HCP Beats by a Cent

HCP, Inc (HCP - Analyst Report) reported FFO (funds from operations) of $259.6 million or 63 cents per share in the third quarter of 2011 compared with $96.1 million or 31 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 came in at $274.9 million or 67 cents per share compared with $167.8 million or 54 cents per share in the year-ago quarter. Recurring FFO in the third quarter of 2011 surpassed the Zacks Consensus Estimate by a penny.

HCP reported total revenue of $444.7 million in the reported quarter compared with $317.0 million in the year-ago period. Total revenue was ahead of  the Zacks Consensus Estimate by $433 million.

During the reported quarter, HCP completed a strategic venture with Brookdale Senior Living, Inc., which includes the operation of 37 HCP-owned senior living communities.

Subsequent to quarter end, LinkedIn Corporation agreed to expand their corporate headquarters at HCP’s Shoreline campus in Mountain View, California. The expansion totaling 373,000 square feet consists of a lease totaling 303,000 square feet and includes an option of extending the lease till March 2023. Additionally, it also includes a lease for a new 70,000 square foot building for 10 years, which is expected to complete in 2013.

In the reported quarter, HCP made investments worth $43 million to fund development and other capital projects primarily in the life science and medical office segments.

At quarter end, the company had cash and cash equivalents of $44.9 million. For full-year 2011, HCP increased its FFO guidance before non-recurring items from $2.63 -$2.69 per share to $2.65 - $2.71.

HCP currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Health Care REIT Inc. (HCN - Analyst Report) currently  holds a Zacks #4 Rank, which translates into a short-term Sell rating.

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