8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

November 4, 2008

Date of Report (Date of earliest event reported)

HCP, Inc.

(Exact name of registrant as specified in its charter)

Maryland	1-08895	33-0091377
(State of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)

3760 Kilroy Airport Way

Suite 300

Long Beach, California 90806

(Address of principal executive offices) (Zip Code)

(562) 733-5100

(Registrant’s telephone number, including area code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On November 4, 2008, HCP, Inc. (“HCP”) issued a press release setting forth its financial results for the three and nine months ended September 30, 2008.  The press release referred to a supplemental information package that is available on HCP’s website, free of charge, at www.hcpi.com.  The text of the press release and the supplemental information package are furnished herewith as Exhibits 99.1 and 99.2, respectively, and are specifically incorporated by reference herein.

The information in this Form 8-K and the related information in the exhibits attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section and shall not be incorporated by reference into any filing of HCP under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in any such filing.

Item 9.01.		Financial Statements and Exhibits.
	(d)	Exhibits.
99.1		Press Release of HCP, Inc., dated November 4, 2008.
99.2		HCP, Inc. Supplemental Information Package for the quarter ended September 30, 2008.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	HCP, Inc.
	(Registrant)
Date: November 4, 2008	By:	/s/ Edward J. Henning
	Name:	Edward J. Henning
	Title:	Executive Vice President, General Counsel,
		Chief Administrative Officer and Corporate Secretary

3

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
99.1	Press Release of HCP, Inc., dated November 4, 2008.
99.2	HCP, Inc. Supplemental Information Package for the quarter ended September 30, 2008.

4

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

HCP ANNOUNCES THIRD QUARTER 2008 RESULTS

HIGHLIGHTS

·  $0.71 FFO per diluted share of common stock

·  Raised over $900 million during the quarter ended September 30, 2008:

·   $116 millio n from asset dispositions

·   $312 million from debt financing

·   $481 million from equity issuance

·  Completed Tenet settlement and sale of Tarzana hospital

·  Completed $200 million unsecured term loan on October 24, 2008

LONG BEACH, CA, November 4, 2008 – HCP (the “Company” or “we”) (NYSE:HCP) announced results for the quarter ended September 30, 2008.  Funds from operations (“FFO”) applicable to common shares was $175.1 million, or $0.71 per diluted share of common stock, for the quarter ended September 30, 2008, compared to FFO applicable to common shares of $109.0 million, or $0.52 per diluted share of common stock, in the year ago period.

FFO applicable to common shares for the quarter ended September 30, 2008 includes the impact of $0.17 per diluted share of common stock of the following i) lease termination fees of $0.07 per diluted share of common stock resulting from the early termination of three leases in our life science segment and a related impairment of $0.01 per diluted share of common stock; and ii) income of $0.11 per diluted share of common stock related to the settlement of various disputes with Tenet Healthcare Corporation (“Tenet”).  FFO applicable to common shares for the quarter ended September 30, 2007 includes the impact of $0.01 per diluted share of common stock of the following i) merger-related charges of $0.05 per diluted share of common stock; and ii) straight-line rental income of $0.04 per diluted share of common stock, resulting from our change in estimate related to the collectibility of straight-line rental income. FFO is a supplemental non-GAAP financial measure that the Company believes is helpful in evaluating the operating performance of real estate investment trusts.

Net income applicable to common shares for the quarter ended September 30, 2008 was $120.1 million, or $0.49 per diluted share of common stock, compared to net income applicable to common shares of $316.9 million, or $1.53 per diluted share of common stock, in the year ago period. Net income applicable to common shares for the quarter ended September 30, 2008 includes gain on sales of real estate of $27.4 million, compared to gain on sales of real estate of $286.2 million in the year ago period.

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INVESTMENT TRANSACTIONS

During the quarter ended September 30, 2008, we sold three hospitals valued at $116 million and made investments aggregating $89 million through the purchase of debt securities and a joint venture interest, and funding of construction and other capital projects.

During the quarter ended September 30, 2008, two of our life science facilities located in South San Francisco were placed into service representing 147,000 square feet.

FINANCING TRANSACTIONS

On August 11, 2008, we issued 14.95 million shares of our common stock. We received net proceeds of $481 million, which were used to repay a portion of our outstanding indebtedness under our bridge loan facility.

In September 2008, we placed mortgage financing on senior housing assets through Fannie Mae aggregating $319 million, which was comprised of $140 million of five-year mortgage financing on four assets and $179 million of eight-year financing on 12 assets. The assets are cross-collateralized and the debt has a weighted-average fixed interest rate of 6.39%. We received net proceeds aggregating $312 million, which were used to repay our outstanding indebtedness under our revolving line of credit facility.

On October 24, 2008, we entered into a credit agreement with a syndicate of banks for a $200 million unsecured term loan. The term loan accrues interest at a rate of LIBOR plus 2.00%, based on our current debt ratings, and matures in August 2011. The net proceeds of $197 million received by us from the term loan were used to repay a portion of our outstanding indebtedness under our bridge loan facility, reducing the outstanding balance to $320 million.

OTHER EVENTS

On July 30, 2008, we received and recognized lease termination fees of $18 million from a tenant in connection with the early termination of three leases representing 149,000 square feet in our life science segment. Upon termination of the leases, we recognized an impairment of $4 million related to intangible assets associated with these leases, which resulted in a net FFO impact of $14 million.

On September 19, 2008, we completed the restructuring of our hospital portfolio leased to Tenet and settled various disputes. The settlement provided for, among other things, the sale of our hospital in Tarzana, California, valued at $89 million, the purchase of Tenet’s minority interest in a joint venture valued at $29 million and the extension of the terms of three other hospitals leased by us to Tenet. As a result of the sale of our hospital in Tarzana, California and the settlement of our legal disputes with Tenet, we recognized income of $47 million, of which $29 million, or $0.11 per diluted share of common stock, was included in FFO.

DIVIDEND

On October 30, 2008, we announced that our Board of Directors declared a quarterly common stock cash dividend of $0.455 per share. The dividend will be paid on November 21, 2008 to stockholders of record as of the close of business on November 10, 2008.

FUTURE OPERATIONS

For the full year 2008, we presently expect net income applicable to common shares to range between $1.88 and $1.92 per diluted common share, FFO applicable to common shares to range between $2.31 and $2.35 per diluted common share, and FFO applicable to common shares, before giving effect to merger-related charges and impairments, to range between $2.38 and $2.42 per diluted common share.

COMPANY INFORMATION

HCP has scheduled a conference call and webcast for Tuesday, November 4, 2008 at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) in order to present the Company’s performance and operating results for the quarter ended September 30, 2008. The conference call is accessible by dialing (866) 713-8307 (U.S.) or (617) 597-5307 (International). The participant passcode is 15288842. The webcast is accessible via the Company’s website at www.hcpi.com. The link can be found on the “Event Calendar” page, which is under the “Investor Relations” tab. A webcast replay of the conference call will be available after 11:00 a.m. Pacific Time (2:00 p.m. Eastern Time) on November 4, 2008 through November 18, 2008 on the

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Company’s website and a telephonic replay can be accessed by calling (888) 286-8010 (U.S.) or (617) 801-6888 (International) and entering passcode 85554892. The Company’s supplemental information package for the current period will also be available on the Company’s website in the “Presentations” section of the “Investor Relations” tab.

ABOUT HCP

HCP, Inc., an S&P 500 company, is a real estate investment trust (REIT) that, together with its consolidated subsidiaries, invests primarily in real estate serving the healthcare industry in the United States. As of September 30, 2008, the Company’s portfolio of properties, excluding assets held for sale but including mortgage loans and properties owned by unconsolidated joint ventures, totaled 704 properties among the following segments: 267 senior housing, 107 life science, 254 medical office, 25 hospital and 51 skilled nursing. For more information, visit the Company’s website at www.hcpi.com.

###

FORWARD-LOOKING STATEMENTS

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this release which are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include among other things net income applicable to common shares on a diluted basis, FFO applicable to common shares on a diluted basis, FFO applicable to common shares on a diluted basis before giving effect to merger-related charges and impairments, gain on sales of real estate, real estate depreciation and amortization, joint venture adjustments, merger-related charges and impairments for the full year of 2008.  These statements are made as of the date hereof and are subject to known and unknown risks, uncertainties, assumptions and other factors—many of which are out of the Company’s control and difficult to forecast—that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks and uncertainties include but are not limited to: the Company’s ability to access external sources of capital when desired and on reasonable terms; the Company’s ability to manage its indebtedness levels; the Company’s ability to maintain its credit ratings; the Company’s ability to achieve its expected benefits from acquisitions, including integrating and preserving the goodwill of those companies; competition for lessees and mortgagors (including new leases and mortgages and the renewal or rollover of existing leases); continuing reimbursement uncertainty in the skilled nursing segment; competition in the senior housing segment specifically and in the healthcare industry in general; the Company’s ability to acquire, sell or lease facilities and the timing of acquisitions, sales and leasings; the Company’s ability to realize the benefits of its mezzanine investments; changes in the financial condition of the Company’s lessees and obligors; changes in healthcare laws and regulations and other changes in the healthcare industry which affect the operations of the Company’s lessees or obligors; changes in the Company’s management; litigation claims and developments; costs of compliance with building regulations; changes in tax laws and regulations; changes in rules governing financial reporting, including new accounting pronouncements; changes in economic conditions, including changes in interest rates and the availability and cost of capital, which affect opportunities for profitable investments; and other risks  described from time to time in the Company’s Securities and Exchange Commission filings.  The Company assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements as a result of new information or new or future developments, except as otherwise required by law.

