Healthpeak Properties, Inc. · NYSE:DOC
Healthpeak Properties — HCP — Q2 2018 Earnings Presentation
56 slides from Healthpeak Properties's earnings presentation, Aug 2, 2018
Slide 1: Earnings Release and Supplemental Report Second Quarter 2018
Earnings Release and Supplemental Report second quarter 2018 Rendering of Sierra Point Development South San Francisco, CA 1
Slide 2: Table of Contents
Earnings Release 3 Overview 8 Consolidated Financial Statements 9 Portfolio Summary 13 Same Property Portfolio 15 Capitalization and Indebtedness 16 Investment Summary 19 Developments and Redevelopments 20 Capital Expenditures 22 Portfolio Diversification 23 Expirations and Maturities 25 Triple-net
Slide 3: HCP Reports Second Quarter 2018 Results
HCP Reports Second Quarter 2018 Results IRVINE, CA, August 2, 2018 -- HCP, Inc. (NYSE: HCP) today announced results for the second quarter ended June 30, 2018. For the quarter, we generated net income of $0.19 per share, FFO of $0.45 per share and FFO as adjusted of $0.47 per share. QUARTERLY AND RE
Slide 4: Same Property Portfolio Operating Summary
SAME PROPERTY PORTFOLIO OPERATING SUMMARY The tables below outline the year-over-year three-month SPP Cash NOI growth and the components of our senior housing operating portfolio ("SHOP") SPP Cash NOI growth for the second quarter: Year-Over-Year Three-Month SPP Cash NOI Growth Components of SHOP SP
Slide 5: RIDEA II Joint Venture Sale and Dispositions
RIDEA II JOINT VENTURE SALE As previously announced, in June we closed on the disposition of our remaining investment in RIDEA II, generating $332 million of proceeds. At the time of the sale, the RIDEA II joint venture owned 49 communities, of which 46 were managed by Brookdale. ADDITIONAL SIGNIFIC
Slide 6: Dividend, Sustainability and 2018 Guidance
DIVIDEND On July 26, 2018, our Board declared a quarterly cash dividend of $0.37 per common share. The dividend will be paid on August 21, 2018 to stockholders of record as of the close of business on August 6, 2018. SUSTAINABILITY For the seventh consecutive year, we were named as a constituent to
Slide 7: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Statements in this release that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, am
Slide 8: Overview
The Numbers Overview (1) As of and for the quarter ended June 30, 2018, dollars, square feet and shares in thousands, except per share data Full Year 2018 Guidance 2Q18 YTD 2018 (August 2, 2018) Financial Metrics (1) Reconciliations, definitions and important discussions Diluted earnings per common
Slide 9: Consolidated Balance Sheets
HCP, Inc. Consolidated Balance Sheets In thousands, except share and per share data (unaudited) June 30, 2018 December 31, 2017 Assets Real estate: Buildings and improvements $ 10,683,541 $ 11,239,732 Development costs and construction in progress 373,818 447,976 Land 1,655,012 1,785,865 Accumulated
Slide 10: Consolidated Statements of Operations
HCP, Inc. Consolidated Statements of Operations In thousands, except per share data (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Revenues: Rental and related revenues $ 279,056 $ 263,820 $ 558,634 $ 550,038 Tenant recoveries 38,784 35,259 75,958 68,934 Reside
Slide 11: Funds From Operations
HCP, Inc. Funds From Operations In thousands, except per share data (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Net income (loss) applicable to common shares $ 89,481 $ 19,283 $ 129,322 $ 479,854 Real estate related depreciation and amortization 143,292 130,
Slide 12: Funds Available for Distribution
