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Lower Real Estate Gains Hurt HCP

First quarter earnings dropped 2.9% despite rising revenue.

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On April 28, 2009,



reported that its Q1 FY09 earnings declined 2.9% year-over-year, hurt by lower real estate gains. Net income applicable to common shareholders stood at $43.29 million or $0.17 per share compared to $44.58 million or $0.21 per share a year ago. However, diluted funds from operations (FFO) increased 2.7% to $129.64 million from $126.25 million. On a per share basis, FFO decreased 10.7% to $0.50 per share from $0.56 per share, due to higher shares count. The latest quarterly FFO missed the consensus estimate of $0.53 per share.

Total revenue advanced 2.8% to $251.62 million from $244.79 million, driven by higher rental and related revenue, spiked 3.2% to $213.59 million from $206.91 million a year ago. Revenue from tenant recoveries increased 10.3% to $23.66 million from $21.45 million. On the flip side, income from direct financing leases dipped 13.7% to $12.93 million from $14.97 million in the year-ago quarter. Finally, investment management fee income decreased marginally to $1.44 million from $1.47 million in Q1 FY08.

During the quarter under review, Thomas Herzog replaced Mark Wallace as the company's executive vice president and chief financial officer. Recently, the company sold its Los Gatos, California hospital for $45.00 million, recognizing a gain on sale of $31.00 million. Also, the company declared a quarterly cash dividend of $0.46 per share on its common stock, payable on May 21, 2009.

Looking forward to FY09, the company lowered its net income applicable to common shares guidance to be in the range of $1.00 per share and $1.06 per share, from previous estimate of $1.03 per share to $1.09 per share. However, it reaffirmed FFO applicable to common shares between $2.15 per share and $2.21 per share.