IRVINE, Calif., Nov. 2, 2017 /PRNewswire/ -- HCP, Inc. (NYSE:
HCP) today announced several transactions with Brookdale
Senior Living Inc. ("Brookdale")
and Columbia Pacific Advisors, LLC ("CPA") which will ultimately
result in: (i) a significant reduction in HCP's Brookdale concentration, (ii) an increase in
lease coverage of the remaining triple-net assets leased to
Brookdale to be retained by HCP,
(iii) a meaningful improvement in the diversification in HCP's
overall real estate portfolio, and (iv) enhancements to HCP's
balance sheet and credit profile.
Specifically, the restructuring of the Brookdale portfolio includes the
following:
- HCP will sell to Brookdale six properties for $275 million.
- HCP will purchase Brookdale's 10% interest in two joint ventures
for $99 million.
- HCP and Brookdale have agreed to terminate management
agreements on 36 senior housing operating properties ("SHOP") and
leases on 32 triple-net communities. Brookdale has agreed to waive fees on all
management agreement terminations and HCP has agreed to modify the
rent on the remaining Brookdale
triple-net portfolio, providing a $5
million annual rent reduction.
- HCP intends to either transition to other
operators or sell the aforementioned 68 properties during
2018. The anticipated sales are expected to generate
$600 million to $900 million of net
proceeds to HCP depending on the mix of asset sales versus
transitions to new operators.
- HCP received the rights to terminate
management agreements on its remaining 20 consolidated SHOP
properties managed by Brookdale,
subject to a fee.
- HCP and Brookdale have modified the change in control
consent language in the current agreements to remove HCP's ability
to deny consent in its sole and absolute discretion. In
return, upon a change in control, Brookdale will grant HCP additional rights to
sell or transition all of its SHOP and CCRC properties at no cost,
and will receive lease and financial covenants on its Brookdale triple-net portfolio.
HCP also announced today that it has agreed to sell its
remaining investments in the RIDEA II senior housing joint venture
("RIDEA II") to an investor group led by CPA for $332 million. The RIDEA II joint venture owns 49
communities, of which 46 are managed by Brookdale.
Combined, these transactions are expected to reduce HCP's
Brookdale concentration, on a pro
forma basis, from 27.0% of Cash NOI and Interest Income (excluding
the previously announced planned sale or transition of 25 Brookdale
assets) to approximately 15.7%. HCP intends to use the
proceeds from dispositions primarily to repay debt and for general
corporate purposes.
"This is a win-win for Brookdale and HCP, and we appreciate very much
the collaborative way this agreement has come together," said
Tom Herzog, President and Chief
Executive Officer of HCP. "Reducing our Brookdale concentration has been one of our
highest priorities in 2017, and these agreements allow us to do
that in a structured and cooperative manner."
Strategic Benefits of the Brookdale and CPA Transactions:
- Reduces HCP's Brookdale Concentration on a pro forma
basis to approximately 15.7% following anticipated future sales and
transitions
- Improves Lease Coverage for HCP's Brookdale triple-net portfolio on a pro forma
basis to approximately 1.28x for the twelve months ended
September 30, 2017
- Diversifies Operator Relationships by transitioning
certain communities to other operators
- Strengthens HCP's Balance Sheet and Credit Profile by
reducing net debt to adjusted EBITDA to below 6.0x over time and
decreasing tenant concentration
- Strengthens Brookdale Relationship with a targeted,
high-quality portfolio
- Simplifies HCP's Ownership Structure by reducing the
number of assets held in joint ventures
An investor presentation regarding the transactions can be found
on the Company's website under the Presentations tab in the
Investor Relations section at http://ir.hcpi.com.
The transactions are expected to be completed in various stages
throughout 2017 and 2018, but the closings may not occur on the
anticipated timeline, or at all. In addition, the transactions are
subject to regulatory approvals and the satisfaction of other
customary closing conditions.
Barclays is acting as financial advisor and Paul, Weiss,
Rifkind, Wharton & Garrison LLP is serving as legal counsel to
HCP.
About HCP
HCP, Inc. is a fully integrated real estate investment trust
(REIT) that invests primarily in real estate serving the healthcare
industry in the United States. HCP owns a large-scale
portfolio diversified across multiple sectors, led by senior
housing, life science and medical office. 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 factual
statements 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. These
statements include, among other things, statements regarding our
pending transactions with Brookdale and CPA, including the anticipated
benefits from, and results of, the transactions, execution plans,
expected proceeds, anticipated use of proceeds, additional
agreements or terms that may be agreed to by the parties, and the
anticipated closing or completion timeframes of the transactions.
All forward-looking statements are made as of the date hereof, are
not guarantees of future performance and are subject to known and
unknown risks, uncertainties, assumptions and other factors — many
of which are out of our and our management's control and difficult
to forecast — that could cause actual results to differ materially
from those set forth in or implied by such forward-looking
statements. These risks and uncertainties include but are not
limited to: our ability to complete the transactions, or any of
them, on the currently proposed terms or at all, including in
respect of the satisfaction of closing conditions, the risk that
any regulatory or other approvals required for the transactions are
not obtained or are subject to unanticipated conditions,
uncertainties as to the timing of the transactions; the risk that
we may not be able to achieve the benefits of the transactions, or
any of them, within expected time-frames or at all, or within
expected cost projections; and other risks and uncertainties
described from time to time in our Securities and Exchange
Commission filings. We caution investors not to place undue
reliance on any forward-looking statements. We assume no, and
hereby disclaim any, obligation to update any forward-looking
statements as a result of new information or new or future
developments, except as otherwise required by law.
Contact
Andrew
Johns
Vice President – Finance and Investor Relations
(949) 407-0400
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SOURCE HCP, Inc.