Real estate investment trust in healthcare industry HCP, Inc. (HCP) on Tuesday reported a 26 percent decline in funds from operations for the fourth quarter from last year. Strong revenue growth in the quarter were offset by a litigation settlement charge arising out of rival Ventas Inc.'s (VTR) 2007 acquisition of Sunrise Senior Living REIT.
Excluding the litigation charge, funds from operations or FFO as adjusted, rose from the prior-year period, but missed analysts' expectations. FFO is a key measure of a real estate firm's profitability.
HCP has been reporting higher revenues in recent quarters from rent and lease financing as well as acquisitions. Rental and related revenues rose 5 percent in the latest quarter, while income from direct financing leases surged more than ten-fold from the year-ago period.
Looking ahead to fiscal year 2012, the company maintained its outlook for FFO.
The Long Beach, California-based health care property investor's fourth-quarter FFO was $150.58 million or $0.37 per share, lower than $202.61 million or $0.62 per share in the year-ago period.
FFO for the latest quarter includes a litigation settlement charge of $125 million or $0.30 per share.
Adjusted FFO per share for the quarter rose to $0.67 from $0.64 in the prior-year period. On average, 14 analysts polled by Thomson Reuters expected the company to earn $0.66 per share. Analysts' estimates typically exclude special items.
Total revenues grew 35 percent to $461.60 million from $340.97 million in the prior-year quarter. Analysts estimated revenues of $450.89 million.
For fiscal year 2011, HCP's FFO surged to $877.91 million from $690.64 million in the previous year. However, FFO per share declined to $2.19 from $2.25 in the prior year. Adjusted FFO rose to $2.69 per share from $2.23 per share last year.
Total revenues for the year grew 38 percent to $1.73 billion from $1.25 billion in the previous year.
Analysts expected the company to earn $2.55 per share for the year on revenues of $1.64 billion.
Looking ahead to fiscal 2012, HCP forecasts FFO applicable to common shares in a range of $2.70 to $2.76 per share. Analysts expect the company to earn $2.79 per share.
In Tuesday's regular session, HCP is trading at $41.12, down $0.58 or 1.39 percent on a volume of 307,897 shares.
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