HCP, Inc. Funds Available for Distribution In thousands (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 FFO as adjusted applicable to common shares $ 219,511 $ 224,770 $ 446,861 $ 464,925 Amortization of deferred compensation(1) 4,299 3,327 7,719 7,092 Amortizat
Slide 13: Portfolio Summary
Portfolio Summary As of and for the quarter ended June 30, 2018, dollars in thousands Property Portfolio Portfolio Private PORTFOLIO INCOME Count Age Investment Income Pay %(1) Wholly Owned Property Portfolio Unconsolidated JVs Senior housing triple-net 169 20 $ 3,339,787 $ 70,929 92.6 6% U.K. 4% SH
Slide 14: NOI and Cash NOI Summary
NOI and Cash NOI Summary For the quarter ended June 30, 2018, dollars in thousands NOI SUMMARY Rental and Operating Operating Revenues Expenses NOI(1) Wholly-Owned Senior housing triple-net $ 70,714 $ (791) $ 69,922 SHOP 138,352 (101,767) 36,585 Life science 101,031 (22,731) 78,299 Medical office 12
Slide 15: Same Property Portfolio
Same Property Portfolio As of June 30, 2018, dollars in thousands SAME PROPERTY PORTFOLIO RECONCILIATION Senior Housing Life Medical Triple-net SHOP Science Office Other Total (1) Our 103 properties in unconsolidated JVs are reported in the Other non-reportable segment Total Property Count 169 102 1
Slide 16: Capitalization
Capitalization Dollars and shares in thousands, except price per share data TOTAL CAPITALIZATION June 30, 2018 Shares Value Total Value Common stock (NYSE: HCP) 469,830 $ 25.82 $ 12,131,011 Convertible partnership (DownREIT) units 6,619 25.82 170,903 Total Market Equity 476,449 $ 12,301,914 Consolid
Slide 17: Indebtedness and Ratios
Indebtedness and Ratios As of June 30, 2018, dollars in thousands DEBT MATURITIES AND SCHEDULED PRINCIPAL REPAYMENTS (AMORTIZATION) HCP's Share of Senior Unsecured Notes Mortgage Debt Unconsolidated JV Debt Enterprise Debt Bank Line Consolidated of Credit(1) Term Loan(2) Amounts Rates %(3) Amounts R
Slide 18: Indebtedness and Ratios
Indebtedness and Ratios As of June 30, 2018, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs DEBT STRUCTURE Weighted Average Balance % of Total Rates % Years to Maturity Secured Fixed rate $ 182,937 2 4.19 15.9 Floating rate 276,444 4 4.85 2.9 Combined $ 459,381 6 4.59 8.1
Slide 19: Investment Summary
Investment Summary For the three and six months ended June 30, 2018, dollars and square feet in thousands INVESTMENT SUMMARY Three Months Ended Six Months Ended (1) In March 2018, we acquired the rights to develop a 214,000 square foot lab building on our June 30, 2018 June 30, 2018 Hayden life scie
Slide 20: Developments
Developments As of June 30, 2018, dollars and square feet in thousands DEVELOPMENT PROJECTS IN PROCESS Property Cost to Total at Project MSA Property Type Count CIP(1) Complete(1) Completion Wholly-Owned Ridgeview San Diego, CA Life science 3 $ 54,527 $ 8,069 $ 62,596 The Cove at Oyster Point - Phas
Slide 21: Redevelopments and Land Held for Development
Redevelopments and Land Held for (1) Development As of June 30, 2018, dollars and square feet in thousands REDEVELOPMENT PROJECTS IN PROCESS Incremental Costs Property Property Placed in Cost to Project Estimated Project MSA Type Count Service CIP(2) Complete(2) Total Start Completion(3) Wholly-Owne
Slide 22: Capital Expenditures
Capital Expenditures For the quarter and six months ended June 30, 2018, dollars in thousands, except per unit/square foot SECOND QUARTER Senior Housing Triple-net SHOP Life Science Medical Office Other Total Wholly-Owned Recurring capital expenditures $ 248 $ 5,455 $ 650 $ 3,719 $ — $ 10,071 Tenant
Slide 23: Portfolio Diversification by MSA
