Healthpeak Properties, Inc. · NYSE:DOC
Healthpeak Properties — HCP — Q4 2017 Earnings Presentation
64 slides from Healthpeak Properties's earnings presentation, Feb 13, 2018
Slide 1: Earnings Release and Supplemental Report Fourth Quarter 2017
Earnings Release and Supplemental Report fourth quarter 2017 65 Hayden 1 Boston, MA
Slide 2: Table of Contents
Earnings Release 3 Overview 10 Consolidated Financial Statements 11 Portfolio Summary 15 Same Property Portfolio 17 Capitalization and Debt 18 Investment Summary - Acquisitions, Fundings & Dispositions 21 Developments and Redevelopments 23 Capital Expenditures 25 Portfolio Diversification 27 Expirat
Slide 3: HCP Announces Results for the Fourth Quarter and Year Ended 2017
HCP Announces Results for the Fourth Quarter and Year Ended 2017 IRVINE, CA, February 13, 2018 -- HCP (NYSE:HCP) announced results for the fourth quarter and full year ended December 31, 2017. FOURTH QUARTER 2017 FINANCIAL PERFORMANCE AND RECENT HIGHLIGHTS – Net loss, FFO and FFO as adjusted applica
Slide 4: Fourth Quarter Comparison
FOURTH QUARTER COMPARISON Three Months Ended Three Months Ended December 31, 2017 December 31, 2016 Diluted Diluted Per Share (in thousands, except per share amounts) Amount Per Share Amount Per Share Change Net income (loss)(1) $ (59,298) $ (0.13) $ 58,440 $ 0.12 $ (0.25) FFO $ 52,884 $ 0.11 $ 162,
Slide 5: Full Year Comparison
FULL YEAR COMPARISON Year Ended Year Ended December 31, 2017 December 31, 2016 Diluted Diluted Per Share (in thousands, except per share amounts) Amount Per Share Amount Per Share Change Net income (loss)(1) $ 413,013 $ 0.88 $ 626,549 $ 1.34 $ (0.46) FFO $ 661,113 $ 1.41 $ 1,119,153 $ 2.39 $ (0.98)
Slide 6: Same Property Portfolio Operating Summary
SAME PROPERTY PORTFOLIO OPERATING SUMMARY The table below outlines the same property portfolio operating results for the quarter and full year: Year-Over-Year Total SPP Cash NOI Growth(1) Three Months Full Year Senior housing triple-net 2.6% 5.6% Senior housing operating portfolio ("SHOP")(2) (8.3%)
Slide 7: Acquisitions
ACQUISITIONS For the fourth quarter, we announced $424 million of acquisitions, bringing our year-to-date total acquisitions to $562 million. Significant transactions during the quarter included: In November, we acquired The Residence at Watertown Square, a 90-unit senior housing community located i
Slide 8: 2018 Guidance
2018 GUIDANCE For full year 2018, we have established the following guidance ranges: • Net income per share applicable to common shares of $0.79 to $0.85 • FFO per share of $1.73 to $1.79 • FFO as adjusted per share of $1.77 to $1.83 • SPP Cash NOI to increase 0.25% to 1.75% These estimates do not r
Slide 9: 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 10: Overview
The Numbers Overview (1) As of and for the quarter and year ended December 31, 2017 and the year ending December 31, 2018, dollars, square feet and shares in thousands, except per share data Full Year 2018 Guidance 4Q17 Full Year 2017 (February 13, 2018) (1) Reconciliations, definitions and importan
Slide 11: Consolidated Balance Sheets
HCP, Inc. Consolidated Balance Sheets In thousands, except share and per share data December 31, 2017 December 31, 2016 Assets Real estate: Buildings and improvements $ 11,239,732 $ 11,692,654 Development costs and construction in progress 447,976 400,619 Land 1,785,865 1,881,487 Accumulated depreci
Slide 12: Consolidated Statements of Operations
HCP, Inc. Consolidated Statements of Operations In thousands, except per share data Three Months Ended December 31, Year Ended December 31, 2017 2016 2017 2016 (unaudited) Revenues: Rental and related revenues $ 255,006 $ 286,968 $ 1,071,153 $ 1,159,791 Tenant recoveries 36,702 34,565 142,496 134,28
Slide 13: Funds From Operations
HCP, Inc. Funds From Operations In thousands, except per share data (unaudited) Three Months Ended Year Ended (1) For the year ended December 31, 2017, represents income December 31, December 31, tax benefit associated with the disposition of real estate assets in our RIDEA II transaction. For the y
Slide 14: Funds Available for Distribution
