Healthpeak Properties, Inc. · NYSE:DOC
Healthpeak Properties — HCP — Q3 2018 Earnings Presentation
56 slides from Healthpeak Properties's earnings presentation, Oct 31, 2018
Slide 1: Earnings Release and Supplemental Report third quarter 2018
Earnings Release and Supplemental Report third quarter 2018 Patewood Medical Office Building C Greenville, SC 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 21 Capital Expenditures 23 Portfolio Diversification 24 Expirations and Maturities 26 Triple-net
Slide 3: HCP Reports Third Quarter 2018 Results
HCP Reports Third Quarter 2018 Results IRVINE, CA, October 31, 2018 -- HCP, Inc. (NYSE: HCP) today announced results for the third quarter ended September 30, 2018. For the quarter, we generated net income of $0.21 per share, FFO of $0.33 per share and FFO as adjusted of $0.44 per share. QUARTERLY A
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 third quarter: Year-Over-Year Three-Month SPP Cash NOI Growth Components of SHOP SPP
Slide 5: Operator Transition Update
OPERATOR TRANSITION UPDATE We have completed the vast majority of our planned operator transitions with 35 HCP-owned senior housing communities transitioning from Brookdale to other operators, including Atria Senior Living, Sunrise Senior Living, Elmcroft by Eclipse Senior Living, Discovery Senior L
Slide 6: 2018 Guidance
2018 GUIDANCE For full-year 2018, we expect net income per share to range between $2.23 and $2.29; FFO per share to range between $1.65 and $1.69; and FFO as adjusted per share to range between $1.79 and $1.83. In addition, we expect 2018 SPP Cash NOI to increase between 0.25% and 1.75%. These estim
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 September 30, 2018, dollars, square feet and shares in thousands, except per share data Full Year 2018 Guidance 3Q18 YTD 2018 (October 31, 2018) (1) Reconciliations, definitions and important discussions Financial Metrics regarding the usefuln
Slide 9: Consolidated Balance Sheets
HCP, Inc. Consolidated Balance Sheets In thousands, except share and per share data (unaudited) September 30, 2018 December 31, 2017 Assets Real estate: Buildings and improvements $ 10,956,474 $ 11,239,732 Development costs and construction in progress 442,007 447,976 Land 1,663,069 1,785,865 Accumu
Slide 10: Consolidated Statements of Operations
HCP, Inc. Consolidated Statements of Operations In thousands, except per share data (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Revenues: Rental and related revenues $ 262,828 $ 266,109 $ 821,462 $ 816,147 Tenant recoveries 41,026 36,860 116,984 1
Slide 11: Funds From Operations
HCP, Inc. Funds From Operations In thousands, except per share data (unaudited) Three Months Ended Nine Months Ended (1) For the nine months ended September 30, 2018, September 30, September 30, represents the loss on consolidation of seven U.K. 2018 2017 2018 2017 care homes. (2) Represents the inc
Slide 12: Funds Available for Distribution
HCP, Inc. Funds Available for Distribution In thousands (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 FFO as adjusted applicable to common shares $ 208,196 $ 227,769 $ 655,099 $ 692,726 Amortization of deferred compensation(1) 3,530 3,237 11,249 10,
Slide 13: Portfolio Summary
Portfolio Summary As of and for the quarter ended September 30, 2018, dollars in thousands Property Average Portfolio Portfolio Private PORTFOLIO INCOME Count Age Investment Income Pay %(1) Wholly Owned Property Portfolio Unconsolidated JVs(2) Senior housing triple-net 163 20 $ 3,257,336 $ 67,181 92
Slide 14: NOI and Cash NOI Summary
NOI and Cash NOI Summary For the quarter ended September 30, 2018, dollars in thousands NOI SUMMARY Rental and Operating Operating Revenues Expenses NOI(1) Wholly-Owned Senior housing triple-net $ 67,487 $ (840) $ 66,646 SHOP 137,044 (106,182) 30,863 Life science 98,040 (23,668) 74,372 Medical offic
Slide 15: Same Property Portfolio
Same Property Portfolio As of September 30, 2018, dollars in thousands SAME PROPERTY PORTFOLIO RECONCILIATION Senior Housing Life Medical Triple-net SHOP Science Office Other Total Total Property Count 163 97 129 268 118 775 Unconsolidated JVs — — — — (103) (103) Acquisitions — (1) (3) (30) — (34) A
