1, 2016; the adoption of which did not have a material impact on its consolidated financial position or results of operations. In February 2015, the FASB issued ASU No. 2015-02, Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 requires amendments to both the VIE and voting consolidation accounting models. The amendments (i) rescind the indefinite deferral of certain aspects of accounting standards relating to consolidations and provide a permanent scope exception for registered money market funds and similar unregistered money market funds, (ii) modify (a) the identification of variable interests (fees paid to a decision maker or service provider), (b) the VIE characteristics for a limited partnership or similar entity and (c) the primary beneficiary determination under the VIE model, and (iii) eliminate the presumption within the current voting model that a general partner controls a limited partnership or similar entity. ASU 2015-02 is effective for fiscal years, and interim periods within, beginning after December 15, 2015. Early adoption is permitted. A reporting entity may apply the amendments in ASU 2015-02 using either a modified retrospective or retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. The Company adopted ASU 2015-02 on January 1, 2016; the adoption of which did not have a material impact to its consolidated financial position or results of operations. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). This update changes the requirements for recognizing revenue. ASU 2014-09 provides guidance for revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”). ASU 2015-14 defers the effective date of ASU 2014-09 by one year to fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted for annual periods, and interim periods within, beginning after December 15, 2016. The Company is evaluating the impact of the adoption of ASU 2014-09 on January 1, 2018 to its consolidated financial position or results of operations. Reclassification Certain amounts in the Company’s consolidated financial statements have been reclassified for prior periods to conform to the current period presentation. Assets held for sale and associated liabilities have been reclassified on the consolidated balance sheets (see Note 4). |
Real Estate Property Investment
Real Estate Property Investments | 3 Months Ended |
Mar. 31, 2016 | |
Real Estate Property Investments | |
Real Estate Property Investments | NOTE 3. Real Estate Property Investments 2016 Acquisitions A summary of real estate acquisitions for the three months ended March 31, 2016 (in thousands): Consideration Assets Acquired (1) Liabilities Net Segment Cash Paid Assumed Real Estate Intangibles Senior housing $ $ $ $ Post-acute/skilled nursing — $ $ $ $ (1) The purchase price allocation is preliminary and may be subject to change. Acquisition of Private Pay Senior Housing Portfolio (“RIDEA III”) On June 30, 2015, the Company and Brookdale Senior Living (“Brookdale”) acquired a portfolio of 35 private pay senior housing communities from Chartwell Retirement Residences, including two leasehold interests, representing 5,025 units. The portfolio was acquired in a RIDEA structure (“RIDEA III”), with Brookdale owning a 10% noncontrolling interest. Brookdale has operated these communities since 2011 and continues to manage the communities under a long-term management agreement, which is cancellable under certain conditions (subject to a fee if terminated within seven years from the acquisition date). The Company paid $770 million in cash consideration, net of cash assumed, and assumed $32 million of net liabilities and $29 million of noncontrolling interests to acquire: (i) real estate with a fair value of $771 million, (ii) lease-up intangible assets with a fair value of $53 million and (iii) working capital of $7 million. As a result of the acquisition, the Company recognized a net termination fee of $8 million in rental and related revenues, which represents the termination value of the two leasehold interests. The lease-up intangible assets recognized were attributable to the value of the acquired underlying operating resident leases of the senior housing communities that were stabilized or nearly stabilized (i.e., resident occupancy above 80% ). As of March 31, 2016, the purchase price allocation is preliminary and may be subject to change. Pro Forma Results of Operations The following unaudited pro forma consolidated results of operations assume that the RIDEA III acquisition was completed as of January 1, 2014 (in thousands, except per share amounts): Three Months Ended March 31, 2015 Revenues $ Net loss Net loss applicable to HCP, Inc. Basic earnings per common share Diluted earnings per common share 2015 Other Acquisitions A summary of real estate acquisitions for the three months ended March 31, 2015 (in thousands): Consideration Assets Acquired Liabilities Noncontrolling Net Segment Cash Paid Assumed Interest Real Estate Intangibles Senior housing $ $ $ $ $ Medical office — — — $ $ $ $ $ Construction, Tenant and Other Capital Improvements A summary of the Company’s funding for construction, tenant and other capital improvements (in thousands): Three Months Ended March 31, Segment 2016 2015 Senior housing $ $ Post-acute/skilled nursing — Life science Medical office Hospital — $ $ Subsequent Event . In May 2016, the Company announced it entered into definitive agreements to acquire a portfolio of seven private pay senior housing communities for $190 million, including the assumption of $75 million of debt maturing in 2044 at a 4.0% rate. Consisting of 526 assisted living and memory care units, the portfolio will be managed by Senior Lifestyle Corporation in a 100% owned RIDEA structure at closing. The closing of this transaction is expected in the second half of 2016 and remains subject to customary closing conditions. |
Dispositions of Real Estate
Dispositions of Real Estate | 3 Months Ended |
Mar. 31, 2016 | |
Dispositions of Real Estate | |
Dispositions of Real Estate | NOTE 4. Dispositions of Real Estate At March 31, 2016 and December 31, 2015, four life science facilities were classified as held for sale, with an aggregate carrying value of $311 million and $314 million, respectively. During the three months ended March 31, 2015 , the Company sold eight senior housing facilities for $51 million resulting from Brookdale’s exercise of its purchase option received as part of the 2014 Brookdale transaction. Subsequent Event . In April 2016, the Company sold a life science facility for $74 million with a carrying value of $43 million at March 31, 2016 . |
Net Investment in Direct Financ
Net Investment in Direct Financing Leases | 3 Months Ended |
Mar. 31, 2016 | |
Net Investment in Direct Financing Leases | |
Net Investment in Direct Financing Leases | NOTE 5. Net Investment in Direct Financing Leases Net investment in direct financing leases (“DFLs”) consisted of the following (dollars in thousands): March 31, December 31, 2016 2015 Minimum lease payments receivable $ $ Estimated residual values Less unearned income Net investment in direct financing leases before allowance Allowance for DFL losses Net investment in direct financing leases $ $ Properties subject to direct financing leases HCR ManorCare, Inc. The Company acquired 334 post-acute, skilled nursing and assisted living facilities in its 2011 transaction with HCR ManorCare Inc. (“HCRMC”) and entered into a triple-net Master Lease and Security Agreement (the “Master Lease”) with a subsidiary (“Lessee”) of HCRMC. As part of the Company’s fourth quarter 2015 review process, including its internal rating evaluation, it assessed the collectibility of all contractual rent payments under the HCRMC amended master lease (the “Amended Master Lease”). The Company’s evaluation included, but was not limited to, consideration of: (i) the continued decline in HCRMC’s operating performance and fixed charge coverage ratio during the second half of 2015, with the most significant deterioration occurring during the fourth quarter, (ii) the reduced growth outlook for the post-acute/skilled nursing business and (iii) HCRMC’s 2015 audited financial statements. The Company determined that the timing and amounts owed under the HCRMC DFL investments were no longer reasonably assured and assigned an internal rating of “Watch List” as of December 31, 2015. Further, the Company placed the HCRMC DFL investments on nonaccrual and utilizes the cash method of accounting in accordance with its policy. As a result of assigning an internal rating of “Watch List” for its HCRMC DFL investments during the quarterly review process, the Company further evaluated the carrying amount of its HCRMC DFL investments. As a result of the significant decline in HCRMC’s fixed charge coverage ratio in the fourth quarter of 2015, combined with a lower growth outlook for the post-acute/skilled nursing business, the Company determined that it was probable that its HCRMC DFL investments were impaired and the amount of the loss could be reasonably estimated. In the fourth quarter of 2015, the Company recorded an allowance for DFL losses (impairment charge) of $817 million, reducing the carrying amount of its HCRMC DFL investments from $6.0 billion to $5.2 billion. In December 2015, the Company reduced the carrying amount of its equity investment in HCRMC to zero , and income will be recognized only if cash distributions are received from HCRMC; as a result, the Company no longer recharacterizes (eliminates) its proportional ownership share of income from DFLs to equity income from unconsolidated joint ventures (see Note 7). During the quarter ended March 31, 2015, the Company and HCRMC agreed to market for sale the real estate and operations associated with 50 non-strategic facilities that are under the Master Lease. HCRMC will receive an annual rent reduction under the Master Lease based on 7.75% of the net sales proceeds received by HCP. During the year ended December 31, 2015, the Company completed sales of 22 non-strategic HCRMC facilities for $219 million. During the three months ended March 31, 2016, the Company sold an additional 11 facilities for $62 million, bringing the total facilities sold through May 9, 2016 to 33 , with the remaining facility sales expected to close by the end of 2016. On March 29, 2015, certain subsidiaries of the Company entered into an amendment to the Master Lease (the “HCRMC Lease Amendment”) effective April 1, 2015. The HCRMC Lease Amendment reduced initial annual rent by a net $68 million from $541 million to $473 million. Commencing on April 1, 2016, the minimum rent escalation was reset to 3.0% for each lease year through the expiration of the initial term of each applicable pool of facilities. Prior to the HCRMC Lease Amendment, rent payments would have increased 3.5% on April 1, 2015 and 2016 and 3.0% thereafter. The initial term was extended five years to an average of 16 years, and the extension options’ aggregate terms remained the same. As consideration for the rent reduction, the Company received a Deferred Rent Obligation (“DRO”) from the Lessee equal to an aggregate amount of $525 million, which was allocated into two tranches: (i) a Tranche A DRO of $275 million and (ii) a Tranche B DRO of $250 million. The Lessee made rental payments equal to 6.9% of the outstanding amount (representing $19 million) for the initial lease year until the entire Tranche A DRO was paid in full in March 2016. Commencing on April 1, 2016, until the Tranche B DRO is paid in full, the outstanding principal balance of the Tranche B DRO will be increased annually by (i) 3.0% initially, (ii) 4.0% commencing on April 1, 2019, (iii) 5.0% commencing on April 1, 2020, and (iv) 6.0% commencing on April 1, 2021 and for the remainder of its term. The DRO is due and payable on the earlier of (i) certain capital or liquidity events of HCRMC, including an initial public offering or sale, or (ii) March 31, 2029, which is not subject to any extensions. The HCRMC Lease Amendment also imposes certain restrictions on the Lessee and HCRMC until the DRO is paid in full, including with respect to the payment of dividends and the transfer of interest in HCRMC. Additionally, HCRMC agreed to sell, and HCP agreed to purchase, nine post-acute facilities for an aggregate purchase price of $275 million. Through March 31, 2016, HCRMC and HCP completed the nine facility purchases for $275 million, the proceeds of which were used to settle the Tranche A DRO. Following the purchase of a facility, the Lessee leases such facility from the Company pursuant to the Amended Master Lease. The nine facilities contribute an aggregate of $19 million of annual rent (subject to escalation) under the Amended Master Lease. In March 2015, the Company recorded a net impairment charge of $478 million related to its HCRMC DFL investments. The impairment charge reduced the carrying value of the HCRMC DFL investments from $6.6 billion to $6.1 billion, based on the present value of the future lease payments effective April 1, 2015 under the Amended Master Lease discounted at the original DFL investments’ effective lease rate. During the three months ended March 31, 2016 and 2015, the Company recognized DFL income of $113 million and $152 million, respectively, and received cash payments of $113 million and $131 million, respectively, from the HCRMC DFL investments. During the three months ended March 31, 2015, the Company recognized a total of $21 million of net accretion related to its HCRMC DFL investments. The carrying value of the HCRMC DFL investments was $5.1 billion and $5.2 billion at March 31, 2016 and December 31, 2015, respectively. The Company acquired the HCRMC DFL investments in 2011 through an acquisition of a C-Corporation, which was subject to federal and state built-in gain tax, if all the assets were sold within 10 years, of up to $2 billion. At the time, the Company intended to hold the assets for at least 10 years, at which time the assets would no longer be subject to the built-in gain tax. In December 2015, the U.S. Federal Government passed legislation which permanently reduced the holding period, for federal tax purposes, to five years. The Company satisfied the five year holding period requirement in April 2016. However, certain states still require a 10 -year holding period and, as such, the assets are still subject to state built-in gain tax. During the three months ended March 31, 2016, the Company determined that it may sell assets during the next five years and, therefore, recorded a deferred tax liability of approximately $49 million representing its estimated exposure to state built-in gain tax. On April 20, 2015, the DOJ unsealed a previously filed complaint in the U.S. District Court for the Eastern District of Virginia against HCRMC and certain of its affiliates in three consolidated cases following a civil investigation arising out of three lawsuits filed by former employees of HCRMC under the qui tam provisions of the federal False Claims Act. The DOJ’s complaint in intervention is captioned United States of America, ex rel. Ribik, Carson, and Slough v. HCR ManorCare, Inc., ManorCare Inc., HCR ManorCare Services, LLC and Heartland Employment Services, LLC (Civil Action Numbers: 1:09cv13; 1:11cv1054; 1:14cv1228 (CMH/TCB)). The complaint alleges that HCRMC submitted claims to Medicare for therapy services that were not covered by the skilled nursing facility benefit, were not medically reasonable and necessary, and were not skilled in nature, and therefore not entitled to Medicare reimbursement. HCRMC and the DOJ have filed a motion requesting that the court adopt their Joint Proposed Discovery Plan, which establishes the scope of discovery and depositions. Under the Joint Proposed Discovery Plan, motions for summary judgment would be due to be filed in April 2017. While this litigation is at an early stage and HCRMC has indicated that it believes the claims are unjust and it will vigorously defend against them, a significant adverse judgment against HCRMC or significant settlement obligation could impact the carrying value of the Company’s HCRMC DFL investments further . See Notes 7 and 20 for additional discussion of HCRMC. Direct Financing Lease Internal Ratings The following table summarizes the Company’s internal ratings for DFLs at March 31, 2016 (dollars in thousands): Carrying Percentage of Internal Ratings Segment Amount DFL Portfolio Performing DFLs Watch List DFLs Workout DFLs Senior housing $ 31 $ $ $ — Post-acute/skilled nursing 67 — — Hospital 2 — — $ 100 $ $ $ — Beginning September 30, 2013, the Company placed a 14 -property senior housing DFL (the “DFL Portfolio”) on nonaccrual status and assigned an internal rating of “Watch List.” The Company determined that the collection of all rental payments was and continues to be no longer reasonably assured; therefore, rental revenue from the DFL Portfolio is recognized on a cash basis. During the three months ended March 31, 2016 and 2015 , the Company recognized DFL income of $3 million and $4 million, respectively, and received cash payments of $4 million and $5 million, respectively, from the DFL Portfolio. The carrying value of the DFL Portfolio was $364 million and $366 million at March 31, 2016 and December 31, 2015 , respectively. |
Loans Receivable
Loans Receivable | 3 Months Ended |
Mar. 31, 2016 | |
Loans Receivable. | |
Loans Receivable | NOTE 6. Loans Receivable The following table summarizes the Company’s loans receivable (in thousands): March 31, 2016 December 31, 2015 Real Estate Other Real Estate Other Secured Secured Total Secured Secured Total Mezzanine (1) (2) $ — $ $ $ — $ $ Other (2) (3) — — Unamortized discounts, fees and costs (1) $ $ $ $ $ $ (1) At March 31, 2016, included £278 million ( $400 million) outstanding and £3 million ( $5 million) of associated unamortized discounts, fees and costs. At December 31, 2015, included £273 million ( $403 million) outstanding and £4 million ( $5 million) of associated unamortized discounts, fees and costs. (2) At March 31, 2016 , the Company had £43 million ( $62 million) remaining under its commitments to fund development projects and capital expenditures under its United Kingdom (“U.K.”) development projects. (3) At March 31, 2016, the Company had $2 million remaining of commitments to fund development projects and capital expenditures under the senior housing development loan program. Loans Receivable Internal Ratings The following table summarizes the Company’s internal ratings for loans receivable at March 31, 2016 (dollars in thousands): Carrying Percentage of Internal Ratings Investment Type Amount Loan Portfolio Performing Loans Watch List Loans Workout Loans Real estate secured $ 15 $ $ — $ — Other secured 85 — — $ 100 $ $ — $ — Real Estate Secured Loans Four Seasons Health Care . In December 2015, the Company purchased £28 million ( $42 million) of Four Seasons Health Care’s (“Four Seasons”) £40 million senior secured term loan. The loan is secured by, among other things, the real estate assets of Four Seasons, and represents the most senior debt tranche. The loan bears interest at a rate of LIBOR plus 6.0% per annum and matures in December 2017. Other Secured Loans HC-One Facility. In November 2014, the Company was the lead investor in the financing for Formation Capital and Safanad’s acquisition of NHP, a company that, at closing, owned 273 nursing and residential care homes representing over 12,500 beds in the U.K. principally operated by HC-One. The Company provided a loan facility (the “HC-One Facility”), secured by substantially all of NHP’s assets, totaling £395 million, with £363 million ( $574 million) drawn at closing and has a five -year term. In February 2015, the Company increased the HC-One Facility by £108 million ( $164 million) to £502 million ( $795 million), in conjunction with HC-One’s acquisition of Meridian Healthcare. In April 2015, the Company converted £174 million of the HC-One Facility into a sale-leaseback transaction for 36 nursing and residential care homes located throughout the U.K. In September 2015, the Company amended and increased its commitment under the HC-One Facility by £11 million primarily for the funding of capital expenditures and a development project. As part of the amendments, the Company shortened the non-call period by 17 months and provided consent for (i) the paydown of £34 million from disposition proceeds without a prepayment premium and (ii) the spinoff of 36 properties into a separate joint venture. In return, the Company retained security over the spinoff properties for a period of two years. During the year ended December 31, 2015, the Company received paydowns of £34 million ( $52 million). At March 31, 2016, the HC-One Facility had an outstanding balance of $395 million. Tandem Health Care Loan. On July 31, 2012, the Company closed a mezzanine loan facility to lend up to $205 million to Tandem Health Care (“Tandem”), as part of the recapitalization of a post-acute/skilled nursing portfolio. The Company funded $100 million (the “First Tranche”) at closing and funded an additional $102 million (the “Second Tranche”) in June 2013. In May 2015, the Company increased and extended the mezzanine loan facility with Tandem to (i) fund $50 million (the “Third Tranche”) and $5 million (the “Fourth Tranche”), which proceeds were used to repay a portion of Tandem’s existing senior and mortgage debt, respectively; (ii) extend its maturity to October 2018; and (iii) extend the prepayment penalty period to January 2017. The loans bear interest at fixed rates of 12% , 14% , 6% and 6% per annum for the First, Second, Third and Fourth Tranches, respectively. At March 31, 2016 , the facility had an outstanding balance of $256 million at an 11.5% blended interest rate and was subordinate to $ 380 million of senior mortgage debt. |