HCP, Inc. Funds Available for Distribution In thousands (unaudited) Three Months Ended Year Ended December 31, December 31, 2017 2016 2017 2016 FFO as adjusted applicable to common shares $ 225,608 $ 276,200 $ 918,402 $ 1,282,390 Amortization of deferred compensation(1) 3,180 2,687 13,510 15,581 Amo
Slide 15: Portfolio Summary
Portfolio Summary As of and for the quarter ended December 31, 2017, dollars in thousands Total Cash Property NOI and Private Count Age Investment Interest Pay %(1) Property Portfolio TOTAL CASH NOI AND INTEREST INCOME Senior housing triple-net 181 19 $ 3,569,085 $ 77,265 93.0 SHOP 101 22 2,606,937
Slide 16: Portfolio Summary: Total NOI, Cash NOI and Interest Income
Portfolio Summary For the quarter ended December 31, 2017, dollars in thousands TOTAL NOI, TOTAL CASH NOI AND INTEREST INCOME Total Rental and Total Total Cash NOI Operating Operating Interest and Interest Revenues(1) Expenses(1) Total NOI(1)(2) Total Cash NOI(2) Income Income Wholly-Owned Senior ho
Slide 17: Same Property Portfolio
Same Property Portfolio As of December 31, 2017, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs Senior Housing Life Medical (1) Includes non-cash adjustments related to the SAME PROPERTY PORTFOLIO RECONCILIATION Triple-net SHOP Science Office Other Total Brookdale Transact
Slide 18: Capitalization
Capitalization Dollars and shares in thousands, except price per share data TOTAL CAPITALIZATION December 31, 2017 Shares Value Total Value Common stock (NYSE: HCP) 469,436 $ 26.08 $ 12,242,891 Convertible partnership (DownREIT) units 6,617 26.08 172,571 Total Market Equity 476,053 $ 12,415,462 Cons
Slide 19: Indebtedness and Ratios
Indebtedness and Ratios As of December 31, 2017, dollars in thousands DEBT MATURITIES AND SCHEDULED PRINCIPAL REPAYMENTS (AMORTIZATION) Senior Unsecured HCP's Share of Notes Mortgage Debt Unconsolidated JV Debt Total Debt Bank Line of Consolidated Credit(1) Term Loan(2) Amounts Rates %(3) Amounts Ra
Slide 20: Indebtedness and Ratios
Indebtedness and Ratios As of December 31, 2017, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs DEBT STRUCTURE Weighted Average Balance % of Total Interest Rate Years to Maturity Secured Fixed rate $ 199,529 3 4.18% 15.5 Floating rate 111,320 1 3.89% 5.2 Combined $ 310,849
Slide 21: Investment Summary: Acquisitions, Fundings and Repayments
Acquisitions, Fundings Investment Summary and Repayments For the three and twelve months ended December 31, 2017, dollars and square feet in thousands INVESTMENT SUMMARY Three Months Ended Twelve Months Ended December 31, 2017 December 31, 2017 Acquisitions $ 423,842 $ 561,942 Development fundings 6
Slide 22: Investment Summary: Dispositions and Assets Held for Sale
Dispositions and Investment Summary Assets Held for Sale For the year ended December 31, 2017, dollars and square feet in thousands DISPOSITIONS Trailing Date Capacity Property Count Property Type Sales Price Cash Yield(1) Salt Lake City, UT January 324 Sq. Ft. 4 Life science $ 75,750 Memphis, TN Ja
Slide 23: Developments
Developments As of December 31, 2017, dollars and square feet in thousands DEVELOPMENT PROJECTS IN PROCESS Property Placed Construction in Cost to Total at (1) Property counts Name of Project MSA Segment Count(1) in Service(2) Process ("CIP") Complete Completion exclude properties Wholly-Owned place
Slide 24: Redevelopments and Land Held for Development
Redevelopments and Land Held for (1) Development As of December 31, 2017, dollars and square feet in thousands REDEVELOPMENT PROJECTS IN PROCESS Incremental Costs Investment Placed Property Placed in in Cost to Total at Project Estimated Name of Project MSA Segment Count Redevelopment(2) Service CIP
Slide 25: Capital Expenditures Fourth Quarter
Capital Expenditures Fourth Quarter For the quarter ended December 31, 2017, dollars in thousands, except per unit/square foot Senior Housing Medical Triple-net SHOP Life Science Office Other Total Wholly-Owned Recurring capital expenditures $ 4,971 $ 5,929 $ 1,566 $ 8,366 $ — $ 20,832 Tenant improv
Slide 26: Capital Expenditures Full Year
Capital Expenditures Full Year For the twelve months ended December 31, 2017, dollars in thousands, except per unit/square foot Senior Housing Medical Triple-net SHOP Life Science Office Other Total Wholly-Owned Recurring capital expenditures $ 7,074 $ 19,913 $ 4,339 $ 18,425 $ 132 $ 49,883 Tenant i
Slide 27: Portfolio Diversification by MSA
Portfolio Diversification As of and for the quarter ended December 31, 2017, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs TOTAL CASH NOI AND INTEREST INCOME BY MSA Property Senior Housing Medical MSA Count Triple-net SHOP Life Science Office Other Total % of Total San Fr
Slide 28: Portfolio Diversification by Operator/Tenant
Portfolio Diversification As of and for the quarter ended December 31, 2017, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs TOTAL CASH NOI AND INTEREST INCOME BY OPERATOR/TENANT Tenant/Credit Exposure SHOP/Operator Exposure % of Total % of Total Senior Cash NOI Cash NOI Pr
Slide 29: Expirations and Maturities
Expirations and Maturities As of December 31, 2017, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs 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) $ 97,7
Slide 30: Triple-Net Master Lease Profile
(1)(2) Triple-Net Master Lease Profile INVESTMENT TYPE 1.9% 0x x .0 25 13 2. Senior Housing LOWER RISK FACILITY EBITDAR CFC (TRAILING 12 MONTHS ENDED 09/30/2017) No Corporate Guaranty 0x 2.0 Other 0.6% 1.2% 0.4% 0.2% % Share of Total Cash NOI 5x and Interest Income 1.7 x 50 1. 0.1% 1.0% 1.6% 1.0% 2.
Slide 31: Senior Housing Triple-net
Senior Housing Triple-net As of and for the quarter ended December 31, 2017, dollars in thousands, except REVPOR Facility Facility Property Occupancy REVPOR EBITDARM EBITDAR Property Portfolio Count Investment Cash NOI Units % Triple-Net CFC CFC Assisted living 150 $ 2,638,542 $ 53,927 12,870 86.0 $
Slide 32: Senior Housing Triple-net Same Property Portfolio
Senior Housing Triple-net Same Property Portfolio Dollars in thousands, except REVPOR 4Q16 1Q17 2Q17 3Q17 4Q17 Property count 179 179 179 179 179 Investment $ 3,493,433 $ 3,500,167 $ 3,503,104 $ 3,511,361 $ 3,520,582 Units 18,130 18,124 18,123 18,126 18,123 Occupancy % 88.0 87.7 87.1 86.2 86.4 REVPO
Slide 33: Senior Housing Triple-net New Supply
Senior Housing Triple-net New Supply As of and for the quarter ended December 31, 2017, dollars in thousands NEW SUPPLY ANALYSIS HCP Portfolio 5-Mile Radius(1) % of Cash NOI 5-Year 80+ Triple- Properties/ Exposed Population 80+ Qualified Median net Cash Units Under to New Growth % Penetration Care H
Slide 34: SHOP
SHOP As of and for the quarter ended December 31, 2017, dollars in thousands, except REVPOR INVESTMENTS(1) Property Total Cash REVPOR Count Investment NOI Units Occupancy % SHOP Wholly-Owned AL 68 $ 1,181,196 $ 14,057 6,514 83.7 $ 4,412 IL 32 1,377,738 23,078 6,852 90.0 3,543 CCRC 2 48,003 949 378 8
Slide 35: SHOP MSA
SHOP MSA As of and for the quarter ended December 31, 2017, dollars in thousands, except REVPOR, includes HCP's pro rata share of unconsolidated JVs OPERATING PORTFOLIO METRICS Units(1) REVPOR SHOP(1) Total Cash % of Total MSA Investment NOI Cash NOI AL IL CCRC Occupancy % AL IL CCRC Tampa, FL $ 325
Slide 36: SHOP Trend
SHOP Trend Dollars in thousands, except REVPOR, includes HCP's pro rata share of unconsolidated JVs TOTAL OPERATING PORTFOLIO 4Q16 1Q17(1) 2Q17 3Q17 4Q17 Property count 152 153 153 156 174 Investment $ 3,986,662 $ 3,481,155 $ 3,500,131 $ 3,533,382 $ 3,797,967 Units 25,407 25,472 25,484 25,674 27,212
Slide 37: SHOP Same Property Portfolio
SHOP Same Property Portfolio Dollars in thousands, except REVPOR, includes HCP's pro rata share of unconsolidated JVs TOTAL SHOP(1) 4Q16 1Q17 2Q17 3Q17 4Q17 (1) Excludes non-refundable cash Property count 83 83 83 83 83 Entrance Fees and related activity Investment $ 2,675,093 $ 2,682,869 $ 2,696,53
Slide 38: SHOP CCRC JV Same Property Portfolio
SHOP CCRC JV Same Property Portfolio(1)(2) Dollars in thousands, except REVPOR, includes HCP's pro rata share of unconsolidated JVs CCRC JV 4Q16 1Q17 2Q17 3Q17 4Q17 Property count 15 15 15 15 15 Investment $ 691,408 $ 694,762 $ 700,776 $ 705,554 $ 709,625 Units 7,193 7,198 7,245 7,249 7,250 Occupanc
