Healthpeak Properties, Inc. · NYSE:DOC
Healthpeak Properties — HCP — Q4 2018 Earnings Presentation
58 slides from Healthpeak Properties's earnings presentation, Feb 13, 2019
Slide 1: Earnings Release and Supplemental Report
Earnings Release and Supplemental Report fourth quarter 2018 The Cove at Oyster Point South San Francisco, CA 1
Slide 2: Table of Contents
Earnings Release 3 Overview 9 Consolidated Financial Statements 10 Portfolio Summary 14 Same Property Portfolio 16 Capitalization and Indebtedness 17 Investment Summary 20 Developments and Redevelopments 22 Capital Expenditures 24 Portfolio Diversification 25 Expirations and Maturities 27 Triple-net
Slide 3: HCP Reports Fourth Quarter and Year Ended 2018 Results
HCP Reports Fourth Quarter and Year Ended 2018 Results IRVINE, CA, February 13, 2019 -- HCP, Inc. (NYSE: HCP) today announced results for the fourth quarter and full year ended December 31, 2018. FOURTH QUARTER 2018 AND RECENT HIGHLIGHTS – Diluted net income of $1.73 per share, diluted NAREIT FFO of
Slide 4: Fourth Quarter and Full Year Comparison
FOURTH QUARTER COMPARISON Three Months Ended Three Months Ended December 31, 2018 December 31, 2017 (in thousands, except per share amounts) Amount Per Share Amount Per Share Net income (loss), diluted $ 831,965 $ 1.73 $ (59,298) $ (0.13) NAREIT FFO, diluted 195,187 0.41 52,884 0.11 FFO as adjusted,
Slide 5: Same Property Portfolio Operating Summary
SAME PROPERTY PORTFOLIO OPERATING SUMMARY The tables below outline the year-over-year three-month and full year SPP Cash NOI growth and the components of our senior housing operating portfolio ("SHOP") SPP Cash NOI growth: Year-Over-Year Total SPP Cash NOI Growth Components of Three-Month SHOP SPP C
Slide 6: Operator Transition Update and Development Updates
OPERATOR TRANSITION UPDATE During 2018, we transitioned 38 HCP-owned senior housing communities from Brookdale to new operators, including Atria Senior Living, Sunrise Senior Living, Elmcroft by Eclipse Senior Living, Discovery Senior Living and Sonata Senior Living. DEVELOPMENT UPDATES ADDITIONAL P
Slide 7: Dividend and Sustainability
DIVIDEND On January 31, 2019, we announced that our Board declared a quarterly cash dividend of $0.37 per common share. The dividend will be paid on February 28, 2019 to stockholders of record as of the close of business on February 19, 2019. SUSTAINABILITY HCP’s leadership and performance in enviro
Slide 8: Company Information
COMPANY INFORMATION HCP has scheduled a conference call and webcast for Thursday, February 14, 2019, at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) to present its performance and operating results for the fourth quarter and full year 2018. The conference call is accessible by dialing (888) 317-
Slide 9: Overview
The Numbers Overview (1) As of and for the quarter and year ended December 31, 2018, dollars, square feet and shares in thousands, except per share data 4Q18 YTD 2018 (1) Reconciliations, definitions and important discussions Financial Metrics regarding the usefulness and limitations of the non-GAAP
Slide 10: Consolidated Balance Sheets
HCP, Inc. Consolidated Balance Sheets In thousands, except share and per share data December 31, 2018 December 31, 2017 Assets Real estate: Buildings and improvements $ 10,877,248 $ 11,239,732 Development costs and construction in progress 537,643 447,976 Land 1,637,506 1,785,865 Accumulated depreci
Slide 11: 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, 2018 2017 2018 2017 (unaudited) Revenues: Rental and related revenues $ 298,790 $ 291,708 $ 1,237,236 $ 1,213,649 Resident fees and services 127,826 132,587 544
Slide 12: Funds From Operations
HCP, Inc. Funds From Operations In thousands, except per share data (unaudited) Three Months Ended Year Ended (1) For the three months ended December 31, 2018, December 31, December 31, represents the gain related to the acquisition of our 2018 2017 2018 2017 partner's interests in four previously u
Slide 13: Funds Available for Distribution
