During the fourth quarter of 2012, the Company acquired 129 senior housing communities for $1.7 billion, from a joint venture between Emeritus Corporation ("Emeritus") and Blackstone Real Estate Partners VI, an affiliate of Blackstone (the "Blackstone JV"). Located in 29 states, the portfolio encompasses 10,077 units representing a diversified care mix of 61% assisted living, 25% independent living, 13% memory care and 1% skilled nursing. Based on operating performance at closing, the 129 communities consist of 95 that are stabilized and 34 that were in lease-up. The transaction closed in two stages: (i) 127 senior housing facilities on October 31, 2012 for $1.68 billion representing 9,842 units; and (ii) two senior housing facilities on December 4, 2012 for $24 million representing 235 units. The Company paid $1.7 billion in cash consideration to acquire: (i) real estate with a fair value of $1.5 billion, (ii) intangible assets with a fair value of $170 million and assumed intangible liabilities with a fair value of $4 million. As of December 31, 2012, the purchase price allocation is preliminary, and the final purchase price allocation will be determined pending the receipt of information necessary to complete the valuation of certain assets and liabilities, which may result in a change from the initial estimate.

Emeritus operates the communities pursuant to a new triple-net, master lease for the 129 properties (the "Master Lease") guaranteed by Emeritus. The Master Lease provides aggregate contractual rent in the first year of $103.6 million. The contractual rent will increase annually by the greater of the percentage increase in the Consumer Price Index ("CPI") or 3.7% on average over the initial five years, and thereafter by the greater of CPI or 3.0% for the remaining initial lease term. At the beginning of the sixth lease year, rent on the 34 lease-up properties will increase to the greater of the percentage increase in CPI or fair market, subject to a floor of 103% and a cap of 130% of the prior year's rent. From the acquisition dates to December 31, 2012, the Company recognized income of $22 million related to its acquisitions of the 129 senior housing communities.

The leased properties are grouped into three pools that share comparable characteristics and these leased pools have initial terms of 14 to 16 years. Emeritus has two extension options, which, if exercised, will provide for lease terms of 30 to 35 years.

Concurrent with the acquisition, Emeritus purchased nine communities from the Blackstone JV, for which the Company provided secured debt financing of $52 million with a four-year term. The loan is secured by the underlying real estate and is prepayable at Emeritus' option. The interest rate on the loan was initially 6.1% and will gradually increase during its four year term to 6.8%.

The following unaudited pro forma consolidated results of operations assume that the acquisition of 129 senior housing communities from the Blackstone JV were completed as of January 1 for each of the periods presented below (in thousands, except per share amounts):

	Year Ended December 31,

	2012		2011		2010
Revenues	$	1,987,055	$	1,815,696	$	1,343,806
Net income		870,802		584,361		374,262
Net income applicable to HCP, Inc.		856,500		568,758		360,576
Basic earnings per common share	$	1.88	$	1.30	$	1.03
Diluted earnings per common share		1.88		1.29		1.03

A summary of other acquisitions for the year ended December 31, 2012 follows (in thousands):

	Consideration							Assets Acquired

Acquisitions	Cash Paid		Debt and Other Liabilities Assumed		Noncontrolling Interest			Real Estate		Net Intangibles
Senior housing	$	3,860	$	—	$	—		$	3,541	$	319
Life science		7,964		—		86			7,580		470
Medical office		171,654		60,597		42,648	⁽¹⁾		207,561		67,338
Hospital		3,000		—		—			3,000		—

	$	186,478	$	60,597	$	42,734		$	221,682	$	68,127

During the year ended December 31, 2012, the Company incurred an aggregate of $183 million for construction, tenant and other capital improvement projects, primarily in the senior housing, life science and medical office segments.

A summary of acquisitions for the year ended December 31, 2011 follows (in thousands):

	Consideration						Assets Acquired

Acquisitions	Cash Paid		Debt Assumed		Noncontrolling Interest		Real Estate		Net Intangibles
Life science	$	84,087	$	57,869	$	—	$	133,210	$	8,746
Medical office		29,743		—		1,500		26,191		5,052

	$	113,830	$	57,869	$	1,500	$	159,401	$	13,798

During the year ended December 31, 2011, the Company incurred an aggregate of $127 million for construction, tenant and other capital improvement projects, primarily in the life science and medical office segments. During the year ended December 31, 2011, two of the Company's life science facilities located in South San Francisco were placed in service representing 88,000 square feet.