Looking to fund its future growth, HCP recently priced $750 million of senior unsecured notes with a fixed rate of 4.00% for 10 years. The price to investors was 99.126% of the principal amount, representing a yield-to-maturity of 4.107%, and a spread over Treasuries of about 195 basis points. After expenses, the net proceeds of the offering are approximately $736.5 million, which HCP plans to allocate to pay off a portion of the debt used for its recent $849 million acquisition of 35 private pay seniors housing communities from Chartwell and its $161 million acquisition of a medical office building in Philadelphia, Pennsylvania. This offering follows HCP’s amending of its master lease with HCR ManorCare, where it reduced annual rent payments from HCR by $68 million. But with HCP also disclosing the sale of 50 non-strategic facilities, expected to close within late 2015 to early 2016 and generate net proceeds of between $250 and $350 million, HCP should have plenty of flexibility to fund future acquisitions and investments, while repaying any indebtedness as well. Goldman, Sachs & Co., J.P. Morgan Securities, Morgan Stanley & Co. and Wells Fargo Securities are acting as joint book-running managers for the offering.
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