Health Care Property Investors, Inc. Reports Results for the Quarter Ended March 31, 2006.LONG BEACH, Calif. -- Health Care Property Investors, Inc. (the "Company") (NYSE NYSE See: New York Stock Exchange :HCP HCP, n healthcare provider, a professional who specializes in treating and managing a person's general or specific health needs. ), a healthcare real estate investment trust ("REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). "), today announced operating results for the quarter ended March 31, 2006. Net income applicable to common shares for the quarter ended March 31, 2006, was $52.6 million, or $0.38 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share of common stock. This compares with net income applicable to common shares of $38.2 million, or $0.28 per diluted share of common stock, for the quarter ended March 31, 2005. Funds From Operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. ("FFO FFO See: Funds from operations ") applicable to common shares was $73.0 million, or $0.53 per diluted share of common stock, for the quarter ended March 31, 2006, compared to FFO applicable to common shares of $58.9 million, or $0.44 per diluted share of common stock, for the quarter ended March 31, 2005. The Company's results for the quarter ended March 31, 2006, include income of $7.3 million, or $0.05 per diluted share of common stock, resulting from a prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. premium the Company received upon the early repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of a secured loan receivable. FFO is a supplemental non-GAAP financial measure that the Company believes is helpful in evaluating the operating performance of real estate investment trusts.
RECENT DEVELOPMENTS
-- Year-to-date, the Company acquired interests in properties
aggregating $214 million, including the following:
-- During the three months ended March 31, 2006, the Company
acquired 13 medical office buildings for $138 million,
including DownREIT units valued at $6 million, in related
transactions. These properties were acquired as part of a
$163 million acquisition of 15 MOBs, with a total of
882,000 rentable square feet, at an initial yield of 7.3%.
-- On February 8, 2006, the Company acquired four laboratory,
office and biotechnology manufacturing buildings located
in San Diego, California for $30 million. The initial
yield on these buildings is 6.1%, with the stabilized
yield expected to be 8.3%. The buildings include
approximately 158,000 rentable square feet.
-- On February 24, 2006, the Company acquired two medical
office buildings for approximately $21 million, including
assumed debt valued at $12 million. The two buildings,
with 157,000 rentable square feet, have an initial yield
of 8.0%.
-- On March 14, 2006, the Company received $38 million in
proceeds, including $7.3 million in excess of the carrying
value, upon the early repayment of a secured loan receivable
due May 1, 2010. The amount received in excess of the carrying
value of the secured loan receivable was recorded as interest
income and is included in interest and other income in the
Company's Consolidated Statement of Income for the three
months ended March 31, 2006. This loan was secured by nine
skilled nursing facilities and carried an interest rate of
11.4% per annum.
-- During the three months ended March 31, 2006, HCP MOP, the
Company's 33% owned joint venture with an affiliate of General
Electric, sold 22 medical office buildings, with 871,000 of
rentable square feet, for $61 million, net of estimated
transaction costs, and recognized aggregate gains of
approximately $10 million. In connection with the sale,
approximately $46 million of secured debt was either repaid or
assumed by the purchaser.
-- During the three months ended March 31, 2006, the Company sold
six properties for $21 million and recognized gains of
approximately $9 million.
-- On February 27, 2006, the Company issued $150 million of
5.625% senior unsecured notes due 2013. The notes were priced
at 99.071% of the principal amount for an effective yield of
5.788%. The Company received net proceeds of $149 million,
which were used to repay outstanding indebtedness and for
other general corporate purposes.
-- On April 25, 2006, the Company announced that its Board of
Directors declared a quarterly common stock cash dividend of
$0.425 per share. The common stock dividend will be paid on
May 19, 2006, to stockholders of record as of the close of
business on May 8, 2006.
