Fitch affirms HCP

Fitch Ratings said it affirmed HCP, Inc.'s issuer default rating at BBB+, unsecured bank credit facility at BBB+, senior notes at BBB+ and preferred stock at BBB-.

The outlook is stable.

The affirmations reflect HCP's credit strengths, namely steady cash flows from a large portfolio of high quality properties across the health care real estate spectrum, maintenance of leverage and fixed charge coverage metrics appropriate for the rating category, manageable lease expiration and debt maturity schedules, financial flexibility stemming from a large unencumbered pool to support unsecured borrowings and a solid liquidity position, according to the agency.

Credit concerns include operator and geographic concentration, the agency noted.

HCP's leverage was 5.9x as of Dec. 31. Pro forma for the HCR ManorCare transaction, leverage was 5.3x compared with 5.0x for 2010 pro forma, 6.1x for 2009 and 6.5x for 2008. Fitch projects HCP's leverage to remain around 5.0x through 2014. Fitch said it defines leverage as net debt divided by recurring operating EBITDA.

HCP maintains solid financial flexibility stemming mainly from its large unencumbered property pool, which serves as a source of contingent liquidity, the agency said.

Credit concerns include operator and geographic concentration, Fitch noted.

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