Slide 16: Capitalization
Capitalization Dollars and shares in thousands, except price per share data TOTAL CAPITALIZATION September 30, 2018 Shares Value Total Value Common stock (NYSE: HCP) 469,916 $ 26.32 $ 12,368,189 Convertible partnership (DownREIT) units 6,617 26.32 174,159 Total Market Equity 476,533 $ 12,542,348 Con
Slide 17: Indebtedness and Ratios
Indebtedness and Ratios As of September 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 Amounts Rates %(2) Amounts
Slide 18: Indebtedness and Ratios
Indebtedness and Ratios As of September 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 $ 181,775 3 4.19 15.7 Floating rate 280,017 4 4.98 2.8 Combined $ 461,792 7 4.67
Slide 19: Investment Summary
Investment Summary For the three and nine months ended September 30, 2018, dollars and square feet in thousands INVESTMENT SUMMARY Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 Acquisition of 16 MOBs - Greenville, SC(1) $ 285,000 $ 285,000 Hayden development entitlements
Slide 20: Investment Summary Dispositions
Investment Summary Dispositions For the nine months ended September 30, 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) Jan
Slide 21: Developments
Developments As of September 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 $ 58,203 $ 4,393 $ 62,596 The Cove at Oyster Point -
Slide 22: Redevelopments and Land Held for Development
Redevelopments and Land Held for (1) Development As of September 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
Slide 23: Capital Expenditures
Capital Expenditures For the three and nine months ended September 30, 2018, dollars in thousands, except per unit/square foot THIRD QUARTER Senior Housing Triple-net SHOP Life Science Medical Office Other Total Wholly-Owned Recurring capital expenditures $ 473 $ 4,514 $ 1,009 $ 4,852 $ — $ 10,848 T
Slide 24: Portfolio Diversification
Portfolio Diversification As of and for the quarter ended September 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 74 $ 2,609 $ — $ 45,369 $ 781 $ — $ 48,758 16 Dallas, T
Slide 25: Portfolio Diversification
Portfolio Diversification As of and for the quarter ended September 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
Slide 26: Expirations and Maturities
Expirations and Maturities As of September 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) $ 35,885 3 $ — $ 3,618 $ 32,267 $ — $ — 2019 85,535 8 2,30
Slide 27: Triple-Net Master Lease Profile
(1)(2) Triple-Net Master Lease Profile INVESTMENT TYPE 2.4% 0x x .0 25 13 2. Senior Housing - Guaranty LOWER RISK FACILITY EBITDAR CFC (TRAILING 12 MONTHS ENDED 06/30/2018) 0.7% Senior Housing - No Guaranty x 00 2. 1.4% Other - Guaranty 0.2% x % Percent of Total Cash NOI and 75 1. 0.4% Interest Inco
Slide 28: Senior Housing Triple-net
Senior Housing Triple-net As of and for the quarter ended September 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 161 $ 3,003,572 $ 61,961
Slide 29: Senior Housing Triple-net Same Property Portfolio
Senior Housing Triple-net Same Property Portfolio Dollars in thousands, except REVPOR 3Q17 4Q17 1Q18 2Q18 3Q18 Property count 152 152 152 152 152 Investment $ 3,075,911 $ 3,084,696 $ 3,088,338 $ 3,088,453 $ 3,091,822 Units 15,623 15,620 15,620 15,621 15,629 Occupancy % 85.8 86.1 86.2 85.3 84.7 REVPO
Slide 30: Senior Housing Triple-net New Supply
Senior Housing Triple-net New Supply As of and for the quarter ended September 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
Slide 31: SHOP
SHOP As of and for the quarter ended September 30, 2018, dollars in thousands, except REVPOR INVESTMENTS Property REVPOR Count Investment Cash NOI Units Occupancy % SHOP Operator Brookdale 43 $ 1,258,211 $ 19,599 6,748 87.4 $ 3,746 Atria Senior Living 27 594,163 6,536 3,541 79.7 4,249 Senior Lifesty
Slide 32: SHOP MSA
SHOP MSA As of and for the quarter ended September 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 $ 348,446 $ 6,565 20.4 311 1,962 91.0 $ 4,993 $ 2,564 Chicago, IL 180,68
Slide 33: SHOP Same Property Portfolio
