Property Performance Drives HCP's Growth

There are "broad-based" investment opportunities in the healthcare sector, according to Jay Flaherty III, HCP Inc.'s (NYSE: HCP) chairman and CEO.

In a video interview with REIT.com at REITWeek 2012: NAREIT's Investor Forum, Flaherty discussed his own company's prospects for growth. Flaherty noted that HCP invests in five separate property types in the healthcare sector—medical offices, life science buildings, senior housing facilities, post-acute and skilled nursing centers and hospitals—in a number of different formats, including wholly owned real estate, mezzanine debt, development and joint ventures. He said he's finding opportunities in all areas.

"The interesting thing right now, given what's going on both domestically in the United States and abroad, particularly in Europe, is that we've got dialogue across that entire spectrum, so it's very encouraging right now," he said.

Going into the second half of 2012, Flaherty said he's anticipating growth will come from "a high degree of profitability on our same property performance." He pointed out that HCP currently enjoys organic growth of approximately 4 percent on its existing properties. HCP's "conservative" use of leverage helps boost returns.

Flaherty also said the firm will to a lesser extent look to grow by capitalizing on the attractive acquisition opportunities currently available in the market.

Flaherty offered praise for the REIT approach to real estate investment. He cited REITs' governance, "reasonable" use of leverage and best practices as some of the qualities that have helped REITs endure during hard times. In particular, Flaherty said the strong governance structures in place have made REITs stand out from the crowd.

"If you take a look, even today, as to what's going on in other industries, you've got some of the same old shenanigans that are happening again," he said.