Contact:

HCP

Mark A. Wallace

Executive Vice President – Chief Financial Officer and Treasurer

(562) 733-5100

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HCP, Inc.

Summary of Information

In thousands, except per share data

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2008		2007		2008		2007
Revenues	$	269,938	$	243,579	$	767,433	$	658,039
Net income applicable to common shares	$	120,135	$	316,866	$	392,276	$	522,872
Basic earnings per common share	$	0.49	$	1.54	$	1.69	$	2.55
Diluted earnings per common share	$	0.49	$	1.53	$	1.68	$	2.53
Weighted average shares used to calculate diluted earnings per common share	245,906		207,070		233,391		206,672
Funds from operations applicable to common shares (1)	$	175,063	$	109,007	$	416,783	$	331,850
Diluted funds from operations applicable to common shares (1)	$	179,055	$	111,613	$	427,938	$	341,937
Basic funds from operations per common share (1)	$	0.72	$	0.53	$	1.79	$	1.62
Diluted funds from operations per common share (1)	$	0.71	$	0.52	$	1.78	$	1.60
Weighted average shares used to calculate diluted funds from operations per common share (1)	253,956		212,920		240,988		213,947
Impact of merger-related charges and impairments:
Merger-related charges (2)	$	843	$	9,078	$	3,173	$	18,057
Impairments	3,710		—		13,425		—
	$	4,553	$	9,078	$	16,598	$	18,057
Per common share impact of merger-related charges and impairments on diluted funds from operations	$	0.01	$	0.05	$	0.06	$	0.08

(1)	The Company believes that funds from operations applicable to common shares, diluted funds from operations applicable to common shares and basic and diluted funds from operations per common share are important supplemental measures of operating performance for a real estate investment trust. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a real estate investment trust that uses historical cost accounting for depreciation could be less informative. The term funds from operations (“FFO”) was designed by the real estate investment trust industry to address this issue.
	FFO is defined as net income applicable to common shares (computed in accordance with U.S. generally accepted accounting principles), excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization, with adjustments for joint ventures. Adjustments for joint ventures are calculated to reflect FFO on the same basis. FFO does not represent cash generated from operating activities in accordance with U.S. generally accepted accounting principles, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income. The Company’s computation of FFO may not be comparable to FFO reported by other real estate investment trusts that do not define the term in accordance with the current National Association of Real Estate Investment Trusts’ (“NAREIT”) definition or that have a different interpretation of the current NAREIT definition from the Company. A reconciliation of net income applicable to common shares to FFO applicable to common shares is provided herein.
(2)	Merger-related charges in the periods ended September 30, 2008 and 2007 include the amortization of fees associated with our acquisition financing for Slough Estates USA Inc. (“SEUSA”), as well as other SEUSA integration costs. Merger-related charges in the periods ended September 30, 2007 also include the amortization and write-off of fees associated with our acquisition financing for CNL Retirement Properties, Inc. (“CRP”), severance and retention-related compensation, as well as other CRP integration costs.

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HCP, Inc.

Consolidated Statements of Income

In thousands, except per share data

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Revenues:
Rental and related revenues	$	233,632		$	205,585		$	657,484		$	554,031
Tenant recoveries	20,240			17,560			61,855			42,909
Income from direct financing leases	14,543			18,832			43,646			49,037
Investment management fee income	1,523			1,602			4,448			12,062
Total revenues	269,938			243,579			767,433			658,039
Costs and expenses:
Depreciation and amortization	77,659			70,418			233,920			184,132
Operating	49,846			49,914			146,506			127,457
General and administrative	17,541			16,499			56,913			53,894
Impairments	3,710			—			13,425			—
Total costs and expenses	148,756			136,831			450,764			365,483
Other income (expense):
Gain on sale of real estate interest	—			—			—			10,141
Interest and other income, net	62,312			21,538			128,378			54,724
Interest expense	(83,249		)	(103,707		)	(265,054		)	(254,434		)
Total other income (expense)	(20,937		)	(82,169		)	(136,676		)	(189,569		)
Income before income taxes, equity income from unconsolidated joint ventures and minority interests’ share in earnings	100,245			24,579			179,993			102,987
Income taxes	(866		)	318			(4,385		)	860
Equity income from unconsolidated joint ventures	1,227			1,242			3,736			3,758
Minority interests’ share in earnings	(5,803		)	(6,018		)	(17,055		)	(17,992		)
Income from continuing operations	94,803			20,121			162,289			89,613
Discontinued operations:
Income before gain on sales of real estate, net of income taxes	3,198			15,874			18,025			56,838
Gain on sales of real estate, net of income taxes	27,416			286,153			227,810			392,269
Total discontinued operations	30,614			302,027			245,835			449,107
Net income	125,417			322,148			408,124			538,720
Preferred stock dividends	(5,282		)	(5,282		)	(15,848		)	(15,848		)
Net income applicable to common shares	$	120,135		$	316,866		$	392,276		$	522,872
Basic earnings per common share:
Continuing operations	$	0.37		$	0.07		$	0.63		$	0.36
Discontinued operations	0.12			1.47			1.06			2.19
Net income applicable to common shares	$	0.49		$	1.54		$	1.69		$	2.55
Diluted earnings per common share:
Continuing operations	$	0.37		$	0.07		$	0.63		$	0.36
Discontinued operations	0.12			1.46			1.05			2.17
Net income applicable to common shares	$	0.49		$	1.53		$	1.68		$	2.53
Weighted average shares used to calculate earnings per common share:
Basic	244,572			206,186			232,199			205,322
Diluted	245,906			207,070			233,391			206,672

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HCP, Inc.

Funds From Operations Information

In thousands, except per share data

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Net income applicable to common shares	$	120,135		$	316,866		$	392,276		$	522,872
Depreciation and amortization of real estate, in-place lease and other intangibles:
Continuing operations	77,659			70,418			233,920			184,132
Discontinued operations	47			3,886			5,832			17,748
Gains on sales of real estate and real estate interest	(27,416		)	(286,153		)	(227,810		)	(402,410		)
Equity income from unconsolidated joint ventures	(1,227		)	(1,242		)	(3,736		)	(3,758		)
FFO from unconsolidated joint ventures	6,488			6,187			18,216			15,819
Minority interests’ share in earnings	5,803			6,018			17,055			17,992
Minority interests’ share in FFO	(6,426		)	(6,973		)	(18,970		)	(20,545		)
Funds from operations applicable to common shares (1)	$	175,063		$	109,007		$	416,783		$	331,850
Distributions on convertible units	$	3,992		$	2,606		$	11,155		$	10,087
Diluted funds from operations applicable to common shares (1)	$	179,055		$	111,613		$	427,938		$	341,937
Basic funds from operations per common share (1)	$	0.72		$	0.53		$	1.79		$	1.62
Diluted funds from operations per common share (1)	$	0.71		$	0.52		$	1.78		$	1.60
Weighted average shares used to calculate diluted funds from operations per common share	253,956			212,920			240,988			213,947
Impact of merger-related charges and impairments:
Merger-related charges (2)	$	843		$	9,078		$	3,173		$	18,057
Impairments	3,710			—			13,425			—
	$	4,553		$	9,078		$	16,598		$	18,057
Per common share impact of merger-related charges and impairments on diluted funds from operations	$	0.01		$	0.05		$	0.06		$	0.08

(1)	The Company believes that funds from operations applicable to common shares, diluted funds from operations applicable to common shares and basic and diluted funds from operations per common share are important supplemental measures of operating performance for a real estate investment trust. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a real estate investment trust that uses historical cost accounting for depreciation could be less informative. The term funds from operations was designed by the real estate investment trust industry to address this issue.
	FFO is defined as net income applicable to common shares (computed in accordance with U.S. generally accepted accounting principles), excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization, with adjustments for joint ventures. Adjustments for joint ventures are calculated to reflect FFO on the same basis. FFO does not represent cash generated from operating activities in accordance with U.S. generally accepted accounting principles, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income. The Company’s computation of FFO may not be comparable to FFO reported by other real estate investment trusts that do not define the term in accordance with the current NAREIT definition or that have a different interpretation of the current NAREIT definition from the Company.
(2)	Merger-related charges in the periods ended September 30, 2008 and 2007 include the amortization of fees associated with our acquisition financing for Slough Estates USA Inc. (“SEUSA”), as well as other SEUSA integration costs. Merger-related charges in the periods ended September 30, 2007 also include the amortization and write-off of fees associated with our acquisition financing for CNL Retirement Properties, Inc. (“CRP”), severance and retention-related compensation, as well as other CRP integration costs.