COMPANY INFORMATION Health Care Property Investors, Inc. has scheduled a conference call and webcast for Tuesday Tuesday: see week. , May 2, 2006, at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) in order to present the Company's performance and operating results for the quarter ended March 31, 2006. The conference call is accessible by dialing 866-578-5801 (U.S.) or 617-213-8058 (International). The participant Participant A party of a funding. It usually refers to the lowest rank or smallest level of funding. pass code is 46705918. The webcast is accessible via the Company's Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the web site at www.hcpi.com. A webcast replay of the conference call will be available after 2:00 p.m. Eastern Time on May 2, 2006, through May 16, 2006, on the Company's web site. The Company's supplemental information package for the current period will also be available on the Company's web site in the "Presentations" section of the "Investor Relations Investor relations The process by which the corporation communicates with its investors. " tab. Health Care Property Investors, Inc. (NYSE:HCP) is a self-administered REIT that invests directly or through joint ventures in healthcare facilities. As of March 31, 2006, the Company's portfolio of properties, excluding assets held for sale but including investments through joint ventures and mortgage loans, included 534 properties in 42 states and consisted of 138 senior housing facilities, 185 medical office buildings, 29 hospitals, 156 skilled nursing facilities skilled nursing facility n. Abbr. SNF An establishment that houses chronically ill, usually elderly patients, and provides long-term nursing care, rehabilitation, and other services. and 26 other healthcare facilities. For more information on Health Care Property Investors, Inc., visit the Company's web site at www.hcpi.com. "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: The statements contained in this release which are not historical facts are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements, which include statements regarding expected yields on properties, are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by forward-looking statements. These risks and uncertainties include competition for the acquisition and financing of healthcare facilities; competition for lessees and mortgagors (including new leases and mortgages and the renewal or rollover A graphic element in an application or on a Web page that changes its color or shape when the pointer is moved (rolled) over it. See JavaScript rollover. See also n-key rollover. of existing leases); continuing operational difficulties in the skilled nursing and assisted living as·sist·ed living n. A living arrangement in which people with special needs, especially older people with disabilities, reside in a facility that provides help with everyday tasks such as bathing, dressing, and taking medication. sectors; the Company's ability to acquire, sell or lease facilities and the timing of acquisitions, sales and leasings; changes in healthcare laws and regulations and other changes in the healthcare industry which affect the operations of the Company's lessees or mortgagors; changes in management; costs of compliance with building regulations; changes in tax laws and regulations; changes in the financial position of the Company's lessees and mortgagors; changes in rules governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. financial reporting, including new accounting pronouncements; and changes in economic conditions, including changes in interest rates and the availability and cost of capital, which affect opportunities for profitable investments. Some of these risks, and other risks, are described from time to time in Health Care Property Investors, Inc.'s Securities and Exchange Commission filings.
HEALTH CARE PROPERTY INVESTORS, INC.
Summary of Information
In thousands, except per share data
(Unaudited)
Quarter Ended March 31,
--------------------------------
2006 2005
---------------- ---------------
Revenues and other income $ 141,695 $ 107,247
Net income applicable to common
shares $ 52,605 $ 38,175
Basic earnings per common share $ 0.39 $ 0.29
---------------- ---------------
Diluted earnings per common share $ 0.38 $ 0.28
---------------- ---------------
Weighted average shares used to
calculate diluted earnings per
common share 136,856 134,529
---------------- ---------------
Funds from operations applicable to
common shares(1) $ 72,966 $ 58,914
---------------- ---------------
Diluted funds from operations
applicable to common shares(1) $ 75,539 $ 61,034
---------------- ---------------
Basic funds from operations per
common share(1) $ 0.54 $ 0.44
---------------- ---------------
Diluted funds from operations per
common share(1) $ 0.53 $ 0.44
---------------- ---------------
Weighted average shares used to
calculate diluted funds from
operations per common share 143,090 139,561
---------------- ---------------
________________________________________
(1) The Company believes that Funds From Operations ("FFO")
applicable to common shares, Diluted Funds From Operations
applicable to common shares and Basic and Diluted Funds From
Operations per common share are important supplemental measures of
operating performance for a real estate investment trust. Because
the historical cost accounting convention used for real estate
assets requires straight-line depreciation (except on land), such
accounting presentation implies that the value of real estate
assets diminishes predictably over time. Since real estate values
instead have historically risen and fallen with market conditions,
presentations of operating results for a real estate investment
trust that use historical cost accounting for depreciation could
be less informative. The term FFO was designed by the real estate
investment trust industry to address this issue.