Investments in and Advances to
Investments in and Advances to Unconsolidated Joint Ventures | 3 Months Ended |
Mar. 31, 2016 | |
Investments in and Advances to Unconsolidated Joint Ventures | |
Investments in and Advances to Unconsolidated Joint Ventures | NOTE 7. Investments in and Advances to Unconsolidated Joint Ventures The Company owns interests in the following entities that are accounted for under the equity method at March 31, 2016 (dollars in thousands): Entity (1) Segment Carrying Amount Ownership% CCRC JV (2) Senior housing $ 49 HCRMC (3) Senior housing and post-acute/skilled nursing — 9 MBK JV (4) Senior housing 50 HCP Ventures III, LLC Medical office 30 HCP Ventures IV, LLC Medical office and hospital 20 HCP Life Science (5) Life science – 63 Vintage Park Development JV Senior housing 85 MBK Development JV (4) Senior housing 50 Suburban Properties, LLC Medical office 67 K&Y (6) Post-acute/skilled nursing 8 0 Advances to unconsolidated joint ventures, net and other $ (1) These entities are not consolidated because the Company does not control, through voting rights or other means, the joint ventures. (2) Includes two unconsolidated joint ventures in a RIDEA structure (CCRC PropCo and CCRC OpCo). (3) In December 2014, September 2015 and December 2015, the Company recognized impairment charges of $36 million, $27 million and $19 million, respectively. (4) Includes two unconsolidated joint ventures in a RIDEA structure (PropCo and OpCo). (5) Includes three unconsolidated joint ventures between the Company and an institutional capital partner. HCP Life Science includes the following partnerships (and the Company’s ownership percentage): (i) Torrey Pines Science Center, LP ( 50% ); (ii) Britannia Biotech Gateway, LP ( 55% ); and (iii) LASDK, LP ( 63% ). (6) Includes three unconsolidated joint ventures. Summarized combined financial information for the Company’s equity method investments (in thousands): March 31, December 31, 2016 2015 Real estate, net $ $ Goodwill and other assets, net Assets held for sale Total assets $ $ Capital lease obligations and mortgage debt $ $ Accounts payable Liabilities and mortgage debt held for sale Other partners’ capital HCP’s capital (1) Total liabilities and partners’ capital $ $ (1) The combined basis difference of the Company’s investments in these joint ventures of $35 million, as of March 31, 2016 , is attributable to goodwill, real estate, capital lease obligations, deferred tax assets and lease-related net intangibles. Three Months Ended March 31, 2016 2015 Total revenues $ $ Income (loss) from discontinued operations Net (loss) income HCP’s share of earnings (1) Fees earned by HCP Distributions received by HCP (1) The Company’s joint venture interest in HCRMC is accounted for using the equity method and results in an elimination of DFL income proportional to HCP’s ownership in HCRMC. The elimination of the respective proportional lease expense at the HCRMC level in substance resulted in $16 million of DFL income that was recharacterized to the Company’s share of earnings from HCRMC (equity income from unconsolidated joint ventures) for the three months ended March 31, 2015 . Beginning in January 2016, income will be recognized only if cash distributions are received from HCRMC; as a result, the Company no longer recharacterizes (eliminates) its proportional ownership share of income from DFLs to equity income (loss) from unconsolidated joint ventures. HCRMC . The Company concluded that its equity investment in HCRMC was other-than-temporarily impaired as of December 31, 2014, September 30, 2015 and December 31, 2015 and recorded impairment charges of $36 million, $27 million and $19 million, respectively. Beginning in January 2016, equity income will be recognized only if cash distributions are received from HCRMC (see Note 5). MBK JVs . On March 30, 2015, the Company and MBK Senior Living (“MBK”), a subsidiary of Mitsui & Co. Ltd, formed a new RIDEA joint venture (“MBK JV”) that owns three senior housing facilities with the Company and MBK each owning a 50% equity interest. MBK manages these communities on behalf of the joint venture. The Company contributed $ 27 million of cash and MBK contributed the three senior housing facilities with a fair value of $126 million, which were encumbered by $78 million of mortgage debt at closing. On September 25, 2015, the Company and MBK formed a new RIDEA joint venture (“MBK Development JV”), which acquired a $3 million parcel of land for the purpose of developing a 74 -unit class A senior housing facility in Santa Rosa, California. The parcel of land is located adjacent to the Oakmont Gardens independent living facility currently owned and operated by the MBK JV. |
Intangibles
Intangibles | 3 Months Ended |
Mar. 31, 2016 | |
Intangibles | |
Intangibles | NOTE 8. Intangibles At March 31, 2016 and December 31, 2015 , gross intangible lease assets, comprised of lease-up intangibles, above market tenant lease intangibles and below market ground lease intangibles, were $988 million and $984 million, respectively. At March 31, 2016 and December 31, 2015 , the accumulated amortization of intangible assets was $403 million and $380 million, respectively. At both March 31, 2016 and December 31, 2015 , gross intangible lease liabilities, comprised of below market tenant lease intangibles and above market ground lease intangibles were $156 million. At March 31, 2016 and December 31, 2015 , the accumulated amortization of intangible liabilities was $103 million and $100 million, respectively. |
Other Assets
Other Assets | 3 Months Ended |
Mar. 31, 2016 | |
Other Assets | |
Other Assets | NOTE 9. Other Assets A summary of the Company’s other assets (in thousands): March 31, December 31, 2016 2015 Straight-line rent receivables, net of allowance of $33,012 and $33,648 , respectively $ $ Marketable debt securities, net Leasing costs and inducements, net Goodwill Other Total other assets $ $ At March 31, 2016 and December 31, 2015 , other assets includes a non-interest bearing receivable of $5 million and $9 million, respectively, from Brookdale payable in eight quarterly installments. Four Seasons Health Care Senior Unsecured Notes Marketable debt securities, net are classified as held-to-maturity debt securities and primarily represent senior notes issued by Elli Investments Limited (“Elli”), a company beneficially owned by funds or limited partnerships managed by Terra Firma, as part of the financing for Elli’s acquisition of Four Seasons Health Care (the “Four Seasons Notes”). The Four Seasons Notes mature in June 2020, are non-callable through June 2016 and bear interest on their par value at a fixed rate of 12.25% per annum. The Company purchased an aggregate par value of £138.5 million of the Four Seasons Notes at a discount for £136.8 million ( $215 million) in June 2012, representing 79% of the total £175 million issued and outstanding Four Seasons Notes. In June 2015 and September 2015, the Company determined that the Four Seasons Notes were other-than-temporarily impaired and recorded impairment charges of $42 million and $70 million, respectively. Elli remains obligated to repay the aggregate par value at maturity and interest payments due June 15 and December 15 each year. When the remaining semi-annual interest payments are received, the Company expects to reduce the carrying value of the Four Seasons Notes during the related fiscal period. In December 2015, the Company received its contractual interest payment of £8 million ( $13 million), which was applied against the principal balance reducing the carrying amount to £58 million ( $85 million and $83 million at December 31, 2015 and March 31, 2016, respectively). |
Debt
Debt | 3 Months Ended |
Mar. 31, 2016 | |
Debt | |
Debt | NOTE 10. Debt Bank Line of Credit and Term Loans The Company’s $2.0 billion unsecured revolving line of credit facility (the “Facility”) matures on March 31, 2018 and contains a one -year extension option. Borrowings under the Facility accrue interest at LIBOR plus a margin that depends upon the Company’s credit ratings. The Company pays a facility fee on the entire revolving commitment that depends on its credit ratings. Based on the Company’s credit ratings at March 31, 2016 , the margin on the Facility was 0.925% , and the facility fee was 0.15% . The Facility also includes a feature that allows the Company to increase the borrowing capacity by an aggregate amount of up to $500 million, subject to securing additional commitments from existing lenders or new lending institutions. At March 31, 2016 , the Company had $810 million, including £275 million ( $395 million), outstanding under the Facility with a weighted average effective interest rate of 1.68% . The Facility and term loans contain certain financial restrictions and other customary requirements, including cross-default provisions to other indebtedness. Among other things, these covenants, using terms defined in the agreements, (i) limit the ratio of Consolidated Total Indebtedness to Consolidated Total Asset Value to 60% , (ii) limit the ratio of Secured Debt to Consolidated Total Asset Value to 30% , (iii) limit the ratio of Unsecured Debt to Consolidated Unencumbered Asset Value to 60% and (iv) require a minimum Fixed Charge Coverage ratio of 1.5 times. The Facility and term loans also require a Minimum Consolidated Tangible Net Worth of $9.5 billion at March 31, 2016 . At March 31, 2016 , the Company was in compliance with each of these restrictions and requirements. Senior Unsecured Notes At March 31, 2016 , the Company had senior unsecured notes outstanding with an aggregate principal balance of $8.7 billion. The senior unsecured notes contain certain covenants including limitations on debt, maintenance of unencumbered assets, cross-acceleration provisions and other customary terms. The Company believes it was in compliance with these covenants at March 31, 2016 . The following table summarizes the Company’s senior unsecured notes issuances for the periods presented (dollars in thousands): Issuance Period Amount Coupon Rate Maturity Date Net Proceeds Year ended December 31, 2015: January 21, 2015 $ % $ May 20, 2015 $ % $ December 1, 2015 $ % $ The following table summarizes the Company’s senior unsecured notes payoffs for the periods presented (dollars in thousands): Period Amount Coupon Rate Three months ended March 31, 2016: February 1, 2016 $ % Year ended December 31, 2015: March 1, 2015 $ % June 8, 2015 $ % Mortgage Debt At March 31, 2016 , the Company had $895 million in aggregate principal amount of mortgage debt outstanding, which is secured by 56 healthcare facilities (including redevelopment properties) with a carrying value of $1.1 billion. Mortgage debt generally requires monthly principal and interest payments, is collateralized by real estate assets and is generally non-recourse. Mortgage debt typically restricts transfer of the encumbered assets, prohibits additional liens, restricts prepayment, requires payment of real estate taxes, requires maintenance of the assets in good condition, requires maintenance of insurance on the assets and includes conditions to obtain lender consent to enter into or terminate material leases. Some of the mortgage debt is also cross-collateralized by multiple assets and may require tenants or operators to maintain compliance with the applicable leases or operating agreements of such real estate assets. Debt Maturities The following table summarizes the Company’s stated debt maturities and scheduled principal repayments at March 31, 2016 , (in thousands): Senior Bank Line of Unsecured Mortgage Year Credit (1) Term Loans (2) Notes (3) Debt (4) Total (5) 2016 (nine months) $ — $ $ $ $ 2017 — — 2018 — 2019 — 2020 — — Thereafter — — Discounts, net — $ $ $ $ $ (1) Includes £275 million ( $395 million) translated into U.S. dollars (“USD”). (2) Represents £357 million translated into USD. (3) Interest rates on senior unsecured notes ranged from 2.79% to 6.88% with a weighted average effective interest rate of 4.72% and a weighted average maturity of six years. (4) Interest rates on the mortgage debt ranged from 3.11% to 8.35% with a weighted average effective interest rate of 6.22% and a weighted average maturity of two years. (5) Excludes $ 95 million of other debt that represents Life Care Bonds and Demand Notes that have no scheduled maturities. Other Debt At March 31, 2016 , the Company had $67 million of non-interest bearing life care bonds at two of its continuing care retirement communities and non-interest bearing occupancy fee deposits at two of its senior housing facilities, all of which are payable to certain residents of the facilities (collectively, “Life Care Bonds”). The Life Care Bonds are generally refundable to the residents upon the termination of the contract or upon the successful resale of the unit. At March 31, 2016 , the Company had $28 million of on-demand notes (“Demand Notes”) from the CCRC JV. The Demand Notes bear interest at a rate of 4.5% . |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies. | |
Commitments and Contingencies | NOTE 11. Commitments and Contingencies Legal Proceedings From time to time, the Company is a party to legal proceedings, lawsuits and other claims that arise in the ordinary course of the Company’s business. The Company is not aware of any legal proceedings or claims that it believes may have, individually or taken together, a material adverse effect on the Company’s business, prospects, financial condition, results of operations or cash flows. The Company’s policy is to expense legal costs as they are incurred. |
Equity
Equity | 3 Months Ended |
Mar. 31, 2016 | |
Equity | |
Equity | NOTE 12. Equity Common Stock The following table lists the common stock cash dividends declared by the Company in 2016 : Amount Dividend Declaration Date Record Date Per Share Payable Date January 28 February 8 $ February 23 April 27 May 9 May 24 The following is a summary of the Company’s other common stock activities (shares in thousands): Three Months Ended March 31, 2016 2015 Dividend Reinvestment and Stock Purchase Plan Conversion of DownREIT units (1) Exercise of stock options Vesting of restricted stock units Repurchase of common stock (1) Non-managing member limited liability company (“LLC”) units. Accumulated Other Comprehensive Loss The following is a summary of the Company’s accumulated other comprehensive loss (in thousands): March 31, December 31, 2016 2015 Cumulative foreign currency translation adjustment $ $ Unrealized losses on cash flow hedges, net Supplemental Executive Retirement Plan minimum liability Unrealized (losses) gains on available for sale securities Total accumulated other comprehensive loss $ $ Noncontrolling Interests At March 31, 2016 , non-managing members held an aggregate of 4 million units in five limited liability companies (“DownREITs”), for which the Company is the managing member. At March 31, 2016 , the carrying and fair values of these DownREIT units were $181 million and $191 million, respectively. See Note 15 for the supplemental schedule of non-cash financing activities. |
Segment Disclosures
Segment Disclosures | 3 Months Ended |
Mar. 31, 2016 | |
Segment Disclosures | |
Segment Disclosures | NOTE 13. Segment Disclosures The Company evaluates its business and makes resource allocations based on its five business segments: (i) senior housing, (ii) post-acute/skilled nursing, (iii) life science, (iv) medical office and (v) hospital. Under the medical office segment, the Company invests through the acquisition and development of medical office buildings (“MOBs”), which generally require a greater level of property management. Otherwise, the Company primarily invests, through the acquisition and development of real estate, in single tenant and operator properties and debt issued by tenants and operators in these sectors. The accounting policies of the segments are the same as those described in Note 2 to the Consolidated Financial Statements herein and in the Company’s 2015 Annual Report on Form 10-K filed with the SEC. There were no intersegment sales or transfers during the three months ended March 31, 2016 and 2015 . The Company evaluates performance based upon (i) property net operating income from continuing operations (“NOI”), (ii) adjusted NOI (cash NOI), and (iii) adjusted NOI, including the Company’s pro rata share of unconsolidated joint ventures, plus interest income (“Portfolio Income”) of the combined investments in each segment. Non-segment assets consist primarily of corporate assets, including cash and cash equivalents, restricted cash, accounts receivable, net, marketable equity securities and, if any, real estate held for sale. Interest expense, depreciation and amortization, and non-property specific revenues and expenses are not allocated to individual segments in evaluating the Company’s segment-level performance. See Note 17 for other information regarding concentrations of credit risk. Summary information for the reportable segments (in thousands): For the three months ended March 31, 2016 : Senior Post-acute/ Life Medical Housing Skilled Nursing Science Office Hospital Total Rental revenues (1) $ $ $ $ $ $ Resident fees and services — — — — Operating expenses NOI Non-cash adjustments to NOI (2) Adjusted (cash) NOI Adjusted (cash) NOI from unconsolidated joint ventures — Interest income — — — Portfolio Income $ $ $ $ $ Addback non-cash adjustments Investment management fee income Interest expense Depreciation and amortization General and administrative expenses Acquisition and pursuit costs Other income, net Income tax expense Equity loss in unconsolidated joint ventures, excluding adjusted (cash) NOI Net income $ For the three months ended March 31, 2015 : Senior Post-acute/ Life Medical Housing Skilled Nursing Science Office Hospital Total Rental revenues (1) $ $ $ $ $ $ Resident fees and services — — — — Operating expenses NOI Non-cash adjustments to NOI (2) Adjusted (cash) NOI Adjusted (cash) NOI from unconsolidated joint ventures — — Interest income — — — Portfolio Income $ $ $ $ $ Addback non-cash adjustments Investment management fee income Interest expense Depreciation and amortization General and administrative expenses Acquisition and pursuit costs Impairment Gain on sales of real estate Other income, net Income tax benefit Equity loss in unconsolidated joint ventures, excluding adjusted (cash) NOI Net loss $ (1) Represents rental and related revenues, tenant recoveries and income from DFLs. (2) Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles and lease termination fees. A summary of the Company’s total assets by segment (in thousands): March 31, December 31, Segment 2016 2015 Senior housing $ $ Post-acute/skilled nursing Life science Medical office Hospital Gross segment assets Accumulated depreciation and amortization Net segment assets Real estate assets held for sale, net Other non-segment assets Total assets $ $ At both March 31, 2016 and December 31, 2015 , goodwill of $50 million was allocated to segment assets as follows: (i) senior housing— $31 million, (ii) post-acute/skilled nursing — $3 million, (iii) medical office— $11 million and (iv) hospital— $5 million. |
Earnings Per Common Share
Earnings Per Common Share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Common Share | |