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HCP, Inc.

Consolidated Balance Sheets

In thousands, except share and per share data

	September 30,			December 31,
	2008			2007
	(unaudited)
Assets
Real estate:
Buildings and improvements	$	7,733,690		$	7,521,415
Development costs and construction in progress	249,837			372,527
Land	1,563,167			1,569,956
Less accumulated depreciation and amortization	781,903			621,379
Net real estate	8,764,791			8,842,519
Net investment in direct financing leases	647,429			640,052
Loans receivable, net	1,068,240			1,065,485
Investments in and advances to unconsolidated joint ventures	275,593			248,894
Accounts receivable, net of allowance of $17,860 and $23,109, respectively	30,011			44,892
Cash and cash equivalents	117,052			96,269
Restricted cash	37,310			36,427
Intangible assets, net	552,906			623,073
Real estate held for sale, net	5,301			408,028
Other assets, net	532,771			516,133
Total assets	$	12,031,404		$	12,521,772
Liabilities and Stockholders’ Equity
Bank line of credit	$	—		$	951,700
Bridge loan	520,000			1,350,000
Senior unsecured notes	3,522,689			3,819,950
Mortgage debt	1,804,069			1,277,291
Mortgage debt on assets held for sale	978			3,470
Other debt	102,602			108,496
Intangible liabilities, net	249,965			278,143
Accounts payable and accrued liabilities	224,680			233,752
Deferred revenue	64,841			55,990
Total liabilities	6,489,824			8,078,792
Minority interests:
Joint venture partners	17,430			33,436
Non-managing member unitholders	230,811			305,835
Total minority interests	248,241			339,271
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $1.00 par value: 50,000,000 shares authorized; 11,820,000 shares issued and outstanding, liquidation preference of $25.00 per share	285,173			285,173
Common stock, $1.00 par value: 750,000,000 shares authorized 251,925,869 and 216,818,780 shares issued and outstanding, respectively	251,926			216,819
Additional paid-in capital	4,835,014			3,724,739
Cumulative dividends in excess of earnings	(49,893		)	(120,920		)
Accumulated other comprehensive loss	(28,881		)	(2,102		)
Total stockholders’ equity	5,293,339			4,103,709
Total liabilities and stockholders’ equity	$	12,031,404		$	12,521,772

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HCP, Inc.

Projected Funds From Operations (1)

(Unaudited)

PROJECTED FUTURE OPERATIONS (Full Year 2008):

	2008
	Low			High
Diluted earnings per common share	$	1.88		$	1.92
Gain on sales of real estate and real estate interest	(0.94		)	(0.94		)
Real estate depreciation and amortization	1.30			1.30
Joint venture adjustments	0.07			0.07
Diluted funds from operations per common share (2)	2.31			2.35
Merger-related charges (3)	0.02			0.02
Impairments	0.05			0.05
Diluted funds from operations per common share before merger-related charges and impairments	$	2.38		$	2.42

(1)	Except as otherwise noted above, the foregoing projections reflect management’s view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels, development activities, property dispositions and the earnings impact of the events referenced in this release. Expect as otherwise noted, these estimates do not reflect the potential impact of future property acquisitions, impairments, realized gains or losses on marketable securities, ineffectiveness related to our cash flow hedges, offerings of debt or equity securities or existing and future litigation matters.  By definition, FFO does not include real estate-related depreciation and amortization or gains and losses associated with real estate disposition activities, but does include impairments. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth above. The aforementioned ranges represent management’s best estimate of results based upon the underlying assumptions as of the date of this press release.
(2)	The Company believes that diluted funds from operations per common share is an important supplemental measure of operating performance for a real estate investment trust. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a real estate investment trust that uses historical cost accounting for depreciation could be less informative. The term FFO was designed by the real estate investment trust industry to address this issue.
	FFO is defined as net income (computed in accordance with U.S. generally accepted accounting principles), excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization, with adjustments for joint ventures. Adjustments for joint ventures are calculated to reflect FFO on the same basis. FFO does not represent cash generated from operating activities in accordance with U.S. generally accepted accounting principles, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income. The Company’s computation of FFO may not be comparable to FFO reported by other real estate investment trusts that do not define the term in accordance with the current NAREIT definition or that have a different interpretation of the current NAREIT definition from the Company.
(3)	Merger-related charges primarily include amortization of fees associated with the Company’s bridge loan and integration costs.

Page 8 of 8

EX-99.2

Exhibit 99.2

Supplemental Information

September 30, 2008

(Unaudited)

Sugar Land, TX	South San Francisco, CA	Dallas, TX	Walnut Creek, CA

Company Information (1)
Board of Directors		Senior Management
Robert R. Fanning, Jr.	Harold M. Messmer, Jr.	Jon M. Bergschneider		Brian J. Maas
Managing Director (Retired),	Chairman and Chief Executive Officer	Senior Vice President		Senior Vice President
The Huron Consulting Group	Robert Half International, Inc.	Life Science Estates		Associate General Counsel
James F. Flaherty III	Peter L. Rhein	George P. Doyle		Dennis J. Martin
Chairman and Chief Executive Officer	Partner, Sarlot & Rhein	Senior Vice President		Senior Vice President
HCP, Inc.		Chief Accounting Officer		Financial Planning and Analysis
	Kenneth B. Roath
Christine N. Garvey	Chairman Emeritus, HCP, Inc.	James F. Flaherty III		Randall W. Rohner
Former Global Head of Corporate		Chairman and		Senior Vice President
Real Estate Services, Deutsche Bank AG	Richard M. Rosenberg	Chief Executive Officer		Life Science Estates
	Chairman and Chief Executive Officer
David B. Henry	(Retired), Bank of America	Paul F. Gallagher		Timothy M. Schoen
Vice Chairman and Chief Investment		Executive Vice President		Senior Vice President
Officer, Kimco Realty Corporation	Joseph P. Sullivan	Chief Investment Officer		Investment Management
	Chairman of the Board of Advisors
Lauralee E. Martin	RAND Health	Edward J. Henning		Susan M. Tate
Chief Operating and Financial Officer		Executive Vice President		Senior Vice President
Jones Lang LaSalle Incorporated		General Counsel, Chief Administrative		Asset Management
		Officer and Corporate Secretary
Michael D. McKee				Mark A. Wallace
Chief Executive Officer and Vice		Thomas D. Kirby		Executive Vice President
Chairman		Senior Vice President		Chief Financial Officer and
(Retired), The Irvine Company		Acquisitions and Valuations		Treasurer
		Thomas M. Klaritch
		Executive Vice President
		Medical Office Properties
Other Information
Corporate Headquarters	Nashville Office	Trading Symbol		Senior Debt Ratings
3760 Kilroy Airport Way, Suite 300	3100 West End Avenue, Suite 800	HCP	Common Stock	Moody's	Baa3
Long Beach, CA 90806-2473	Nashville, TN 37203	HCP_pe	Series E Preferred	Standard &	BBB
(562) 733-5100			Stock	Poor's
		HCP_pf	Series F Preferred	Fitch	BBB
			Stock
Chicago Office	San Francisco Office	Stock Exchange Listing
444 North Michigan Avenue, Suite 3230	400 Oyster Point Boulevard, Suite 409	NYSE
Chicago, IL 60611	South San Francisco, CA 94080

(1)  As of November 4, 2008.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	2

Highlights
Dollars in thousands, except per share data
	Three Months Ended September  30,				Nine Months Ended September  30,
	2008		2007		2008		2007
Revenues	$	269,938	$	243,579	$	767,433	$	658,039
NOI	218,569		192,063		616,479		518,520
Adjusted EBITDA	275,830		229,889		737,392		638,311
Net income applicable to common shares	120,135		316,866		392,276		522,872
FFO applicable to common shares	175,063		109,007		416,783		331,850
Per diluted common share:
EPS	$	0.49	$	1.53	$	1.68	$	2.53
FFO	0.71		0.52		1.78		1.60
FFO payout ratio per diluted common share	64.1%		85.6%		76.7%		83.4%
Adjusted fixed charge coverage	2.8x		1.9x		2.3x		2.2x
Financial leverage	47%		59%		47%		59%

Developments(1)			Total Assets Under Management: $13.4 Billion(2)
·	$0.71 FFO per diluted share of common stock
·	Raised over $900 million during the quarter ended September 30, 2008:
	–	$116 million from asset dispositions
	–	$312 million from debt financing
	–	$481 million from equity issuance
·	Completed Tenet settlement and sale of Tarzana hospital
·	Completed $200 million unsecured term loan on October 24, 2008

(1)  As of and for the three months ended September 30, 2008, unless otherwise indicated.