HCP, Inc. Funds Available for Distribution In thousands (unaudited) Three Months Ended December 31, Year Ended December 31, 2018 2017 2018 2017 FFO as adjusted applicable to common shares $ 202,133 $ 225,608 $ 857,233 $ 918,402 Amortization of deferred compensation(1) 3,465 3,180 14,714 13,510 Amort
Slide 14: Portfolio Summary
Portfolio Summary As of and for the quarter ended December 31, 2018, dollars in thousands Property Average Portfolio Portfolio Private Count Age Investment Income Pay %(1) PORTFOLIO INCOME Wholly Owned Property Portfolio Senior housing triple-net 146 21 $ 2,997,663 $ 65,111 92.7 Unconsolidated JVs(2
Slide 15: NOI and Cash NOI Summary
NOI and Cash NOI Summary For the quarter ended December 31, 2018, dollars in thousands NOI SUMMARY Real Estate Operating Revenues Expenses NOI(1) Wholly-Owned Senior housing triple-net $ 63,602 $ (941) $ 62,661 SHOP 127,909 (104,617) 23,292 Life science 96,371 (23,534) 72,837 Medical office 130,221
Slide 16: Same Property Portfolio
Same Property Portfolio As of December 31, 2018, dollars in thousands SAME PROPERTY PORTFOLIO RECONCILIATION Senior Housing Life Medical Triple-net SHOP Science Office Other Total Total Property Count 146 93 124 267 114 744 (1) Not meaningful as 4Q17 includes non-cash adjustments Unconsolidated JVs
Slide 17: Capitalization
Capitalization Dollars and shares in thousands, except price per share data TOTAL CAPITALIZATION December 31, 2018 Shares Value Total Value Common stock (NYSE: HCP) 477,496 $ 27.93 $ 13,336,463 Convertible partnership (DownREIT) units 6,614 27.93 184,729 Total Market Equity 484,110 $ 13,521,192 Cons
Slide 18: Indebtedness and Ratios
Indebtedness and Ratios As of December 31, 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 Amounts Rates %(2) Amounts
Slide 19: Indebtedness and Ratios
Indebtedness and Ratios As of December 31, 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 $ 180,598 3 4.19 15.4 Floating rate 282,444 5 5.06 2.7 Combined $ 463,042 8 4.72
Slide 20: Investment Summary
Investment Summary For the three and twelve months ended December 31, 2018, dollars and square feet in thousands INVESTMENT SUMMARY Three Months Ended Twelve Months Ended December 31, 2018 December 31, 2018 Acquisition of 16 MOBs - Greenville, SC(1) $ — $ 285,000 Equity interests in Life Science JVs
Slide 21: Investment Summary Dispositions
Investment Summary Dispositions For the year ended December 31, 2018, dollars and square feet in thousands Property Sales Price/ Trailing Cash Date Capacity Count Property Type Proceeds Yield(1) West Palm Beach, FL January 34 Units 1 SHOP $ 3,350 Altamonte Springs, FL (sale to Brookdale) January 137
Slide 22: Developments
Developments As of December 31, 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 $ 68,193 $ 4,107 $ 72,300 The Cove at Oyster Point -
Slide 23: Redevelopments and Land Held for Development
Redevelopments and Land Held for (1) Development As of December 31, 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-
Slide 24: Capital Expenditures
Capital Expenditures For the three and twelve months ended December 31, 2018, dollars in thousands, except per unit/square foot FOURTH QUARTER Senior Housing Triple-net SHOP Life Science Medical Office Other Total Wholly-Owned Recurring capital expenditures $ 922 $ 4,937 $ 1,715 $ 11,849 $ — $ 19,42
Slide 25: Portfolio Diversification by MSA
Portfolio Diversification As of and for the quarter ended December 31, 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 76 $ 2,634 $ — $ 45,426 $ 795 $ — $ 48,855 17 Dallas, TX
Slide 26: Portfolio Diversification by Operator/Tenant
Portfolio Diversification As of and for the quarter ended December 31, 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 P
Slide 27: Expirations and Maturities
Expirations and Maturities As of December 31, 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 2019(1) $ 96,733 9 $ 2,305 $ 24,653 $ 69,775 $ — $ — 2020 133,163 1
Slide 28: Triple-Net Master Lease Profile
(1)(2) Triple-Net Master Lease Profile INVESTMENT TYPE 2.3% 0x x .0 25 FACILITY EBITDAR CFC (TRAILING 12 MONTHS ENDED 09/30/2018) 13 2. Senior Housing - Guaranty Senior Housing - No Guaranty x 0.7% 00 2. 1.4% Other - Guaranty 0.2% x % Percent of Total Cash NOI and 75 1. Interest Income 0.4% x 50 1.
