Healthpeak Properties, Inc. · NYSE:DOC
Healthpeak Properties — HCP — Q2 2017 Earnings Presentation
58 slides from Healthpeak Properties's earnings presentation, Aug 1, 2017
Slide 1: Earnings Release and Supplemental Report Second Quarter 2017
1 Earnings Release and Supplemental Report second quarter 2017 Freedom Plaza Sun City Center Sun City Center, FL
Slide 2: Table of Contents
2 Earnings Release 3 Overview 8 Consolidated Financial Statements 9 Portfolio Summary 13 Same Property Portfolio 15 Capitalization and Debt 16 Investment Summary - Acquisitions, Fundings & Dispositions 19 Developments and Redevelopments 20 Capital Expenditures 22 Portfolio Diversification 24 Expirat
Slide 3: HCP Announces Results for the Quarter Ended June 30, 2017
3 HCP Announces Results for the Quarter Ended June 30, 2017 SECOND QUARTER 2017 AND RECENT HIGHLIGHTS – EPS, FFO and FFO as adjusted per share, were $0.04, $0.35 and $0.48, respectively – Achieved year-over-year three- and six-month SPP Cash NOI growth of 2.1% and 3.1%, respectively – Completed or u
Slide 4: Same Property Portfolio Operating Summary
4 SAME PROPERTY PORTFOLIO OPERATING SUMMARY The table below outlines the three-month same property portfolio operating results for the second quarter: Year-Over-Year Occupancy SPP Growth 2Q17 2Q16 NOI Cash NOI Senior housing triple-net 86.1% 86.6% 1.6% 2.6% Senior housing operating portfolio ("SHOP"
Slide 5: Balance Sheet and Debt Tender
5 BALANCE SHEET AND DEBT TENDER During the quarter, we made tangible progress towards meeting our balance sheet targets of net debt to adjusted EBITDA in the low-to-mid six-times range and financial leverage in the 43% to 44% range by the end of 2017. As previously disclosed, we repaid $131 million
Slide 6: Company Information and Conference Call
6 _______________________________________ (1) Other primarily includes our hospitals and U.K. real estate investments. See our Supplemental Report for additional details. COMPANY INFORMATION HCP has scheduled a conference call and webcast for Tuesday, August 1, 2017 at 9:00 a.m. Pacific Time (12:00
Slide 7: Forward-Looking Statements
7 FORWARD-LOOKING STATEMENTS “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this release which are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Sec
Slide 8: Overview
8 Overview(1) As of and for the quarter ended June 30, 2017, dollars, square feet and shares in thousands, except per share data 2Q17 YTD Full Year 2017 Guidance (August 1, 2017) Financial Metrics Diluted earnings per common share $0.04 $1.02 $1.18 - $1.24 Diluted FFO per common share $0.35 $0.96 $1
Slide 9: Consolidated Balance Sheets
9 June 30, 2017 December 31, 2016 Assets Real Estate: Buildings and improvements $ 11,114,139 $ 11,692,654 Development costs and construction in progress 444,528 400,619 Land 1,765,305 1,881,487 Accumulated depreciation and amortization (2,672,489) (2,648,930) Net real estate 10,651,483 11,325,830 N
Slide 10: Unaudited Consolidated Statements of Operations
10 HCP, Inc. Unaudited Consolidated Statements of Operations In thousands, except per share data Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Revenues: Rental and related revenues $ 263,820 $ 292,168 $ 550,038 $ 582,548 Tenant recoveries 35,259 33,531 68,934 64,906 Resid
Slide 11: Unaudited Funds From Operations
11 HCP, Inc. Unaudited Funds From Operations In thousands, except per share data Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Net income applicable to common shares $ 19,283 $ 301,375 $ 479,854 $ 417,185 Real estate related depreciation and amortization 130,751 141,386 2
Slide 12: Unaudited Funds Available for Distribution
12 HCP, Inc. Unaudited Funds Available for Distribution In thousands Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 FFO as adjusted applicable to common shares $ 224,770 $ 347,876 $ 464,925 $ 669,659 Amortization of deferred compensation 3,327 4,160 7,092 9,505 Amortizatio