Earnings Per Common Share | NOTE 14. Earnings Per Common Share The following table illustrates the computation of basic and diluted earnings per share (in thousands, except per share amounts): Three Months Ended March 31, 2016 2015 Numerator Net income (loss) $ $ Noncontrolling interests’ share in earnings Net income (loss) attributable to HCP, Inc. Participating securities’ share in earnings Net income (loss) applicable to common shares $ $ Denominator Basic weighted average common shares Dilutive potential common shares — Diluted weighted average common shares Earnings per common share Basic $ $ Diluted $ $ Restricted stock and certain of the Company’s performance restricted stock units are considered participating securities, because dividend payments are not forfeited even if the underlying award does not vest, which requires the use of the two-class method when computing basic and diluted earnings per share. Options to purchase approximately 1.4 million shares of common stock that had an exercise price (including deferred compensation expense) in excess of the average closing market price of the Company’s common stock during the three months ended March 31, 2016 were not included in the Company’s earnings per share calculations because they are anti-dilutive. Restricted stock and performance restricted stock units representing 0.7 million shares of common stock during the three months ended March 31, 2016 were not included because they are anti-dilutive. Additionally, 6 million shares issuable upon conversion of 4 million DownREIT units during the three months ended March 31, 2016 were not included because they are anti-dilutive. For the three months ended March 31, 2015, the Company generated a net loss. The weighted-average basic shares outstanding was used in calculating diluted loss per share from continuing operations, as using diluted shares would be anti-dilutive to loss per share. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 3 Months Ended |
Mar. 31, 2016 | |
Supplemental Cash Flow Information | |
Supplemental Cash Flow Information | NOTE 15. Supplemental Cash Flow Information The following table provides supplemental cash flow information (in thousands): Three Months Ended March 31, 2016 2015 Supplemental cash flow information: Interest paid, net of capitalized interest $ $ Income taxes paid Capitalized interest Supplemental schedule of non-cash investing activities: Accrued construction costs Settlement of HCRMC Tranche A DRO as consideration for DFL acquisition — Tenant funded tenant improvements owned by HCP Supplemental schedule of non-cash financing activities: Vesting of restricted stock units Conversion of non-managing member units into common stock Noncontrolling interest issued in connection with real estate acquisitions — Other liabilities assumed with real estate acquisitions Unrealized (losses) gains on available-for-sale securities and derivatives designated as cash flow hedges, net |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Mar. 31, 2016 | |
Variable Interest Entities | |
Variable Interest Entities | NOTE 16. Variable Interest Entities On January 1, 2016, the Company adopted ASU 2015-02 using the modified retrospective method as permitted by the ASU. As a result of the adoption, the Company identified additional assets and liabilities of certain VIEs in its consolidated total assets and total liabilities at December 31, 2015 of $543 million and $651 million, respectively. Refer to the specific VIE descriptions below for detail on which entities were classified as consolidated VIEs subsequent to the adoption of ASU 2015-02. Additionally, the Company deconsolidated three joint ventures and recognized $0.5 million as a cumulative-effect adjustment to cumulative dividends in excess of earnings. Unconsolidated Variable Interest Entities At March 31, 2016 , the Company had investments in: (i) four unconsolidated VIE joint ventures; (ii) 358 properties leased to VIE tenants; and (iii) marketable debt securities of, and a loan to two VIE borrowers. The Company has determined that it is not the primary beneficiary of these VIEs. The Company does not consolidate these VIEs because it does not have the ability to control the activities that most significantly impact their economic performance. Except for the Company’s equity interest in the unconsolidated joint ventures (CCRC OpCo, HCRMC OpCo, Vintage Park Development JV and LLC investments discussed below), it has no formal involvement in these VIEs beyond its investments. The Company leases 310 properties to, and has an equity ownership investment in, HCRMC that has been identified as a VIE upon a reconsideration event in the fourth quarter of 2015. HCRMC has experienced continued operational declines and is a “thinly capitalized” entity that relies on the operating cash flows generated from its senior housing and post-acute facilities to fund operating expenses, including the rent obligations under the Amended Master Lease (see Notes 5 and 7). The Company leases 48 properties to a total of seven tenants that have been identified as VIEs (“VIE tenants”). These VIE tenants are “thinly capitalized” entities that rely on the operating cash flows generated from the senior housing facilities to pay operating expenses, including the rent obligations under their leases. The Company holds a 49% ownership interest in CCRC OpCo, a joint venture entity formed in August 2014 that operates senior housing properties in a RIDEA structure, that has been identified as a VIE (see Note 7). The equity members of CCRC OpCo “lack power” because they share certain operating rights with Brookdale as manager of the CCRCs. The assets of CCRC OpCo primarily consist of the CCRCs that it owns and leases, resident fees receivable, notes receivable, and cash and cash equivalents; its obligations primarily consist of operating lease obligations to CCRC PropCo and accounts payable and expense accruals associated with the cost of its CCRCs’ operations. Assets generated by the CCRC operations (primarily rents from CCRC residents) of CCRC OpCo may only be used to settle its contractual obligations (primarily the rental costs and operating expenses incurred to manage such facilities). The Company holds Four Seasons Notes (see Note 9) and a portion of Four Season’s senior secured term loan (see Note 6). In the second quarter of 2015, upon the occurrence of a reconsideration event, it was determined that the issuer of the Four Seasons Notes is a VIE because this entity is “thinly capitalized.” The Company holds an 85% ownership interest in Vintage Park Development JV (see Note 7) that has been identified as a VIE. Although power is shared among equity members, one equity member does not have a substantive investment in the entity. The assets of Vintage Park Development JV primarily consist of an in-progress independent living facility development project that it owns and cash and cash equivalents; its obligations primarily consist of accounts payable and expense accruals associated with the cost of the development obligations. Any assets generated by Vintage Park Development JV may only be used to settle its contractual obligations (primarily development expenses and debt service payments). The Company holds a limited partner ownership interest in an unconsolidated LLC that has been identified as a VIE. The Company’s involvement in the entity is limited to its equity investment as a limited partner, and it does not have any ability to direct the activities that most significantly impact the entity. The assets and liabilities of the entity primarily consist of senior housing real estate and development activities. Any assets generated by the entity may only be used to settle its contractual obligations (primarily development expenses and debt service payments). The Company holds commercial mortgage-backed securities (“CMBS”) issued by Federal Home Loan Mortgage Corporation (“Freddie MAC”) through a special purpose entity that has been identified as a VIE because it is “thinly capitalized.” The CMBS issued by the VIE are backed by mortgage debt obligations on real estate assets. The classification of the related assets and liabilities and their maximum loss exposure as a result of the Company’s involvement with these VIEs at March 31, 2016 are presented below (in thousands): Maximum Loss Carrying VIE Type Exposure (1) Asset/Liability Type Amount HCRMC $ Net investment in DFLs and investments in unconsolidated joint ventures $ VIE tenants—DFLs Net investment in DFLs VIE tenants—operating leases Lease intangibles, net and straight-line rent receivables CCRC OpCo Investments in unconsolidated joint ventures Four Seasons Loans and marketable debt securities Vintage Park Development JV Investments in unconsolidated joint ventures CMBS and LLC investments Marketable debt and cost method investments (1) The Company’s maximum loss exposure related to HCRMC, VIE tenants, CCRC OpCo, Vintage Park Development JV, loan and marketable debt securities, and LLC investments to VIE borrowers represents the aggregate carrying amount of such investments (including accrued interest). The Company’s maximum loss exposure may be mitigated by re-leasing the underlying properties to new tenants upon an event of default. As of March 31, 2016 , the Company has not provided, and is not required to provide, financial support through a liquidity arrangement or otherwise, to its unconsolidated VIEs, including circumstances in which it could be exposed to further losses (e.g., cash shortfalls). See Notes 5, 6, 7 and 9 for additional descriptions of the nature, purpose and operating activities of the Company’s unconsolidated VIEs and interests therein. Consolidated Variable Interest Entities RIDEA I. The Company holds a 90% ownership interest in joint venture entities formed in September 2011 that own and operate senior housing properties in a RIDEA structure (“RIDEA I”). The Company has historically classified RIDEA I OpCo as a VIE and, as a result of the adoption of ASU 2015-02, now classifies RIDEA I PropCo as a VIE as well due to the non-managing member having no substantive participating rights in the management of RIDEA I PropCo or kick-out rights over the managing member. The Company consolidates RIDEA I PropCo and RIDEA I OpCo as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of RIDEA I PropCo primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of notes payable to a non-VIE consolidated subsidiary of the Company. The assets of RIDEA I OpCo primarily consist of leasehold interests in senior housing facilities (operating leases), resident fees receivable, and cash and cash equivalents; its obligations primarily consist of lease payments to RIDEA I PropCo and operating expenses of its senior housing facilities (accounts payable and accrued expenses). Assets generated by the senior housing operations (primarily from senior housing resident rents) of the RIDEA I structure may only be used to settle its contractual obligations (primarily from the rental costs, operating expenses incurred to manage such facilities and debt costs). RIDEA II . The Company holds an 80% ownership interest in joint venture entities formed in August 2014 that own and operate senior housing properties in a RIDEA structure (“RIDEA II”). The Company consolidates RIDEA II (“SH PropCo” and “SH OpCo”) as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of SH PropCo primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of a note payable to a non-VIE consolidated subsidiary of the Company. The assets of SH OpCo primarily consist of leasehold interests in senior housing facilities (operating leases), resident fees receivable, and cash and cash equivalents; its obligations primarily consist of lease payments to SH PropCo and operating expenses of its senior housing facilities (accounts payable and accrued expenses). Assets generated by the senior housing operations (primarily from senior housing resident rents) of the RIDEA II structure may only be used to settle its contractual obligations (primarily from the rental costs, operating expenses incurred to manage such facilities and debt costs). See Note 20 for additional discussion of potential RIDEA II transactions. RIDEA III . The Company holds a 90% ownership interest in joint venture entities formed in June 2015 that own and operate senior housing properties in a RIDEA structure (“RIDEA III”). The Company has historically classified RIDEA III OpCo as a VIE and, as a result of the adoption of ASU 2015-02, now classifies RIDEA III PropCo as a VIE as well due to the non-managing member having no substantive participating rights in the management of RIDEA III PropCo or kick-out rights over the managing member. The Company consolidates RIDEA III PropCo and RIDEA III OpCo as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of RIDEA III PropCo primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of a note payable to a non-VIE consolidated subsidiary of the Company. The assets of RIDEA III OpCo primarily consist of leasehold interests in senior housing facilities (operating leases), resident fees receivable, and cash and cash equivalents; its obligations primarily consist of lease payments to RIDEA III PropCo and operating expenses of its senior housing facilities (accounts payable and accrued expenses). Assets generated by the senior housing operations (primarily from senior housing resident rents) of the RIDEA III structure may only be used to settle its contractual obligations (primarily from the rental costs, operating expenses incurred to manage such facilities and debt costs). HCP Ventures V, LLC . The Company holds a 51% ownership interest in and is the managing member of a joint venture entity formed in October 2015 that owns and leases real estate assets (“HCP Ventures V, LLC”). Upon adoption of ASU 2015-02, the Company classified HCP Ventures V, LLC as a VIE due to the non-managing member having no substantive participating rights in the management of the HCP Ventures V, LLC or kick-out rights over the managing member. The Company consolidates HCP Ventures V, LLC as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of HCP Ventures V, LLC primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of capital expenditures for the properties. Assets generated by the HCP Ventures V, LLC may only be used to settle its contractual obligations (primarily from capital expenditures). Vintage Park JV . The Company holds a 90% ownership interest in a joint venture entity formed in January 2015 that owns an 85% interest in an unconsolidated development VIE (“Vintage Park JV”). Upon adoption of ASU 2015-02, the Company classified Vintage Park JV as a VIE due to the non-managing member having no substantive participating rights in the management of the Vintage Park JV or kick-out rights over the managing member. The Company consolidates Vintage Park JV as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of Vintage Park JV primarily consist of an investment in the Vintage Park Development JV and cash and cash equivalents; its obligations primarily consist of funding the ongoing development of the Vintage Park Development JV. Assets generated by the Vintage Park JV may only be used to settle its contractual obligations (primarily from the funding of the Vintage Park Development JV). DownREIT Partnerships . The Company holds a controlling ownership interest in and is the managing member of five partnerships organized in downREIT structures (the “DownREIT Partnerships”). Upon adoption of ASU 2015-02, the Company classified the DownREIT Partnerships as VIEs due to the non-managing members having no substantive participating rights in the management of the DownREIT Partnerships or kick-out rights over the managing member. The Company consolidates the DownREIT Partnerships as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the DownREIT Partnerships primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the DownREIT Partnerships (primarily from resident rents) may only be used to settle its contractual obligations (primarily from debt service and capital expenditures). Other Consolidated Real Estate Partnerships . The Company holds a controlling ownership interest in and is the general partner (or managing member) of multiple partnerships that own and lease real estate assets (the “Partnerships”). Upon adoption of ASU 2015-02, the Company classified the Partnerships as VIEs due to the limited partners (non-managing members) having no substantive participating rights in the management of the Partnerships or kick-out rights over the general partner (managing member). The Company consolidates the Partnerships as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance and its right (or obligation) to the majority of the returns (or losses). The assets of the Partnerships primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the Partnerships (primarily from resident rents) may only be used to settle its contractual obligations (primarily from debt service and capital expenditures). Other consolidated VIEs . The Company made a loan to an entity that entered into a tax credit structure (“Tax Credit Subsidiary”) and a loan to an entity that made an investment in a development joint venture (“Development JV”) both of which are considered VIEs. The Company consolidates the Tax Credit Subsidiary and Development JV because it is the primary beneficiary as it has the ability to control the activities that most significantly impact the VIEs’ economic performance. The assets and liabilities of the Tax Credit Subsidiary and Development JV substantially consist of development in progress, notes receivable, prepaid expenses, notes payable, and accounts payable and accrued liabilities generated from their operating activities. Any assets generated by the operating activities of the Tax Credit Subsidiary and Development JV may only be used to settle their contractual obligations. |
Concentration of Credit Risk
Concentration of Credit Risk | 3 Months Ended |
Mar. 31, 2016 | |
Concentration of Credit Risk | |
Concentration of Credit Risk | NOTE 17. Concentration of Credit Risk Concentrations of credit risk arise when one or more tenants, operators or obligors related to the Company’s investments are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions. The Company regularly monitors various segments of its portfolio to assess potential concentrations of risks. The Company does not have significant foreign operations. The following tables provide information regarding the Company’s concentrations with respect to certain tenants and operators; the information provided is presented for the gross assets and revenues that are associated with certain tenants and operators as percentages of their respective segment’s and total Company’s gross assets and revenues: Percentage of Percentage of Senior Housing Gross Assets Senior Housing Revenues March 31, December 31, Three Months Ended March 31, Operators 2016 2015 2016 2015 Brookdale % % % % HCRMC % % % % Percentage of Post-Acute/ Percentage of Post-Acute/ Skilled Nursing Gross Assets Skilled Nursing Revenues March 31, December 31, Three Months Ended March 31, Operators 2016 2015 2016 2015 HCRMC % % % % Percentage of Percentage of Total Company Gross Assets Total Company Revenues March 31, December 31, Three Months Ended March 31, Operators 2016 2015 2016 2015 HCRMC % % % % Brookdale % % % % HCRMC’s summarized consolidated financial information (in millions): March 31, December 31, 2016 2015 Real estate and other property, net $ $ Cash and cash equivalents Goodwill, intangible and other assets, net Total assets $ $ Debt and financing obligations $ $ Accounts payable, accrued liabilities and other Total equity Total liabilities and equity $ $ Three Months Ended March 31, 2016 2015 Revenues $ $ Operating, general and administrative expense Depreciation and amortization expense Interest expense Other income, net Gain on disposal of assets — (Loss) income from continuing operations before income tax (expense) benefit Income tax benefit (expense) (Loss) income from continuing operations Income from discontinued operations, net of taxes Net (loss) income $ $ As of March 31, 2016 , Brookdale provided comprehensive facility management and accounting services with respect to 108 of the Company’s senior housing facilities and 15 CCRCs owned by the CCRC JV, for which the Company or joint venture pay annual management fees pursuant to long-term management agreements. Most of the management agreements have terms ranging from 10 to 15 years, with three to four 5 -year renewals. The base management fees are 4.5% to 5.0% of gross revenues (as defined) generated by the RIDEA facilities. In addition, there are incentive management fees payable to Brookdale if operating results of the RIDEA properties exceed pre-established EBITDAR (as defined) thresholds. Brookdale is subject to the registration and reporting requirements of the SEC and is required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. The information related to Brookdale contained or referred to in this report has been derived from SEC filings made by Brookdale or other publicly available information, or was provided to the Company by Brookdale, and the Company has not verified this information through an independent investigation or otherwise. The Company has no reason to believe that this information is inaccurate in any material respect, but the Company cannot assure the reader of its accuracy. The Company is providing this data for informational purposes only, and encourages the reader to obtain Brookdale’s publicly available filings, which can be found at the SEC’s website at www.sec.gov. To mitigate the credit risk of leasing properties to certain senior housing and post-acute/skilled nursing operators, leases with operators are often combined into portfolios that contain cross-default terms, so that if a tenant of any of the properties in a portfolio defaults on its obligations under its lease, the Company may pursue its remedies under the lease with respect to any of the properties in the portfolio. Certain portfolios also contain terms whereby the net operating profits of the properties are combined for the purpose of securing the funding of rental payments due under each lease. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Measurements | |