FFO is defined as net income applicable to common shares (computed
in accordance with U.S. generally accepted accounting principles),
excluding gains or losses from real estate dispositions, plus real
estate depreciation and amortization, with adjustments for joint
ventures. Adjustments for joint ventures are calculated to reflect
FFO on the same basis. FFO does not represent cash generated from
operating activities in accordance with U.S. generally accepted
accounting principles, is not necessarily indicative of cash
available to fund cash needs and should not be considered an
alternative to net income. A reconciliation of net income
applicable to common shares to FFO applicable to common shares is
provided herein.
HEALTH CARE PROPERTY INVESTORS, INC.
Consolidated Statements of Income
In thousands, except per share data
(Unaudited)
Quarter Ended March 31,
--------------------------------
2006 2005
---------------- ---------------
Revenues and other income:
Rental and other revenues $ 122,126 $ 101,857
Equity income from unconsolidated
joint ventures 3,822 211
Interest and other income 15,747 5,179
---------------- ---------------
141,695 107,247
---------------- ---------------
Costs and expenses:
Interest 32,093 23,238
Depreciation and amortization 30,679 23,464
Operating 17,564 13,301
General and administrative 8,742 7,319
---------------- ---------------
89,078 67,322
---------------- ---------------
Income before minority interests 52,617 39,925
Minority interests (3,777) (3,147)
---------------- ---------------
Income from continuing operations 48,840 36,778
---------------- ---------------
Discontinued operations:
Operating income 457 1,942
Gain on sales of real estate 8,591 4,738
---------------- ---------------
9,048 6,680
---------------- ---------------
Net income 57,888 43,458
Preferred stock dividends (5,283) (5,283)
---------------- ---------------
Net income applicable to common
shares $ 52,605 $ 38,175
---------------- ---------------
Basic earnings per common share:
Continuing operations $ 0.32 $ 0.24
Discontinued operations 0.07 0.05
---------------- ---------------
Net income applicable to common
shares $ 0.39 $ 0.29
---------------- ---------------
Diluted earnings per common share:
Continuing operations $ 0.32 $ 0.23
Discontinued operations 0.06 0.05
---------------- ---------------
Net income applicable to common
shares $ 0.38 $ 0.28
---------------- ---------------
Weighted average shares used to
calculate earnings per common share:
Basic 136,040 133,492
---------------- ---------------
Diluted 136,856 134,529
---------------- ---------------
HEALTH CARE PROPERTY INVESTORS, INC.