Slide 13: Portfolio Summary
13 Other: 15% Senior housing triple-net: 24% SHOP: 18% Life science: 21% Medical office: 22% Portfolio Summary As of and for the quarter ended June 30, 2017, dollars in thousands Property Count Age Investment Cash NOI and Interest Income Private Pay %(1) Property Portfolio Senior housing triple-net
Slide 14: Portfolio Summary: NOI, Cash NOI and Interest Income
14 Portfolio Summary (1) Includes $5.3 million attributable to non-controlling interests, excluding five limited liability companies in which the Company is the managing member and non- managing member units are exchangeable for an amount of cash based on the then-current market value of shares of t
Slide 15: Same Property Portfolio
15 Same Property Portfolio As of June 30, 2017, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs THREE-MONTH SPP Year-Over-Year Sequential Property Count Investment Percent of Property Portfolio Occupancy Growth Occupancy Growth 2Q17 2Q16 NOI Cash NOI 2Q17 1Q17 NOI Cash NOI
Slide 16: Capitalization
16 Capitalization Dollars and shares in thousands, except price per share data TOTAL CAPITALIZATION June 30, 2017 Shares Value Total Value Common stock (NYSE: HCP) 468,879 $ 31.96 $ 14,985,373 Convertible partnership (DownREIT) units 6,629 31.96 211,863 Total Market Equity 475,508 $ 15,197,236 Conso
Slide 17: Indebtedness and Ratios: Debt Maturities
17 Indebtedness and Ratios As of June 30, 2017, dollars in thousands DEBT MATURITIES AND SCHEDULED PRINCIPAL REPAYMENTS (AMORTIZATION) Senior Unsecured Notes Mortgage Debt HCP's Share of Unconsolidated JV Debt Total Debt Bank Line of Credit(1) Term Loan(2) Amounts Rates %(3) Amounts Rates %(3) Conso
Slide 18: Indebtedness and Ratios: Debt Structure
18 Indebtedness and Ratios As of June 30, 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 $ 233,912 3 4.12% 13.8 Floating rate 73,516 1 3.96% 2.3 Combined $ 307,428 4
Slide 19: Investment Summary: Acquisitions, Fundings & Dispositions
19 Investment Summary Acquisitions, Fundings& Dispositions For the three and six months ended June 30, 2017, dollars and square feet in thousands INVESTMENT SUMMARY Three Months Ended June 30, 2017 Six Months Ended June 30, 2017 Acquisitions $ 26,100 $ 26,100 Development fundings 64,002 103,833 Rede
Slide 20: Developments
20 Developments As of June 30, 2017, dollars and square feet in thousands DEVELOPMENT PROJECTS IN PROCESS Name of Project MSA Segment Placed in Service(1) Construction in Process ("CIP") Cost to Complete Total at Completion Wholly-Owned Pearland II Houston, TX Medical office $ 6,067 $ 10,406 $ 2,327
Slide 21: Redevelopments and Land Held for Development
21 Redevelopments and Land Held for Development(1) As of June 30, 2017, dollars and square feet in thousands REDEVELOPMENT PROJECTS IN PROCESS Incremental Costs Name of Project MSA Segment Investment Placed in Redevelopment(2) Placed in Service CIP Cost to Complete Total Total at Completion Project
Slide 22: Capital Expenditures: Second Quarter
22 Capital Expenditures Second Quarter For the quarter ended June 30, 2017, dollars in thousands except per unit/square foot Senior Housing Triple-net SHOP Life Science Medical Office Other Total Wholly-Owned Recurring capital expenditures $ 193 $ 4,677 $ 613 $ 3,766 $ — $ 9,249 Tenant improvements
Slide 23: Capital Expenditures: Year-to-Date
23 Capital Expenditures Year-to-Date (1) Includes $1.0 million attributable to non-controlling interests. (2) Revenue enhancing capital expenditures per unit for SHOP is $865. The per unit based on majority type is $546, $686 and $1,809 for IL, AL and CCRC, respectively. (3) Recurring capital expend
