HCP Posts FFO Up 9%, Says No Strategy Change Under New CEO

HCP (NYSE: HCP) reported strong operating results for the third quarter with funds from operations adjusted per share up 14% to $0.79 and FFO per share up 9% to $0.73 per share. 

Net income attributable to common shares was $233 million during the quarter, up from $196 million in the third quarter of 2012. 

The company cited its senior housing assets as bolstering the company’s performance during the quarter, as well as better-than expected performance of an Emeritus portfolio of properties the company acquired for $1.73 billion in October 2012. 


HCP maintains it will not change strategy as a result of a management change announced in early October, in which former chairman, president and CEO James Flaherty announced his resignation and Lauralee Martin, formerly of Jones Lang LaSalle, was elected to the position of president and CEO. 

“As a board member, I’ve been very comfortable with our strategy,” Martin said on a call with analysts following the earnings announcement. “If we change strategy, it will be because the operating environment tells us to. But right now it’s working very well.”

Martin assured analysts there was no triggering event for the leadership change and that acquisition strategy would not be affected by the shift. 


The company noted areas of opportunity through the continuation of its current strategy, including a closer look at overseas potential following the company’s $170 million debt investment in a 160-facility portfolio leased and operated by UK-based Barchester Healthcare in 2012. 

“European markets have lagged the U.S.,” Martin said, noting the lack of liquidity experienced in countries including the U.K. “That makes this a market worth seriously considering for potential.” 

The company also reported year-over-year cash SPP NOI growth of of 3.7% during the quarter and has raised full year guidance for FAD to $2.48 to $2.54 per share, for a growth rate of 13% based on the mid-point over 2012 FAD per share. 

Investments during the quarter included a new five-year lease with Roche/Genentech in South San Francisco, the acquisition of a 60-bed inpatient rehabilitation facility from Kindred Healthcare in Webster Texas, and a new lease with CardioDx at the company’s Redwood City, Calif. life science campus. 

Written by Elizabeth Ecker

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