SHOP Same Property Portfolio Dollars in thousands, except REVPOR 3Q17 4Q17 1Q18 2Q18 3Q18 Property count 50 50 50 50 50 Investment $ 1,419,313 $ 1,426,090 $ 1,429,960 $ 1,437,347 $ 1,444,778 Units 6,652 6,650 6,646 6,646 6,646 Occupancy % 87.5 88.7 88.3 87.0 86.1 REVPOR SHOP $ 4,031 $ 4,032 $ 4,152
Slide 34: SHOP New Supply
SHOP New Supply As of and for the quarter ended September 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 Co
Slide 35: Life Science
Life Science As of and for the quarter ended September 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 81 $ 2,792,581 $ 54,169 4,497 97.2 San Diego, CA 28 786,725 13,770 1,925 93.9 Boston, MA
Slide 36: Life Science
Life Science As of September 30, 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 37: Life Science
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 June 30, 2018 7,375 $ 43.58 Disposit
Slide 38: Medical Office
Medical Office As of and for the quarter ended September 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
Slide 39: Medical Office
Medical Office As of and for the quarter ended September 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 % Squa
Slide 40: Medical Office
Medical Office As of and for the quarter ended September 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)
Slide 41: Other Wholly-owned
Other Wholly-owned As of and for the quarter ended September 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 $ 342,426 $ 14,235 1,442 44.8 9.65x 9.07x Remaini
Slide 42: Other Same Property Portfolio - Wholly-owned
Other Same Property Portfolio - Wholly-owned As of and for the quarter ended September 30, 2018, dollars in thousands OTHER 3Q17 4Q17 1Q18 2Q18 3Q18 Property count 15 15 15 15 15 Investment $ 548,818 $ 548,818 $ 549,968 $ 549,987 $ 550,211 Beds 2,254 2,254 2,254 2,258 2,258 Occupancy %(1) 50.7 48.6
Slide 43: Other Unconsolidated JVs
Other Unconsolidated JVs(1) As of and for the quarter ended September 30, 2018, dollars and square feet in thousands Other SHOP Medical SELECTED FINANCIAL DATA AT 100% Total CCRC JV JVs U.K. JV Life Science Office Remaining Joint ventures' Investment $ 2,471,438 $ 1,475,599 $ 251,165 $ 519,350 $ 165
Slide 44: Other Unconsolidated JV Capital
Other Unconsolidated JV Capital Represents HCP's pro rata share of unconsolidated JVs for the quarter ended September 30, 2018, dollars in thousands UNCONSOLIDATED JV CAPITAL Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 FAD capital expenditures $ 1,740 $ 7,840 Revenue e
Slide 45: Other CCRC JV
Other CCRC JV Dollars in thousands, except REVPOR CCRC JV 3Q17 4Q17 1Q18 2Q18 3Q18 Property count 15 15 15 15 15 Units 7,249 7,250 7,257 7,262 7,268 Occupancy % 84.9 85.7 86.4 85.8 85.5 REVPOR(1) $ 5,094 $ 5,153 $ 5,099 $ 5,132 $ 5,188 HCP's SHARE OF CCRC JV Investment $ 705,554 $ 709,625 $ 713,996
Slide 46: 2018 Guidance
2018 Guidance Projected full year 2018, dollars in millions, except per share amounts Full Year 2018 Guidance (October 31, 2018) Net Income, FFO and FFO as Adjusted per Share Guidance (1) SPP Cash NOI guidance includes $9.0 million related to non-recurring items identified in Diluted earnings per co
Slide 47: 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 48: 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 49: 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 50: 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 51: 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 September 30, 2018 Net income $ 102,926 Interest expense 63,486 Income tax expense (benefit) (4,929) Depreciation and amortization 132,198 Other depreciation and amort
Slide 52: Debt Ratios
Debt Ratios As of and for the quarter ended September 30, 2018, dollars in thousands ENTERPRISE DEBT AND NET DEBT September 30, 2018 Bank line of credit(1) $ 636,709 Term loans 223,468 Senior unsecured notes(2) 5,706,181 Mortgage debt 139,401 Other debt 92,494 Consolidated Debt $ 6,798,253 HCP's sha
Slide 53: 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 54: Forward-Looking Statements & Risk Factors
Forward-Looking Statements Hoag Hospital 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)
Forward-Looking Statements & 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 legislation, executive orders and other
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