HCP to Spin Off SNF Portfolio

The spin-off of HCR ManorCare will be led by properties the division currently operates, such as this SNF in Cedar Rapids, IA.

IRVINE, CA—HCP said Monday that its board had approved a plan to spin off the REIT’s HCR ManorCare portfolio of mainly skilled nursing facilities into an independent, publicly-traded company. In connection with the spin-off, Mark Ordan has joined HCP as a senior advisor and will lead the new company as CEO. The idea is to enable HCP to improve its portfolio quality and increase its focus on core growth businesses, namely seniors housing, life sciences and medical office. 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. For its part, SpinCo is expected to have a real estate portfolio composed of more than 320 properties, led by facilities operated by HCR ManorCore, with expected in-place annual rent of approximately $485 million “We believe this transaction gives HCP the ability to re-confirm itself as a blue-chip, innovative and relationship-oriented healthcare REIT,” says Lauralee Martin, HCP’s president and CEO. “Post spin, HCP will own a stable, private-pay portfolio that has a track record of delivering consistent, attractive returns.” Martin adds that HCP “will be able to sharpen its focus on high-growth healthcare sectors and, with a cost of capital benefiting from the stability and growth profile of these strong sectors, we will be positioned to achieve accretive new investment growth.  The transaction also gives our shareholders ownership of a separate company structured with the tools and flexibility to maximize the value of its assets.” Separately, HCP reported its first-quarter results on Monday. The Irvine, CA-based REIT said its adjusted funds from operations for the three months ended March 31 came to 69 cents per share, in line with analysts’ projections.  It also posted a year-over-year increase in revenues to $640.8 million, although the figure just missed the Zacks Consensus Estimate of $642.3 million.