Slide 24: Portfolio Diversification
24 Portfolio Diversification As of and for the quarter ended June 30, 2017, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs CASH NOI AND INTEREST INCOME BY MSA MSA Properties Senior Housing Triple-net SHOP Life Science Medical Office Other Total % of Total San Francisco, CA
Slide 25: Expirations and Maturities
25 Expirations and Maturities As of June 30, 2017, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs EXCLUDES PURCHASE AND PREPAYMENT OPTIONS Annualized Base Rent Year Total % of Total Senior Housing Triple-net Life Science Medical Office Other Interest Income 2017(1) $ 58,87
Slide 26: Triple-net Master Lease Profile
26 2.2 5x 2.0 0x 1.7 5x 1.5 0x 1.2 5x 1.0 0x 0.7 5x 0.5 0x0 2 4 6 8 10 12 14 16 18 6.9% 0.7% 0.7% 0.4% 0.7% 0.7% 1.0% 1.3%1.1% 0.5% 1.8% 1.1% 0.3% 0.1% 0.9% 0.3% 0.1% 1.3% 0.2% 1.6% 1.1% 2.1% 0.4% 1.6% 0.2% 0.3% 25 13.00 x EBIT D AR CFC (TRAILING 12 MONTHS ENDED 03/31/2017 ) HIGHER RIS K LOWER RIS K
Slide 27: Senior Housing Triple-net
27 Senior Housing Triple-net As of and for the quarter ended June 30, 2017, dollars in thousands, except REVPOR Property Portfolio Property Count Investment Cash NOI Units Occupancy % REVPOR EBITDARM CFC EBITDAR CFC Assisted living 174 $ 2,848,310 $ 53,478 14,649 85.5 $ 5,873 1.32x 1.10x Independent
Slide 28: Senior Housing Triple-net Same Property Portfolio
28 Senior Housing Triple-net Same Property Portfolio Dollars in thousands, except REVPOR 2Q16 3Q16 4Q16 1Q17 2Q17 Property count 209 209 209 209 209 Investment $ 3,831,482 $ 3,841,080 $ 3,849,799 $ 3,856,908 $ 3,860,136 Units 20,578 20,580 20,562 20,559 20,559 Occupancy % 86.6 86.8 86.8 86.6 86.1 RE
Slide 29: Senior Housing Triple-net New Supply - Assisted Living
29 Senior Housing Triple-net New Supply - Assisted Living As of and for the quarter ended June 30, 2017, dollars in thousands NEW SUPPLY ANALYSIS HCP Portfolio 5-Mile Radius(1) MSA Units Cash NOI % of Triple- net Cash NOI Properties/ Units Under Construction(2) Cash NOI Exposed to New Supply(3) 5-Ye
Slide 30: Senior Housing Triple-net New Supply - Independent Living & CCRC
30 Senior Housing Triple-net New Supply - IndependentLiving & CCRC As of and for the quarter ended June 30, 2017, dollars in thousands NEW SUPPLY ANALYSIS HCP Portfolio 5-Mile Radius(1) MSA Units Cash NOI % of Triple Net Cash NOI Properties/ Units Under Construction(2) Cash NOI Exposed to New Supply
Slide 31: SHOP
31 SHOP As of and for the quarter ended June 30, 2017, dollars in thousands, except REVPOR Property Count Investment Cash NOI Units Occupancy % REVPOR Wholly-Owned AL 48 $ 930,900 $ 14,762 4,857 83.9 $ 4,493 IL 32 1,365,281 24,001 6,946 88.9 3,544 CCRC 1 25,877 799 244 86.5 7,408 81 $ 2,322,058 $ 39
Slide 32: SHOP MSA
32 (1) Units and REVPOR are based on the majority type within each community. AL includes needs-based care such as memory care. SHOP MSA As of and for the quarter ended June 30, 2017, dollars in thousands, except REVPOR, includes HCP's pro rata share of unconsolidated JVs OPERATING PORTFOLIO METRICS
Slide 33: SHOP Trend
33 SHOP Trend Dollars in thousands, except REVPOR, includes HCP's pro rata share of unconsolidated JVs TOTAL OPERATING PORTFOLIO 2Q16 3Q16 4Q16 1Q17(1) 2Q17 Property count 130 143 152 153 153 Investment $ 3,539,673 $ 3,831,503 $ 3,986,662 $ 3,481,155 $ 3,500,131 Units 23,237 24,440 25,407 25,472 25,
Slide 34: SHOP Same Property Portfolio
34 SHOP Same Property Portfolio Dollars in thousands, except REVPOR, includes HCP's pro rata share of unconsolidated JVs TOTAL SHOP(1)(2) 2Q16 3Q16 4Q16 1Q17 2Q17 Property count 124 124 124 124 124 Investment $ 2,906,605 $ 2,926,860 $ 2,944,854 $ 2,956,051 $ 2,970,344 Units 22,333 22,332 22,351 22,3
Slide 35: SHOP CCRC JV Same Property Portfolio