(2)  Represents the historical cost of real estate owned by HCP, the carrying amount of mortgage loans and 100% of the cost of real estate owned by unconsolidated joint ventures, excluding assets under development and land held for future development, as of September 30, 2008.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	3

Consolidated Balance Sheets
In thousands
	September  30,			December  31,
	2008			2007
	(Unaudited)
ASSETS
Real estate:
Buildings and improvements	$	7,733,690		$	7,521,415
Development costs and construction in progress	249,837			372,527
Land	1,563,167			1,569,956
Less accumulated depreciation and amortization	781,903			621,379
Net real estate	8,764,791			8,842,519
Net investment in direct financing leases	647,429			640,052
Loans receivable, net	1,068,240			1,065,485
Investments in and advances to unconsolidated joint ventures	275,593			248,894
Accounts receivable, net	30,011			44,892
Cash and cash equivalents	117,052			96,269
Restricted cash	37,310			36,427
Intangible assets, net	552,906			623,073
Real estate held for sale, net	5,301			408,028
Other assets, net	532,771			516,133
Total assets	$	12,031,404		$	12,521,772
LIABILITIES AND STOCKHOLDERS’ EQUITY
Bank line of credit	$	—		$	951,700
Bridge loan	520,000			1,350,000
Senior unsecured notes	3,522,689			3,819,950
Mortgage debt	1,804,069			1,277,291
Mortgage debt on assets held for sale	978			3,470
Other debt	102,602			108,496
Intangible liabilities, net	249,965			278,143
Accounts payable and accrued liabilities	224,680			233,752
Deferred revenue	64,841			55,990
Total liabilities	6,489,824			8,078,792
Minority interests:
Joint venture partners	17,430			33,436
Non-managing member unitholders	230,811			305,835
Total minority interests	248,241			339,271
Commitments and contingencies
Stockholders’ equity:
Preferred stock	285,173			285,173
Common stock	251,926			216,819
Additional paid-in capital	4,835,014			3,724,739
Cumulative dividends in excess of earnings	(49,893		)	(120,920		)
Accumulated other comprehensive loss	(28,881		)	(2,102		)
Total stockholders’ equity	5,293,339			4,103,709
Total liabilities and stockholders’ equity	$	12,031,404		$	12,521,772

See Reporting Definitions and Supplemental Financial Measures Disclosures
	4

Consolidated Statements of Income (Unaudited)

In thousands, except per share data	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Revenues:
Rental and related revenues	$	233,632		$	205,585		$	657,484		$	554,031
Tenant recoveries	20,240			17,560			61,855			42,909
Income from direct financing leases	14,543			18,832			43,646			49,037
Investment management fee income	1,523			1,602			4,448			12,062
Total revenues	269,938			243,579			767,433			658,039
Costs and expenses:
Depreciation and amortization	77,659			70,418			233,920			184,132
Operating	49,846			49,914			146,506			127,457
General and administrative	17,541			16,499			56,913			53,894
Impairments	3,710			—			13,425			—
Total costs and expenses	148,756			136,831			450,764			365,483
Other income (expense):
Gain on sale of real estate interest	—			—			—			10,141
Interest and other income, net	62,312			21,538			128,378			54,724
Interest expense	(83,249		)	(103,707		)	(265,054		)	(254,434		)
Total other income (expense)	(20,937		)	(82,169		)	(136,676		)	(189,569		)
Income before income taxes, equity income from unconsolidated joint ventures and minority interests’ share in earnings	100,245			24,579			179,993			102,987
Income taxes	(866		)	318			(4,385		)	860
Equity income from unconsolidated joint ventures	1,227			1,242			3,736			3,758
Minority interests’ share in earnings	(5,803		)	(6,018		)	(17,055		)	(17,992		)
Income from continuing operations	94,803			20,121			162,289			89,613
Discontinued operations:
Income before gain on sales of real estate, net of income taxes	3,198			15,874			18,025			56,838
Gain on sales of real estate, net of income taxes	27,416			286,153			227,810			392,269
Total discontinued operations	30,614			302,027			245,835			449,107
Net income	125,417			322,148			408,124			538,720
Preferred stock dividends	(5,282		)	(5,282		)	(15,848		)	(15,848		)
Net income applicable to common shares	$	120,135		$	316,866		$	392,276		$	522,872
Basic earnings per common share:
Continuing operations	$	0.37		$	0.07		$	0.63		$	0.36
Discontinued operations	0.12			1.47			1.06			2.19
Net income applicable to common shares	$	0.49		$	1.54		$	1.69		$	2.55
Diluted earnings per common share:
Continuing operations	$	0.37		$	0.07		$	0.63		$	0.36
Discontinued operations	0.12			1.46			1.05			2.17
Net income applicable to common shares	$	0.49		$	1.53		$	1.68		$	2.53
Weighted average shares used to calculate earnings per common share:
Basic	244,572			206,186			232,199			205,322
Diluted	245,906			207,070			233,391			206,672
Dividends declared per common share	$	0.455		$	0.445		$	1.365		$	1.335

See Reporting Definitions and Supplemental Financial Measures Disclosures

5

Consolidated Statements of Cash Flows (Unaudited)

In thousands

	Nine Months Ended September 30,
	2008			2007
Cash flows from operating activities:
Net income	$	408,124		$	538,720
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of real estate, in-place lease and other intangibles:
Continuing operations	233,920			184,132
Discontinued operations	5,832			17,748
Amortization of below market lease intangibles, net	(6,020		)	(3,185		)
Stock-based compensation	10,637			8,516
Amortization of debt issuance costs	9,226			15,274
Recovery of loan losses	—			(386		)
Straight-line rents	(28,645		)	(39,467		)
Interest accretion	(20,134		)	(6,428		)
Deferred rental revenue	16,227			8,937
Equity income from unconsolidated joint ventures	(3,736		)	(3,758		)
Distributions of earnings from unconsolidated joint ventures	3,736			3,148
Minority interests’ share in earnings	17,055			17,992
Gains on sales of real estate and real estate interest	(227,810		)	(402,410		)
Marketable securities losses (gains), net	2,746			(4,874		)
Derivative losses, net	1,803			—
Impairments	13,425			—
Changes in:
Accounts receivable	14,881			(2,626		)
Other assets	(6,660		)	(18,384		)
Accounts payable and accrued liabilities	10,776			(3,128		)
Net cash provided by operating activities	455,383			309,821
Cash flows from investing activities:
Cash used in acquisitions and development of real estate	(132,436		)	(339,692		)
Lease commissions and tenant and capital improvements	(44,734		)	(27,029		)
Proceeds from sales of real estate, net	629,404			854,505
Cash used in SEUSA acquisition, net of cash acquired	—			(2,977,564		)
Contributions to unconsolidated joint ventures	(2,620		)	(2,619		)
Distributions in excess of earnings from unconsolidated joint ventures	8,727			476,992
Purchase of marketable securities	(26,101		)	(26,647		)
Proceeds from the sale of marketable securities	10,700			53,514
Proceeds from sales of interests in unconsolidated joint ventures	2,855			—
Principal repayments on loans receivable	14,590			101,340
Investment in loans receivable	(2,863		)	(18,615		)
Increase in restricted cash	(883		)	(28,461		)
Net cash provided by (used in) investing activities	456,639			(1,934,276		)

See Reporting Definitions and Supplemental Financial Measures Disclosures

6

Consolidated Statements of Cash Flows (Unaudited) (continued)

In thousands
	Nine Months Ended September 30,
	2008			2007
Cash flows from financing activities:
Net repayments under bank line of credit	(951,700		)	(624,500		)
Repayments of bridge and term loans	(830,000		)	(504,593		)
Borrowings under bridge loan	—			2,750,000
Repayments of mortgage debt	(63,740		)	(82,482		)
Issuance of mortgage debt	579,078			143,421
Repayments of senior unsecured notes	(300,000		)	(20,000		)
Issuance of senior unsecured notes	—			500,000
Settlement of cash flow hedges	(9,658		)	—
Debt issuance costs	(10,068		)	(18,659		)
Net proceeds from the issuance of common stock and exercise of options	1,060,236			300,591
Dividends paid on common and preferred stock	(337,097		)	(291,787		)
Distributions to minority interests	(28,290		)	(17,088		)
Net cash provided by (used in) financing activities	(891,239		)	2,134,903
Net increase in cash and cash equivalents	20,783			510,448
Cash and cash equivalents, beginning of period	96,269			58,405
Cash and cash equivalents, end of period	$	117,052		$	568,853

