HCP To Spin Off HCR ManorCare Portfolio - Quick Facts

(RTTNews) - HCP Inc. (HCP) said that its board approved a plan to spin off its HCR ManorCare or "HCRMC" portfolio of skilled nursing or "SNF" and assisted living assets, as well as other skilled nursing assets, into an independent, publicly-traded REIT or "SpinCo".

The spin-off transaction will enable HCP to improve its portfolio quality and increase its focus on core growth businesses - Senior Housing, Life Science and Medical Office - that consist of a diversified group of leading operators and tenants primarily within the private-pay sector. Following the completion of the spin-off, HCP's diversified portfolio is expected to consist of more than 860 properties, generating annual portfolio income of approximately $1.4 billion.

In conjunction with the spin-off, Mark Ordan has joined HCP as a Senior Advisor to focus on the HCRMC investment and will lead SpinCo as Chief Executive Officer upon completion of the transaction. Ordan previously served as the Chief Executive Officer of Washington Prime Group, and prior to that, served as Chief Executive Officer of Sunrise Senior Living and led its financial and operating turnaround.

SpinCo is expected to have a real estate portfolio composed of more than 320 properties, led by facilities operated by HCRMC, with expected in-place annual rent of approximately $485 million. With a flexible balance sheet, SpinCo will be positioned to create value through active asset management that is tailored to address the ongoing changes in the post-acute/SNF industry. Upon completion of the spin-off, SpinCo will be led by an independent management team with deep experience in real estate and healthcare, led by Mark Ordan.

Upon completion of the planned spin-off, HCP shareholders will receive shares of SpinCo via a pro rata special distribution. The number of HCP shares owned by each shareholder will not change as a result of the distribution.

The spin-off is expected to be completed in the second half of 2016. The SpinCo intends to apply to have its common stock authorized for listing on the New York Stock Exchange.

In a separate press release, HCP said that it expects 2016 FFO per share to range between $2.76 and $2.82; FFO as adjusted per share to range between $2.77 and $2.83; FAD per share to range between $2.65 and $2.71; and EPS to range between $1.80 and $1.86. Analysts polled by Thomson Reuters expect the company to report earnings of $2.76 per share for fiscal year 2016. Analysts' estimates typically exclude special items.

In addition, the company expects 2016 SPP Cash NOI to increase between 1.5% and 2.5%. Excluding HCRMC, it expects 2016 SPP Cash NOI to increase between 2.3% and 3.3%. These estimates do not reflect the potential impact of the spin-off transaction involving HCRMC real estate portfolio or unannounced future transactions.