35 SHOP CCRC JV Same Property Portfolio(1)(2) Dollars in thousands, except REVPOR, includes HCP's pro rata share of unconsolidated JVs CCRC JV 2Q16 3Q16 4Q16 1Q17 2Q17 Property count 15 15 15 15 15 Investment $ 678,075 $ 685,466 $ 691,408 $ 694,762 $ 700,776 Units 7,175 7,175 7,193 7,198 7,245 Occup
Slide 36: SHOP New Supply - Assisted Living
36 SHOP New Supply - Assisted Living As of and for the quarter ended June 30, 2017, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs NEW SUPPLY ANALYSIS HCP Portfolio 5-Mile Radius(1) MSA Units Cash NOI % of SHOP Cash NOI Properties/ Units Under Construction(2) Cash NOI Expo
Slide 37: SHOP New Supply - Independent Living & CCRC
37 SHOP New Supply - Independent Living & CCRC As of and for the quarter ended June 30, 2017, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs NEW SUPPLY ANALYSIS HCP Portfolio 5-Mile Radius(1) MSA Units Cash NOI % of SHOP Cash NOI Properties/ Units Under Construction(2) Cas
Slide 38: Life Science
38 Life Science As of and for the quarter ended June 30, 2017, dollars and square feet in thousands, includes HCP's pro rata share of unconsolidated JVs INVESTMENTS MSA Property Count Investment Cash NOI Square Feet Occupancy % Wholly-Owned San Francisco/San Jose, CA 81 $ 2,713,485 $ 51,389 4,571 96
Slide 39: Life Science: Lease Expirations and Tenant Concentration
39 Public Biotech / Medical Device 43% University, Government, Research 4% Office and R&D 16% Pharma 19% Private Biotech / Medical Device 18% Life Science As of June 30, 2017, dollars and square feet in thousands, includes HCP's pro rata share of unconsolidated JVs SELECTED LEASE EXPIRATION DATA (NE
Slide 40: Life Science Leasing Activity
40 Life Science Square feet in thousands, includes unconsolidated JVs LEASING ACTIVITY Leased Square Feet Annualized Base Rent Per Sq. Ft. % Change in Cash Rents(1) HCP Tenant Improvements per Sq. Ft. Leasing Costs per Sq. Ft. Average Lease Term (Months) Retention Rate YTD Leased Square Feet as of M
Slide 41: Medical Office
41 Medical Office As of and for the quarter ended June 30, 2017, dollars and square feet in thousands, includes HCP's pro rata share of unconsolidated JVs PORTFOLIO BY MARKET Square Feet On-campus(1) Off-campus(2) Total MSA Investment Cash NOI Occupancy % Multi-tenant Single-tenant Multi-tenant Sing
Slide 42: Medical Office: Square Feet by Health System
42 Medical Office As of and for the quarter ended June 30, 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 Health System Rank(1) Credit Rating On-Campus Anchored(2) Adjacent(2)
Slide 43: Medical Office: Lease Expirations and Same Property Portfolio
43 Medical Office As of and for the quarter ended June 30, 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 Year Leased Square Feet % Annualized Base Rent % Square Feet Annualized
Slide 44: Other: Debt Investments
44 (1) Certain operators in the Company's hospital portfolio are not required under their respective leases to provide operational data. (2) In June 2017, the Company recorded a $57 million impairment charge on our $257 million loan investment. On July 31, 2017, we entered into a definitive agreemen
Slide 45: Other Same Property Portfolio: Hospitals and UK
45 (1) Certain operators in the Company's hospital portfolio are not required under their respective leases to provide operational data. Other Same Property Portfolio As of and for the quarter ended June 30, 2017, dollars in thousands HOSPITALS 2Q16 3Q16 4Q16 1Q17 2Q17 Property count 14 14 14 14 14
Slide 46: Other Same Property Portfolio: Total Other
46 Other Same Property Portfolio As of and for the quarter ended June 30, 2017, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs TOTAL OTHER(1) 2Q16 3Q16 4Q16 1Q17 2Q17 Property count 80 80 80 80 80 Investment $ 957,057 $ 945,406 $ 927,448 $ 931,767 $ 946,243 NOI: Total reve
