HCP Inc. (HCP), a health care real estate investment trust (REIT), reported second quarter 2010 FFO (funds from operations) of $161.9 million or 55 cents per share, compared with $146.1 million or 55 cents per share in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. The second quarter 2010 FFO marginally beat the Zacks Consensus Estimate by a penny.
HCP reported total revenue of $303.0 million during the quarter compared with $292.5 million in the year-ago period. Total revenue for the reported quarter was well ahead of the Zacks Consensus Estimate of $281.0 million.
During the quarter, HCP acquired four senior housing facilities for $102 million. The company also invested $34 million for construction and other capital projects, primarily in the life science segment. Subsequent to the quarter end, HCP acquired an 85,000 square feet life science facility, and two medical office buildings spanning 103,000 square feet for a total investment of $48 million.
For the reported quarter, net operating income (NOI) of the company (excluding straight-line rents and lease termination fees) was $206.5 million compared with $193.0 million in the year-ago period. At quarter-end, HCP had six redevelopment properties under construction, primarily in California, for an estimated total investment of $210.9 million. In addition, the company had approximately 149 acres of land for future development.
During the quarter, HCP issued 15.5 million common shares at $33.0 each, raising net proceeds of $492 million bulk of which was used to repay debt. At quarter-end, the company had cash and cash equivalents of $96.3 million. During the quarter, HCP reduced its financial leverage from 44.2% in the year-earlier quarter to 40.9%. The adjusted fixed charge coverage ratio for the quarter was 2.8x compared with 2.6x in the prior-year period.
For full year 2010, HCP revised its FFO guidance before non-recurring items from the range of $2.11 to $2.17 per share to $2.10 to $2.16. We maintain our Neutral rating on the stock with a Zacks #3 Rank, which translates into a short-term “Hold” rating.
HCP INC (HCP): Free Stock Analysis Report
Zacks Investment Research
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