Healthcare: HCP Closes $440M Equity Offering

Healthcare: HCP Closes $440M Equity Offering

By Bob Howard

LONG BEACH, CA-HCP, a health care properties REIT that successfully raised additional funds last year by issuing new stock, has completed a $440-million public offering of 20.7 million shares of common stock at a price of $21.25 per share. HCP had said previously that it hoped to raise a minimum of nearly $383 million from the offering, but it also said that the amount could be higher if underwriters exercised their option to buy additional shares–which they did.

HCP plans to use the proceeds of the offering to repay all of the debt under a bridge loan that the REIT has–a bridge loan that carried a balance of $320 million as of May 1–with the remainder to be used for general corporate purposes. In addition to offering the 18 million shares, HCP has granted the underwriters of the offering an option to purchase up to 2.7 million shares within 30 days of the offering. UBS Investment Bank and Merrill Lynch & Co. are joint book-running managers for the offering.

According to its filings with the SEC, the health care properties REIT anticipated that the net proceeds of its offering, after expenses, would be approximately $366.7 million if it raised only $383 million, or approximately $421.8 million if the underwriters fully exercised their option to purchase additional shares. It plans to use the net proceeds to repay all the outstanding balance under a bridge loan that carried a balance of $320 million as of May 1.

HCP’s new offering illustrates the confidence and success that health care-related enterprises and related types of public companies have had in raising capital despite the difficulty that commercial real estate firms in general have had in finding funds. Last summer, for example, HCP completed a $500-million offering of 14.95 million shares at a price of $33.50.

Earlier in the year, the company issued approximately $560 million in stock to respond to the anticipated demand for shares of its common stock by index funds in connection with the REIT’s addition to the S&P 500 Index. As of its latest quarterly report, HCP owned 692 properties. The 692 included 264 senior housing, 100 life science, 254 medical office, 23 hospital and 51 skilled nursing facilities.

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