HCP, Inc. (HCP) reported second quarter 2011 FFO (funds from operations) of $317.9 million or 78 cents per share compared with $161.8 million or 55 cents per share in the year-earlier quarter. Funds from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Excluding non-recurring items, FFO in the reported quarter was $312.2 million or 77 cents per share compared with $161.8 million or 55 cents per share in the year-ago quarter. Recurring FFO in the second quarter of 2011 surpassed the Zacks Consensus Estimate by a penny.
HCP reported total revenue of $488.7 million during the quarter compared with $301.9 million in the year-ago period. Total revenue in the reported quarter comfortably beat the Zacks Consensus Estimate by $74 million.
During the reported quarter, HCP entered into a strategic venture with Brookdale Senior Living, Inc., which includes the operation of 37 HCP-owned senior living communities. The transaction is expected to be completed by September 2011.
During the quarter, HCP acquired real estate assets of HCR ManorCare Inc., a leading privately owned provider of skilled nursing facilities, for $6.1 billion. The properties span across more than 30 states including Ohio, Pennsylvania, Florida, Illinois and Michigan. With the deal, HCP will gain ownership interests in 334 post-acute, skilled nursing and assisted living facilities, located in some of the premium markets of the country typified by high barriers to entry.
In the reported quarter, HCP made investments of $97 million, including a 20-acre parcel of land for $65 million and also funded capital projects in life science and medical office segments worth $32 million.
During the quarter, HCP paid Genesis debt investments and received $330.4 million.
At quarter end, the company had cash and cash equivalents of $276.2 million. For full-year 2011, HCP expects FFO before non-recurring items in the range of $2.63 to $2.69 per share.
HCP currently retains a Zacks #4 Rank, which translates into a short-term Sell rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Health Care REIT Inc. (HCN) currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
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