HCP Updates 2015 Guidance To Reflect Impact From Amended Master Lease

(RTTNews) - HCP (HCP) and HCR ManorCare Inc. (HCRMC) announced they have agreed to amend Master Lease, encompassing a portfolio of 333 post-acute, skilled nursing and assisted living facilities owned by HCP. Commencing April 1, 2015, HCP will provide an annual net rent reduction of $68 million. The contractual rent will increase by 3.0% annually during the initial term.

In exchange, HCP will receive: fee ownership in nine new post-acute facilities valued at $275 million with a median age of four years, currently owned and operated by HCRMC; a second lease receivable with an initial amount of $250 million, payable by HCRMC; and an extension of the initial lease term by five years, to an average of 16 years. The company also announced that it will record a non-cash impairment charge estimated to be approximately $481 million, or $1.03 per share, related to direct financing lease investments with HCRMC.

The company updated its full year 2015 guidance to reflect the impact from the Amended Master Lease and the non-cash impairment charge. HCP expects Funds From Operations applicable to common shares to range between $2.02 and $2.08 per share; FFO as adjusted applicable to common shares to range between $3.06 and $3.12 per share; Funds Available for Distribution applicable to common shares to range between $2.63 and $2.69 per share; and net income applicable to common shares to range between $0.87 and $0.93 per share.