BTIG Remains Neutral on HCP, Inc. (HCP) Amid Q3 Results, Senior Housing Sale, Other Items

BTIG affirms HCP, Inc. (NYSE: HCP) at Neutral following Q3 results, lease terminations, and asset sales.

Analyst Michael Gorman commented today, HCP announced 3Q16 FFO/sh of $0.72, $0.03 ahead of our estimate and $0.01 above the Street. However, we believe most of the focus will be away from the quarterly results and on guidance as well as strategic transactions. Management updated its FY guidance to reflect the recently-completed spinoff of its skilled nursing division and rolled out 2017. HCP announced a number of transactions in its Senior Housing portfolio including a $1.125B asset sale to Blackstone.

Operating metrics during the quarter were solid. Cash SSNOI grew 3.1% across the portfolio, led by Life Science (+8.8%), and Medical Office (+3.1%). Leasing results in the Life Science portfolio were strong with 16.2% lease spreads while the Medical Office portfolio generated 1.4% spreads. Coverage ratios in the Senior Housing Triple Net portfolio declined to 1.24x from 1.26x in the prior quarter and 1.29x in the prior year. However, the pending transactions with Brookdale are likely to boost coverages in the coming quarters, the analyst noted.

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