Fair Value Measurements | NOTE 18. Fair Value Measurements Items Measured at Fair Value on a Recurring Basis The following table illustrates the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2016 in the consolidated balance sheets (in thousands): Financial Instrument (1) Fair Value Level 1 Level 2 Level 3 Marketable equity securities $ $ $ — $ — Interest-rate swap liabilities — — Currency swap assets — — Warrants — — (1) Interest-rate and currency swaps, as well as common stock warrant fair values, are determined based on observable and unobservable market assumptions utilizing standardized derivative pricing models. Recognized gains and losses are recorded in other income, net on the Company’s consolidated statements of operations. During the three months ended March 31, 2016 , there were no transfers of financial assets or liabilities within the fair value hierarchy. Disclosures About Fair Value of Financial Instruments Cash and cash equivalents, restricted cash, accounts receivable, net, and accounts payable and accrued liabilities – The carrying values are reasonable estimates of fair value because of the short-term maturities of these instruments. Loans receivable, net and mortgage debt – The fair values are based on discounting future cash flows utilizing current market rates for loans and debt of the same type and remaining maturity. Marketable debt securities – The fair value is based on quoted prices from inactive markets. Marketable equity securities and senior unsecured notes – The fair values are based on quoted prices in active markets. Warrants – The fair value is based on significant unobservable market inputs utilizing standardized derivative pricing models. Bank line of credit, term loans and other debt – The carrying values are reasonable estimates of fair value because the borrowings are primarily based on market interest rates and the Company’s current credit ratings. Interest-rate swaps – The fair value is based on observable inputs utilizing standardized pricing models that consider forward yield curves and discount rates which are observable in active and inactive markets. Currency swaps – The fair value is based on observable inputs utilizing standardized pricing models that consider the future value of the currency exchange rates, comprised of current spot and traded forward points, and calculating a present value of the net amount using discount rates based on observable traded interest rates. The table below summarizes the carrying values and fair values of the Company’s financial instruments (in thousands): March 31, 2016 December 31, 2015 Carrying Carrying Value Fair Value Value Fair Value Loans receivable, net (2) $ $ $ $ Marketable debt securities (2) Marketable equity securities (1) Warrants (3) Bank line of credit (2) Term loans (2) Senior unsecured notes (1) Mortgage debt (2) Other debt (2) Interest-rate swap assets (2) — — Interest-rate swap liabilities (2) Currency swap assets (2) (1) Level 1: Fair value calculated based on quoted prices in active markets. (2) Level 2: Fair value based on quoted prices for similar or identical instruments in active or inactive markets, respectively, or calculated utilizing standardized pricing models in which significant inputs or value drivers are observable in active markets. (3) Level 3: Fair value determined based on significant unobservable market inputs using standardized derivative pricing models. |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | NOTE 19. Derivative Financial Instruments The following table summarizes the Company’s outstanding interest-rate and foreign currency swap contracts as of March 31, 2016 (dollars and GBP in thousands): Fixed Hedge Rate/Buy Floating/Exchange Notional/ Date Entered Maturity Date Designation Amount Rate Index Sell Amount Fair Value (1) Interest rate: July 2005 (2) July 2020 Cash Flow % BMA Swap Index $ $ November 2008 (3) October 2016 Cash Flow % 1 Month LIBOR+ 1.50 % $ $ July 2012 (4) June 2016 Cash Flow % 1 Month GBP LIBOR+ 1.20 % £ $ January 2015 (4) October 2017 Cash Flow % 1 Month GBP LIBOR+ 0.975 % £ $ Foreign currency: July 2012 (5) June 2016 N/A $ Buy USD/Sell GBP £ $ January 2015 (6) October 2017 Cash Flow $ Buy USD/Sell GBP £ $ (1) Derivative assets are recorded in other assets, net and derivative liabilities are recorded in accounts payable and accrued liabilities on the consolidated balance sheets. (2) Represents three interest-rate swap contracts, which hedge fluctuations in interest payments on variable-rate secured debt due to overall changes in hedged cash flows. (3) Represents an interest-rate swap contract, which hedges fluctuations in interest payments on variable-rate secured debt due to overall changes in hedged cash flows. (4) Hedges fluctuations in interest payments on variable-rate unsecured debt due to fluctuations in the underlying benchmark interest rate. (5) Currency swap contract (buy USD/sell GBP) hedges the foreign currency exchange risk related to a portion of the Company’s forecasted interest receipts on British pound sterling (“GBP”) denominated senior notes. Represents a currency swap to sell £7.2 million at a rate of 1.5695 in June 2016. (6) Currency swap contract (buy USD/sell GBP) hedges the foreign currency exchange risk related to the Company’s forecasted GBP denominated interest receipts on its HC-One Facility. Represents a currency swap to sell approximately £1.0 million monthly at a rate of 1.5149 through October 2017. The Company uses derivative instruments to mitigate the effects of interest rate and foreign currency fluctuations on specific forecasted transactions as well as recognized financial obligations or assets. Utilizing derivative instruments allows the Company to manage the risk of fluctuations in interest and foreign currency rates related to the potential impact these changes could have on future earnings and forecasted cash flows. The Company does not use derivative instruments for speculative or trading purposes. The primary risks associated with derivative instruments are market and credit risk. Market risk is defined as the potential for loss in value of a derivative instrument due to adverse changes in market prices. Credit risk is the risk that one of the parties to a derivative contract fails to perform or meet their financial obligation. The Company does not obtain collateral associated with its derivative contracts, but monitors the credit standing of its counterparties on a regular basis. Should a counterparty fail to perform, the Company would incur a financial loss to the extent that the associated derivative contract was in an asset position. At March 31, 2016 , the Company does not anticipate non-performance by the counterparties to its outstanding derivative contracts. During the three months ended March 31, 2016 , the Company determined a portion of a cash flow hedge was ineffective and reclassified $0.1 million of unrealized gains related to this interest-rate swap contract into other income, net. The Company expects that the hedged forecasted transactions for each of the outstanding qualifying cash flow hedging relationships at March 31, 2016 remain probable of occurring, and as a result, no additional gains or losses recorded to accumulated other comprehensive loss are expected to be reclassified to earnings for any other outstanding hedges, other than those discussed above. To illustrate the effect of movements in the interest rate and foreign currency markets, the Company performed a market sensitivity analysis on its outstanding derivative financial instruments. The Company applied various basis point spreads to the underlying interest rate curves and foreign currency exchange rates of the derivative portfolio in order to determine the instruments’ change in fair value. The following table summarizes the results of the analysis performed (dollars in thousands): Effects of Change in Interest and Foreign Currency Rates +50 Basis -50 Basis +100 Basis -100 Basis Date Entered Maturity Date Points Points Points Points Interest rate: July 2005 July 2020 $ $ $ $ November 2008 October 2016 July 2012 June 2016 January 2015 October 2017 Foreign currency: July 2012 June 2016 January 2015 October 2017 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events | |
Subsequent Events | NOTE 20. Subsequent Events In May 2016, the Company announced its intention to spin off interests in 338 properties (including 17 facility sales expected to close by the end of 2016 and potentially before completion of the spin off), primarily comprised of its HCRMC DFL investments, and its equity investment in HCRMC OpCo, into an independent, publicly-traded REIT (“SpinCo”). The spin-off is expected to be effectuated through a pro rata special distribution of SpinCo’s common shares to HCP stockholders and will be treated as a taxable transaction for U.S. federal income tax purposes. The transaction is subject to certain conditions, including the SEC declaring effective a registration statement for the SpinCo common share to be distributed, filing and approval of SpinCo to be listed on an exchange, customary third party consents, and formal approval and declaration of the distribution by the Company’s Board of Directors. The transaction is expected to be completed in the second half of 2016. The Company may, at any time and for any reason until the proposed transaction is complete, abandon the spin-off or modify or change its terms. In May 2016, the Company entered into a master contribution agreement to contribute its interests in RIDEA II to an unconsolidated joint venture owned 50.1% by HCP and 49.9% by an investor group led by Columbia Pacific Advisors, LLC (“CPA”) (the “HCP/CPA JV”). In return, the Company will receive $109 million in cash proceeds from the HCP/CPA JV, a $636 million note receivable (“Note”) and retain an approximately 40% beneficial interest in RIDEA II. This transaction, upon completion, would result in the Company deconsolidating the net assets of RIDEA II because it will not direct the activities that most significantly impact the venture. The Company further expects that the members will recapitalize RIDEA II, at which time the Company expects to receive cash proceeds in payment against the Note. The closing of these transactions are expected to occur in 2016 and remain subject to regulatory and third party approvals and other customary closing conditions. |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Management is required to make estimates and assumptions in the preparation of financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from management’s estimates. The consolidated financial statements include the accounts of HCP, Inc., its wholly-owned subsidiaries, joint ventures and VIEs that it controls through voting rights or other means. Intercompany transactions and balances have been eliminated upon consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows have been included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 . The accompanying unaudited interim financial information should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”). |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 is intended to simplify accounting for share-based payment transactions. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statements of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within, beginning after December 15, 2016. Early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2016-09 on January 1, 2017 to its consolidated financial position, results of operations or cash flows. In March 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”). ASU 2016-08 is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. ASU 2016-08 is effective for fiscal years, and interim periods within, beginning after December 15, 2017. Early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2016-08 on January 1, 2018 to its consolidated financial position or results of operations. In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 amends the current accounting for leases to (i) require lessees to put most leases on their balance sheets, but continue recognizing expenses on their income statements in a manner similar to today’s accounting, (ii) eliminate current real estate specific lease provisions, and (iii) modify classification criteria and accounting for sales-type leases for lessors. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2016-02 on January 1, 2019 to its consolidated financial position or results of operations. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). This update requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. This update also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment at each reporting period. ASU 2016-01 is effective for fiscal years, and interim periods within, beginning after December 15, 2017. Early adoption is permitted only for certain disclosure requirements. The Company is evaluating the impact of the adoption of ASU 2016-01 on January 1, 2018 to its consolidated financial position or results of operations. In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). ASU 2015-16 simplifies the accounting for adjustments made to provisional amounts recognized in a business combination by requiring the acquirer to (i) recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amount is determined, (ii) record, in the same period, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date, and (iii) present separately or disclose the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for fiscal years, and interim periods within, beginning after December 15, 2015. Early adoption is permitted. The Company adopted ASU 2015-16 on January 1, 2016; the adoption of which did not have a material impact on its consolidated financial position or results of operations. In February 2015, the FASB issued ASU No. 2015-02, Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 requires amendments to both the VIE and voting consolidation accounting models. The amendments (i) rescind the indefinite deferral of certain aspects of accounting standards relating to consolidations and provide a permanent scope exception for registered money market funds and similar unregistered money market funds, (ii) modify (a) the identification of variable interests (fees paid to a decision maker or service provider), (b) the VIE characteristics for a limited partnership or similar entity and (c) the primary beneficiary determination under the VIE model, and (iii) eliminate the presumption within the current voting model that a general partner controls a limited partnership or similar entity. ASU 2015-02 is effective for fiscal years, and interim periods within, beginning after December 15, 2015. Early adoption is permitted. A reporting entity may apply the amendments in ASU 2015-02 using either a modified retrospective or retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. The Company adopted ASU 2015-02 on January 1, 2016; the adoption of which did not have a material impact to its consolidated financial position or results of operations. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). This update changes the requirements for recognizing revenue. ASU 2014-09 provides guidance for revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”). ASU 2015-14 defers the effective date of ASU 2014-09 by one year to fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted for annual periods, and interim periods within, beginning after December 15, 2016. The Company is evaluating the impact of the adoption of ASU 2014-09 on January 1, 2018 to its consolidated financial position or results of operations. |
Reclassifications | Reclassification Certain amounts in the Company’s consolidated financial statements have been reclassified for prior periods to conform to the current period presentation. Assets held for sale and associated liabilities have been reclassified on the consolidated balance sheets (see Note 4). |
Real Estate Property Investme30
Real Estate Property Investments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Real Estate Property Investments | |
Schedule of real estate acquisitions (in thousands) | A summary of real estate acquisitions for the three months ended March 31, 2016 follows (in thousands): Consideration Assets Acquired (1) Liabilities Net Segment Cash Paid Assumed Real Estate Intangibles Senior housing $ $ $ $ Post-acute/skilled nursing — $ $ $ $ (1) The purchase price allocation is preliminary and may be subject to change. A summary of real estate acquisitions for the three months ended March 31, 2015 follows (in thousands): Consideration Assets Acquired Liabilities Noncontrolling Net Segment Cash Paid Assumed Interest Real Estate Intangibles Senior housing $ $ $ $ $ Medical office — — — $ $ $ $ $ |
Schedule of unaudited pro forma consolidated results of operations (in thousands, except per share amounts) | The following unaudited pro forma consolidated results of operations assume that the RIDEA III acquisition was completed as of January 1, 2014 (in thousands, except per share amounts): Three Months Ended March 31, 2015 Revenues $ Net loss Net loss applicable to HCP, Inc. Basic earnings per common share Diluted earnings per common share |
Schedule of capital improvements (in thousands) | A summary of the Company’s funding for construction, tenant and other capital improvements (in thousands): Three Months Ended March 31, Segment 2016 2015 Senior housing $ $ Post-acute/skilled nursing — Life science Medical office Hospital — $ $ |
Net Investment in Direct Fina31
Net Investment in Direct Financing Leases (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Loans Receivable: | |
Schedule of components of net investment in DFLs (dollars in thousands) | Net investment in direct financing leases (“DFLs”) consisted of the following (dollars in thousands): March 31, December 31, 2016 2015 Minimum lease payments receivable $ $ Estimated residual values Less unearned income Net investment in direct financing leases before allowance Allowance for DFL losses Net investment in direct financing leases $ $ Properties subject to direct financing leases |
Direct Financing Leases | |
Loans Receivable: | |
Summary of the Company's internal ratings for DFLs (dollars in thousands) | The following table summarizes the Company’s internal ratings for DFLs at March 31, 2016 (dollars in thousands): Carrying Percentage of Internal Ratings Segment Amount DFL Portfolio Performing DFLs Watch List DFLs Workout DFLs Senior housing $ 31 $ $ $ — Post-acute/skilled nursing 67 — — Hospital 2 — — $ 100 $ $ $ — |
Loans Receivable (Tables)
Loans Receivable (Tables) - Loans receivable | 3 Months Ended |
Mar. 31, 2016 | |
Loans Receivable: | |
