HCP Q3 FFO Declines; Backs FY09 FFO Outlook

11/3/2009 12:58 PM ET

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(RTTNews) - Tuesday, HCP, Inc. (HCP: News ), a real estate investment trust, reported a decrease in funds from operation in the third-quarter, hurt by the negative impact of impairments, litigation liabilities and income from the sales of marketable debt securities. The company slipped to a loss in the third quarter on lower revenues and the special items that affected quarterly FFO. Adjusted FFO for the quarter fell short of Street estimates by a penny. Looking forward, the company reiterated its adjusted FFO forecast for the full year 2009.

The Long Beach, California-based company reported a net loss for the third quarter of $52.4 million or $0.18 per share, compared to net income of $119.6 million or $0.49 per share in the year-ago quarter.

Funds from operations or FFO applicable to common shares for the quarter was $32.2 million or $0.11 per share, compared to $174.3 million or $0.70 per share in the year-ago period.

FFO applicable to common shares for the quarter ended September 30, 2009 included the negative impact a $0.05 per share of impairments, a charge of $0.36 per share related to an accrued liability in connection with a jury verdict in the Ventas litigation and an income of $0.02 per share related to sales of marketable debt securities. Also included in the items impacting FFO was a gain on sales of real estate of $2.5 million.

Excluding items, adjusted FFO applicable to common shares was $149.3 million or $0.52 per share, down from $178.8 million or $0.72 per share in the same quarter last year.

On average, fourteen analysts polled by Thomson Reuters expected the company to earn $0.53 per share for the quarter. Analysts estimates typically exclude special items.

Loss from continuing operations for the third quarter was $45.53 million or $0.19 per share, compared to net income of $100.51 million or $0.36 per share in the same quarter a year ago.

Total revenues for the quarter decreased to $255.33 million from $267.85 million in the prior-year quarter. Five analysts had a revenue consensus of $250.81 million for the third quarter.

In the immediately preceding quarter, HCP's funds from operation in the second-quarter increased to $146.1 million or $0.55 per share over last year. However, profit declined to $91.8 million from the same quarter a year ago. Quarterly revenues improved to $267.34 million from $248.77 million in the same quarter last year.

Among competitors, Simon Property Group Inc. (SPG), Friday reported funds from operations for the first quarter that increased 2% to $473.07 million from a year ago, helped by stable performance of franchise retail assets within its regional mall, premium outlet and mills platforms. However, revenues for the quarter decreased to $924.93 million from $935.59 million in the prior-year quarter.