HCP raised $900 million in the third quarter alone from acombination of a $481 million stock offering, $116 million fromproperty sales and $312 million in refinancings. Flaherty pointedout that the Long Beach-based REIT enjoys a "low level of secureddebt" and that the "crown jewels" among its properties—includingits Genentech and the Amgen campuses—are "completely unencumberedby secured debt." In that respect, HCP stands in contrast to themany property owners whose balance sheets are encumbered byburdensome levels of debt.

|

One reason for HCP's low level of debt is that the company hasbeen using the $2.4 billion it has raised this year to pay downdebt and secure favorable terms on new debt, Flaherty explained inthe conference call. Mark Wallace, the company's CFO and treasurer,detailed how HCP has applied the $2.4 billion it has raised thisyear to pay down its line of credit, retire $300 million of otherdebt that matured in September and reduce the outstanding balanceon its bridge loan. The company now has sufficient funding to payits debt obligations until the third quarter of 2011.

|

HCP is "glad to be in the healthcare space," especially duringan economic downturn, Flaherty said. He noted that during economicdownturns, sales of prescription drugs and medical devices tend tohold up better than nonessential goods. The country's agingpopulation and the ongoing need for healthcare in general bode wellfor the medical office sector, which represents 21% of HCP'sportfolio, Flaherty added.

|

"We are now 15 months into a severe economic downturn, themagnitude of which is only beginning to be understood," the HCPchairman said. "Our crystal ball is no better than anyone else's,"he said, but the company believes it is positioned to perform wellbecause of the ongoing demand for the types of properties it ownsand operates.

|

At a time when general office occupancy levels are declining formany companies, occupancy rose by 1% during the latest quarter inHCP's life sciences portfolio, where it has executed more than400,000 square feet of new leases. Wallace pointed out that thelife sciences portfolio has limited lease expirations over the nexttwo years and that HCP is already signing renewals with tenantswhose leases don't expire until 2010.

|

HCP, which generated $175.1 million in FFO for the third quarterversus $109 million in last year's third quarter, owns 704properties in five segments within the healthcare industry. Medicaloffice and life sciences properties account for more than half ofthe 704 properties, with the rest distributed among senior housing,hospital and skilled nursing facilities.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.