Schedule of loans receivable (in thousands) | The following table summarizes the Company’s loans receivable (in thousands): March 31, 2016 December 31, 2015 Real Estate Other Real Estate Other Secured Secured Total Secured Secured Total Mezzanine (1) (2) $ — $ $ $ — $ $ Other (2) (3) — — Unamortized discounts, fees and costs (1) $ $ $ $ $ $ (1) At March 31, 2016, included £278 million ( $400 million) outstanding and £3 million ( $5 million) of associated unamortized discounts, fees and costs. At December 31, 2015, included £273 million ( $403 million) outstanding and £4 million ( $5 million) of associated unamortized discounts, fees and costs. (2) At March 31, 2016 , the Company had £43 million ( $62 million) remaining under its commitments to fund development projects and capital expenditures under its United Kingdom (“U.K.”) development projects. (3) At March 31, 2016, the Company had $2 million remaining of commitments to fund development projects and capital expenditures under the senior housing development loan program. |
Summary of the Company's internal ratings for loans receivable (dollars in thousands) | The following table summarizes the Company’s internal ratings for loans receivable at March 31, 2016 (dollars in thousands): Carrying Percentage of Internal Ratings Investment Type Amount Loan Portfolio Performing Loans Watch List Loans Workout Loans Real estate secured $ 15 $ $ — $ — Other secured 85 — — $ 100 $ $ — $ — |
Investments in and Advances t33
Investments in and Advances to Unconsolidated Joint Ventures (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Investments in and Advances to Unconsolidated Joint Ventures | |
Company owned interests in entities, accounted under equity method (dollars in thousands) | The Company owns interests in the following entities that are accounted for under the equity method at March 31, 2016 (dollars in thousands): Entity (1) Segment Carrying Amount Ownership% CCRC JV (2) Senior housing $ 49 HCRMC (3) Senior housing and post-acute/skilled nursing — 9 MBK JV (4) Senior housing 50 HCP Ventures III, LLC Medical office 30 HCP Ventures IV, LLC Medical office and hospital 20 HCP Life Science (5) Life science – 63 Vintage Park Development JV Senior housing 85 MBK Development JV (4) Senior housing 50 Suburban Properties, LLC Medical office 67 K&Y (6) Post-acute/skilled nursing 8 0 Advances to unconsolidated joint ventures, net and other $ (1) These entities are not consolidated because the Company does not control, through voting rights or other means, the joint ventures. (2) Includes two unconsolidated joint ventures in a RIDEA structure (CCRC PropCo and CCRC OpCo). (3) In December 2014, September 2015 and December 2015, the Company recognized impairment charges of $36 million, $27 million and $19 million, respectively. (4) Includes two unconsolidated joint ventures in a RIDEA structure (PropCo and OpCo). (5) Includes three unconsolidated joint ventures between the Company and an institutional capital partner. HCP Life Science includes the following partnerships (and the Company’s ownership percentage): (i) Torrey Pines Science Center, LP ( 50% ); (ii) Britannia Biotech Gateway, LP ( 55% ); and (iii) LASDK, LP ( 63% ). (6) Includes three unconsolidated joint ventures. |
Summarized combined financial information for equity method investments (in thousands) | Summarized combined financial information for the Company’s equity method investments (in thousands): March 31, December 31, 2016 2015 Real estate, net $ $ Goodwill and other assets, net Assets held for sale Total assets $ $ Capital lease obligations and mortgage debt $ $ Accounts payable Liabilities and mortgage debt held for sale Other partners’ capital HCP’s capital (1) Total liabilities and partners’ capital $ $ (1) The combined basis difference of the Company’s investments in these joint ventures of $35 million, as of March 31, 2016 , is attributable to goodwill, real estate, capital lease obligations, deferred tax assets and lease-related net intangibles. Three Months Ended March 31, 2016 2015 Total revenues $ $ Income (loss) from discontinued operations Net (loss) income HCP’s share of earnings (1) Fees earned by HCP Distributions received by HCP (1) The Company’s joint venture interest in HCRMC is accounted for using the equity method and results in an elimination of DFL income proportional to HCP’s ownership in HCRMC. The elimination of the respective proportional lease expense at the HCRMC level in substance resulted in $16 million of DFL income that was recharacterized to the Company’s share of earnings from HCRMC (equity income from unconsolidated joint ventures) for the three months ended March 31, 2015 . Beginning in January 2016, income will be recognized only if cash distributions are received from HCRMC; as a result, the Company no longer recharacterizes (eliminates) its proportional ownership share of income from DFLs to equity income (loss) from unconsolidated joint ventures. |
Other Assets (Tables)
Other Assets (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Other Assets | |
Schedule of other assets (in thousands) | A summary of the Company’s other assets (in thousands): March 31, December 31, 2016 2015 Straight-line rent receivables, net of allowance of $33,012 and $33,648 , respectively $ $ Marketable debt securities, net Leasing costs and inducements, net Goodwill Other Total other assets $ $ |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt | |
Summary of senior notes issuances (dollars in thousands) | The following table summarizes the Company’s senior unsecured notes issuances for the periods presented (dollars in thousands): Issuance Period Amount Coupon Rate Maturity Date Net Proceeds Year ended December 31, 2015: January 21, 2015 $ % $ May 20, 2015 $ % $ December 1, 2015 $ % $ |
Summary of senior notes payoffs (dollars in thousands) | The following table summarizes the Company’s senior unsecured notes payoffs for the periods presented (dollars in thousands): Period Amount Coupon Rate Three months ended March 31, 2016: February 1, 2016 $ % Year ended December 31, 2015: March 1, 2015 $ % June 8, 2015 $ % |
Summary of stated debt maturities and scheduled principal repayments (in thousands) | The following table summarizes the Company’s stated debt maturities and scheduled principal repayments at March 31, 2016 , (in thousands): Senior Bank Line of Unsecured Mortgage Year Credit (1) Term Loans (2) Notes (3) Debt (4) Total (5) 2016 (nine months) $ — $ $ $ $ 2017 — — 2018 — 2019 — 2020 — — Thereafter — — Discounts, net — $ $ $ $ $ (1) Includes £275 million ( $395 million) translated into U.S. dollars (“USD”). (2) Represents £357 million translated into USD. (3) Interest rates on senior unsecured notes ranged from 2.79% to 6.88% with a weighted average effective interest rate of 4.72% and a weighted average maturity of six years. (4) Interest rates on the mortgage debt ranged from 3.11% to 8.35% with a weighted average effective interest rate of 6.22% and a weighted average maturity of two years. (5) Excludes $ 95 million of other debt that represents Life Care Bonds and Demand Notes that have no scheduled maturities. |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Equity | |
Schedule of common stock, cash dividends | Amount Dividend Declaration Date Record Date Per Share Payable Date January 28 February 8 $ February 23 April 27 May 9 May 24 |
Schedule of company's other common stock activities (shares in thousands) | The following is a summary of the Company’s other common stock activities (shares in thousands): Three Months Ended March 31, 2016 2015 Dividend Reinvestment and Stock Purchase Plan Conversion of DownREIT units (1) Exercise of stock options Vesting of restricted stock units Repurchase of common stock (1) Non-managing member limited liability company (“LLC”) units. |
Schedule of accumulated other comprehensive loss (in thousands) | The following is a summary of the Company’s accumulated other comprehensive loss (in thousands): March 31, December 31, 2016 2015 Cumulative foreign currency translation adjustment $ $ Unrealized losses on cash flow hedges, net Supplemental Executive Retirement Plan minimum liability Unrealized (losses) gains on available for sale securities Total accumulated other comprehensive loss $ $ |
Segment Disclosures (Tables)
Segment Disclosures (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Disclosures | |
Summary financial information of reportable segment (in thousands) | Summary information for the reportable segments (in thousands): For the three months ended March 31, 2016 : Senior Post-acute/ Life Medical Housing Skilled Nursing Science Office Hospital Total Rental revenues (1) $ $ $ $ $ $ Resident fees and services — — — — Operating expenses NOI Non-cash adjustments to NOI (2) Adjusted (cash) NOI Adjusted (cash) NOI from unconsolidated joint ventures — Interest income — — — Portfolio Income $ $ $ $ $ Addback non-cash adjustments Investment management fee income Interest expense Depreciation and amortization General and administrative expenses Acquisition and pursuit costs Other income, net Income tax expense Equity loss in unconsolidated joint ventures, excluding adjusted (cash) NOI Net income $ For the three months ended March 31, 2015 : Senior Post-acute/ Life Medical Housing Skilled Nursing Science Office Hospital Total Rental revenues (1) $ $ $ $ $ $ Resident fees and services — — — — Operating expenses NOI Non-cash adjustments to NOI (2) Adjusted (cash) NOI Adjusted (cash) NOI from unconsolidated joint ventures — — Interest income — — — Portfolio Income $ $ $ $ $ Addback non-cash adjustments Investment management fee income Interest expense Depreciation and amortization General and administrative expenses Acquisition and pursuit costs Impairment Gain on sales of real estate Other income, net Income tax benefit Equity loss in unconsolidated joint ventures, excluding adjusted (cash) NOI Net loss $ (1) Represents rental and related revenues, tenant recoveries and income from DFLs. (2) Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles and lease termination fees. |
Reconciliation of company's assets to total assets (in thousands) | A summary of the Company’s total assets by segment (in thousands): March 31, December 31, Segment 2016 2015 Senior housing $ $ Post-acute/skilled nursing Life science Medical office Hospital Gross segment assets Accumulated depreciation and amortization Net segment assets Real estate assets held for sale, net Other non-segment assets Total assets $ $ |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Common Share | |
Computation of basic and diluted earnings per share (in thousands, except per share amounts) | The following table illustrates the computation of basic and diluted earnings per share (in thousands, except per share amounts): Three Months Ended March 31, 2016 2015 Numerator Net income (loss) $ $ Noncontrolling interests’ share in earnings Net income (loss) attributable to HCP, Inc. Participating securities’ share in earnings Net income (loss) applicable to common shares $ $ Denominator Basic weighted average common shares Dilutive potential common shares — Diluted weighted average common shares Earnings per common share Basic $ $ Diluted $ $ |
Supplemental Cash Flow Inform39
Supplemental Cash Flow Information (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Supplemental Cash Flow Information | |
Supplemental cash flow information (in thousands) | The following table provides supplemental cash flow information (in thousands): Three Months Ended March 31, 2016 2015 Supplemental cash flow information: Interest paid, net of capitalized interest $ $ Income taxes paid Capitalized interest Supplemental schedule of non-cash investing activities: Accrued construction costs Settlement of HCRMC Tranche A DRO as consideration for DFL acquisition — Tenant funded tenant improvements owned by HCP Supplemental schedule of non-cash financing activities: Vesting of restricted stock units Conversion of non-managing member units into common stock Noncontrolling interest issued in connection with real estate acquisitions — Other liabilities assumed with real estate acquisitions Unrealized (losses) gains on available-for-sale securities and derivatives designated as cash flow hedges, net |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Variable Interest Entities | |
Schedule of Variable Interest Entities (in thousands) | Maximum Loss Carrying VIE Type Exposure (1) Asset/Liability Type Amount HCRMC $ Net investment in DFLs and investments in unconsolidated joint ventures $ VIE tenants—DFLs Net investment in DFLs VIE tenants—operating leases Lease intangibles, net and straight-line rent receivables CCRC OpCo Investments in unconsolidated joint ventures Four Seasons Loans and marketable debt securities Vintage Park Development JV Investments in unconsolidated joint ventures CMBS and LLC investments Marketable debt and cost method investments (1) The Company’s maximum loss exposure related to HCRMC, VIE tenants, CCRC OpCo, Vintage Park Development JV, loan and marketable debt securities, and LLC investments to VIE borrowers represents the aggregate carrying amount of such investments (including accrued interest). The Company’s maximum loss exposure may be mitigated by re-leasing the underlying properties to new tenants upon an event of default. |
Concentration of Credit Risk (T
Concentration of Credit Risk (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Summary of consolidated financial information (in millions) | March 31, December 31, 2016 2015 Real estate and other property, net $ $ Cash and cash equivalents Goodwill, intangible and other assets, net Total assets $ $ Debt and financing obligations $ $ Accounts payable, accrued liabilities and other Total equity Total liabilities and equity $ $ Three Months Ended March 31, 2016 2015 Revenues $ $ Operating, general and administrative expense Depreciation and amortization expense Interest expense Other income, net Gain on disposal of assets — (Loss) income from continuing operations before income tax (expense) benefit Income tax benefit (expense) (Loss) income from continuing operations Income from discontinued operations, net of taxes Net (loss) income $ $ |
Tenants and Operators | |
Schedule of concentration of credit risk | Percentage of Percentage of Total Company Gross Assets Total Company Revenues March 31, December 31, Three Months Ended March 31, Operators 2016 2015 2016 2015 HCRMC % % % % Brookdale % % % % |
Senior housing | Tenants and Operators | |
Schedule of concentration of credit risk | Percentage of Percentage of Senior Housing Gross Assets Senior Housing Revenues March 31, December 31, Three Months Ended March 31, Operators 2016 2015 2016 2015 Brookdale % % % % HCRMC % % % % |
Post-acute/skilled | Tenants and Operators | |
Schedule of concentration of credit risk | Percentage of Post-Acute/ Percentage of Post-Acute/ Skilled Nursing Gross Assets Skilled Nursing Revenues March 31, December 31, Three Months Ended March 31, Operators 2016 2015 2016 2015 HCRMC % % % % |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Measurements | |
Fair value measurements of financial assets and liabilities (in thousands) | The following table illustrates the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2016 in the consolidated balance sheets (in thousands): Financial Instrument (1) Fair Value Level 1 Level 2 Level 3 Marketable equity securities $ $ $ — $ — Interest-rate swap liabilities — — Currency swap assets — — Warrants — — (1) Interest-rate and currency swaps, as well as common stock warrant fair values, are determined based on observable and unobservable market assumptions utilizing standardized derivative pricing models. |
Summary of the carrying values and fair values of financial instruments (in thousands) | The table below summarizes the carrying values and fair values of the Company’s financial instruments (in thousands): March 31, 2016 December 31, 2015 Carrying Carrying Value Fair Value Value Fair Value Loans receivable, net (2) $ $ $ $ Marketable debt securities (2) Marketable equity securities (1) Warrants (3) Bank line of credit (2) Term loans (2) Senior unsecured notes (1) Mortgage debt (2) Other debt (2) Interest-rate swap assets (2) — — Interest-rate swap liabilities (2) Currency swap assets (2) (1) Level 1: Fair value calculated based on quoted prices in active markets. (2) Level 2: Fair value based on quoted prices for similar or identical instruments in active or inactive markets, respectively, or calculated utilizing standardized pricing models in which significant inputs or value drivers are observable in active markets. (3) Level 3: Fair value determined based on significant unobservable market inputs using standardized derivative pricing models. |
Derivative Financial Instrume43
Derivative Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Financial Instruments | |
Schedule of derivative instruments (dollars and GBP in thousands) | The following table summarizes the Company’s outstanding interest-rate and foreign currency swap contracts as of March 31, 2016 (dollars and GBP in thousands): Fixed Hedge Rate/Buy Floating/Exchange Notional/ Date Entered Maturity Date Designation Amount Rate Index Sell Amount Fair Value (1) Interest rate: July 2005 (2) July 2020 Cash Flow % BMA Swap Index $ $ November 2008 (3) October 2016 Cash Flow % 1 Month LIBOR+ 1.50 % $ $ July 2012 (4) June 2016 Cash Flow % 1 Month GBP LIBOR+ 1.20 % £ $ January 2015 (4) October 2017 Cash Flow % 1 Month GBP LIBOR+ 0.975 % £ $ Foreign currency: July 2012 (5) June 2016 N/A $ Buy USD/Sell GBP £ $ January 2015 (6) October 2017 Cash Flow $ Buy USD/Sell GBP £ $ (1) Derivative assets are recorded in other assets, net and derivative liabilities are recorded in accounts payable and accrued liabilities on the consolidated balance sheets. (2) Represents three interest-rate swap contracts, which hedge fluctuations in interest payments on variable-rate secured debt due to overall changes in hedged cash flows. (3) Represents an interest-rate swap contract, which hedges fluctuations in interest payments on variable-rate secured debt due to overall changes in hedged cash flows. (4) Hedges fluctuations in interest payments on variable-rate unsecured debt due to fluctuations in the underlying benchmark interest rate. (5) Currency swap contract (buy USD/sell GBP) hedges the foreign currency exchange risk related to a portion of the Company’s forecasted interest receipts on British pound sterling (“GBP”) denominated senior notes. Represents a currency swap to sell £7.2 million at a rate of 1.5695 in June 2016. (6) Currency swap contract (buy USD/sell GBP) hedges the foreign currency exchange risk related to the Company’s forecasted GBP denominated interest receipts on its HC-One Facility. Represents a currency swap to sell approximately £1.0 million monthly at a rate of 1.5149 through October 2017. |
Schedule of effect of change in interest and foreign currency rate (dollars in thousands) | The following table summarizes the results of the analysis performed (dollars in thousands): Effects of Change in Interest and Foreign Currency Rates +50 Basis -50 Basis +100 Basis -100 Basis Date Entered Maturity Date Points Points Points Points Interest rate: July 2005 July 2020 $ $ $ $ November 2008 October 2016 July 2012 June 2016 January 2015 October 2017 Foreign currency: July 2012 June 2016 January 2015 October 2017 |
Real Estate Property Investme44
Real Estate Property Investments (Details) $ / shares in Units, $ in Thousands | Jun. 30, 2015USD ($) | Mar. 29, 2015USD ($) | May. 31, 2016USD ($)propertyitem | Jun. 30, 2015USD ($)propertyitem | Mar. 31, 2016USD ($) | Mar. 31, 2015USD ($)$ / shares |
Acquisition | ||||||
Net termination fee revenue | $ 1,103 | |||||
Real estate acquisitions | ||||||
Consideration, Cash Paid | $ 94,271 | 34,248 | ||||
Consideration, Liabilities assumed | 1,200 | 626 | ||||
Consideration, Noncontrolling Interest | 1,306 | |||||
Assets Acquired, Real Estate | 88,471 | 34,530 | ||||
Assets Acquired, Net Intangibles | 7,000 | 1,650 | ||||
Funding for construction, tenant and other capital improvements | 109,503 | 64,793 | ||||
Senior housing | ||||||
Real estate acquisitions | ||||||
Consideration, Cash Paid | 76,362 | 34,068 | ||||
Consideration, Liabilities assumed | 1,200 | 626 | ||||
Consideration, Noncontrolling Interest | 1,306 | |||||
Assets Acquired, Real Estate | 71,875 | 34,350 | ||||
Assets Acquired, Net Intangibles | 5,687 | 1,650 | ||||
Funding for construction, tenant and other capital improvements | 39,513 | 16,172 | ||||
Post-acute/skilled | ||||||
Real estate acquisitions | ||||||
Consideration, Cash Paid | 17,909 | |||||
Assets Acquired, Real Estate | 16,596 | |||||
Assets Acquired, Net Intangibles | 1,313 | |||||
Funding for construction, tenant and other capital improvements | 1,960 | |||||
Aggregate purchase price | $ 275,000 | 275,000 | ||||
Life science | ||||||
Real estate acquisitions | ||||||
Funding for construction, tenant and other capital improvements | 39,070 | 27,391 | ||||