See Reporting Definitions and Supplemental Financial Measures Disclosures

7

Consolidated Funds From Operations

Dollars in thousands, except per share data
	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Net income applicable to common shares	$	120,135		$	316,866		$	392,276		$	522,872
Depreciation and amortization of real estate, in-place lease and other intangibles:
Continuing operations	77,659			70,418			233,920			184,132
Discontinued operations	47			3,886			5,832			17,748
Gains on sales of real estate and real estate interest	(27,416		)	(286,153		)	(227,810		)	(402,410		)
Equity income from unconsolidated joint ventures	(1,227		)	(1,242		)	(3,736		)	(3,758		)
FFO from unconsolidated joint ventures	6,488			6,187			18,216			15,819
Minority interests’ share in earnings	5,803			6,018			17,055			17,992
Minority interests’ share in FFO	(6,426		)	(6,973		)	(18,970		)	(20,545		)
FFO applicable to common shares	$	175,063		$	109,007		$	416,783		$	331,850
Distributions on convertible units	$	3,992		$	2,606		$	11,155		$	10,087
Diluted FFO applicable to common shares	$	179,055		$	111,613		$	427,938		$	341,937
Basic FFO per common share	$	0.72		$	0.53		$	1.79		$	1.62
Diluted FFO per common share	$	0.71		$	0.52		$	1.78		$	1.60
Weighted average shares used to calculate diluted FFO per common share	253,956			212,920			240,988			213,947
Dividends declared per common share	$	0.455		$	0.445		$	1.365		$	1.335
FFO payout ratio per common share	64.1%			85.6%			76.7%			83.4%
Impact of merger-related charges and impairments	$	4,553		$	9,078		$	16,598		$	18,057
Per common share impact of merger-related charges and impairments on diluted FFO	$	0.01		$	0.05		$	0.06		$	0.08
FFO payout ratio per common share prior to merger-related charges and impairments	63.2%			78.1%			74.2%			79.5%
Consolidated selected supplemental cash flow information:
Impairments	$	3,710		$	—		$	13,425		$	—
Amortization of below market lease intangibles, net	1,991			1,613			6,020			3,185
Stock-based compensation	3,152			2,674			10,637			8,516
Amortization of debt issuance costs	3,064			9,631			9,226			15,274
Straight-line rents	9,112			19,088			28,645			39,467
Interest accretion	7,108			2,265			20,134			6,428
Increase in deferred revenues – tenant improvement related	3,677			3,726			12,594			4,922
Increase (decrease) in SAB 104 deferred revenue	(729		)	1,540			3,633			4,015
Lease commissions and tenant and capital improvements	12,375			12,621			44,734			27,029
Capitalized interest	5,579			3,851			22,479			4,024
HCP’s share of selected supplemental cash flow information from investment management business:
Amortization of above market lease intangibles, net	$	257		$	275		$	781		$	728
Amortization of debt issuance costs	107			66			252			211
Straight-line rents	1,328			1,502			3,667			4,445
Lease commissions and tenant and capital improvements	501			312			1,303			391

See Reporting Definitions and Supplemental Financial Measures Disclosures

8

Capitalization
Dollars in thousands
Debt Maturities and Scheduled Principal Repayments
September 30, 2008
															HCP’s Share of
					Senior										Unconsolidated
	Bank Line		Bridge		Unsecured			Mortgage		Other		Consolidated			Mortgage
	of Credit		Loan(1)		Notes			Debt		Debt(2)		Debt			Debt(3)			Total Debt
2008 (3 months)	$	—	$	—	$	—		$	43,073	$	102,602	$	145,675		$	1,262		$	146,937
2009	—		320,000		—			274,169		—		594,169			5,205			599,374
2010	—		—		206,421			298,453		—		504,874			5,546			510,420
2011	—		200,000		300,000			137,310		—		637,310			6,224			643,534
2012	—		—		250,000			108,625		—		358,625			13,560			372,185
2013	—		—		550,000			185,544		—		735,544			44,508			780,052
2014	—		—		87,000			175,288		—		262,288			4,364			266,652
2015	—		—		400,000			279,178		—		679,178			15,070			694,248
2016	—		—		400,000			215,748		—		615,748			217,843			833,591
2017	—		—		750,000			22,798		—		772,798			34,780			807,578
Thereafter	—		—		600,000			59,348		—		659,348			—			659,348
Subtotal	—		520,000		3,543,421			1,799,534		102,602		5,965,557			348,362			6,313,919
(Discounts) and premiums, net	—		—		(20,732		)	5,513		—		(15,219		)	(661		)	(15,880		)
Total	$	—	$	520,000	$	3,522,689		$	1,805,047	$	102,602	$	5,950,338		$	347,701		$	6,298,039
Weighted average interest rate	%		3.38%		6.25%			6.02%		N/A		5.93%			5.70%			5.91%
Weighted average maturity in years	—		0.84		6.54			4.91		N/A		5.53			8.15			5.68

Capitalization Ratios			Variable Rate Debt
	September 30,	December 31,		September 30,	December 31,
	2008	2007		2008	2007
Total Debt/Total Book Capitalization	53.2%	63.9%	Fixed and variable rate ratios
Total Debt/Total Undepreciated Book Capitalization	49.1%	59.8%		88.2%	64.1%
			Fixed rate	11.8%	35.9%
Consolidated Debt/Consolidated Gross Assets	46.8%	57.3%	Variable rate	100.0%	100.0%
Financial Leverage (Total Debt/Total Gross Assets)	47.3%	57.4%
Consolidated Secured Debt/Consolidated Gross Assets	14.2%	9.7%
Total Secured Debt/Total Gross Assets	16.2%	11.8%
Consolidated Debt/Consolidated Market Capitalization	35.8%	48.0%
Total Debt/Total Market Capitalization	37.2%	49.2%

(1)	On October 24, 2008, the Company entered into a credit agreement with a syndicate of banks for a $200 million term loan. The above table reflects the reclassification of the portion of the bridge loan that was repaid with proceeds from the term loan, which matures on August 1, 2011.
(2)	The Company has non-interest bearing Life Care Bonds at two of its CCRCs and non-interest bearing occupancy fee deposits at another of its senior housing facilities.
(3)	Includes pro-rata share of the Company’s unconsolidated institutional joint ventures of the investment management business.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	9

Investments and Dispositions

As of and for the nine months ended September 30, 2008, dollars in thousands
Investments
Description	Capacity	Property Count	Segment	Investment
Property acquisition:
First quarter
Orangevale, CA	104 units	1	Senior housing	$	10,878
Weighted average yield on property acquisition				8.5%
Joint venture interest acquisition			Hospital/Skilled nursing	$	29,137
Total fundings for development, tenant and capital improvements				$	126,129
Total marketable securities purchased				$	26,101
Total investments				$	192,245

Dispositions
Description	Capacity	Property Count	Segment	Sales Price, Net of Costs
Property dispositions:
First quarter
Various	450 beds	3	Skilled nursing	$	26,775
Arlington, TX	80 units	1	Senior housing	2,875
				29,650
Second quarter
Various	1,103 beds	12	Hospital	310,518
Various	N/A	6	Senior housing	15,301
Various	689,286 Sq. Ft.	13	MOB	86,970
Various	937 beds	9	Skilled nursing	70,444
				483,233
Third quarter
Various	345 beds	3	Hospital	116,521
Total property dispositions				$	629,404
Joint venture interest dispositions:
Various	104 units	2	Senior housing	$	2,855
Total marketable securities sold				$	10,700
Total dispositions				$	642,959

See Reporting Definitions and Supplemental Financial Measures Disclosures
	10

Development

As of September 30, 2008, dollars and square feet in thousands
Development Projects in Process
					Estimated
			Estimated	Rent	Rentable
			Completion	Commencement	Square
Name of Project	Location	Segment	Date	Date	Feet
Oyster Point II (Building A)	So. San Francisco, CA	Life science	4Q 2008	4Q 2008	122
Oyster Point II (Building B)	So. San Francisco, CA	Life science	4Q 2008	1Q 2009	129
Oyster Point II (Building C)	So. San Francisco, CA	Life science	4Q 2008	N/A	78
					329
Redevelopment
500/600 Saginaw	So. San Francisco, CA	Life science	4Q 2009	N/A	89
	Estimated total investment				$	307,214
	Investment-to-date(1)				$	237,050
	Percentage pre-leased				60%

Land Held for Future Development
				Estimated
				Rentable
			Gross Site	Square
Name of Project	Location	Segment	Acreage	Feet
Forbes Research Center	So. San Francisco, CA	Life science	7	326
Sierra Point	So. San Francisco, CA	Life science	23	540
Bressi I	Carlsbad, CA	Life science	23	397
Bressi II	Carlsbad, CA	Life science	18	300
Poway I	Poway, CA	Life science	41	676
Poway II	Poway, CA	Life science	31	585
Torrey Pines Science Center	Torrey Pines, CA	Life science	6	93
			149	2,917

Projects Placed in Service
			Date	Rentable
			Placed in	Square
Name of Project	Location	Segment	Service	Feet
East Grand (Building 8)	So. San Francisco, CA	Life science	2Q 2008	82
East Grand (Building 7)	So. San Francisco, CA	Life science	3Q 2008	93
East Grand (Building 9)	So. San Francisco, CA	Life science	3Q 2008	54

(1) Investment-to-date includes $42 million of land, $24 million of buildings and $12 million of net intangible assets, which are not included in development costs and construction in progress on the Company’s consolidated balance sheet.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	11