Slide 39: SHOP New Supply
SHOP New Supply As of and for the quarter ended December 31, 2017, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs NEW SUPPLY ANALYSIS HCP Portfolio 5-Mile Radius(1) % of Total Cash NOI 5-Year 80+ SHOP Properties/ Exposed Population 80+ Qualified Median Total Total Units Un
Slide 40: Life Science
Life Science As of and for the quarter ended December 31, 2017, dollars and square feet in thousands, includes HCP's pro rata share of unconsolidated JVs INVESTMENTS(1) Total Property Cash Square Occupancy MSA Count Investment NOI Feet % Wholly-Owned San Francisco/San Jose, CA 84 $ 2,944,977 $ 55,24
Slide 41: Life Science Lease Expiration and Tenant Concentration
Life Science As of December 31, 2017, dollars and square feet in thousands, includes HCP's pro rata share of unconsolidated JVs SELECTED LEASE EXPIRATION DATA (NEXT 5 YEARS)(1) San Francisco / Total San Jose San Diego Remaining Leased Square Annualized Square Annualized Square Annualized Square Annu
Slide 42: Life Science Leasing Activity
Life Science Square feet in thousands, includes unconsolidated JVs 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 Septemb
Slide 43: Medical Office
Medical Office As of and for the quarter ended December 31, 2017, dollars and square feet in thousands, includes HCP's pro rata share of unconsolidated JVs PORTFOLIO BY MARKET(1) Square Feet On-campus(2) Off-campus(3) Total Property Total Cash Occupancy MSA Count Investment NOI % Multi-tenant Single
Slide 44: Medical Office Square Feet by Health System
Medical Office As of and for the quarter ended December 31, 2017, square feet in thousands, includes HCP's pro rata share of unconsolidated JVs SQUARE FEET BY HEALTH SYSTEM Square Feet Directly Leased by Health System Health System Credit % of Annualized Health System Rank(1) Rating On-Campus Anchor
Slide 45: Medical Office Lease Expirations and Same Property Portfolio
Medical Office As of and for the quarter ended December 31, 2017, dollars and square feet in thousands, includes HCP's pro rata share of unconsolidated JVs SELECTED LEASE EXPIRATION DATA (NEXT 5 YEARS) Total On-Campus Off-Campus Leased Annualized Annualized Annualized Year Square Feet % Base Rent %
Slide 46: Other
Other As of and for the quarter ended December 31, 2017, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs LEASED PROPERTIES Facility Facility Property Total Cash Occupancy EBITDARM EBITDAR Type/Operator Count Investment NOI Beds %(1) CFC(1) CFC(1) Hospitals Acute care 4 $ 34
Slide 47: Other Same Property Portfolio: Hospitals
Other Same Property Portfolio As of and for the quarter ended December 31, 2017, dollars in thousands HOSPITALS 4Q16 1Q17 2Q17 3Q17 4Q17 Property count 14 14 14 14 14 Investment $ 530,777 $ 530,910 $ 530,910 $ 530,910 $ 530,910 Beds 2,134 2,134 2,134 2,134 2,134 Occupancy %(1) 50.7 51.2 52.1 50.7 48
Slide 48: Other Same Property Portfolio: Total Other
Other Same Property Portfolio As of and for the quarter ended December 31, 2017, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs TOTAL OTHER(1) 4Q16 1Q17 2Q17 3Q17 4Q17 Property count 79 79 79 79 79 Investment $ 925,958 $ 930,278 $ 944,754 $ 957,645 $ 961,174 Total Rental a
Slide 49: Unconsolidated Joint Ventures
(1) Unconsolidated Joint Ventures As of and for the quarter ended December 31, 2017, dollars and square feet in thousands SHOP Remaining Life Medical SELECTED FINANCIAL DATA AT 100% Total CCRC RIDEA II JV SHOP JV Science Office Other Joint ventures' Investment $ 2,785,873 $ 1,448,214 $ 908,530 $ 213
Slide 50: 2018 Guidance
2018 Guidance Projected full year 2018, dollars in millions, except per share amounts (1) Effective 2018, unconsolidated JVs will be removed from the same property portfolio in order to better align with how management views the business and to improve the comparability of our results. For additiona
Slide 51: Brookdale Transaction Non-Cash NOI Impact
Brookdale Transaction Non-Cash NOI Impact (1) Dollars in thousands Three Months Ended December 31, 2017 Senior Housing Life Medical Triple-net SHOP Science Office Other Total Total NOI $ 57,322 $ 21,436 $ 76,238 $ 75,197 $ 28,465 $ 258,658 Revenue reduction related to triple-net lease terminations(2
