NEW YORK--(BUSINESS WIRE)--HCP, Inc.'s (NYSE: HCP) reiterated commitment to its existing conservative business and financing strategies alleviates some of the credit concerns that stem from the abrupt change in leadership, according to Fitch Ratings.
On Oct. 3, 2013, HCP announced the election of Lauralee Martin to the position of President and Chief Executive Officer and the corresponding termination of Jay Flaherty who had led the company since 2003. HCP's assertion that there will not be any related subsequent events or changes in business or financing strategies is material. The latter are key factors that support HCP's ratings and the former signals there are no undisclosed or potential issues that could diminish the amount or durability of HCP's cash flows as catalysts for the sudden and costly management change.
The more conservative nature of HCP's investments (i.e. focus on triple-net leased properties and reticence towards RIDEA) coupled with a similarly conservative financing strategy (e.g. announcing underwritten equity offerings in conjunction with acquisition announcements, not closings) are material credit strengths. Fitch would evaluate the effects of a deviation or evolution from said strategies on the ratings should HCP's future actions or comments indicate one is forthcoming.
Additional credit considerations resulting from the change in leadership are the modest improvement in corporate governance due to the now separated roles of CEO and Chairman of the Board of Directors and the potential for diminished access to capital as the debt and equity capital markets react to the change and initial uncertainty.
Fitch currently rates HCP as follows:
--Issuer Default Rating (IDR) at 'BBB+';
--Unsecured bank credit facility at 'BBB+';
--Unsecured term loan at 'BBB+';
--Senior unsecured notes at 'BBB+'.
The Rating Outlook is Stable.
Additional information is available at www.fitchratings.com.