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HCP Beats Funds from Operations, Misses on Revenues in 4Q17

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Outlook for 2018

HCP Inc. (HCP) reduced its outlook for FFO (funds from operation) per share for 2018 in comparison to 2017. The expected range is $1.73–$1.79, and its adjusted FFO per share is expected to be $1.77–$1.83. Its SPP (same property portfolio) cash NOI (net operating income) is expected to increase 0.25% to ~1.8%.

Below are the projected 2018 segment SPP cash NOI figures:

  • Senior housing triple-net: 0.50%–1.5%
  • SHOP (senior housing operating portfolio): -4.0%–0.0%
  • Life Science segment: 0.25%–~1.3%
  • Medical Office portfolio: ~1.8%–2.8%
  • Other: 0.50%–1.5%
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4Q17 results

HCP Inc.’s (HCP) 4Q17 FFO stood at $0.48 and beat analysts’ estimates by $0.01. HCP generated revenues of ~$443.3 million, a fall of 17.0% year-over-year. The company missed analysts’ estimates by ~$5.4 million. Its total portfolio year-over-year same-store cash NOI growth was 3.4%.

For 2017, HCP’s FFO stood at $1.95 per share, and its same-store cash NOI growth was 3.4%. During the year, HCP lowered its Brookdale Senior Living Inc. tenant concentration with $1.6 billion of closed dispositions.

HCP entered into additional strategic transactions, which is expected to help it gain a more diversified senior housing portfolio, improved triple net lease coverage, and improve the balance sheet.

HCP’s expected revenues in 2018 fell to ~$1.8 billion. Among its peers, the expected revenues for Healthcare Trust of America (HTA) totaled ~$726.4 million. Ventas’s (VTR) revenues are expected to be ~$3.5 billion, and Welltower’s (HCN) revenues are expected to be ~$4.4 billion.

Investors looking for exposure to the healthcare real estate sector can invest in REIT ETFs. HCP holds ~1.2% in the Vanguard REIT ETF (VNQ).

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