Slide 29: Senior Housing Triple-net
Senior Housing Triple-net As of and for the quarter ended December 31, 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 144 $ 2,742,200 $ 57,940 1
Slide 30: Senior Housing Triple-net Same Property Portfolio
Senior Housing Triple-net Same Property Portfolio Dollars in thousands, except REVPOR 4Q17 1Q18 2Q18 3Q18 4Q18 Property count 146 146 146 146 146 Investment $ 2,987,568 $ 2,991,211 $ 2,991,325 $ 2,994,695 $ 2,997,663 Units 15,000 15,000 15,001 15,009 15,001 Occupancy % 86.7 86.9 86.0 85.3 85.6 REVPO
Slide 31: Senior Housing Triple-net New Supply
Senior Housing Triple-net New Supply As of and for the quarter ended December 31, 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 %
Slide 32: SHOP
SHOP As of and for the quarter ended December 31, 2018, dollars in thousands, except REVPOR INVESTMENTS Property REVPOR Count Investment Cash NOI Units Occupancy % SHOP Operator Brookdale 35 $ 943,530 $ 13,874 4,921 86.1 $ 3,799 Atria Senior Living 27 595,240 6,169 3,541 81.2 4,352 Senior Lifestyle
Slide 33: SHOP MSA
SHOP MSA As of and for the quarter ended December 31, 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 $ 301,555 $ 5,691 21.5 311 1,606 89.9 $ 4,906 $ 2,707 Denver, CO 174,377
Slide 34: SHOP Same Property Portfolio - Core
SHOP Same Property Portfolio Dollars in thousands, except REVPOR CORE Sequential Year-Over- 4Q17 1Q18 2Q18 3Q18 4Q18 Growth Year Growth Property count 32 32 32 32 32 — — Investment $ 990,521 $ 992,896 $ 997,646 $ 1,002,862 $ 1,010,194 0.7 % 2.0 % Units 4,248 4,248 4,248 4,248 4,249 — % — % Occupancy
Slide 35: SHOP Same Property Portfolio - Total
SHOP Same Property Portfolio Dollars in thousands, except REVPOR TOTAL Sequential Year-Over- 4Q17 1Q18 2Q18 3Q18 4Q18 Growth Year Growth Property count 48 48 48 48 48 — — Investment $ 1,309,081 $ 1,313,562 $ 1,320,898 $ 1,327,420 $ 1,339,126 0.9 % 2.3 % Units 6,252 6,252 6,251 6,252 6,253 — % — % Oc
Slide 36: SHOP New Supply
SHOP New Supply As of and for the quarter ended December 31, 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 Con
Slide 37: Life Science
Life Science As of and for the quarter ended December 31, 2018, dollars and square feet in thousands INVESTMENTS(1) Property Cash Square Occupancy MSA Count Investment NOI Feet % San Francisco, CA/San Jose, CA 71 $ 2,485,282 $ 50,270 3,749 97.1 San Diego, CA 30 869,994 14,304 2,056 94.3 Boston, MA 2
Slide 38: Life Science Lease Expirations and Tenant Concentration
Life Science As of December 31, 2018, dollars and square feet in thousands SELECTED LEASE EXPIRATION DATA (NEXT 5 YEARS) San Francisco / Total San Jose San Diego Boston Remaining Leased Square Annualized Square Annualized Square Annualized Square Annualized Square Annualized Year Feet % Base Rent %
Slide 39: 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 September 30, 2018 7,064 $ 43.38 Acq
Slide 40: Medical Office
Medical Office As of and for the quarter ended December 31, 2018, dollars and square feet in thousands PORTFOLIO BY MARKET(1) Square Feet On-campus(2) Off-campus(3) Total Property Occupancy MSA Count Investment Cash NOI % Multi-tenant Single-tenant Multi-tenant Single-tenant Multi-tenant Single-tena
Slide 41: Medical Office Square Feet by Health System
Medical Office As of and for the quarter ended December 31, 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 % Squar
Slide 42: Medical Office Lease Expirations and Same Property
Medical Office As of and for the quarter ended December 31, 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 2019(1) 2
Slide 43: Other Wholly-owned
