IRVINE, Calif., Oct. 1, 2019 /PRNewswire/ -- HCP, Inc.
(NYSE: HCP) today announced several transactions with Brookdale
Senior Living Inc. ("Brookdale")
related to HCP's 15-campus CCRC JV and triple-net portfolio with
Brookdale that will position HCP
to: (i) improve operator diversification, (ii) acquire Brookdale's interest in 12 CCRC campuses and
(iii) strengthen the remaining Brookdale triple-net portfolio.
Specifically, the transactions consist of:
CCRC TRANSACTIONS
- HCP to acquire Brookdale's 51%
joint venture interest in 12 entry fee CCRCs with 5,641 units for
$510 million (HCP will then own a
100% interest)
- HCP and Brookdale agree to
terminate management agreements on the 12 CCRCs, and HCP to
transition management from Brookdale to Life Care Services ("LCS") under
a highly incentivized contract
- HCP to pay $100 million
termination fee to Brookdale
(approximately 5x annual management fee) and reset management fee
with LCS (approximately $7 million
annual savings)
- HCP and Brookdale to jointly
market for sale to third parties the remaining three CCRCs in the
existing joint venture
TRIPLE-NET TRANSACTIONS
- Brookdale to acquire 18
triple-net leased properties from HCP for $405 million, representing a 7.4% lease yield on
trailing twelve month rent as of June 30,
2019. These 18 triple-net leased properties had a 0.86x rent
coverage after management fee as of June 30,
2019
- HCP and Brookdale agree to
restructure the 24 remaining Brookdale triple-net leased properties into a
single master lease with 2.4% annual escalators with a maturity
date on December 31, 2027, and pro
forma rent coverage of ~1.1x after management fee and ~1.3x before
management fee
- HCP to provide up to $35 million
capital investment in remaining triple-net portfolio over a 5-year
term and receive a 7% initial return on the invested capital
OTHER TRANSACTIONS
- HCP and Brookdale agree to
terminate agreements related to one Brookdale triple-net leased property with 1.0x
rent coverage after management fee (to be converted to SHOP upon
transition of management to LCS) and one SHOP property to be
marketed for sale to third parties
These transactions are expected to reduce HCP's Brookdale concentration from 16% to 8% of cash
NOI on a pro forma basis.
The acquisition of Brookdale's
51% interest in the 12 CCRCs, the transitions to LCS, and the asset
sales to Brookdale are expected to
close in 1Q 2020, subject to customary closing conditions.
The asset sales to third parties are expected to close over the
next 12 to 18 months.
"We are pleased with the outcome of this mutually beneficial
transaction, which reflects the collaboration and partnership we
share with Brookdale," said
Tom Herzog, President and Chief
Executive Officer of HCP. "This transaction will allow HCP to
improve its operator diversification, as well as strengthen its
remaining Brookdale triple-net
portfolio."
An investor presentation regarding the transactions can be found
on HCP's website under the Presentations tab in the Investor
Relations section at http://ir.hcpi.com.
About HCP
HCP, Inc. is a fully integrated real estate investment trust
(REIT) that invests in real estate serving the healthcare industry
in the United States. HCP owns a large-scale portfolio
primarily diversified across life science, medical office and
senior housing. Recognized as a global leader in
sustainability, HCP has been a publicly-traded company since 1985
and was the first healthcare REIT selected to the S&P 500
index. For more information regarding HCP, visit
www.hcpi.com.
Forward-Looking Statements
Statements in this release that are not historical facts are
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements include, among other things, statements regarding our
and our officers' intent, belief or expectation as identified by
the use of words such as "may," "will," "project," "expect,"
"believe," "intend," "anticipate," "seek," "target," "forecast,"
"plan," "potential," "estimate," "could," "would," "should" and
other comparable and derivative terms or the negatives
thereof. Examples of forward-looking statements include,
among other things, statements regarding the pending and
anticipated transactions with Brookdale, LCS and third parties, including
the anticipated benefits from, and results of, the transactions,
execution plans, expected proceeds, pro forma rent coverage, return
on invested capital, impact on earnings, and the anticipated
closing or completion timeframes of the transactions. The
closing of the transactions remains subject to the satisfaction of
certain conditions, and may not close on the anticipated timeline
or at all. Forward-looking statements reflect our current
expectations and views about future events and are subject to risks
and uncertainties that could significantly affect our future
financial condition and results of operations. While
forward-looking statements reflect our good faith belief and
assumptions we believe to be reasonable based upon current
information, we can give no assurance that our expectations or
forecasts will be attained. Further, we cannot guarantee the
accuracy of any such forward-looking statement contained in this
release, and such forward-looking statements are subject to known
and unknown risks and uncertainties that are difficult to
predict. See Part I, Item 1A.
"Risk Factors" in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2018 for a
description of risks and uncertainties that may cause our actual
results to differ materially from the expectations contained in the
forward-looking statements herein. Except as required by law,
we do not undertake, and hereby disclaim, any obligation to update
any forward-looking statements, which speak only as of the date on
which they are made.
Contact
Andrew
Johns
Vice President – Finance and Investor Relations
(949) 407-0400
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SOURCE HCP, Inc.