Medical office | ||||||
Real estate acquisitions | ||||||
Consideration, Cash Paid | 180 | |||||
Assets Acquired, Real Estate | 180 | |||||
Funding for construction, tenant and other capital improvements | $ 30,920 | 19,233 | ||||
Hospital | ||||||
Real estate acquisitions | ||||||
Funding for construction, tenant and other capital improvements | 37 | |||||
RIDEA III | ||||||
Acquisition | ||||||
Assets Acquired, Working Capital | $ 7,000 | $ 7,000 | ||||
Net termination fee revenue | 8,000 | |||||
Stabilized occupancy rate (as a percent) | 80.00% | |||||
Unaudited pro forma consolidated results of operations | ||||||
Revenues | 654,354 | |||||
Net (loss) income | (233,598) | |||||
Net (loss) income applicable to HCP, Inc. | $ (237,099) | |||||
Basic earnings per common share (in dollars per share) | $ / shares | $ (0.51) | |||||
Diluted earnings per common share (in dollars per share) | $ / shares | $ (0.51) | |||||
Real estate acquisitions | ||||||
Consideration, Cash Paid | 770,000 | |||||
Consideration, Liabilities assumed | 32,000 | 32,000 | ||||
Consideration, Noncontrolling Interest | 29,000 | 29,000 | ||||
Assets Acquired, Real Estate | 771,000 | 771,000 | ||||
Assets Acquired, Net Intangibles | $ 53,000 | $ 53,000 | ||||
RIDEA III | Subsequent event | ||||||
Acquisition | ||||||
Number of facilities acquired | property | 7 | |||||
Number of Units Acquired | item | 526 | |||||
Real estate acquisitions | ||||||
Consideration, Liabilities assumed | $ 75,000 | |||||
Aggregate purchase price | $ 190,000 | |||||
Stated interest rate (as a percent) | 4.00% | |||||
Parent ownership percentage (as a percent) | 100.00% | |||||
RIDEA III | Brookdale JV | ||||||
Acquisition | ||||||
Number of individual leases | property | 2 | |||||
Number of Units Acquired | item | 5,025 | |||||
Noncontrolling interest (as a percent) | 10.00% | |||||
Management Agreement Term | 7 years | |||||
RIDEA III | Senior housing | Brookdale JV | ||||||
Acquisition | ||||||
Number of facilities acquired | property | 35 |
Dispositions of Real Estate (De
Dispositions of Real Estate (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Apr. 30, 2016USD ($) | Mar. 31, 2015USD ($)property | Mar. 31, 2016USD ($)item | Dec. 31, 2015USD ($)item | |
Dispositions of Real Estate | ||||
Real estate assets held for sale, net | $ 311,243 | $ 314,126 | ||
Senior housing | ||||
Dispositions of Real Estate | ||||
Number of properties disposed | property | 8 | |||
Total consideration for disposition of real estate | $ 51,000 | |||
Life science | ||||
Dispositions of Real Estate | ||||
Number of properties classified as held for sale | item | 4 | 4 | ||
Real estate assets held for sale, net | $ 43,000 | |||
Life science | Subsequent event | ||||
Dispositions of Real Estate | ||||
Total consideration for disposition of real estate | $ 74,000 |
Net Investment in Direct Fina46
Net Investment in Direct Financing Leases (Details) $ in Thousands | Apr. 01, 2016 | Apr. 01, 2015 | Mar. 29, 2015USD ($)property | May. 31, 2016facility | Dec. 31, 2015USD ($)property | Mar. 31, 2015USD ($) | Mar. 31, 2016USD ($)property | Dec. 31, 2015USD ($)property | Mar. 31, 2015USD ($)property | Dec. 31, 2015USD ($)property | Dec. 31, 2011USD ($)property | May. 09, 2016property | Sep. 30, 2015USD ($) | Feb. 28, 2015USD ($) | Sep. 30, 2013item |
Net Investment in Direct Financing Leases | |||||||||||||||
Minimum lease payments receivable | $ 26,283,392 | $ 26,044,849 | $ 26,283,392 | $ 26,283,392 | |||||||||||
Estimated residual values | 3,900,679 | 3,930,300 | 3,900,679 | 3,900,679 | |||||||||||
Less unearned income | (23,462,022) | (23,300,899) | (23,462,022) | (23,462,022) | |||||||||||
Net investment in direct financing leases before allowance | 6,722,049 | 6,674,250 | 6,722,049 | 6,722,049 | |||||||||||
Allowance for DFL losses | (817,040) | (817,040) | (817,040) | (817,040) | |||||||||||
Net investment in direct financing leases | $ 5,905,009 | $ 5,857,210 | $ 5,905,009 | $ 5,905,009 | |||||||||||
Properties subject to direct financing leases | property | 348 | 340 | 348 | 348 | |||||||||||
DFL income | $ 127,968 | $ 167,078 | |||||||||||||
Number of facility sales closed | property | 11 | 22 | 33 | ||||||||||||
Sales price | $ 62,000 | $ 219,000 | |||||||||||||
Percentage of DFL Portfolio | 100.00% | ||||||||||||||
Subsequent event | |||||||||||||||
Net Investment in Direct Financing Leases | |||||||||||||||
Number of non-strategic assets involved in sales transaction | facility | 17 | ||||||||||||||
HCRMC | |||||||||||||||
Net Investment in Direct Financing Leases | |||||||||||||||
Net investment in direct financing leases | $ 5,200,000 | $ 6,100,000 | $ 5,200,000 | $ 6,100,000 | 5,200,000 | $ 6,000,000 | $ 6,600,000 | ||||||||
Number of Facilities Acquired | property | 334 | ||||||||||||||
Number of non-strategic assets involved in sales transaction | property | 50 | ||||||||||||||
Annual rent reduction on sold properties, as a percent of the sales proceeds | 7.75% | ||||||||||||||
Reduction in initial net annual rent due to lease amendment | $ 68,000 | ||||||||||||||
Annual rent under Master Agreement | $ 473,000 | $ 541,000 | |||||||||||||
Minimum rent escalation during the initial term (as a percent) | 3.00% | ||||||||||||||
Increase in Rent, first two years (as a percent) | 3.50% | ||||||||||||||
Increase in Rent, afterwards (as a percent) | 3.00% | ||||||||||||||
Period of extension of initial term of lease | 5 years | ||||||||||||||
Average lease term | 16 years | ||||||||||||||
Deferred lease obligation | 525,000 | ||||||||||||||
Expected Annual Rent | 19,000 | ||||||||||||||
Impairment charges related to investments in DFLs | $ 478,000 | 817,000 | |||||||||||||
Federal and state built-in gain tax from assets sold | $ 2,000,000 | ||||||||||||||
Federal and state built-in gain tax from assets sold, term | 10 years | ||||||||||||||
Federal built-in gain tax from assets sold, federal term | 5 years | ||||||||||||||
State built-in gain from assets sold | 49,000 | ||||||||||||||
Direct Financing Lease Tranche A [Member] | HCRMC | |||||||||||||||
Net Investment in Direct Financing Leases | |||||||||||||||
Deferred lease obligation | $ 275,000 | ||||||||||||||
Direct Financing Lease Rental Factor, first period (as a percent) | 6.90% | ||||||||||||||
Expected Annual Rent | $ 19,000 | ||||||||||||||
Direct Financing Lease Tranche B [Member] | HCRMC | |||||||||||||||
Net Investment in Direct Financing Leases | |||||||||||||||
Deferred lease obligation | $ 250,000 | ||||||||||||||
Direct Financing Lease Rental Factor, first period (as a percent) | 3.00% | ||||||||||||||
Direct Financing Lease Rental Factor, second period (as a percent) | 4.00% | ||||||||||||||
Direct Financing Lease Rental Factor, third period (as a percent) | 5.00% | ||||||||||||||
Direct Financing Lease Rental Factor, fourth period (as a percent) | 6.00% | ||||||||||||||
Direct Financing Leases | |||||||||||||||
Net Investment in Direct Financing Leases | |||||||||||||||
DFL income | $ 3,000 | 4,000 | |||||||||||||
Cash payments received | 4,000 | 5,000 | |||||||||||||
Performing Loans | |||||||||||||||
Net Investment in Direct Financing Leases | |||||||||||||||
Net investment in direct financing leases | 385,656 | ||||||||||||||
Watch List Loans | |||||||||||||||
Net Investment in Direct Financing Leases | |||||||||||||||
Net investment in direct financing leases | 5,471,554 | ||||||||||||||
Senior housing | |||||||||||||||
Net Investment in Direct Financing Leases | |||||||||||||||
Net investment in direct financing leases | $ 1,794,409 | ||||||||||||||
Percentage of DFL Portfolio | 31.00% | ||||||||||||||
Senior housing | Direct Financing Leases | |||||||||||||||
Net Investment in Direct Financing Leases | |||||||||||||||
Net investment in direct financing leases | $ 366,000 | $ 364,000 | 366,000 | 366,000 | |||||||||||
Properties subject to direct financing leases | item | 14 | ||||||||||||||
Senior housing | Performing Loans | |||||||||||||||
Net Investment in Direct Financing Leases | |||||||||||||||
Net investment in direct financing leases | 261,765 | ||||||||||||||
Senior housing | Watch List Loans | |||||||||||||||
Net Investment in Direct Financing Leases | |||||||||||||||
Net investment in direct financing leases | 1,532,644 | ||||||||||||||
Post-acute/skilled | |||||||||||||||
Net Investment in Direct Financing Leases | |||||||||||||||
Net investment in direct financing leases | 3,938,910 | ||||||||||||||
Number of Facilities | property | 9 | ||||||||||||||
Acquisition of facility | $ 275,000 | $ 275,000 | |||||||||||||
Percentage of DFL Portfolio | 67.00% | ||||||||||||||
Post-acute/skilled | Watch List Loans | |||||||||||||||
Net Investment in Direct Financing Leases | |||||||||||||||
Net investment in direct financing leases | $ 3,938,910 | ||||||||||||||
Hospital | |||||||||||||||
Net Investment in Direct Financing Leases | |||||||||||||||
Net investment in direct financing leases | $ 123,891 | ||||||||||||||
Percentage of DFL Portfolio | 2.00% | ||||||||||||||
Hospital | Performing Loans | |||||||||||||||
Net Investment in Direct Financing Leases | |||||||||||||||
Net investment in direct financing leases | $ 123,891 | ||||||||||||||
HCRMC | |||||||||||||||
Net Investment in Direct Financing Leases | |||||||||||||||
Net investment in direct financing leases | 5,200,000 | 5,100,000 | 5,200,000 | 5,200,000 | |||||||||||
Carrying value, equity method investments | $ 0 | $ 0 | $ 0 | ||||||||||||
DFL accretion | 21,000 | ||||||||||||||
DFL income | 113,000 | 152,000 | |||||||||||||
Cash payments received | $ 113,000 | $ 131,000 |
Loans Receivable (Details)
Loans Receivable (Details) $ in Thousands, £ in Millions | 3 Months Ended | ||||
Mar. 31, 2016GBP (£) | Mar. 31, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015GBP (£) | Dec. 31, 2015USD ($) | |
Loans Receivable: | |||||
Mezzanine | $ 657,235 | $ 660,138 | |||
Mezzanine | £ 278 | 400,000 | £ 273 | 403,000 | |
Loans receivable, other | 116,818 | 114,322 | |||
Unamortized premiums (discounts), fees and costs | (5,157) | (5,717) | |||
Unamortized premiums (discounts), fees and costs | 3 | 5,000 | £ 4 | 5,000 | |
Loans receivable, net | $ 768,896 | 768,743 | |||
Remaining commitments to fund development projects | £ 43 | $ 62,000 | |||
Percentage of Loan Portfolio | 100.00% | 100.00% | |||
Performing Loans | |||||
Loans Receivable: | |||||
Loans receivable, net | $ 768,896 | ||||
Real Estate Secured | |||||
Loans Receivable: | |||||
Loans receivable, other | 116,818 | 114,322 | |||
Unamortized premiums (discounts), fees and costs | 826 | 961 | |||
Loans receivable, net | $ 117,644 | 115,283 | |||
Remaining commitments to fund development projects | $ 2,000 | ||||
Percentage of Loan Portfolio | 15.00% | 15.00% | |||
Real Estate Secured | Performing Loans | |||||
Loans Receivable: | |||||
Loans receivable, net | $ 117,644 | ||||
Other Secured | |||||
Loans Receivable: | |||||
Mezzanine | 657,235 | 660,138 | |||
Unamortized premiums (discounts), fees and costs | (5,983) | (6,678) | |||
Loans receivable, net | $ 651,252 | $ 653,460 | |||
Percentage of Loan Portfolio | 85.00% | 85.00% | |||
Other Secured | Performing Loans | |||||
Loans Receivable: | |||||
Loans receivable, net | $ 651,252 |
Loans Receivable - Other Secure
Loans Receivable - Other Secured Loans (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2015GBP (£) | Sep. 30, 2015GBP (£)property | Apr. 30, 2015GBP (£)property | Feb. 28, 2015GBP (£) | Feb. 28, 2015USD ($) | Nov. 30, 2014GBP (£)propertyitem | Nov. 30, 2014USD ($)propertyitem | Mar. 31, 2016USD ($)property | Dec. 31, 2015GBP (£) | Dec. 31, 2015USD ($) | Dec. 31, 2015USD ($) | May. 31, 2015USD ($) | Feb. 28, 2015USD ($) | Jun. 30, 2013USD ($) | Jul. 31, 2012USD ($) | Jun. 30, 2012GBP (£) | |
Loans Receivable: | ||||||||||||||||
Loans receivable, other | $ 116,818 | $ 114,322 | ||||||||||||||
Amount draw on the revolving line of credit facility | 422,897 | |||||||||||||||
Loan amount outstanding | $ 810,313 | 397,432 | ||||||||||||||
NHP[Member] | ||||||||||||||||
Loans Receivable: | ||||||||||||||||
Number of facilities | property | 273 | 273 | ||||||||||||||
Number of beds acquired | item | 12,500 | 12,500 | ||||||||||||||
HC-One Facility | ||||||||||||||||
Loans Receivable: | ||||||||||||||||
Number of facilities | property | 36 | |||||||||||||||
Loan facility maximum | £ 502,000,000 | £ 395,000,000 | $ 795,000 | |||||||||||||
Amount draw on the revolving line of credit facility | £ 363,000,000 | $ 574,000 | ||||||||||||||
Term of facility | 5 years | 5 years | ||||||||||||||
Increase in loan facility | £ 11,000,000 | £ 108,000,000 | $ 164,000 | |||||||||||||
Amount of facility converted into sale-leaseback transaction | £ | £ 174,000,000 | |||||||||||||||
Paydowns received | £ | £ 34,000,000 | |||||||||||||||
Non-call period shortened | 17 months | |||||||||||||||
Number of properties spinoff into a separate joint venture | property | 36 | 36 | ||||||||||||||
Term to retain security over the spinoff properties | 2 years | |||||||||||||||
Cash payments received from borrower | £ 34,000,000 | $ 52,000 | ||||||||||||||
Loan amount outstanding | $ 395,000 | |||||||||||||||
Tandem Health Care Loan | ||||||||||||||||
Loans Receivable: | ||||||||||||||||
Loan facility maximum | $ 205,000 | |||||||||||||||
Loans receivable, other | $ 256,000 | |||||||||||||||
Loan receivable, interest rate payable (as a percent) | 11.50% | |||||||||||||||
Loan receivable subordinated to senior mortgage debt | $ 380,000 | |||||||||||||||
Tandem Health Care Loan - First Tranche | ||||||||||||||||
Loans Receivable: | ||||||||||||||||
Loans receivable, other | $ 100,000 | |||||||||||||||
Loan receivable, interest rate payable (as a percent) | 12.00% | |||||||||||||||
Tandem Health Care Loan - Second Tranche | ||||||||||||||||
Loans Receivable: | ||||||||||||||||
Loans receivable, other | $ 102,000 | |||||||||||||||
Loan receivable, interest rate payable (as a percent) | 14.00% | |||||||||||||||
Tandem Health Care Loan Third Tranche [Member] | ||||||||||||||||
Loans Receivable: | ||||||||||||||||
Loans receivable, other | $ 50,000 | |||||||||||||||
Loan receivable, interest rate payable (as a percent) | 6.00% | |||||||||||||||
Tandem Health Care Loan Fourth Tranche [Member] | ||||||||||||||||
Loans Receivable: | ||||||||||||||||
Loans receivable, other | $ 5,000 | |||||||||||||||
Loan receivable, interest rate payable (as a percent) | 6.00% | |||||||||||||||
Four Seasons | ||||||||||||||||
Loans Receivable: | ||||||||||||||||
Marketable debt security, par value | £ 28,000,000 | 28,000,000 | $ 42,000 | £ 138,500,000 | ||||||||||||
Marketable debt security, issued and outstanding | £ | £ 40,000,000 | £ 40,000,000 | ||||||||||||||
Four Seasons | LIBOR | ||||||||||||||||
Loans Receivable: | ||||||||||||||||
Loan, basis spread on variable rate | 6.00% |
Investments in and Advances t49
Investments in and Advances to Unconsolidated Joint Ventures - Equity Method Investments (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | |||
Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2014USD ($) | Mar. 31, 2016USD ($)item | Mar. 30, 2015 | |
Company owned interests in entities, accounted under equity method: | |||||
Investments in and advances to unconsolidated joint ventures | $ 605,244 | $ 608,665 | |||
Number of unconsolidated joint ventures | item | 4 | ||||
CCRC JV | Senior housing | |||||
Company owned interests in entities, accounted under equity method: | |||||
Number of unconsolidated joint ventures | item | 2 | ||||
CCRC JV | Senior housing | |||||
Company owned interests in entities, accounted under equity method: | |||||
Investments in and advances to unconsolidated joint ventures | $ 462,545 | ||||
Investment ownership percentage | 49.00% | ||||
HCRMC | |||||
Company owned interests in entities, accounted under equity method: | |||||
Other than temporary impairment charge | $ 19,000 | $ 27,000 | $ 36,000 | ||
HCRMC | Post-acute/skilled | |||||
Company owned interests in entities, accounted under equity method: | |||||
Investment ownership percentage | 9.00% | ||||
MBK JV and MBK Development JV | Senior housing | |||||
Company owned interests in entities, accounted under equity method: | |||||
Number of unconsolidated joint ventures | item | 2 | ||||
MBK JV | Senior housing | |||||
Company owned interests in entities, accounted under equity method: | |||||
Investments in and advances to unconsolidated joint ventures | $ 43,384 | ||||
Investment ownership percentage | 50.00% | 50.00% | |||
MBK Development JV | Senior housing | |||||
Company owned interests in entities, accounted under equity method: | |||||
Investments in and advances to unconsolidated joint ventures | $ 2,470 | ||||
Investment ownership percentage | 50.00% | ||||
HCP Ventures III, LLC | Medical office | |||||
Company owned interests in entities, accounted under equity method: | |||||
Investments in and advances to unconsolidated joint ventures | $ 9,342 | ||||
Investment ownership percentage | 30.00% | ||||
HCP Ventures IV | Hospital and medical office segments | |||||
Company owned interests in entities, accounted under equity method: | |||||
Investments in and advances to unconsolidated joint ventures | $ 7,236 | ||||
Investment ownership percentage | 20.00% | ||||
HCP Life Science | Life science | |||||
Company owned interests in entities, accounted under equity method: | |||||
Investments in and advances to unconsolidated joint ventures | $ 68,688 | ||||
Number of unconsolidated joint ventures | item | 3 | ||||
HCP Life Science | Life science | Minimum | |||||
Company owned interests in entities, accounted under equity method: | |||||
Investment ownership percentage | 50.00% | ||||
HCP Life Science | Life science | Maximum | |||||
Company owned interests in entities, accounted under equity method: | |||||
Investment ownership percentage | 63.00% | ||||
Torrey Pines Science Center, LP | Life science | |||||
Company owned interests in entities, accounted under equity method: | |||||
Investment ownership percentage | 50.00% | ||||
Britannia Biotech Gateway, LP | Life science | |||||
Company owned interests in entities, accounted under equity method: | |||||
Investment ownership percentage | 55.00% | ||||
LASDK, LP | Life science | |||||
Company owned interests in entities, accounted under equity method: | |||||
Investment ownership percentage | 63.00% | ||||
Vintage Park Development JV | Senior housing | |||||
Company owned interests in entities, accounted under equity method: | |||||
Investments in and advances to unconsolidated joint ventures | $ 8,593 | ||||
Investment ownership percentage | 85.00% | ||||
Suburban Properties, LLC | Medical office | |||||
Company owned interests in entities, accounted under equity method: | |||||
Investments in and advances to unconsolidated joint ventures | $ 4,614 | ||||
Investment ownership percentage | 67.00% | ||||
K&Y | Post-acute/skilled | |||||
Company owned interests in entities, accounted under equity method: | |||||
Investments in and advances to unconsolidated joint ventures | $ 1,270 | ||||
Investment ownership percentage | 80.00% | ||||
Advances to unconsolidated joint ventures, net | |||||
Company owned interests in entities, accounted under equity method: | |||||
Investments in and advances to unconsolidated joint ventures | $ 523 |
Investments in and Advances t50
Investments in and Advances to Unconsolidated Joint Ventures - Combined Financial Information for the unconsolidated joint ventures(Details) $ in Thousands | Sep. 25, 2015USD ($)item | Mar. 30, 2015USD ($)property | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2014USD ($) | Mar. 31, 2016USD ($)property | Mar. 31, 2015USD ($)property |
Summarized combined financial information for equity method investments: | |||||||
Real estate, net | $ 4,470,249 | $ 4,471,115 | |||||
Goodwill and other assets, net | 4,935,343 | 4,921,705 | |||||
Assets held for sale | 94,866 | 70,584 | |||||
Total assets | 9,500,458 | 9,463,404 | |||||
Capital lease obligations and mortgage debt | 6,575,531 | 6,526,878 | |||||
Accounts payable | 1,111,350 | 1,147,155 | |||||
Liabilities and mortgage debt held for sale | 6,318 | 4,941 | |||||
Other partners' capital | 1,163,501 | 1,140,381 | |||||
HCP's capital | 643,758 | 644,049 | |||||
Total liabilities and partners' capital | 9,500,458 | 9,463,404 | |||||
Combined basis difference | 35,000 | ||||||
Total revenues | 1,089,911 | $ 1,146,468 | |||||
Income (loss) from discontinued operations | 1,997 | (2,650) | |||||
Net (loss) income | (12,014) | 9,783 | |||||
HCP's share of earnings | (908) | 13,601 | |||||
Fees earned by HCP | 91 | 460 | |||||
Distributions received by HCP | $ 6,925 | 2,181 | |||||