Investment Management Business

As of and for the nine months ended September 30, 2008

Dollars in thousands

								HCP’s
		Date	HCP’s	Joint		HCP’s Net		Investment		Initial
	Primary	Established/	Ownership	Venture’s		Equity		Management		Term (in
Unconsolidated Institutional Joint Ventures	Segment	Acquired	Percentage	Investment		Investment		Fee Income		years)
HCP Ventures II	Senior housing	January-07	35%	$	1,097,267	$	141,384	$	2,457	Indefinite
HCP Ventures III	Medical office	October-06	30%(1)	140,617		12,159		332		10
HCP Ventures IV	Medical office	April-07	20%	650,920		46,417		1,656		10
HCP Life Science	Life Science	August-07	50%-63%	79,846		68,017		3		97-98
				$	1,968,650	$	267,977	$	4,448

(1)    The Company owns an 85% interest in HCP Birmingham Portfolio LLC, which owns a 30% interest in HCP Ventures III.
See Reporting Definitions and Supplemental Financial Measures Disclosures
	12

Investment Management Business
In thousands
Funds From Operations
	Three Months Ended September 30, 2008											Three Months Ended September 30, 2007
	HCP Ventures II		HCP Ventures III			HCP Ventures IV			HCP Life Science			HCP Ventures II		HCP Ventures III			HCP Ventures IV			HCP Life Science(1)
Net income (loss)	$	2,029	$	60		$	(1,874	)	$	1,231		$	2,457	$	140		$	(2,435	)	$	605
Depreciation and amortization of real estate and in-place lease intangibles	7,142		1,267			6,383			571			7,141		1,235			6,242			376
FFO	$	9,171	$	1,327		$	4,509		$	1,802		$	9,598	$	1,375		$	3,807		$	981
HCP’s share of FFO from unconsolidated joint ventures	$	3,210	$	398		$	902		$	1,033		$	3,359	$	413		$	761		$	575
Selected supplemental cash flow information:
Amortization of above and (below) market lease intangibles, net	$	697	$	(142	)	$	280		$	—		$	697	$	(142	)	$	367		$	—
Amortization of debt issuance costs	239		38			43			7			155		38			—			—
Straight-line rents	3,128		92			1,211			(58		)	3,824		119			677			(9		)
Lease commissions and tenant and capital improvements	—		17			2,369			44			—		129			1,368			—

	Nine Months Ended September 30, 2008											Nine Months Ended September 30, 2007
	HCP Ventures II		HCP Ventures III			HCP Ventures IV			HCP Life Science			HCP Ventures II		HCP Ventures III			HCP Ventures IV(2)			HCP Life Science(1)
Net income (loss)	$	7,266	$	394		$	(6,406	)	$	3,538		$	7,576	$	582		$	(3,432	)	$	605
Depreciation and amortization of real estate and in-place lease intangibles	21,424		3,783			19,317			1,708			21,403		3,452			10,333			376
FFO	$	28,690	$	4,177		$	12,911		$	5,246		$	28,979	$	4,034		$	6,901		$	981
HCP’s share of FFO from unconsolidated joint ventures	$	10,042	$	1,253		$	2,582		$	3,013		$	10,143	$	1,210		$	1,380		$	575
Selected supplemental cash flow information:
Amortization of above and (below) market lease intangibles, net	$	2,091	$	(426	)	$	887		$	—		$	2,091	$	(426	)	$	618		$	—
Amortization of debt issuance costs	498		114			130			31			450		114			94			—
Straight-line rents	9,384		265			2,115			(145		)	11,473		564			1,336			(9		)
Lease commissions and tenant and capital improvements	—		27			4,698			710			—		151			1,730			—

(1)  Acquired as part of the Company’s purchase of Slough Estates USA Inc. on August 1, 2007.

(2) At April 30, 2007, HCP Ventures IV’s assets were wholly owned by the Company; therefore amounts reflected represent five months of operations.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	13

Investment Management Business
In thousands
Balance Sheets
	September 30, 2008								December 31, 2007
	HCP Ventures II		HCP Ventures III		HCP Ventures IV		HCP Life Science		HCP Ventures II		HCP Ventures III		HCP Ventures IV		HCP Life Science
ASSETS
Real estate:
Buildings and improvements	$	936,095	$	129,719	$	519,915	$	43,124	$	936,095	$	129,144	$	515,520	$	43,118
Development costs and construction in progress	—		24		2,689		486		—		551		4,709		—
Land	108,907		1,780		65,860		8,271		108,907		1,780		65,698		8,271
Less accumulated depreciation and amortization	54,344		8,574		32,103		24,360		33,965		6,092		19,384		22,761
Net real estate	990,658		122,949		556,361		27,521		1,011,037		125,383		566,543		28,628
Cash and cash equivalents and restricted cash	9,357		2,700		16,482		1,641		6,998		850		13,937		1,342
Other assets, net	33,960		3,417		11,862		8,419		25,434		4,346		8,264		8,752
Intangible assets, net	45,105		11,033		54,491		—		48,321		12,397		62,755		—
Total assets	$	1,079,080	$	140,099	$	639,196	$	37,581	$	1,091,790	$	142,976	$	651,499	$	38,722
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage debt	$	671,245	$	91,730	$	378,567	$	16,534	$	677,764	$	91,730	$	378,842	$	19,019
Intangible liabilities, net	1,202		5,090		11,825		—		1,282		5,581		12,925		—
Accounts payable, accrued liabilities and deferred revenue	8,259		2,778		16,720		1,314		7,082		2,063		15,138		1,296
Total liabilities	680,706		99,598		407,112		17,848		686,128		99,374		406,905		20,315
HCP’s capital	136,670		10,538		35,074		11,354		139,248		11,468		38,778		10,733
Partners’ capital	261,704		29,963		197,010		8,379		266,414		32,134		205,816		7,674
Total liabilities and members’ capital	$	1,079,080	$	140,099	$	639,196	$	37,581	$	1,091,790	$	142,976	$	651,499	$	38,722

See Reporting Definitions and Supplemental Financial Measures Disclosures
	14

Investment Management Business

In thousands
	Statements of Operations
	Three Months Ended September 30, 2008												Three Months Ended September 30, 2007
	HCP Ventures II			HCP Ventures III			HCP Ventures IV			HCP Life Science			HCP Ventures II			HCP Ventures III			HCP Ventures IV			HCP Life Science(1)
Rental and related revenues:
Rental and related revenues	$	20,832		$	3,339		$	15,079		$	2,093		$	20,899		$	3,409		$	13,689		$	1,261
Tenant recoveries	—			1,093			2,952			177			—			1,143			2,646			150
Total revenues	20,832			4,432			18,031			2,270			20,889			4,552			16,335			1,411
Costs and expenses:
Depreciation and amortization	7,142			1,267			6,383			571			7,141			1,235			6,242			376
Operating	—			1,459			7,084			161			8			1,537			6,600			198
General and administrative	1,685			206			949			4			1,292			158			663			2
Total costs and expenses	8,827			2,932			14,416			736			8,441			2,930			13,505			576
Other income (expense):
Interest and other income, net	16			9			65			—			2			—			—			8
Interest expense	(9,992		)	(1,449		)	(5,554		)	(303		)	(10,003		)	(1,482		)	(5,265		)	(238		)
Net income (loss)	$	2,029		$	60		$	(1,874	)	$	1,231		$	2,457		$	140		$	(2,435	)	$	605

	Nine Months Ended September 30, 2008												Nine Months Ended September 30, 2007
	HCP Ventures II			HCP Ventures III			HCP Ventures IV			HCP Life Science			HCP Ventures II			HCP Ventures III			HCP Ventures IV(2)			HCP Life Science(1)
Rental and related revenues:
Rental and related revenues	$	62,582		$	10,176		$	43,567		$	6,366		$	62,410		$	10,077		$	22,777		$	1,261
Tenant recoveries	—			3,452			8,891			1,280			—			3,442			4,321			150
Total revenues	62,582			13,628			52,458			7,646			62,410			13,519			27,098			1,411
Costs and expenses:
Depreciation and amortization	21,424			3,783			19,317			1,708			21,403			3,452			10,333			376
Operating	4			4,554			20,560			1,398			8			4,585			10,549			198
General and administrative	4,317			608			2,526			53			3,664			548			1,091			2
Total costs and expenses	25,745			8,945			42,403			3,159			25,075			8,585			21,973			576
Other income (expense):
Interest and other income, net	58			28			148			11			2			—			—			8
Interest expense	(29,629		)	(4,317		)	(16,609		)	(960		)	(29,761		)	(4,352		)	(8,557		)	(238		)
Net income (loss)	$	7,266		$	394		$	(6,406	)	$	3,538		$	7,576		$	582		$	(3,432	)	$	605

(1)	Acquired as part of the Company’s purchase of Slough Estates USA Inc. on August 1, 2007.
(2)	At April 30, 2007, HCP Ventures IV’s assets were wholly owned by the Company; therefore amounts reflected represent five months of operations.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	15

Investment Management Business

In thousands
	Net Operating Income
	Three Months Ended September 30, 2008											Three Months Ended September 30, 2007
	HCP Ventures II			HCP Ventures III			HCP Ventures IV			HCP Life Science		HCP Ventures II			HCP Ventures III		HCP Ventures IV			HCP Life Science(1)
Net income (loss)	$	2,029		$	60		$	(1,874	)	$	1,231	$	2,457		$	140	$	(2,435	)	$	605
Depreciation and amortization	7,142			1,267			6,383			571		7,141			1,235		6,242			376
General and administrative	1,685			206			949			4		1,292			158		663			2
Interest and other income, net	(16		)	(9		)	(65		)	—		(2		)	—		—			(8		)
Interest expense	9,992			1,449			5,554			303		10,003			1,482		5,265			238
NOI	$	20,832		$	2,973		$	10,947		$	2,109	$	20,891		$	3,015	$	9,735		$	1,213
HCP’s share of NOI from unconsolidated joint ventures	$	7,291		$	892		$	2,189		$	1,210	$	7,312		$	905	$	1,947		$	711

	Nine Months Ended September 30, 2008												Nine Months Ended September 30, 2007
	HCP Ventures II			HCP Ventures III			HCP Ventures IV			HCP Life Science			HCP Ventures II			HCP Ventures III		HCP Ventures IV(2)			HCP Life Science(1)
Net income (loss)	$	7,266		$	394		$	(6,406	)	$	3,538		$	7,576		$	582	$	(3,432	)	$	605
Depreciation and amortization	21,424			3,783			19,317			1,708			21,403			3,452		10,333			376
General and administrative	4,317			608			2,526			53			3,664			548		1,091			2
Interest and other income, net	(58		)	(28		)	(148		)	(11		)	(2		)	—		—			(8		)
Interest expense	29,629			4,317			16,609			960			29,761			4,352		8,557			238
NOI	$	62,578		$	9,074		$	31,898		$	6,248		$	62,402		$	8,934	$	16,549		$	1,213
HCP’s share of NOI from unconsolidated joint ventures	$	21,902		$	2,722		$	6,380		$	3,590		$	21,841		$	2,680	$	3,310		$	711

(1)	Acquired as part of the Company’s purchase of Slough Estates USA Inc. on August 1, 2007.
(2)	At April 30, 2007, HCP Ventures IV’s assets were wholly owned by the Company; therefore amounts reflected represent five months of operations.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	16

Investment Management Business

In thousands
	EBITDA
	Three Months Ended September 30, 2008									Three Months Ended September 30, 2007
	HCP Ventures II		HCP Ventures III		HCP Ventures IV			HCP Life Science		HCP Ventures II		HCP Ventures III		HCP Ventures IV			HCP Life Science(1)
Net income (loss)	$	2,029	$	60	$	(1,874	)	$	1,231	$	2,457	$	140	$	(2,435	)	$	605
Depreciation and amortization	7,142		1,267		6,383			571		7,141		1,235		6,242			376
Interest expense	9,992		1,449		5,554			303		10,003		1,482		5,265			238
EBITDA	$	19,163	$	2,776	$	10,063		$	2,105	$	19,601	$	2,857	$	9,072		$	1,219
HCP’s share of EBITDA from unconsolidated joint ventures	$	6,707	$	833	$	2,013		$	1,207	$	6,860	$	857	$	1,814		$	715

	Nine Months Ended September 30, 2008									Nine Months Ended September 30, 2007
	HCP Ventures II		HCP Ventures III		HCP Ventures IV			HCP Life Science		HCP Ventures II		HCP Ventures III		HCP Ventures IV(2)			HCP Life Science(1)
Net income (loss)	$	7,266	$	394	$	(6,406	)	$	3,538	$	7,576	$	582	$	(3,432	)	$	605
Depreciation and amortization	21,424		3,783		19,317			1,708		21,403		3,452		10,333			376
Interest expense	29,629		4,317		16,609			960		29,761		4,352		8,557			238
EBITDA	$	58,319	$	8,494	$	29,520		$	6,206	$	58,740	$	8,386	$	15,458		$	1,219
HCP’s share of EBITDA from unconsolidated joint ventures	$	20,412	$	2,548	$	5,904		$	3,566	$	20,559	$	2,516	$	3,092		$	715

(1)	Acquired as part of the Company’s purchase of Slough Estates USA Inc. on August 1, 2007.
(2)	At April 30, 2007, HCP Ventures IV’s assets were wholly owned by the Company; therefore amounts reflected represent five months of operations.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	17

Investment Management Business

In thousands
Mortgage Debt Maturities and Scheduled Principal Repayments
September 30, 2008
														HCP’s Share of
														Unconsolidated
	HCP			HCP		HCP			HCP					Mortgage
	Ventures II			Ventures III		Ventures IV			Life Science		Total			Debt
2008 (3 months)	$	2,333		$	—	$	227		$	689	$	3,249		$	1,262
2009	9,567			—		936			2,877		13,380			5,205
2010	10,130			—		1,048			3,086		14,264			5,546
2011	10,726			—		2,743			3,309		16,778			6,224
2012	11,254			—		37,806			3,548		52,608			13,560
2013	118,124			—		8,451			2,630		129,205			44,508
2014	10,359			—		2,606			395		13,360			4,364
2015	10,969			—		56,156			—		67,125			15,070
2016	488,305			91,730		97,085			—		677,120			217,843
2017	—			—		173,898			—		173,898			34,780
Subtotal	671,767			91,730		380,956			16,534		1,160,987			348,362
Discounts, net	(522		)	—		(2,389		)	—		(2,911		)	(661		)
Total debt	$	671,245		$	91,730	$	378,567		$	16,534	$	1,158,076		$	347,701
HCP’s share of total debt	$	234,936		$	27,519	$	75,713		$	9,533	$	347,701
Weighted average interest rate(1)	5.66%			6.02%		5.56%			6.99%		5.67%			5.70%
Weighted average maturity in years	8.50			7.78		7.59			5.04		8.15

(1) Mortgage debt is 100% fixed rate debt.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	18

Consolidated Portfolio

As of and for the nine months ended September 30, 2008, dollars and square feet in thousands

Consolidated Portfolio
	Property			Average				EBITDAR	EBITDARM
Segment	Count	Investment		Age (Years)	Capacity		Occupancy %	CFC/DSC	CFC/DSC
Senior housing	240	$	4,151,621	12	25,831	Units	89.7	1.16 x	1.40 x
Life science	99	2,822,043		15	6,232	Sq. Ft.	89.1	N/A	N/A
Medical office	190	2,162,655		17	13,145	Sq. Ft.	90.2	N/A	N/A
Hospital	21	1,082,931		22	2,763	Beds	56.0	2.49 x	2.92 x
Skilled nursing	51	1,172,497		23	6,123	Beds	85.9	1.52 x	2.08 x
	601	$	11,391,747	15

Portfolio Diversification
Relationship Concentration				Geographic Concentration(1)
	Annualized Revenues				Investment			Rental Revenues &		Interest		Operating
Company	Amount		%	State	Amount		%	DFL Income		Income		Expenses
Sunrise Senior Living	$	145,256	15	CA	$	3,744,664	37	$	246,210	$	219	$	44,931
HCR ManorCare	81,531		8	TX	1,275,292		12	115,319		2,705		36,313
HCA	65,507		7	FL	682,551		7	55,756		—		10,406
Brookdale	59,117		6	CO	393,561		4	30,454		1,142		8,414
Genentech	33,425		3	VA	383,306		4	22,671		—		1,243
Tenet Healthcare Corporation	32,952		3	WA	307,749		3	26,921		—		7,966
Amgen	25,118		3	NJ	280,589		3	14,710		—		—
Emeritus Corporation	24,612		3	UT	253,312		2	23,825		—		4,774
Cirrus Health	20,566		2	MD	210,996		2	14,918		—		1,176
Aegis Senior Living	19,980		2	Other	2,614,892		26	212,201		381		31,283
Kindred	15,683		2		$	10,146,912	100	$	762,985	$	4,447	$	146,506
Other	440,130		46
	$	963,877	100

(1)  Geographic concentration excludes Mezzanine Loans and Other Debt Investments as the investment and revenues associated with those assets cannot be allocated to a particular geographic region.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	19

Consolidated Portfolio

In thousands
Consolidated Portfolio
	Three Months Ended September 30, 2008
	Rental Revenues
Segment	& DFL Income		Operating Expenses		NOI		Interest Income
Senior housing	$	85,697	$	3,530	$	82,167	$	311
Life science	73,510		9,749		63,761		—
Medical office	78,028		35,727		42,301		—
Hospital	22,019		840		21,179		11,074
Skilled nursing	9,161		—		9,161		20,811
	$	268,415	$	49,846	$	218,569	$	32,196

	Nine Months Ended September 30, 2008
	Rental Revenues
Segment	& DFL Income		Operating Expenses		NOI		Interest Income
Senior housing	$	256,097	$	10,343	$	245,754	$	914
Life science	180,707		31,414		149,293		—
Medical office	232,418		101,968		130,450		—
Hospital	66,794		2,781		64,013		33,344
Skilled nursing	26,969		—		26,969		64,797
	$	762,985	$	146,506	$	616,479	$	99,055

See Reporting Definitions and Supplemental Financial Measures Disclosures
	20

Consolidated Portfolio

As of and for the nine months ended September 30, 2008, dollars and square feet in thousands

Owned Property Portfolio

	Property			Rental		Operating		Average				EBITDAR			EBITDARM
Segment	Count	Investment		Revenues		Expenses		Age (Years)	Capacity		Occupancy %	Amount		CFC	Amount		CFC
Senior housing	207	$	3,503,918	$	212,451	$	10,343	12	22,522	Units	89.4	$	307,959	1.16 x	$	371,258	1.40 x
Life science	99	2,822,043		180,707		31,414		15	6,232	Sq. Ft.	89.1	N/A		N/A	N/A		N/A
Medical office	190	2,162,655		232,418		101,968		17	13,145	Sq. Ft.	90.2	N/A		N/A	N/A		N/A
Hospital	20	705,514		66,794		2,781		23	2,705	Beds	56.1	164,487		2.46 x	192,934		2.88 x
Skilled nursing	48	254,759		26,969		—		23	5,681	Beds	86.0	50,875		1.47 x	70,270		2.03 x
	564	$	9,448,889	$	719,339	$	146,506	16
Direct Financing Lease Portfolio
	Property							Average				EBITDAR			EBITDARM
Segment	Count	Investment		DFL Income				Age (Years)	Capacity		Occupancy %	Amount		CFC	Amount		CFC
Senior housing	30	$	629,826	$	43,646			11	3,141	Units	91.8	$	44,255	1.16 x	$	55,568	1.46 x
Secured Loan Portfolio
	Property			Interest				Average				EBITDAR			EBITDARM
Segment	Count	Investment		Income				Age (Years)	Capacity		Occupancy %	Amount		DSC	Amount		DSC
Senior housing	3	$	17,877	$	914			15	168	Units	84.0	$	826	1.93 x	$	1,000	2.33 x
Hospital	1	35,308		2,251				10	58	Beds	53.8	9,458		3.15 x	11,138		3.71 x
Skilled nursing	3	15,012		1,282				30	442	Beds	84.5	5,189		2.16 x	6,552		2.73 x
	7	$	68,197	$	4,447			21				$	15,473		$	18,690
Mezzanine Loans and Other Debt Investments
				Interest
Segment		Investment		Income
Hospital		$	342,109	$	31,093
Skilled nursing		902,726		63,515
		$	1,244,835	$	94,608
Total	601	$	11,391,747

See Reporting Definitions and Supplemental Financial Measures Disclosures
	21

Consolidated Portfolio

As of and for the nine months ended September 30, 2008, dollars and square feet in thousands

Lease Expirations and Secured Loan Maturities

			Expiration Year
Segment	Total		2008		2009		2010		2011		2012		2013		2014		2015		2016		2017		Thereafter
Senior housing:
Properties	240		1		2		4		4		4		6		8		2		24		26		159
Annualized revenues	$	310,093	$	72	$	294	$	659	$	1,103	$	1,075	$	24,585	$	15,600	$	3,174	$	26,509	$	31,041	$	205,981
Life science:
Square feet	5,552		33		465		558		410		176		198		250		595		197		733		1,937
Annualized revenues	$	186,159	$	335	$	10,310	$	12,260	$	13,655	$	4,112	$	6,850	$	5,398	$	17,752	$	5,748	$	23,474	$	86,265
Medical office:
Square feet	11,851		825		1,752		1,853		1,264		1,470		1,150		651		590		381		461		1,454
Annualized revenues	$	238,203	$	18,311	$	35,917	$	37,594	$	27,079	$	29,786	$	19,801	$	15,427	$	11,491	$	7,860	$	9,981	$	24,956
Hospital(1):
Properties	20		—		2		1		—		—		1		3		1		1		2		9
Annualized revenues	$	67,839	$	—	$	13,961	$	2,973	$	—	$	—	$	2,400	$	16,018	$	369	$	3,001	$	4,413	$	24,704
Skilled nursing:
Properties	51		1		5		2		—		—		10		9		5		5		9		5
Annualized revenues	$	37,148	$	637	$	2,440	$	1,530	$	—	$	—	$	6,899	$	6,672	$	3,197	$	4,837	$	7,953	$	2,983
Total:
Annualized revenues	$	839,442	$	19,355	$	62,922	$	55,016	$	41,837	$	34,973	$	60,535	$	59,115	$	35,983	$	47,955	$	76,862	$	344,889

(1)   Lease expirations exclude one facility in Plaquemine, LA where the lease has been terminated.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	22

Consolidated Same Property Portfolio

As of September 30, 2008, except NOI data, dollars and square feet in thousands

				Senior			Life			Medical						Skilled
	Total			Housing			Science			Office			Hospital			Nursing
Property count	464			203			13			186			14			48
Investment	$	6,258,074		$	3,463,974		$	167,988		$	1,906,458		$	464,895		$	254,759
Percent of owned property portfolio (by investment)	66.2			98.9			6.0			88.2			65.9			100.0
Capacity				22,206 Units			894 Sq. Ft.			12,171 Sq. Ft.			1,748 Beds			5,681 Beds
NOI for the three months ended:
September 30, 2008	$	135,592		$	66,869		$	4,438		$	41,254		$	13,870		$	9,161
June 30, 2008	$	138,467		$	66,012		$	4,427		$	42,797		$	16,216		$	9,015
Same property % change in NOI	(2.1		)	1.3			0.2			(3.6		)	(14.5		)	1.6
Adjusted NOI for the three months ended:
September 30, 2008	$	130,385		$	63,891		$	3,612		$	39,991		$	13,839		$	9,052
June 30, 2008	$	133,143		$	62,852		$	3,650		$	41,555		$	16,185		$	8,901
Same property % change in Adjusted NOI	(2.1		)	1.7			(1.0		)	(3.8		)	(14.5		)	1.7
NOI for the nine months ended:
September 30, 2008	$	407,120		$	199,947		$	11,287		$	127,029		$	41,888		$	26,969
September 30, 2007	$	410,959		$	205,110		$	9,498		$	127,466		$	42,702		$	26,183
Same property % change in NOI	(0.9		)	(2.5		)	18.8			(0.3		)	(1.9		)	3.0
Adjusted NOI for the nine months ended:
September 30, 2008	$	391,647		$	190,274		$	9,743		$	123,219		$	41,795		$	26,616
September 30, 2007	$	383,430		$	186,243		$	8,363		$	120,865		$	42,227		$	25,732
Same property % change in Adjusted NOI	2.1			2.2			16.5			1.9			(1.0		)	3.4

See Reporting Definitions and Supplemental Financial Measures Disclosures
	23

Consolidated Senior Housing Portfolio

As of and for the nine months ended September 30, 2008, dollars in thousands

Owned Property	Property			Rental		Operating		Average			EBITDAR			EBITDARM
Portfolio	Count	Investment		Revenues		Expenses		Age (Years)	Units	Occupancy %	Amount		CFC	Amount		CFC
Assisted living	170	$	2,282,027	$	133,530	$	10,343	11	14,407	88.3	$	186,761	1.13 x	$	229,408	1.38 x
Independent living	28	682,030		42,145		—		14	4,583	89.3	56,931		1.07 x	65,687		1.24 x
CCRCs	9	539,861		36,776		—		20	3,532	94.3	64,267		1.36 x	76,163		1.61 x
	207	$	3,503,918	$	212,451	$	10,343	12	22,522	89.4	$	307,959	1.16 x	$	371,258	1.40 x

Direct Financing Lease	Property					Average			EBITDAR			EBITDARM
Portfolio	Count	Investment		DFL Income		Age (Years)	Units	Occupancy %	Amount		CFC	Amount		CFC
Assisted living	27	$	570,326	$	36,656	11	3,141	91.8	$	44,255	1.16 x	$	55,568	1.46 x
CCRCs(1)	3	59,500		6,990
	30	$	629,826	$	43,646

Secured Loan	Property			Interest		Average			EBITDAR			EBITDARM
Portfolio	Count	Investment		Income		Age (Years)	Units	Occupancy %	Amount		DSC	Amount		DSC
Assisted living	2	$	4,800	$	219	11	68	—	$	—	N/A	$	—	N/A
Independent living	1	3,059		241		24	100	84.0	826		1.93 x	1,000		2.33 x
CCRCs(2)	—	10,018		454		N/A	—
	3	$	17,877	$	914	15	168
Total	240	$	4,151,621

(1) Represents ground leases on CCRCs.

(2) Represents a secured construction loan on one CCRC included in the direct financing lease portfolio.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	24

Consolidated Senior Housing Portfolio

As of and for the nine months ended September 30, 2008, dollars in thousands

Portfolio Diversification

Operator Concentration

	Properties		Investment			Rental Revenues & Interest Income					EBITDAR	EBITDARM
Operator	Count	% