Health Care Property Investors Inc. Reports Operating Results (10-Q)
Health Care Property Investors Inc. has a market cap of $11.33 billion; its shares were traded at around $36.79 with a P/E ratio of 21.3 and P/S ratio of 9.8. The dividend yield of Health Care Property Investors Inc. stocks is 5.1%.HCP is in the portfolios of Manning & Napier Advisors, Inc, Bruce Kovner of Caxton Associates, Pioneer Investments, Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC.
Highlight of Business Operations: In June 2010, we initiated a public offering, which resulted in the sale of 15.5 million shares of common stock at a price of $33.00 per share for gross proceeds of $512 million. This offering included: (i) the June 2010 public offering of 13.5 million shares for $445.5 million; and (ii) the July 2010 sale of 2.025 million shares, for $66.8 million, as a result of the underwriters exercising the over-allotment option from the June 2010 public offering. We received total net proceeds of $492 million from these sales, which were used to repay the outstanding indebtedness under our revolving line of credit, fund acquisitions and capital expenditures, repay mortgage debt and for other general corporate purposes.
For the three months ended June 30, 2010, interest income increased $9.1 million to $36.2 million. This increase was primarily related to additional interest income of $12 million earned from the $720 million participation in the first mortgage debt of HCR ManorCare purchased in August 2009, which was partially offset by a $3 million decrease of interest earned from marketable debt securities that were sold during 2009. For a more detailed description of our participation in the first mortgage debt of HCR ManorCare, see Note 6 to the Condensed Consolidated Financial Statements. Our exposure to income fluctuations related to our variable rate loans is partially mitigated by our variable rate indebtedness. For a more detailed discussion of our interest rate risk, see Quantitative and Qualitative Disclosures About Market Risk in Item 3.
Depreciation and amortization expense decreased $1.4 million to $77.9 million for the three months ended June 30, 2010. The decrease in depreciation and amortization expense was primarily due to a $2.0 million adjustment resulting from a correction to the purchase price allocation of certain assets acquired in 2006, which was included in the three months ended June 30, 2009 (See Note 8 to the Condensed Consolidated Financial Statements).
Interest expense decreased $2.6 million to $72.7 million for the three months ended June 30, 2010. The decrease was primarily due to: (i) a $1.5 million decrease as a result of the early repayment of our term loan in March 2010, (ii) a $0.8 million decrease resulting from the benefit of an interest-rate swap (pay float and receive fixed) that was placed on $250 million of our unsecured senior notes in June 2009, and (iii) a $0.7 million decrease from the repayment of the outstanding balance under our bridge loan in May 2009.
For the three months ended June 30, 2010, other income (expense), net decreased $1.4 million to $224,000. The decrease was primarily due to: (i) a decline in gain of sales of $0.8 million related to the sales of marketable debt securities in 2009 and (ii) a $0.8 million decrease due to changes in the fair value of certain derivative instruments (warrants).
The decrease of $33 million in income from discontinued operations to $79,000 for the three months ended June 30, 2010 is primarily due to a decrease in gain on real estate dispositions of $30.5 million and income from discontinued operations of $2.7 million. During the three months ended June 30, 2010 and 2009, we sold one property for $15 million and two properties for $46 million, respectively. Discontinued operations for the three months ended June 30, 2010 included one property compared to eight properties for the three months ended June 30, 2009.
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