Portfolio Diversification As of and for the quarter ended June 30, 2018, dollars in thousands PORTFOLIO INCOME BY MSA Property Senior Housing Medical MSA Count(1) Triple-net SHOP Life Science Office Other Total % of Total San Francisco, CA 78 $ 2,557 $ — $ 48,901 $ 775 $ — $ 52,233 17 Dallas, TX 41
Slide 24: Portfolio Diversification by Operator/Tenant
Portfolio Diversification As of and for the quarter ended June 30, 2018, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs PORTFOLIO INCOME BY OPERATOR/TENANT Tenant/Credit Exposure SHOP/Operator Exposure Senior % of % of Property Housing Life Medical Portfolio Property Portf
Slide 25: Expirations and Maturities
Expirations and Maturities As of June 30, 2018, dollars in thousands EXCLUDES PURCHASE AND PREPAYMENT OPTIONS Annualized Base Rent Senior Housing Medical Interest Year Total % of Total Triple-net Life Science Office Other Income 2018(1) $ 56,234 5 $ — $ 9,389 $ 46,845 $ — $ — 2019 87,530 8 2,305 30,
Slide 26: Triple-Net Master Lease Profile
(1)(2) Triple-Net Master Lease Profile INVESTMENT TYPE 2.2% 0x x .0 25 13 2. Senior Housing LOWER RISK FACILITY EBITDAR CFC (TRAILING 12 MONTHS ENDED 03/31/2018) No Corporate Guaranty 0x 0.6% 2.0 Other 0.2% 1.4% % Percent of Total Cash NOI x 0.4% and Interest Income 75 1. x 50 1. 0.1% 1.4% 1.6% 1.1%
Slide 27: Senior Housing Triple-net
Senior Housing Triple-net As of and for the quarter ended June 30, 2018, dollars in thousands, except REVPOR Facility Facility Property Occupancy REVPOR EBITDARM EBITDAR Property Portfolio Count Investment Cash NOI Units % Triple-Net CFC CFC Assisted/Independent living 167 $ 3,086,408 $ 65,192 15,90
Slide 28: Senior Housing Triple-net Same Property Portfolio
Senior Housing Triple-net Same Property Portfolio Dollars in thousands, except REVPOR 2Q17 3Q17 4Q17 1Q18 2Q18 Property count 158 158 158 158 158 Investment $ 3,154,808 $ 3,161,495 $ 3,170,516 $ 3,174,159 $ 3,174,273 Units 16,111 16,114 16,111 16,111 16,112 Occupancy % 87.1 86.4 86.5 86.5 85.6 REVPO
Slide 29: Senior Housing Triple-net New Supply
Senior Housing Triple-net New Supply As of and for the quarter ended June 30, 2018, dollars in thousands NEW SUPPLY ANALYSIS Senior Housing Triple-net Portfolio 5-Mile Radius(1) % of Cash NOI 5-Year 80+ Triple- Properties/ Exposed Population 80+ Median Median net Cash Units Under to New Growth % Pen
Slide 30: SHOP
SHOP As of and for the quarter ended June 30, 2018, dollars in thousands, except REVPOR INVESTMENTS Property REVPOR Count Investment Cash NOI Units Occupancy % SHOP Operator Brookdale 57 $ 1,438,589 $ 22,263 8,127 85.3 $ 3,821 Atria Senior Living 25 565,240 8,250 3,398 85.8 3,945 Senior Lifestyle Co
Slide 31: SHOP MSA
SHOP MSA As of and for the quarter ended June 30, 2018, dollars in thousands, except REVPOR OPERATING PORTFOLIO METRICS Units(1) REVPOR SHOP(1) % of SHOP Occupancy MSA Investment Cash NOI Cash NOI AL IL % AL IL Houston, TX $ 353,522 $ 6,869 18.8 311 1,962 92.1 $ 6,204 $ 3,086 Miami, FL 219,080 2,968
Slide 32: SHOP Same Property Portfolio
SHOP Same Property Portfolio Dollars in thousands, except REVPOR 2Q17 3Q17 4Q17 1Q18 2Q18 Property count 55 55 55 55 55 Investment $ 1,558,933 $ 1,560,087 $ 1,567,718 $ 1,571,885 $ 1,579,990 Units 7,537 7,538 7,536 7,532 7,532 Occupancy % 87.1 87.1 87.9 87.4 85.9 REVPOR SHOP $ 4,165 $ 4,162 $ 4,160
Slide 33: SHOP New Supply
SHOP New Supply As of and for the quarter ended June 30, 2018, dollars in thousands NEW SUPPLY ANALYSIS SHOP 5-Mile Radius(1) Cash NOI 5-Year 80+ % of Properties/ Exposed Population 80+ Median SHOP Units Under to New Growth % Penetration Household Median Unemploy- MSA Units Cash NOI Cash NOI Constru
Slide 34: Life Science
