REIT Earnings at a Glance: HCP, Health Care REIT, Senior Housing Properties Trust, LTC Properties

Here’s a quick look at how senior housing and care-related real estate investment trusts fared during the second quarter of 2012, including FFO, net income, revenues, and, when available, guidance. We’ve also included acquisition and development activities and outlooks for some of the REITs based on what was said during their respective earnings calls.

HCP’s Net Income Drops 12.5% in Second Quarter to $205 Million

HCP Inc.’s net income dropped 12.5% to $205 million in the second quarter ended June 30, 2012, compared to the previous year’s $234.3 million.

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Net income applicable to common shares also fell to $201.5 million, or $0.48 per share, compared to Q211’s $223 million, or $0.55 per share in the second quarter of 2011.

Revenues declined nearly 5% to $464.4 million.

Diluted FFO applicable to common shares fell 7.5% to $296.7 million, compared to $320.9 million in the same quarter of 2011.

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Despite the declines, HCP raised its full-year 2012 guidance, adjusting FFO to range between $2.73 to $2.79 per share, and net income applicable to common shares to range between $1.83 and $1.89 per share.

Acquisition activity: In the second quarter, HCP has announced six acquisition transactions, including the financing for Terra Firma’s acquisition of the Four Seasons Health Care company in the U.K. Additionally, the REIT has acquired or made agreements to acquire four medical office buildings (MOB) or healthcare-related portfolios or buildings along with closing on a development loan for a Pennsylvania assisted living facility. 

Health Care REIT’s Net Income Drops 22% After $1.1 Billion of Investments

Health Care REIT (NYSE:HCN) saw its net income drop 21.6% to $54.7 million in the second quarter ended June 30, 2012, compared to $69.8 million in the same period last year, after making a total of $1.1 billion in investments. 

Net income attributable to common stockholders per diluted share went from $0.39 in the second quarter of 2011 down to $0.25 a year later.

“Our ability to source high-quality investments in the seniors housing and MOB sectors has significantly strengthened the quality of our portfolio and increased our private pay percentage,” said George Chapman, chairman and CEO of Health Care REIT. “As we move into the second half of 2012, our investment pipeline remains strong as we continue to execute our business plan.”

Revenues rose 22.6% to $453 million, but didn’t outpace total expenses’ 29% growth to $415.6 million. 

Funds from operations in the second quarter rose to $190.9 million up from $159.9 million in the same period last year.

Portfolio census: HCN’s private pay percentage is at 74%, with expectations to reach 80% within 12 months. 

Noteworthy: So far in 2012, the REIT has made $1.9 billion in investments, with $1.1 billion coming in the second quarter. Out of that, $602 million of investments were made with existing relationships.

Transaction costs more than doubled to nearly $28.7 million, while interest expense rose 16.5% to just under $95 million. 

Outlook: HCN increased its 2012 FFO guidance by 1% to reflect investment and financing activity announced year-to-date. Normalized FFO has been increased to a range of $3.53 to $3.63 per diluted share, up from $3.50 to $3.60 per diluted share. 

Net income attributable to common stockholders has been revised down to a range of $1.07 to $1.17 per diluted share, from the prior outlook of $1.09 to $1.19 per diluted share. 

Net Income for Senior Housing Properties Trust Drops 35% in Q2

Senior Housing Properties Trust (NYSE:SNH) saw its net income drop 35% to $33.3 million, or $0.20 per share, in the second quarter ended June 30, 2012, compared to $51 million, or $0.36 per share, in 2011. 

However, normalized funds from operations were up 17% to $73.2 million, or $0.45 per share, in the second quarter, compared to $62.6 million, or $0.44 per share, in the second quarter of 2011.

Revenues from rental income rose nearly 11% to just under $111 million. Total revenues rose more than 45% to nearly $147 million. 

Q2 transaction activity: In the second quarter, SNH acquired or made agreements to acquire 16 properties for total purchase prices of approximately $368.9 million, including the assumption of approximately $122.8 million of mortgage debt and excluding closing costs. Half of those are senior living communities; the other half are medical office building (MOB) or medical-related properties. 

Three of the MOB acquisitions or acquisition agreements occurred in July and had not been previously disclosed; SNH expects all pending transactions to close in the third quarter. Last month, the senior housing REIT also sold a MOB located in Massachusetts, and is currently marketing the sale of a Pennsylvania senior living community. 

Senior housing growth strategy: “In the Senior Housing space most investment opportunities have been with private operators and investors looking to monetize their real estate or exit the operating businesses altogether,” said CEO David Hegarty. “We’ve been successful in acquiring individual assets and small portfolios of high-quality private pay senior living communities. And we expect to continue our growth in the same manner.” 

Revenues from Acquisitions Boosts LTC’s FFO 7.8% in Q2

LTC Properties, Inc. (NYSE:LTC) saw its funds from operations increase 7.8% to $17.6 million for the second quarter ended June 30, 2012 compared to $16.3 million in the same period last year, on strength of higher revenues resulting primarily from acquisitions.

FFO per diluted common share was $0.57, up 7.5% from the previous year’s $0.53.

Normalized FFO, excluding $0.3 million in non-recurring revenue from the Sunwest Management, Inc. bankruptcy settlement distribution, was $17.3 million, or $0.56 per diluted common share, compared to $16.5 million, or $0.54 per diluted common share, in 2011’s second quarter. 

Second quarter gains were partially offset by an increase in interest expense, LTC notes. 

Net income available to common stockholders rose nearly 8% to $12.2 million, or $0.40 per diluted share, compared to $11.3 million or $0.37 per diluted share the previous year. 

Senior housing expansion activity: Last week, LTC Properties amended its lease agreements with Brookdale Senior Living for a total of $14.6 million in commitments for the expansions and renovations to three facilities in Colorado. The projects will begin in the next 60 days with completion expected in late summer of 2013. Whichever comes first—completion of each project or the second anniversary of the lease amendment—rent will increase by the investment amount funded including compounded rent during construction based on an agreed-upon rate.

LTC is planning on another $20 million of identified investment opportunities within its portfolio, according to Clint Malin, the REIT’s executive vice president and CIO. 

Construction pipeline: Since the first quarter’s conference call, LTC has entered into two new letters of intent, each with the different operating company to construct combination assisted living and memory care facilities. The investment commitment in total for these two transactions will be approximately $16 million, said Malin.

“Our deal pipeline remained strong in the $150 million range, mainly consisting of memory care development opportunities and acquisition of existing operational facilities including both skilled nursing and assisted living facilities,” said the CIO. “A few of the projects in the pipeline are for development of either replacement facilities or for facilities that will be added as new supply into the marketplace.” 

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