HCP’s Per-Share FFO Plunges 40% in Q4 After Settling Ventas Lawsuit

HCP, Inc. (NYSE:HCP) saw its funds from operation per common diluted share plunge 40% to $0.37 in the fourth quarter ended Dec. 31, 2011 compared to the previous year’s $0.67, after the company agreed to pay Ventas, Inc. (NYSE:VTR) a $125 million settlement.

In the fourth quarter, HCP reported total revenues of $461.6 million, a 35% increase from 2010’s $340.9 million. Revenue for the year totaled $1.73 billion, compared to the previous year’s $1.3 billion.

The company’s total quarterly costs and expenses increased more than 80%, however, from $222.5 million in the fourth quarter of 2010 to $402.5 million in Q4 2011.


Income from continuing operations for the quarter decreased from $129.2 million last year to $67.4 million. Net income applicable to common shares fell to just under $62 million, and $0.15 per common share, compared to $136.2 million and $0.42 per common share in the same period last year.

On Nov. 9, 2011, HCP entered into an agreement with Ventas to settle all remaining claims of the Chicago-based REIT’s litigation against HCP which stemmed from Ventas’ 2007 acquisition of Sunrise Senior Living. HCP paid Ventas $125 million and incurred a charge during the fourth quarter for the amount paid.

During the fourth quarter, HCP made investments of $40 million to fund development and other capital projects, primarily in life science and medical office assets. It also executed two loan commitments to fund up to $35 million of senior housing development.


For the year ahead, HCP expects its FFO applicable to common shares to range between $2.70 and $2.76 per share, and net income applicable to common shares to range between $1.81 and $1.87 per share.

View HCP Inc.’s fourth quarter and year-end earnings report here.

Written by Alyssa Gerace

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