Life Science As of and for the quarter ended June 30, 2018, dollars and square feet in thousands INVESTMENTS(1) Property Cash Square Occupancy MSA Count Investment NOI Feet % San Francisco, CA/San Jose, CA 85 $ 3,070,349 $ 57,689 4,948 96.5 San Diego, CA 28 760,582 13,458 1,925 93.9 (2) Boston, MA 2
Slide 35: Life Science
Life Science As of June 30, 2018, dollars and square feet in thousands SELECTED LEASE EXPIRATION DATA (NEXT 5 YEARS)(1) San Francisco / Total San Jose San Diego Boston Remaining Leased Square Annualized Square Annualized Square Annualized Square Annualized Square Annualized Year Feet % Base Rent % F
Slide 36: Life Science Leasing Activity
Life Science Square feet in thousands LEASING ACTIVITY Annualized HCP Tenant Leased Base Rent % Change in Improvements Leasing Costs Average Lease Retention Square Feet Per Sq. Ft. Cash Rents per Sq. Ft. per Sq. Ft. Term (Months) Rate YTD Leased Square Feet as of March 31, 2018 7,269 $ 43.17 Expirat
Slide 37: Medical Office
Medical Office As of and for the quarter ended June 30, 2018, dollars and square feet in thousands PORTFOLIO BY MARKET Square Feet On-campus(1) Off-campus(2) Total Property Occupancy MSA Count Investment Cash NOI % Multi-tenant Single-tenant Multi-tenant Single-tenant Multi-tenant Single-tenant % of
Slide 38: Medical Office Square Feet by Health System
Medical Office As of and for the quarter ended June 30, 2018, square feet in thousands SQUARE FEET BY HEALTH SYSTEM Square Feet Directly Leased by Health System Health System Credit % of Annualized Health System Rank(1) Rating On-Campus Anchored(2) Adjacent(2) Off-Campus Total % of Total % Square Fe
Slide 39: Medical Office
Medical Office As of and for the quarter ended June 30, 2018, dollars and square feet in thousands SELECTED LEASE EXPIRATION DATA (NEXT 5 YEARS) Total On-Campus Off-Campus Leased Annualized Annualized Annualized Year Square Feet % Base Rent % Square Feet Base Rent Square Feet Base Rent 2018(1) 1,877
Slide 40: Other Wholly-owned
Other Wholly-owned As of and for the quarter ended June 30, 2018, dollars in thousands LEASED PROPERTIES Facility Facility Property Occupancy EBITDARM EBITDAR Type/Operator Count Investment Cash NOI Beds %(1) CFC(1) CFC(1) Hospitals Acute care 4 $ 342,202 $ 13,826 1,442 48.5 9.32x 8.76x Remaining 10
Slide 41: Other Same Property Portfolio
Other Same Property Portfolio - Wholly-owned As of and for the quarter ended June 30, 2018, dollars in thousands OTHER 2Q17 3Q17 4Q17 1Q18 2Q18 Property count 15 15 15 15 15 Investment $ 548,818 $ 548,818 $ 548,818 $ 549,968 $ 549,987 Beds 2,254 2,254 2,254 2,254 2,258 Occupancy %(1) 52.1 50.7 48.6
Slide 42: Other Unconsolidated JVs
Other Unconsolidated JVs(1) As of and for the quarter ended June 30, 2018, dollars and square feet in thousands Other SHOP Medical SELECTED FINANCIAL DATA AT 100% Total CCRC JV RIDEA II JV(2) JVs U.K. JV(3) Life Science Office Remaining Joint ventures' Investment $ 2,454,847 $ 1,467,184 $ — $ 242,56
Slide 43: Other Unconsolidated JV Capital
Other Unconsolidated JV Capital Represents HCP's pro rata share of unconsolidated JVs for the quarter ended June 30, 2018, dollars in thousands UNCONSOLIDATED JV CAPITAL Three Months Ended Six Months Ended June 30, 2018 June 30, 2018 FAD capital expenditures $ 3,324 $ 6,100 Revenue enhancing capital
Slide 44: Other CCRC JV
Other CCRC JV Dollars in thousands, except REVPOR CCRC JV 2Q17 3Q17 4Q17 1Q18 2Q18 Property count 15 15 15 15 15 Units 7,245 7,249 7,250 7,257 7,262 Occupancy % 85.2 84.9 85.7 86.4 85.8 (1) REVPOR $ 5,065 $ 5,094 $ 5,153 $ 5,099 $ 5,132 HCP's SHARE OF CCRC JV Investment $ 700,776 $ 705,554 $ 709,625
