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HCP Business Plan “Remains Straightforward and Disciplined”


It was quite an active and productive first half of 2019 for HCP Inc., according to the firm’s CEO, Tom Herzog. On the REIT’s Q1 earnings call, he said that the work his team has done to restructure the portfolio, strengthen the balance sheet and enhance infrastructure has positioned them to take advantage of favorable capital market conditions and accelerate our growth across all three of the firm’s core business segments of life science, senior housing and medical office.

Specifically, he said that firm had better than expected operational performance in both its life science and medical office segments. “We continue making progress transforming our senior housing segment, which has performed generally in line with our expectations. We continue to reposition our portfolio for success with the acquisitions of $1.5 billion of strategic core real estate, and closed replaced under contract $440 million of non-core asset dispositions.”

In addition, he added, the REIT raised $650 million of equity. “We refinanced $1.3 billion of debt, and we improved our liquidity by upsizing and extending our credit facility. These actions and positive outcomes have allowed us to increase the midpoint of our guidance ranges for FFO as adjusted by $0.02 per share and the total SPP NOI growth by 50 basis points.”

Big picture for the firm is that it remains focused on targeting attractive external growth in each of its private paid segments, while maintaining a disciplined approach to capital allocation. “Life science, we continued our strategy of increasing density in our three core markets of San Francisco, San Diego and Boston.”

As the company looks ahead, Herzon said on the call that the business plan remains straightforward and disciplined. “We will maximize value from our current portfolio through focused capital allocations supported by an ever improving operational and organizational platform.”