HCP Lowers Financial Projections for the Year

   By Maria Armental 
 

Health-care real-estate investment trust HCP Inc. (HCP) on Wednesday cut its financial projections for the year by 10 cents, citing a book-value adjustment of its investment in a struggling U.K. chain of homes for the elderly.

The Irvine, Calif., real-estate investment trust said it would log an impairment charge of $42 million, or nine cents a share, from its investment in 12.25% senior unsecured notes due 2020 issued by private-equity firm Terra Firma Capital Corp.'s Elli Investments Ltd. as part of its acquisition of Four Seasons Health Care in 2012.

Four Seasons is the largest elderly and specialist care provider in the U.K. with more than 450 care homes and specialist care centers, HCP said.

HCP said the impairment stems from higher labor and central corporate costs along with a higher number of admissions bans placed on care homes and lower occupancy because of a higher mortality rate during the first quarter.

Last week, the company said it would record about a penny in severance costs related to the resignation of its chief investment officer, Paul F. Gallagher.

Mr. Gallagher, whose resignation becomes effective June 30, plans to stay on as a consultant through March 15, 2016.

HCP now projects funds from operations of $1.92 to $1.98 a share and profit of 74 cents to 80 cents a share, down from its earlier view of funds from operations between $2.02 and $2.08 and profit between 84 cents and 90 cents.

Write to Maria Armental at [e-mail]

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