Slide 1: Master Lease Amendment HCR ManorCare
2015 STRATEGY. EXECUTION. RESULTS. master lease amendment HCR ManorCare march 30 2015
Slide 2: HCRMC master lease amendment strengthens lease coverage for HCP
Before Amendment(1) (1) (2) After Amendment and Asset Sale(2) HCRMC Corporate FCC 1.07x pro forma 1.28x – 1.30x Facility Coverage 0.77x pro forma 0.98x – 1.00x Annual Rent $541 million $473M before asset sales, $446M–$454M after Ownership of assets and lease receivable n/a HCP receives: (A) nine ass
Slide 3: Benefits and cost of the lease amendment to HCP
Benefit HCP’s amended annual rent of $473M(1) will (1) be “covered” at higher levels, both at facility and HCR Corporate FCC HCP receives fee ownership in 9 new assets owned and operated by HCR valued at $275M (added to Master Lease) In addition, HCP receives a lease receivable with an initial value
Slide 4: Lease amendment & asset sales increase master lease coverage
(1) (2) (3) lease amendment & asset sales increase master lease coverage HCRMC Corporate FCC Facility-level Rent Coverage(3) (including 9 assets added to Master Lease) 12-month Ending Sept. 2012 HCRMC 2015 Base Financial Forecast Pro Forma(2) (full-year, run rate basis) 1.29x 1.07x(1) 1.28x – 1.30x(
Slide 5: Sale of 50 non-strategic assets
(1) Sale of non-strategic assets meaningfully improves portfolio metrics for HCP: Occupancy Quality Mix (revenue) Skilled Mix (census) Operating Margins Increases coverage by 5 to 7 bps on a full-year, run rate basis(1) Process on schedule since initial February announcement: Engaged brokers and hav
Slide 6: HCP receives fee ownership in nine post-acute facilities
As part of the lease amendment, HCP receives 100% fee ownership in nine post-acute facilities owned and operated by HCRMC valued at $275M (no capital outlay for HCP) Median age of 4 years (three properties in stabilization) Quality mix, skilled mix and operating margins meaningfully above portfolio
Slide 7: CY2015 financial impact to HCP from lease amendment
Calendar Yr. 2015 (9–month impact)(1) Before After Contribution from Master Lease:(2) Amendment Amendment Change Cash Rent $537 $485 ($51) DFL Income 674 634 (40) Non-cash Impairment Charge (481) (481) Selected Credit Metrics: Financial Leverage (at year end) 40%–41% 41%–42% (1%) CY'15 Adj. Fixed Ch
Slide 8: Summary of lease amendment rationale and benefits
(1) Increase HCRMC corporate fixed charge coverage (“FCC”) and facility-level coverage, giving effect to the amended rent (reduced $68M from $541M to $473M commencing April 2015) HCP receives consideration through “economic trades”: HCP receives 100% fee ownership in nine new post-acute facilities o
Slide 9: Appendix
appendix E
Slide 10: Overview of contractual master lease rent before and after lease amendment
overview of contractual master lease rent before and after lease amendment(1) Lease Years Commencing April Year 1 Year 2 Year 3 Year 11 Year 12 Year 16 ($M) 2014 2015 2016 2017 ... 2025 2026 ... 2030 Lease Before Amendment : Cash Rent $523 $541 $560 $577 $731 Annual Escalator 3.5% 3.5% 3.0% 3.0% Lea
Slide 11: Disclaimer
disclaimer This presentation is being presented solely for your information, is subject to change and speaks only as of the date hereof. This presentation and comments made by management do not constitute an offer to sell or the solicitation of an offer to buy any securities of HCP or any investment