Slide 45: 2018 Guidance
2018 Guidance Projected full year 2018, dollars in millions, except per share amounts Full Year 2018 (1) SPP Cash NOI guidance includes $9.0 million related to non-recurring items identified in Guidance our 4Q17 Earnings Release and Supplemental Report. Excluding these items, SPP Cash (August 2, 201
Slide 46: Glossary
Glossary Adjusted Fixed Charge Coverage* Consolidated Gross Assets* Adjusted EBITDA divided by Fixed Charges. Adjusted Fixed Charge Coverage is a supplemental The carrying amount of total assets, excluding investments in and advances to our measure of liquidity and our ability to meet interest payme
Slide 47: Glossary
Glossary Enterprise Gross Assets* Fixed Charges* Consolidated Gross Assets plus our pro rata share of total gross assets from our unconsolidated Total interest expense plus capitalized interest plus preferred stock dividends (if applicable). Fixed JVs, after adding back accumulated depreciation and
Slide 48: Glossary
Glossary Net Debt* Redevelopment Enterprise Debt less the carrying amount of cash and cash equivalents as reporting in our Properties that incur major capital expenditures to significantly improve, change the use, or consolidated financial statements and our pro rata share of cash and cash equivalen
Slide 49: Glossary
Glossary Secured Debt Ratio* Enterprise Secured Debt divided by Enterprise Gross Assets. Secured Debt Ratio is a supplemental measure of our financial position, which enables both management and investors to analyze our leverage and to compare our leverage to that of other companies. Square Feet (Sq
Slide 50: Debt Ratios: Adjusted EBITDA and Adjusted Fixed Charge Coverage
Adjusted EBITDA and Adjusted Debt Ratios Fixed Charge Coverage Dollars in thousands NET INCOME TO ADJUSTED EBITDA Three Months Ended June 30, 2018 Net income $ 92,928 Interest expense 73,038 Income tax expense (benefit) (4,654) Depreciation and amortization 143,292 Other depreciation and amortizatio
Slide 51: Debt Ratios
Debt Ratios As of and for the quarter ended June 30, 2018, dollars in thousands ENTERPRISE DEBT AND NET DEBT June 30, 2018 Bank line of credit(1) $ 545,226 (2) Term loans 222,923 Senior unsecured notes(3) 6,401,502 Mortgage debt(4) 142,560 Other debt 93,070 Consolidated Debt $ 7,405,281 HCP's share
Slide 52: Company Information
COMPANY Information BOARD OF DIRECTORS BRIAN G. CARTWRIGHT LYDIA H. KENNARD Chairman of the Board, HCP, Inc. President and Chief Executive Officer, Former General Counsel KDG Construction Consulting U.S. Securities and Exchange Commission PETER L. RHEIN THOMAS M. HERZOG Partner, President and Chief
Slide 53: Sunrise Beverly Hills
Sunrise Beverly Hills Beverly Hills, CA 53
Slide 54: Forward-Looking Statements & Risk Factors
Hoag Hospital Forward-Looking Statements Irvine, CA & Risk Factors Statements contained in this supplemental report which are not historical facts are "forward- looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Slide 55: Forward-Looking Statements & Risk Factors (continued)
The Cove Forward-Looking Statements South San Francisco, CA & Risk Factors (continued) operational risks associated with third party management contracts, including the additional regulation and liabilities of RIDEA lease structures; the effect on the Company and its tenants and operators of legisla
Slide 56: Corporate Headquarters and Offices
CORPORATE HEADQUARTERS SAN FRANCISCO OFFICE NASHVILLE OFFICE 1920 MAIN STREET, SUITE 1200 950 TOWER LANE, SUITE 1650 3000 MERIDIAN BOULEVARD, SUITE 200 IRVINE, CA 92614 FOSTER CITY, CA 94404 FRANKLIN, TN 37067 (949) 407-0700 56