Funds From Operations Information
In thousands, except per share data
(Unaudited)
Quarter Ended March 31,
--------------------------------
2006 2005
---------------- ---------------
Net income applicable to common
shares $ 52,605 $ 38,175
Real estate depreciation and
amortization:
Continuing operations 30,679 23,464
Discontinued operations 177 520
Gain on sales of real estate (8,591) (4,738)
Equity income from unconsolidated
joint ventures (3,822) (211)
FFO from unconsolidated joint
ventures 2,233 2,022
Minority interests 3,777 3,147
Minority interests in FFO (4,092) (3,465)
---------------- ---------------
Funds from operations applicable to
common shares(1) $ 72,966 $ 58,914
---------------- ---------------
Distributions on convertible units $ 2,573 $ 2,120
---------------- ---------------
Diluted funds from operations
applicable to common shares(1) $ 75,539 $ 61,034
---------------- ---------------
Basic funds from operations per
common share(1) $ 0.54 $ 0.44
---------------- ---------------
Diluted funds from operations per
common share(1) $ 0.53 $ 0.44
---------------- ---------------
Weighted average shares used to
calculate diluted funds from
operations per common share 143,090 139,561
---------------- ---------------
________________________________________
(1) The Company believes that Funds From Operations ("FFO") applicable
to common shares, Diluted Funds From Operations applicable to
common shares and Basic and Diluted Funds From Operations per
common share are important supplemental measures of operating
performance for a real estate investment trust. Because the
historical cost accounting convention used for real estate assets
requires straight-line depreciation (except on land), such
accounting presentation implies that the value of real estate
assets diminishes predictably over time. Since real estate values
instead have historically risen and fallen with market conditions,
presentations of operating results for a real estate investment
trust that use historical cost accounting for depreciation could
be less informative. The term FFO was designed by the real estate
investment trust industry to address this issue.
FFO is defined as net income applicable to common shares (computed
in accordance with U.S. generally accepted accounting principles),
excluding gains or losses from real estate dispositions, plus real
estate depreciation and amortization, with adjustments for joint
ventures. Adjustments for joint ventures are calculated to reflect
FFO on the same basis. FFO does not represent cash generated from
operating activities in accordance with U.S. generally accepted
accounting principles, is not necessarily indicative of cash
available to fund cash needs and should not be considered an
alternative to net income.
HEALTH CARE PROPERTY INVESTORS, INC.
Consolidated Balance Sheets
In thousands, except share and per share data
March 31, December 31,
2006 2005
---------------- ---------------
Assets (Unaudited)
Real estate:
Buildings and improvements $ 3,678,006 $ 3,489,415
Developments in process 19,580 22,286
Land 344,496 344,240
Less accumulated depreciation and
amortization 638,405 614,089
---------------- ---------------
Net real estate 3,403,677 3,241,852
---------------- ---------------
Loans receivable, net:
Joint venture partners 7,006 7,006
Others 145,638 179,825
Investments in and advances to
unconsolidated joint ventures 49,058 48,598
Accounts receivable, net of allowance
of $550 and $1,205, respectively 13,696 13,313
Cash and cash equivalents 55,957 21,342
Restricted cash 2,694 2,270
Intangibles, net 51,556 38,804
Other assets, net 59,534 44,255
---------------- ---------------
Total assets $ 3,788,816 $ 3,597,265
---------------- ---------------
Liabilities and Stockholders' Equity
Bank lines of credit $ 375,000 $ 258,600
Senior unsecured notes 1,476,215 1,462,250
Mortgage debt 268,654 236,096
Accounts payable and accrued
liabilities 72,867 68,718
Deferred revenue 31,781 22,551
---------------- ---------------
Total liabilities 2,224,517 2,048,215
---------------- ---------------
Minority interests:
Joint venture partners 22,584 20,905
Non-managing member unitholders 134,210 128,379
---------------- ---------------
Total minority interests 156,794 149,284
---------------- ---------------
Stockholders' equity:
Preferred stock, $1.00 par value:
50,000,000 shares authorized;
11,820,000 shares issued and
outstanding, liquidation preference
of $25 per share 285,173 285,173
Common stock, $1.00 par value:
750,000,000 shares authorized;
136,841,504 and 136,193,764 shares
issued and outstanding,
respectively 136,842 136,194
Additional paid-in capital 1,457,108 1,446,349
Cumulative net income 1,579,034 1,521,146
Cumulative dividends (2,052,009) (1,988,248)
Accumulated other comprehensive
income (loss) 1,357 (848)
---------------- ---------------
Total stockholders' equity 1,407,505 1,399,766
---------------- ---------------
Total liabilities and stockholders'
equity $ 3,788,816 $ 3,597,265
---------------- ---------------
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