MBK Development JV | |||||||
Subsequent Events | |||||||
Payment to acquire land | $ 3,000 | ||||||
Number of units to be built | item | 74 | ||||||
HCRMC | |||||||
Subsequent Events | |||||||
Other than temporary impairment charge | $ 19,000 | $ 27,000 | $ 36,000 | ||||
HCRMC | Post-acute/skilled | |||||||
Summarized combined financial information for equity method investments: | |||||||
Recharacterized DFL income to equity income | $ 16,000 | ||||||
Subsequent Events | |||||||
Investment ownership percentage | 9.00% | ||||||
MBK JV | |||||||
Subsequent Events | |||||||
Debt related to retirement communities or properties contributed | $ 78,000 | ||||||
MBK JV | Senior housing | |||||||
Subsequent Events | |||||||
Investment ownership percentage | 50.00% | 50.00% | |||||
Cash contributed | $ 27,000 | ||||||
Number of retirement communities | property | 3 | ||||||
MBK JV | Senior housing | MBK | |||||||
Subsequent Events | |||||||
Number of retirement communities contributed to joint venture | property | 3 | 3 | |||||
Fair value of retirement communities or properties contributed | $ 126,000 |
Intangibles (Details)
Intangibles (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Intangibles | ||
Gross intangible lease assets | $ 988 | $ 984 |
Intangible assets, accumulated depreciation and amortization | 403 | 380 |
Gross intangible lease liabilities | 156 | 156 |
Intangible liabilities, accumulated depreciation and amortization | $ 103 | $ 100 |
Other Assets (Details)
Other Assets (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2012GBP (£) | Jun. 30, 2012USD ($) | Mar. 31, 2016USD ($)item | Dec. 31, 2015GBP (£) | Dec. 31, 2015USD ($) | Dec. 31, 2015USD ($) | |
Other assets | ||||||||
Straight-line rent receivables, net of allowance of $33,012 and $33,648, respectively | $ 377,464 | $ 370,296 | ||||||
Allowance on straight-line rent receivables | 33,012 | 33,648 | ||||||
Marketable debt securities, net | 100,915 | 102,958 | ||||||
Leasing costs and inducements, net | 157,443 | 158,708 | ||||||
Goodwill | 50,346 | 50,346 | ||||||
Other | 131,111 | 119,965 | ||||||
Total other assets | 817,279 | 802,273 | ||||||
Loans receivables | 768,896 | 768,743 | ||||||
Four Seasons Health Care Ltd | ||||||||
Other assets | ||||||||
Other-than-temporary impairment on securities | $ 70,000 | $ 42,000 | ||||||
Debt Instrument, Face Amount | £ | £ 175,000,000 | |||||||
Four Seasons | ||||||||
Other assets | ||||||||
Marketable debt securities, net | $ 83,000 | £ 58,000,000 | 85,000 | |||||
Marketable debt security, par value | 138,500,000 | 28,000,000 | 42,000 | |||||
Marketable debt security, issued and outstanding | £ | 40,000,000 | |||||||
Purchase of debt securities | £ 136,800,000 | $ 215,000 | ||||||
Portion of debt held, as a percent. | 79.00% | 79.00% | ||||||
Interest payment received | £ 8,000,000 | $ 13,000 | ||||||
Annual interest rate (as a percent) | 12.25% | |||||||
Brookdale JV | ||||||||
Other assets | ||||||||
Loans receivables | $ 5,000 | $ 9,000 | ||||||
Number of installments | item | 8 |
Debt (Details)
Debt (Details) £ in Millions | Feb. 01, 2016USD ($) | Dec. 01, 2015USD ($) | Jun. 08, 2015USD ($) | May. 20, 2015USD ($) | Mar. 01, 2015USD ($) | Jan. 21, 2015USD ($) | Mar. 31, 2016USD ($) | Mar. 31, 2016GBP (£)item | Mar. 31, 2016USD ($)item | Jan. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Debt Instrument | |||||||||||
Bank line of credit | $ 810,313,000 | $ 397,432,000 | |||||||||
Senior unsecured notes | 8,623,376,000 | 9,120,107,000 | |||||||||
Total debt before discount, net | 10,918,709,000 | ||||||||||
Discounts, net | (77,994,000) | ||||||||||
Debt instruments, carrying amount | 10,840,715,000 | ||||||||||
Other debt | 95,229,000 | $ 94,445,000 | |||||||||
Debt maturing in 2016 | |||||||||||
Debt Instrument | |||||||||||
2016 (Nine months) | 838,430,000 | ||||||||||
Debt maturing in 2017 | |||||||||||
Debt Instrument | |||||||||||
2,017 | 1,331,891,000 | ||||||||||
Debt maturing in 2018 | |||||||||||
Debt Instrument | |||||||||||
2,018 | 1,416,896,000 | ||||||||||
Debt maturing in 2019 | |||||||||||
Debt Instrument | |||||||||||
2,019 | 768,322,000 | ||||||||||
Debt maturing in 2020 | |||||||||||
Debt Instrument | |||||||||||
2,020 | 802,078,000 | ||||||||||
Thereafter | |||||||||||
Debt Instrument | |||||||||||
Thereafter | $ 5,761,092,000 | ||||||||||
Line of Credit and Term Loan | |||||||||||
Debt Instrument | |||||||||||
Debt instrument, covenant debt to assets (as a percent) | 60.00% | 60.00% | |||||||||
Debt instrument, covenant secured debt to assets (as a percent) | 30.00% | 30.00% | |||||||||
Debt instrument, covenant unsecured debt to unencumbered assets (as a percent) | 60.00% | 60.00% | |||||||||
Debt instrument, covenant minimum fixed charge coverage ratio | 1.5 | 1.5 | |||||||||
Bank Line of Credit | |||||||||||
Debt Instrument | |||||||||||
Line of credit facility, maximum borrowing capacity | $ 2,000,000,000 | ||||||||||
Debt instrument, variable rate basis | LIBOR | ||||||||||
Length of debt instrument extension period | 1 year | ||||||||||
Debt instrument, basis spread on variable rate (as a percent) | 0.925% | ||||||||||
Debt instrument, facility fee (as a percent) | 0.15% | ||||||||||
Line of credit facility additional aggregate amount, maximum | $ 500,000,000 | ||||||||||
Bank line of credit | $ 810,000,000 | ||||||||||
Weighted-average interest rate (as a percent) | 1.68% | 1.68% | |||||||||
Debt instrument, covenant net worth | $ 9,500,000,000 | ||||||||||
Line of credit, portion denominated in GBP | £ 275 | 395,000,000 | |||||||||
Total debt before discount, net | 810,313,000 | ||||||||||
Debt instruments, carrying amount | 810,313,000 | ||||||||||
Bank Line of Credit | Debt maturing in 2018 | |||||||||||
Debt Instrument | |||||||||||
2,018 | 810,313,000 | ||||||||||
Term loans | |||||||||||
Debt Instrument | |||||||||||
2016 (Nine months) | £ | £ 357 | ||||||||||
2,019 | $ 357,000,000 | ||||||||||
Total debt before discount, net | 513,188,000 | ||||||||||
Discounts, net | (1,451,000) | ||||||||||
Debt instruments, carrying amount | 511,737,000 | ||||||||||
Term loans | Debt maturing in 2016 | |||||||||||
Debt Instrument | |||||||||||
2016 (Nine months) | 196,938,000 | ||||||||||
Term loans | Debt maturing in 2019 | |||||||||||
Debt Instrument | |||||||||||
2,019 | $ 316,250,000 | ||||||||||
Senior Unsecured Notes | |||||||||||
Debt Instrument | |||||||||||
Weighted-average interest rate (as a percent) | 4.72% | 4.72% | |||||||||
Senior unsecured notes | $ 8,700,000,000 | ||||||||||
Total debt before discount, net | 8,700,000,000 | ||||||||||
Discounts, net | (76,624,000) | ||||||||||
Debt instruments, carrying amount | $ 8,623,376,000 | ||||||||||
Weighted-average maturity | 6 years | ||||||||||
Senior Unsecured Notes | Minimum | |||||||||||
Debt Instrument | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage (as a percent) | 2.79% | 2.79% | |||||||||
Senior Unsecured Notes | Maximum | |||||||||||
Debt Instrument | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage (as a percent) | 6.88% | 6.88% | |||||||||
Senior Unsecured Notes | Debt maturing in 2016 | |||||||||||
Debt Instrument | |||||||||||
2016 (Nine months) | $ 400,000,000 | ||||||||||
Senior Unsecured Notes | Debt maturing in 2017 | |||||||||||
Debt Instrument | |||||||||||
2,017 | 750,000,000 | ||||||||||
Senior Unsecured Notes | Debt maturing in 2018 | |||||||||||
Debt Instrument | |||||||||||
2,018 | 600,000,000 | ||||||||||
Senior Unsecured Notes | Debt maturing in 2019 | |||||||||||
Debt Instrument | |||||||||||
2,019 | 450,000,000 | ||||||||||
Senior Unsecured Notes | Debt maturing in 2020 | |||||||||||
Debt Instrument | |||||||||||
2,020 | 800,000,000 | ||||||||||
Senior Unsecured Notes | Thereafter | |||||||||||
Debt Instrument | |||||||||||
Thereafter | $ 5,700,000,000 | ||||||||||
Senior Unsecured, 3.40% notes due 2025 | |||||||||||
Debt Instrument | |||||||||||
Debt Instrument, Face Amount | $ 600,000,000 | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage (as a percent) | 3.40% | ||||||||||
Net proceeds from issuance of senior unsecured notes | $ 591,000,000 | ||||||||||
Senior Unsecured 4.0% notes due 2025 | |||||||||||
Debt Instrument | |||||||||||
Debt Instrument, Face Amount | $ 750,000,000 | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage (as a percent) | 4.00% | ||||||||||
Net proceeds from issuance of senior unsecured notes | $ 739,000,000 | ||||||||||
Senior Unsecured, 4.0% notes due 2022 | |||||||||||
Debt Instrument | |||||||||||
Debt Instrument, Face Amount | $ 600,000,000 | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage (as a percent) | 4.00% | ||||||||||
Net proceeds from issuance of senior unsecured notes | $ 594,000,000 | ||||||||||
Senior Unsecured Debt 3.75 Percent Incepted February 1 2016 [Member] | |||||||||||
Debt Instrument | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage (as a percent) | 3.75% | ||||||||||
Repayment of senior unsecured notes | $ 500,000,000 | ||||||||||
Senior Unsecured Debt 6.0 Percent Incepted March 1, 2015 | |||||||||||
Debt Instrument | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage (as a percent) | 6.00% | ||||||||||
Repayment of senior unsecured notes | $ 200,000,000 | ||||||||||
Senior Unsecured Debt 7.07 Percent Incepted June 8, 2015 [Member] | |||||||||||
Debt Instrument | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage (as a percent) | 7.072% | ||||||||||
Repayment of senior unsecured notes | $ 200,000,000 | ||||||||||
Mortgage Debt | |||||||||||
Debt Instrument | |||||||||||
Weighted-average interest rate (as a percent) | 6.22% | 6.22% | |||||||||
Number of healthcare facilities used to secure debt | item | 56 | 56 | |||||||||
Debt instrument, collateral, healthcare facilities carrying value | $ 1,100,000,000 | ||||||||||
Total debt before discount, net | 895,208,000 | ||||||||||
Discounts, net | 81,000 | ||||||||||
Debt instruments, carrying amount | $ 895,289,000 | ||||||||||
Weighted-average maturity | 2 years | ||||||||||
Mortgage Debt | Minimum | |||||||||||
Debt Instrument | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage (as a percent) | 3.11% | 3.11% | |||||||||
Mortgage Debt | Maximum | |||||||||||
Debt Instrument | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage (as a percent) | 8.35% | 8.35% | |||||||||
Mortgage Debt | Debt maturing in 2016 | |||||||||||
Debt Instrument | |||||||||||
2016 (Nine months) | $ 241,492,000 | ||||||||||
Mortgage Debt | Debt maturing in 2017 | |||||||||||
Debt Instrument | |||||||||||
2,017 | 581,891,000 | ||||||||||
Mortgage Debt | Debt maturing in 2018 | |||||||||||
Debt Instrument | |||||||||||
2,018 | 6,583,000 | ||||||||||
Mortgage Debt | Debt maturing in 2019 | |||||||||||
Debt Instrument | |||||||||||
2,019 | 2,072,000 | ||||||||||
Mortgage Debt | Debt maturing in 2020 | |||||||||||
Debt Instrument | |||||||||||
2,020 | 2,078,000 | ||||||||||
Mortgage Debt | Thereafter | |||||||||||
Debt Instrument | |||||||||||
Thereafter | 61,092,000 | ||||||||||
Non-interest Bearing Life Care Bonds | |||||||||||
Debt Instrument | |||||||||||
Other debt | $ 67,000,000 | ||||||||||
Number of CCRC issuing non-interest life care bonds | item | 2 | 2 | |||||||||
Number of facilities with non-interest bearing occupancy fee deposits | item | 2 | 2 | |||||||||
Demand Note | |||||||||||
Debt Instrument | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage (as a percent) | 4.50% | 4.50% | |||||||||
Other debt | $ 28,000,000 |
Equity (Details)
Equity (Details) $ / shares in Units, shares in Thousands, $ in Thousands | Apr. 27, 2016$ / shares | Jan. 28, 2016$ / shares | Mar. 31, 2016USD ($)item$ / sharesshares | Mar. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2015USD ($) |
Equity | |||||
Dividends declared per common share (in dollars per share) | $ / shares | $ 0.575 | $ 0.575 | $ 0.575 | $ 0.565 | |
Company's common stock issuances | |||||
Repurchase of common stock | $ 3,628 | $ 6,096 | |||
Accumulated Other Comprehensive Loss | |||||
Cumulative foreign currency translation adjustment | (20,222) | $ (19,485) | |||
Unrealized losses on cash flow hedges, net | (8,103) | (7,582) | |||
Supplemental Executive Retirement Plan minimum liability | (3,341) | (3,411) | |||
Unrealized (losses) gains on available for sale securities | (7) | 8 | |||
Total accumulated other comprehensive loss | (31,673) | (30,470) | |||
Noncontrolling interests | |||||
DownREIT unit, carrying value | $ 181,468 | $ 185,608 | |||
Common Stock | |||||
Company's common stock issuances | |||||
Dividend Reinvestment and Stock Purchase Plan (in shares) | shares | 1,081 | 829 | |||
Conversion of DownREIT units (in shares) | shares | 99 | 38 | |||
Exercise of stock options (in shares) | shares | 111 | 811 | |||
Vesting of restricted stock units (in shares) | shares | 248 | 288 | |||
Repurchase of common stock | $ 102 | $ 128 | |||
Noncontrolling Interests | |||||
Noncontrolling interests | |||||
Non-managing members DownREIT units outstanding | item | 4,000,000 | ||||
Number of DownREIT LLCs | item | 5 | ||||
DownREIT unit, carrying value | $ 181,000 | ||||
DownREIT unit, fair value | $ 191,000 |
Segment Disclosures - Summary I
Segment Disclosures - Summary Information for the Reportable Segments (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016USD ($)item | Mar. 31, 2015USD ($) | |
Segment reporting information, revenues | ||
Number of reportable segments | item | 5 | |
Rental Revenues | $ 456,899 | $ 472,056 |
Resident fees and services | 165,763 | 105,013 |
Operating expenses | (176,955) | (132,031) |
NOI | 445,707 | 445,038 |
Non-cash adjustments to NOI | (7,402) | (29,185) |
Adjusted (cash) NOI | 438,305 | 415,853 |
Adjusted (cash) NOI from unconsolidated joint ventures | 17,044 | 15,544 |
Interest Income | 18,029 | 33,262 |
Portfolio Income | 473,378 | 464,659 |
Addback non-cash adjustments | 7,402 | 29,185 |
Investment management fee income | 91 | 460 |
Interest expense | (122,062) | (116,780) |
Depreciation and amortization | (141,322) | (114,522) |
General and administrative expenses | (25,499) | (24,773) |
Acquisition and pursuit costs | (2,475) | (3,390) |
Impairments | (478,464) | |
Gain on sales of real estate | 6,264 | |
Other income, net | 1,222 | 1,724 |
Income tax (expense) benefit | (53,038) | 77 |
Equity loss in unconsolidated joint ventures, excluding adjusted (cash) NOI | (17,952) | (1,943) |
Net income (loss) | 119,745 | (237,503) |
Senior housing | ||
Segment reporting information, revenues | ||
Rental Revenues | 128,897 | 127,382 |
Resident fees and services | 165,763 | 105,013 |
Operating expenses | (116,136) | (75,510) |
NOI | 178,524 | 156,885 |
Non-cash adjustments to NOI | (5,956) | (6,413) |
Adjusted (cash) NOI | 172,568 | 150,472 |
Adjusted (cash) NOI from unconsolidated joint ventures | 14,898 | 14,012 |
Interest Income | 1,851 | 7,394 |
Portfolio Income | 189,317 | 171,878 |
Post-acute/skilled | ||
Segment reporting information, revenues | ||
Rental Revenues | 107,190 | 140,576 |
Operating expenses | (564) | (533) |
NOI | 106,626 | 140,043 |
Non-cash adjustments to NOI | (271) | (18,083) |
Adjusted (cash) NOI | 106,355 | 121,960 |
Adjusted (cash) NOI from unconsolidated joint ventures | 404 | |
Interest Income | 16,178 | 25,868 |
Portfolio Income | 122,937 | 147,828 |
Life science | ||
Segment reporting information, revenues | ||
Rental Revenues | 88,948 | 83,551 |
Operating expenses | (16,743) | (16,699) |
NOI | 72,205 | 66,852 |
Non-cash adjustments to NOI | (673) | (3,075) |
Adjusted (cash) NOI | 71,532 | 63,777 |
Adjusted (cash) NOI from unconsolidated joint ventures | 1,420 | 1,228 |
Portfolio Income | 72,952 | 65,005 |
Medical office | ||
Segment reporting information, revenues | ||
Rental Revenues | 108,994 | 98,305 |
Operating expenses | (42,313) | (38,252) |
NOI | 66,681 | 60,053 |
Non-cash adjustments to NOI | (805) | (1,866) |
Adjusted (cash) NOI | 65,876 | 58,187 |
Adjusted (cash) NOI from unconsolidated joint ventures | 322 | 304 |
Portfolio Income | 66,198 | 58,491 |
Hospital | ||
Segment reporting information, revenues | ||
Rental Revenues | 22,870 | 22,242 |
Operating expenses | (1,199) | (1,037) |
NOI | 21,671 | 21,205 |
Non-cash adjustments to NOI | 303 | 252 |
Adjusted (cash) NOI | 21,974 | 21,457 |
Portfolio Income | $ 21,974 | $ 21,457 |
Segment Disclosures - Assets by
Segment Disclosures - Assets by Segment (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | |
Segment Disclosure | |||
Real estate assets held for sale, net | $ 311,243 | $ 314,126 | |
Total assets | [1] | 21,199,927 | 21,449,849 |
Goodwill | 50,346 | 50,346 | |
Life science | |||
Segment Disclosure | |||
Real estate assets held for sale, net | 43,000 | ||
Operating segment | |||
Segment Disclosure | |||
Gross assets | 23,095,757 | 22,972,094 | |
Accumulated depreciation and amortization | (3,059,436) | (2,941,568) | |
Total assets | 20,036,321 | 20,030,526 | |
Operating segment | Senior housing | |||
Segment Disclosure | |||
Gross assets | 9,931,444 | 9,812,142 | |
Goodwill | 31,000 | 31,000 | |
Operating segment | Post-acute/skilled | |||
Segment Disclosure | |||
Gross assets | 5,111,794 | 5,162,947 | |
Goodwill | 3,000 | 3,000 | |
Operating segment | Life science | |||
Segment Disclosure | |||
Gross assets | 3,944,689 | 3,905,137 | |
Operating segment | Medical office | |||
Segment Disclosure | |||
Gross assets | 3,485,010 | 3,469,048 | |
Goodwill | 11,000 | 11,000 | |
Operating segment | Hospital | |||
Segment Disclosure | |||
Gross assets | 622,820 | 622,820 | |
Goodwill | 5,000 | 5,000 | |
Other non-segment | |||
Segment Disclosure | |||
Total assets | $ 852,363 | $ 1,105,197 | |
[1] | HCP, Inc.’s consolidated total assets and total liabilities at March 31, 2016 and December 31, 2015 include certain assets of variable interest entities (“VIEs”) that can only be used to settle the liabilities of the related VIE. The VIE creditors do not have recourse to HCP, Inc. Total assets at March 31, 2016 include VIE assets as follows: buildings and improvements $3.4 billion; development costs $60 million; land $327 million; accumulated depreciation and amortization $567 million; investments in unconsolidated joint ventures $14 million; accounts receivable $18 million; cash $60 million; restricted cash $23 million; intangible assets, net $197 million; and other assets, net $66 million. Total assets at December 31, 2015 include VIE assets as follows: buildings and improvements $3.4 billion; development costs $54 million; land $327 million; accumulated depreciation and amortization $537 million; investments in unconsolidated joint ventures $14 million; accounts receivable $19 million; cash $61 million; restricted cash $21 million; intangible assets, net $204 million; and other assets, net $63 million. Total liabilities at March 31, 2016 include VIE liabilities as follows: mortgage debt $573 million; intangible liabilities, net $10 million; accounts payable and accrued liabilities of $107 million and deferred revenue of $23 million from VIEs. Total liabilities at December 31, 2015 include VIE liabilities as follows: mortgage debt $589 million; intangible liabilities, net $10 million; accounts payable and accrued liabilities of $107 million and deferred revenue of $19 million. See Note 16 to the Consolidated Financial Statements for additional information. |
Earnings Per Common Share (Deta
Earnings Per Common Share (Details) $ / shares in Units, shares in Thousands, $ in Thousands, item in Millions | 3 Months Ended | |
Mar. 31, 2016USD ($)item$ / sharesshares | Mar. 31, 2015USD ($)$ / sharesshares | |
Numerator | ||
Net income (loss) | $ | $ 119,745 | $ (237,503) |
Noncontrolling interests’ share in earnings | $ | (3,626) | (3,111) |
Net income (loss) attributable to HCP, Inc. | $ | 116,119 | (240,614) |
Participating securities' share in earnings | $ | (357) | (335) |
Net income (loss) applicable to common shares | $ | $ 115,762 | $ (240,949) |
Denominator | ||
Basic weighted average common shares | 466,074 | 460,880 |
Dilutive potential common shares | 188 | |
Diluted weighted average common shares | 466,262 | 460,880 |
Earnings per common share: | ||
Basic (in dollars per share) | $ / shares | $ 0.25 | $ (0.52) |
Diluted (in dollars per share) | $ / shares | $ 0.25 | $ (0.52) |
Common Stock Options | ||
Earnings per common share: | ||
Shares of anti-dilutive securities excluded from earnings per share calculation | 1,400 | |
Down REIT | ||
Earnings per common share: | ||
Shares of anti-dilutive securities excluded from earnings per share calculation | 6,000 | |
DownREIT LLCs, non-managing member units outstanding | item | 4 | |
Restricted Stock and Performance Restricted Stock Units | ||
Earnings per common share: | ||