Slide 47: Unconsolidated Joint Ventures
47 (1) Excludes $450 million related to debt funded by HCP, assets held for sale and land held for development. (2) Includes operating activity for two assets held for sale as of June 30, 2017. (3) Includes $16.3 million related to non- refundable entrance fees (net of reserve for early terminations
Slide 48: 2017 Guidance
48 2017 Guidance Projected full year 2017, dollars in millions, except per share amounts and net dispositions Full Year 2017 Guidance (August 1, 2017) Full Year 2017 Prior Guidance (May 2, 2017) Net income, FFO and FFO as Adjusted per Share Guidance Diluted earnings per common share $1.18 - $1.24 $1
Slide 49: Glossary
49 Glossary Adjusted Fixed Charge Coverage* Adjusted EBITDA divided by Fixed Charges. Adjusted Fixed Charge Coverage is a supplemental measure of liquidity and the Company’s ability to meet its interest payments on outstanding debt and pay dividends to its preferred stockholders, if applicable. The
Slide 50: Glossary
50 Glossary Estimated / Actual Completion Date For Developments, management’s estimate of the period the core and shell structure improvements are expected to be or have been completed. For Redevelopments, management’s estimate of the period in which major construction activity in relation to the sc
Slide 51: Glossary
51 Glossary Net Debt to Adjusted EBITDA* Net Debt divided by Adjusted EBITDA is a supplemental measure of the Company’s ability to decrease its debt. Because the Company may not be able to use its cash to reduce its debt on a dollar-for-dollar basis, this measure may have material limitations. Net O
Slide 52: Glossary
52 Glossary Square Feet (Sq. Ft.) The square footage for properties, excluding square footage for development or redevelopment properties prior to completion. Stabilized / Stabilization Newly acquired operating assets are generally considered Stabilized at the earlier of lease-up (typically when the
Slide 53: Debt Ratios: Adjusted EBITDA and Adjusted Fixed Charge Coverage
53 Debt Ratios Adjusted EBITDA and AdjustedFixed Charge Coverage Dollars in thousands Three Months Ended June 30, 2017 Net income $ 22,101 Interest expense 77,788 Income tax benefit (2,987) Depreciation and amortization of real estate and in-place lease intangibles 130,751 Equity income from unconso
Slide 54: Debt Ratios: Total Debt and Net Debt
54 As of and for the quarter ended June 30, 2017, dollars in thousands TOTAL DEBT AND NET DEBT June 30, 2017 Bank line of credit(1) $ 136,311 Term loans(2) 218,832 Senior unsecured notes 6,889,045 Mortgage debt 146,337 Other debt 94,801 Consolidated Debt $ 7,485,326 HCP's share of unconsolidated JV
Slide 55: Company Information
55 COMPANY Information BOARD OF DIRECTORS MICHAEL D. MCKEE Executive Chairman, HCP, Inc. THOMAS M. HERZOG President and Chief Executive Officer, HCP, Inc. DAVID B. HENRY Lead Independent Director, HCP, Inc. Former Vice Chairman and Chief Executive Officer, Kimco Realty Corporation BRIAN G. CARTWRIGH
Slide 56: Forward-Looking Statements & Risk Factors
56 Forward-Looking Statements & Risk Factors “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: The 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
Slide 57: Risk Factors (continued)
57 including the Affordable Care Act and licensure, certification and inspection requirements as well as laws addressing entitlement programs and related services, including Medicare and Medicaid, which may result in future reductions in reimbursements; changes in federal, state or local laws and re
Slide 58: Corporate Headquarters and Offices
58 CORPORATE HEADQUARTERS 1920 MAIN STREET, SUITE 1200 IRVINE, CA 92614 (949) 407-0700 SAN FRANCISCO OFFICE 950 TOWER LANE, SUITE 1650 FOSTER CITY, CA 94404 NASHVILLE OFFICE 3000 MERIDIAN BOULEVARD, SUITE 200 FRANKLIN, TN 37067