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Health Care Property Investors Inc. Reports Operating Results (10-Q)

October 30, 2012 | About:
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10qk

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Health Care Property Investors Inc. (HCP) filed Quarterly Report for the period ended 2012-09-30.

Hcp Inc has a market cap of $18.91 billion; its shares were traded at around $44.02 with a P/E ratio of 16.3 and P/S ratio of 11. The dividend yield of Hcp Inc stocks is 4.5%.

Highlight of Business Operations:

(3) The Companys joint venture interest in HCR ManorCare is accounted for using the equity method and results in an ongoing reduction of DFL income, proportional to HCPs ownership in HCR ManorCare. The Company recorded a reduction of $14.9 million and $44.4 million for the three and nine months ended September 30, 2012, respectively, and a reduction of $14.4 million and $27.7 million for the three and nine months ended September 30, 2011. Further, the Companys share of earnings from HCR ManorCare (equity income) increases for the corresponding reduction of related lease expense recognized at the HCR ManorCare level.

(2) As of September 30, 2012 and December 31, 2011, Brookdale Senior Living (Brookdale) percentages exclude $685.4 and $682.7 million, respectively, of senior housing assets related to 21 senior housing facilities that Brookdale operates (beginning September 1, 2011) on the Companys behalf under a RIDEA structure. Assuming that these assets were attributable to Brookdale, the percentage of segment and total assets for Brookdale would be 25% and 8%, respectively, as of September 30, 2012. Assuming that these assets were attributable to Brookdale, the percentage of segment and total assets for Brookdale would be 26% and 9%, respectively, as of December 31, 2011. For the three and nine months ended September 30, 2012, Brookdale percentages exclude $36.1 million and $106.8 million, respectively, of senior housing revenues related to these facilities. Assuming that these revenues were attributable to Brookdale, the percentage of segment and total revenues for Brookdale would be 38% and 12% respectively, for both the three months and nine months ended September 30, 2012.

Under the provisions of RIDEA, a REIT may lease qualified healthcare properties on an arms length basis to a taxable REIT subsidiary if the property is operated on behalf of such subsidiary by a person who qualifies as an eligible independent contractor. The three months ended September 30, 2012 include $36.1 million and $24.1 million in revenues and operating expenses, respectively, and the nine months ended September 30, 2012 include $106.8 million and $67.5 million in revenues and operating expenses, respectively, as a result of reflecting the facility-level results for the 21 RIDEA facilities operated by Brookdale beginning September 1, 2011.

During the three months ended September 30, 2012, the Company executed an expansion of its tenant relationship with General Atomics in Poway, CA, to a total of 396,000 square feet, consisting of the following: (i) a lease extension of 281,000 square feet through June 2024, (ii) a new 10year lease for a 115,000 square feet building to be developed and (iii) the purchase of a 19 acre land parcel from the Company for $19 million. As a result of the pending land sale the Company recognized an impairment charge of $7.9 million, which reduced the carrying value of the Companys investment from $27 million to the expected sales price of $19 million. The fair value of the Companys land parcel was based on the sales price from its anticipated disposition in conjunction with this transaction. The contractual sales price of the land parcel is considered to be a Level 2 measurement within the fair value hierarchy.

Equity income from unconsolidated joint ventures increased $10 million to $42.8 million for the nine months ended September 30, 2012. The increase was primarily the result of an increase in our share of earnings from our approximate 10% interest in HCR ManorCare, Inc. which interest was acquired in April 2011 (see Notes 3 and 8 to the Condensed Consolidated Financial Statements for additional information).

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