Slide 52: 2017 Summary Results Portfolio Summary
2017 Summary Results Portfolio Summary Effective with the first quarter 2018 Supplemental, HCP's Share of the Unconsolidated JVs will be reported in the Other non-reportable segment and will be removed from the same property portfolio, consistent with the 2018 FY SPP guidance. • Removing the unconso
Slide 53: 2017 Summary Results: Unconsolidated JVs in Other
HCP's Share of 2017 Summary Results Unconsolidated JVs in Other For the quarter ended December 31, 2017, dollars in thousands TABLE 1 - PORTFOLIO SUMMARY WITH UNCONSOLIDATED JVS REPORTED IN SEGMENTS(1) Total Rental and Total Total Cash NOI Operating Operating Interest and Interest Revenues Expenses
Slide 54: 2017 Summary Results: SPP Excluding Unconsolidated JVs
SPP Excluding HCP's Share 2017 Summary Results of Unconsolidated JVs As of and for the quarter and year ended December 31, 2017, dollars in thousands YEAR-OVER-YEAR SPP - INCLUDING HCP'S SHARE OF UNCONSOLIDATED JVS Three-Month Full Year Occupancy Growth Occupancy Growth Property Total SPP Total SPP
Slide 55: Glossary
Glossary Adjusted Fixed Charge Coverage* Consolidated Secured Debt Adjusted EBITDA divided by Fixed Charges. Adjusted Fixed Charge Coverage is a supplemental Mortgage and other debt secured by real estate, as reported in the Company’s consolidated measure of liquidity and the Company’s ability to me
Slide 56: Glossary
Glossary Estimated / Actual Completion Date Funds Available for Distribution (“FAD”)* For Developments, management’s estimate of the period the core and shell structure improvements See the “Funds Available for Distribution” definition included in the accompanying Discussion and are expected to be o
Slide 57: Glossary
Glossary Net Operating Income from Continuing Operations (“NOI”) and Cash Retention Rate NOI* The ratio of total renewed square feet to the total square feet expiring and available for lease, NOI is defined as rental and related revenues, including tenant recoveries, resident fees and excluding the
Slide 58: Glossary
Glossary Square Feet (Sq. Ft.) Total Market Equity The square footage for properties, excluding square footage for development or redevelopment The total number of outstanding shares of the Company’s common stock multiplied by the closing properties prior to completion. price per share of its common
Slide 59: Debt Ratios: Adjusted EBITDA and Adjusted Fixed Charge Coverage
Adjusted EBITDA and Adjusted Debt Ratios Fixed Charge Coverage Dollars in thousands Three Months Ended Year Ended December 31, 2017 December 31, 2017 Net income $ (57,924) $ 422,634 Interest expense 71,882 307,716 Income tax expense (benefit) 13,297 (1,333) Depreciation and amortization 136,833 534,
Slide 60: Debt Ratios
Debt Ratios As of the year ended December 31, 2017, dollars in thousands TOTAL DEBT AND NET DEBT December 31, 2017 Bank line of credit(1) $ 1,017,076 (2) Term loan 228,288 Senior unsecured notes 6,396,451 Mortgage debt 144,486 Other debt 94,165 Consolidated debt $ 7,880,466 HCP's share of unconsolid
Slide 61: Company Information
COMPANY Information BOARD OF DIRECTORS DAVID B. HENRY JAMES P. HOFFMANN Chairman of the Board, HCP, Inc. Former Partner and Senior Vice President, Former Vice Chairman and Chief Executive Officer, Wellington Management Company Kimco Realty Corporation MICHAEL D. MCKEE THOMAS M. HERZOG Former Executi
Slide 62: Forward-Looking Statements & Risk Factors
Solana Preserve Vintage Park Forward-Looking Statements Houston, TX & 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 Sec
Slide 63: Forward-Looking Statements & Risk Factors (continued)
Solana Preserve Vintage Park Forward-Looking Statements Houston, TX & Risk Factors (continued) and its tenants, operators and borrowers from current and future litigation matters, including the possibility of larger than expected litigation costs, adverse results and related developments; the effect
Slide 64: 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 64