Other Wholly-owned As of and for the quarter ended December 31, 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 $ 342,426 $ 13,931 1,480 43.2 9.75x 9.16x Remainin
Slide 44: Other Same Property Portfolio
Other Same Property Portfolio - Wholly-owned As of and for the quarter ended December 31, 2018, dollars in thousands OTHER 4Q17 1Q18 2Q18 3Q18 4Q18 Property count 15 15 15 15 15 Investment $ 548,818 $ 549,968 $ 549,987 $ 550,211 $ 550,211 Beds 2,254 2,254 2,258 2,258 2,296 Occupancy %(1) 48.6 47.7 5
Slide 45: Other Unconsolidated JVs
Other Unconsolidated JVs(1) As of and for the quarter ended December 31, 2018, dollars and square feet in thousands Other SHOP Medical SELECTED FINANCIAL DATA AT 100% Total CCRC JV JVs U.K. JV Life Science(2) Office Remaining Joint ventures' Investment $ 2,314,314 $ 1,488,782 $ 256,105 $ 508,756 $ —
Slide 46: Other Unconsolidated JV Capital
Other Unconsolidated JV Capital Represents HCP's pro rata share of unconsolidated JVs for the quarter ended December 31, 2018, dollars in thousands UNCONSOLIDATED JV CAPITAL Three Months Ended Twelve Months Ended December 31, 2018 December 31, 2018 FAD capital expenditures $ 2,870 $ 10,710 Revenue e
Slide 47: Other CCRC JV
Other CCRC JV Dollars in thousands, except REVPOR CCRC JV 4Q17 1Q18 2Q18 3Q18 4Q18 Property count 15 15 15 15 15 Units 7,250 7,257 7,262 7,268 7,273 Occupancy % 85.7 86.4 85.8 85.5 85.7 REVPOR(1) $ 5,153 $ 5,099 $ 5,132 $ 5,188 $ 5,206 HCP's SHARE OF CCRC JV Investment $ 709,625 $ 713,996 $ 718,920
Slide 48: 2019 Guidance
2019 Guidance Projected full year 2019, dollars in millions, except per share amounts Full Year 2019 Guidance Additional 2019 Guidance Assumptions (February 13, 2019) Net income, FFO and FFO as Adjusted per Share Guidance • The components to initial Total Portfolio year-over-year SPP Cash NOI Guidan
Slide 49: 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 unconsolidated measure of liquidity and our ability to meet
Slide 50: 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 51: Glossary
Glossary Net Debt* Real Estate Revenues* Enterprise Debt less the carrying amount of cash and cash equivalents as reported in our Includes rental related revenues, tenant recoveries, resident fees and services and income from consolidated financial statements and our pro rata share of cash and cash
Slide 52: 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 53: Debt Ratios: Adjusted EBITDA and Fixed Charge Coverage
Adjusted EBITDA and Adjusted Debt Ratios Fixed Charge Coverage Dollars in thousands NET INCOME TO ADJUSTED EBITDA Three Months Ended Twelve Months Ended December 31, 2018 December 31, 2018 Net income (loss) $ 834,383 $ 1,073,474 Interest expense 54,717 266,343 Income tax expense (benefit) (2,935) (1
Slide 54: Debt Ratios
Debt Ratios As of and for the quarter ended December 31, 2018, dollars in thousands ENTERPRISE DEBT AND NET DEBT December 31, 2018 Bank line of credit(1) $ 80,103 Term loans — Senior unsecured notes 5,258,550 Mortgage debt 138,470 Other debt 90,785 Consolidated Debt $ 5,567,908 HCP's share of uncons
Slide 55: 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 56: Forward-Looking Statements & Risk Factors
Madison Medical Tower Forward-Looking Statements Seattle, WA & 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
Slide 57: Forward-Looking Statements & Risk Factors (continued)
Forward-Looking Statements 65 Hayden Boston, MA & Risk Factors (continued) including its lack of sole decision making authority and its reliance on its partners’ financial condition and continued cooperation; competition for the acquisition and financing of suitable healthcare properties as well as
Slide 58: 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 58