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



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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