Shares of anti-dilutive securities excluded from earnings per share calculation | 700 |
Supplemental Cash Flow Inform58
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Supplemental cash flow information: | ||
Interest paid, net of capitalized interest | $ 171,422 | $ 168,165 |
Income taxes paid | 1,213 | 383 |
Capitalized interest | 3,128 | 1,698 |
Supplemental schedule of non-cash investing activities: | ||
Accrued construction costs | 56,972 | 32,236 |
Settlement of HCRMC Tranche A DRO as consideration for DFL acquisition | 91,605 | |
Tenant funded tenant improvements owned by HCP | 9,178 | 572 |
Supplemental schedule of non-cash financing activities: | ||
Vesting of restricted stock units | 248 | 288 |
Conversion of non-managing member units into common stock | 4,136 | 1,608 |
Noncontrolling interest issued in connection with real estate acquisitions | 1,306 | |
Other liabilities assumed with real estate acquisitions | 1,200 | 626 |
Unrealized (losses) on available-for-sale securities and derivatives designated as cash flow hedges, net | $ (705) | $ 2,334 |
Variable Interest Entities (Det
Variable Interest Entities (Details) $ in Thousands | Jan. 01, 2016USD ($)entity | Mar. 31, 2016USD ($)propertyitem | Dec. 31, 2015USD ($)property | Aug. 29, 2014 |
Company's involvement with VIEs: | ||||
Number of unconsolidated joint ventures | item | 4 | |||
Number of VIE borrowers with debt securities and loan | item | 2 | |||
Number of joint ventures deconsolidated | entity | 3 | |||
Cumulative-effect adjustment to cumulative dividends in excess of earnings | $ 500 | |||
Vintage Park Development JV | ||||
Company's involvement with VIEs: | ||||
Number of equity members without substantive interest | item | 1 | |||
Unconsolidated Variable Interest Entities | ||||
Company's involvement with VIEs: | ||||
Number of properties leased | property | 358 | |||
Number of VIE tenants | item | 7 | |||
CCRC OpCo | ||||
Company's involvement with VIEs: | ||||
Joint Venture Ownership Percentage | 49.00% | |||
Maximum Loss Exposure | $ 230,275 | |||
Assets/liability type | Investments in unconsolidated joint ventures | |||
Carrying amount | $ 230,275 | |||
Vintage Park Development JV | ||||
Company's involvement with VIEs: | ||||
Maximum Loss Exposure | $ 8,593 | |||
Assets/liability type | Investments in unconsolidated joint ventures | |||
Carrying amount | $ 8,593 | |||
Ownership percentage (as a percent) | 85.00% | |||
VIE tenants-operating leases | ||||
Company's involvement with VIEs: | ||||
Number of properties leased | property | 48 | |||
Maximum Loss Exposure | $ 9,952 | |||
Assets/liability type | Lease intangibles, net and straight-line rent receivables | |||
Carrying amount | $ 9,952 | |||
HCRMC | ||||
Company's involvement with VIEs: | ||||
Number of properties leased | property | 310 | |||
Maximum Loss Exposure | $ 5,107,180 | |||
Assets/liability type | Net investment in DFLs and investments in unconsolidated joint ventures | |||
Carrying amount | $ 5,107,180 | |||
VIE tenants-DFLs | ||||
Company's involvement with VIEs: | ||||
Maximum Loss Exposure | $ 598,960 | |||
Assets/liability type | Net investment in DFLs | |||
Carrying amount | $ 598,960 | |||
Four Seasons | ||||
Company's involvement with VIEs: | ||||
Maximum Loss Exposure | $ 124,108 | |||
Assets/liability type | Loans and marketable debt securities | |||
Carrying amount | $ 124,108 | |||
CMBS and LLC investment | ||||
Company's involvement with VIEs: | ||||
Maximum Loss Exposure | $ 32,944 | |||
Assets/liability type | Marketable debt and cost method investments | |||
Carrying amount | $ 32,944 | |||
Consolidated Variable Interest Entities | Accounting Standards Update ("ASU") 2015-02 - Consolidation | Adjustment | ||||
Company's involvement with VIEs: | ||||
Total assets | $ 543,000 | |||
Total liabilities | $ 651,000 | |||
RIDEA I | ||||
Company's involvement with VIEs: | ||||
Ownership percentage (as a percent) | 90.00% | |||
RIDEA II | ||||
Company's involvement with VIEs: | ||||
Ownership percentage (as a percent) | 80.00% | |||
RIDEA III | ||||
Company's involvement with VIEs: | ||||
Ownership percentage (as a percent) | 90.00% | |||
HCP Ventures V | ||||
Company's involvement with VIEs: | ||||
Ownership percentage (as a percent) | 51.00% | |||
Vintage Park Development JV | ||||
Company's involvement with VIEs: | ||||
Ownership percentage (as a percent) | 90.00% | |||
DownREIT Partnerships | ||||
Company's involvement with VIEs: | ||||
Number of controlling ownership interest entities as a managing member | item | 5 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2016USD ($)item | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | ||
Concentration of risk | |||||
Number of RIDEA joint ventures | item | 4 | ||||
Balance Sheets: | |||||
Real estate and other property, net | $ 12,065,135 | $ 11,994,703 | |||
Cash and cash equivalents | 94,665 | $ 137,170 | 346,500 | $ 183,810 | |
Goodwill, intangible and other assets, net | 817,279 | 802,273 | |||
Total assets | [1] | 21,199,927 | 21,449,849 | ||
Accounts payable, accrued liabilities and other | 433,144 | 436,239 | |||
Total equity | 9,630,325 | 10,555,646 | 9,746,317 | $ 10,997,099 | |
Total liabilities and equity | 21,199,927 | 21,449,849 | |||
Income Statements: | |||||
Revenues | 640,782 | 610,791 | |||
Operating, general and administrative expense | (176,955) | (132,031) | |||
Depreciation and amortization expense | (141,322) | (114,522) | |||
Interest expense | (122,062) | (116,780) | |||
Other income, net | 1,222 | 7,988 | |||
Loss on disposal of assets | 6,264 | ||||
Income taxes | (53,038) | 77 | |||
Net income (loss) | $ 119,745 | (237,503) | |||
Brookdale JV | Minimum | |||||
Income Statements: | |||||
Management fees as percentage of gross revenues | 4.50% | ||||
Brookdale JV | Maximum | |||||
Income Statements: | |||||
Management fees as percentage of gross revenues | 5.00% | ||||
HCRMC | |||||
Balance Sheets: | |||||
Real estate and other property, net | $ 2,611,800 | 2,628,500 | |||
Cash and cash equivalents | 173,800 | 125,000 | |||
Goodwill, intangible and other assets, net | 4,526,900 | 4,598,300 | |||
Total assets | 7,312,500 | 7,351,800 | |||
Debt and financing obligations | 5,783,800 | 5,836,400 | |||
Accounts payable, accrued liabilities and other | 1,006,700 | 982,900 | |||
Total equity | 522,000 | 532,500 | |||
Total liabilities and equity | 7,312,500 | $ 7,351,800 | |||
Income Statements: | |||||
Revenues | 984,500 | 1,054,000 | |||
Operating, general and administrative expense | (857,200) | (897,900) | |||
Depreciation and amortization expense | (32,500) | (35,900) | |||
Interest expense | (115,100) | (100,300) | |||
Other income, net | 3,500 | 2,800 | |||
Loss on disposal of assets | 3,300 | ||||
(Loss) income from continuing operations before income tax expense | (13,500) | 22,700 | |||
Income taxes | 2,900 | (10,100) | |||
(Loss) income from continuing operations | (10,600) | 12,600 | |||
Income from discontinued operations, net of taxes | 100 | 1,100 | |||
Net income (loss) | (10,500) | 13,700 | |||
Senior housing | |||||
Income Statements: | |||||
Operating, general and administrative expense | $ (116,136) | (75,510) | |||
Senior housing | CCRC JV | |||||
Concentration of risk | |||||
Number of RIDEA joint ventures | item | 2 | ||||
Senior housing | Management and Accounting Services | Brookdale JV | |||||
Concentration of risk | |||||
Number of RIDEA joint ventures | item | 15 | ||||
Investments in Joint Ventures Senior Housing Facilities Number | item | 108 | ||||
Post-acute/skilled | |||||
Income Statements: | |||||
Operating, general and administrative expense | $ (564) | $ (533) | |||
Management and Accounting Services | Brookdale JV | Minimum | |||||
Income Statements: | |||||
Management Agreement Number of Renewals | item | 3 | ||||
Management and Accounting Services | Brookdale JV | Maximum | |||||
Income Statements: | |||||
Management Agreement Number of Renewals | item | 4 | ||||
Management and Accounting Services | Senior housing | Brookdale JV | |||||
Income Statements: | |||||
Management agreement renewal term (in years) | 5 years | ||||
Management and Accounting Services | Senior housing | Brookdale JV | Minimum | |||||
Income Statements: | |||||
Management agreement term (in years) | 10 years | ||||
Management and Accounting Services | Senior housing | Brookdale JV | Maximum | |||||
Income Statements: | |||||
Management agreement term (in years) | 15 years | ||||
Assets | Tenants and Operators | Senior housing | Brookdale JV | |||||
Concentration of risk | |||||
Concentration risk (as a percent) | 27.00% | 28.00% | |||
Assets | Tenants and Operators | Senior housing | HCRMC | |||||
Concentration of risk | |||||
Concentration risk (as a percent) | 12.00% | 12.00% | |||
Assets | Tenants and Operators | Post-acute/skilled | HCRMC | |||||
Concentration of risk | |||||
Concentration risk (as a percent) | 77.00% | 64.00% | |||
Revenue | Tenants and Operators | Senior housing | Brookdale JV | |||||
Concentration of risk | |||||
Concentration risk (as a percent) | 21.00% | 25.00% | |||
Revenue | Tenants and Operators | Senior housing | HCRMC | |||||
Concentration of risk | |||||
Concentration risk (as a percent) | 6.00% | 8.00% | |||
Revenue | Tenants and Operators | Post-acute/skilled | HCRMC | |||||
Concentration of risk | |||||
Concentration risk (as a percent) | 78.00% | 80.00% | |||
[1] | HCP, Inc.’s consolidated total assets and total liabilities at March 31, 2016 and December 31, 2015 include certain assets of variable interest entities (“VIEs”) that can only be used to settle the liabilities of the related VIE. The VIE creditors do not have recourse to HCP, Inc. Total assets at March 31, 2016 include VIE assets as follows: buildings and improvements $3.4 billion; development costs $60 million; land $327 million; accumulated depreciation and amortization $567 million; investments in unconsolidated joint ventures $14 million; accounts receivable $18 million; cash $60 million; restricted cash $23 million; intangible assets, net $197 million; and other assets, net $66 million. Total assets at December 31, 2015 include VIE assets as follows: buildings and improvements $3.4 billion; development costs $54 million; land $327 million; accumulated depreciation and amortization $537 million; investments in unconsolidated joint ventures $14 million; accounts receivable $19 million; cash $61 million; restricted cash $21 million; intangible assets, net $204 million; and other assets, net $63 million. Total liabilities at March 31, 2016 include VIE liabilities as follows: mortgage debt $573 million; intangible liabilities, net $10 million; accounts payable and accrued liabilities of $107 million and deferred revenue of $23 million from VIEs. Total liabilities at December 31, 2015 include VIE liabilities as follows: mortgage debt $589 million; intangible liabilities, net $10 million; accounts payable and accrued liabilities of $107 million and deferred revenue of $19 million. See Note 16 to the Consolidated Financial Statements for additional information. |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring basis (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Fair value on a recurring basis | Level 1 | ||
Fair value assets and liabilities measured on recurring basis: | ||
Marketable equity securities | $ 24 | |
Fair value on a recurring basis | Level 2 | Interest-rate swap contracts | ||
Fair value assets and liabilities measured on recurring basis: | ||
Derivative liabilities | 7,384 | |
Fair value on a recurring basis | Level 2 | Currency Swap | ||
Fair value assets and liabilities measured on recurring basis: | ||
Derivative assets | 2,469 | |
Fair value on a recurring basis | Level 3 | Warrants | ||
Fair value assets and liabilities measured on recurring basis: | ||
Derivative assets | 16 | |
Fair Value | Currency Swap | ||
Fair value assets and liabilities measured on recurring basis: | ||
Derivative assets | 2,469 | $ 1,551 |
Fair Value | Level 1 | ||
Fair value assets and liabilities measured on recurring basis: | ||
Marketable equity securities | 24 | 39 |
Fair Value | Level 2 | Interest-rate swap contracts | ||
Fair value assets and liabilities measured on recurring basis: | ||
Derivative assets | 196 | |
Derivative liabilities | 7,384 | 6,251 |
Fair Value | Level 3 | Warrants | ||
Fair value assets and liabilities measured on recurring basis: | ||
Derivative assets | 16 | $ 55 |
Fair Value | Fair value on a recurring basis | ||
Fair value assets and liabilities measured on recurring basis: | ||
Marketable equity securities | 24 | |
Fair Value | Fair value on a recurring basis | Interest-rate swap contracts | ||
Fair value assets and liabilities measured on recurring basis: | ||
Derivative liabilities | 7,384 | |
Fair Value | Fair value on a recurring basis | Currency Swap | ||
Fair value assets and liabilities measured on recurring basis: | ||
Derivative assets | 2,469 | |
Fair Value | Fair value on a recurring basis | Warrants | ||
Fair value assets and liabilities measured on recurring basis: | ||
Derivative assets | $ 16 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of the Carrying Amounts and Fair Values of the Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Summary of financial instruments | ||
Bank line of credit | $ 810,313 | $ 397,432 |
Senior unsecured notes | 8,623,376 | 9,120,107 |
Mortgage debt | 895,289 | 932,212 |
Other debt | 95,229 | 94,445 |
Carrying Value | ||
Summary of financial instruments | ||
Loans receivable, net | 768,896 | 768,743 |
Marketable debt securities | 100,915 | 102,958 |
Marketable equity securities | 24 | 39 |
Bank line of credit | 810,313 | 397,432 |
Term loans | 511,737 | 524,807 |
Senior unsecured notes | 8,623,376 | 9,120,107 |
Mortgage debt | 895,289 | 932,212 |
Other debt | 95,229 | 94,445 |
Carrying Value | Warrants | ||
Summary of financial instruments | ||
Derivative assets | 16 | 55 |
Carrying Value | Interest-rate swap contracts | ||
Summary of financial instruments | ||
Derivative assets | 196 | |
Derivative liabilities | (7,384) | 6,251 |
Carrying Value | Currency Swap | ||
Summary of financial instruments | ||
Derivative assets | 2,469 | 1,551 |
Fair Value | Level 1 | ||
Summary of financial instruments | ||
Marketable equity securities | 24 | 39 |
Senior unsecured notes | 8,854,121 | 9,390,668 |
Fair Value | Level 2 | ||
Summary of financial instruments | ||
Loans receivable, net | 775,109 | 770,052 |
Marketable debt securities | 100,915 | 102,958 |
Bank line of credit | 810,313 | 397,432 |
Term loans | 511,737 | 524,807 |
Mortgage debt | 936,466 | 963,786 |
Other debt | 95,229 | 94,445 |
Fair Value | Warrants | Level 3 | ||
Summary of financial instruments | ||
Derivative assets | 16 | 55 |
Fair Value | Interest-rate swap contracts | Level 2 | ||
Summary of financial instruments | ||
Derivative assets | 196 | |
Derivative liabilities | 7,384 | 6,251 |
Fair Value | Currency Swap | ||
Summary of financial instruments | ||
Derivative assets | $ 2,469 | $ 1,551 |
Derivative Financial Instrume63
Derivative Financial Instruments (Details) £ in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016USD ($) | Mar. 31, 2016GBP (£)item | Mar. 31, 2016USD ($)item | |
Derivative | |||
Gains or losses recorded to accumulated other comprehensive loss reclassified to earnings | $ 0 | ||
Reclassification out of Accumulated Other Comprehensive Income | |||
Effects of Change in Interest Rates | |||
Reclassification of unrealized gains into other income (expense), ineffectiveness | 100 | ||
Interest rate swap, entered in July 2005, maturity in July 2020 | |||
Effects of Change in Interest Rates | |||
+50 Basis Points | 1,066 | ||
-50 Basis Points | (773) | ||
+100 Basis Points | 1,986 | ||
-100 Basis Points | (1,692) | ||
Interest rate swap, entered in July 2005, maturity in July 2020 | BMA Swap Index | |||
Derivative | |||
Notional amount | $ 45,600 | ||
Fair value of hedge, liabilities | $ (5,487) | ||
Interest rate swap, entered in July 2005, maturity in July 2020 | Cash flow hedge | |||
Derivative | |||
Number of interest-rate swap contracts | item | 3 | 3 | |
Interest rate swap, entered in July 2005, maturity in July 2020 | Cash flow hedge | BMA Swap Index | |||
Derivative | |||
Fixed Rate/Buy Amount (as a percent) | 3.82% | 3.82% | |
Interest rate swap, entered in November 2008, maturity in October 2016 | |||
Effects of Change in Interest Rates | |||
+50 Basis Points | 67 | ||
-50 Basis Points | (68) | ||
+100 Basis Points | 135 | ||
-100 Basis Points | (135) | ||
Interest rate swap, entered in November 2008, maturity in October 2016 | LIBOR | |||
Derivative | |||
Notional amount | $ 24,900 | ||
Fair value of hedge, liabilities | $ (532) | ||
Interest rate swap, entered in November 2008, maturity in October 2016 | Cash flow hedge | LIBOR | |||
Derivative | |||
Fixed Rate/Buy Amount (as a percent) | 5.95% | 5.95% | |
Floating/Exchange Rate Index, percentage | 1.50% | 1.50% | |
Interest rate swap, entered in July 2012, maturity in June 2016 | |||
Effects of Change in Interest Rates | |||
+50 Basis Points | 209 | ||
-50 Basis Points | (200) | ||
+100 Basis Points | 417 | ||
-100 Basis Points | (401) | ||
Interest rate swap, entered in July 2012, maturity in June 2016 | GBP LIBOR | |||
Derivative | |||
Notional amount | £ | £ 137,000 | ||
Fair value of hedge, liabilities | $ (29) | ||
Interest rate swap, entered in July 2012, maturity in June 2016 | Cash flow hedge | |||
Derivative | |||
Buy (sell) amount | £ | £ 7,200 | ||
Interest rate swap, entered in July 2012, maturity in June 2016 | Cash flow hedge | GBP LIBOR | |||
Derivative | |||
Fixed Rate/Buy Amount (as a percent) | 1.81% | 1.81% | |
Floating/Exchange Rate Index, percentage | 1.20% | 1.20% | |
Interest rate swap, entered in January 2015, maturity in October 2017 | |||
Effects of Change in Interest Rates | |||
+50 Basis Points | 2,486 | ||
-50 Basis Points | (2,494) | ||
+100 Basis Points | 4,976 | ||
-100 Basis Points | (4,984) | ||
Interest rate swap, entered in January 2015, maturity in October 2017 | GBP LIBOR | |||
Derivative | |||
Notional amount | £ | £ 220,000 | ||
Fair value of hedge, liabilities | $ (1,336) | ||
Interest rate swap, entered in January 2015, maturity in October 2017 | Cash flow hedge | |||
Derivative | |||
Exchange rate GBP/USD | 1.5149 | 1.5149 | |
Interest rate swap, entered in January 2015, maturity in October 2017 | Cash flow hedge | GBP LIBOR | |||
Derivative | |||
Fixed Rate/Buy Amount (as a percent) | 1.79% | 1.79% | |
Floating/Exchange Rate Index, percentage | 0.975% | 0.975% | |
Currency swap, entered in July 2012, maturity in June 2016 | |||
Derivative | |||
Notional amount | £ | £ 7,200 | ||
Fair value of foreign currency derivative instruments not designated as hedging instruments, assets | $ 964 | ||
Effects of Change in Interest Rates | |||
+50 Basis Points | (47) | ||
-50 Basis Points | 57 | ||
+100 Basis Points | (99) | ||
-100 Basis Points | 109 | ||
Currency swap, entered in July 2012, maturity in June 2016 | Cash flow hedge | |||
Derivative | |||
Semi annual buy (sell) amount | $ 11,400 | ||
Exchange rate GBP/USD | 1.5695 | 1.5695 | |
Currency swap, entered in January 2015, maturity in October 2017 | |||
Derivative | |||
Notional amount | £ | £ 20,000 | ||
Fair value of foreign currency hedge, assets | $ 1,505 | ||
Effects of Change in Interest Rates | |||
+50 Basis Points | (72) | ||
-50 Basis Points | 216 | ||
+100 Basis Points | (215) | ||
-100 Basis Points | $ 360 | ||
Currency swap, entered in January 2015, maturity in October 2017 | Cash flow hedge | |||
Derivative | |||
Buy (sell) amount | £ | £ 1,000 | ||
Monthly buy (sell) amount | $ 30,300 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
May. 31, 2016USD ($)facilityproperty | Mar. 31, 2016USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | |
Subsequent Events | ||||
Loans receivable, net | $ 768,896 | $ 768,743 | ||
Payments to Acquire Notes Receivable | $ 117,282 | $ 176,504 | ||
Subsequent event | ||||
Subsequent Events | ||||
Number of facility sales expected to close | facility | 17 | |||
Subsequent event | RIDEA II | ||||
Subsequent Events | ||||
Cash proceeds | $ 109,000 | |||
Note receivable | $ 636,000 | |||
Subsequent event | HCP/CPA/Brookdale JV | ||||
Subsequent Events | ||||
Investment ownership percentage | 40.00% | |||
SpinCo | Subsequent event | ||||
Subsequent Events | ||||
Number of properties intended to spin off | property | 338 | |||
HCP/CPA JV | Subsequent event | ||||
Subsequent Events | ||||
Investment ownership percentage | 50.10% | |||
An investor group led by Columbia Pacific Advisors, LLC [Member] | HCP/CPA JV | Subsequent event | ||||
Subsequent Events | ||||
Investment ownership percentage | 49.90% |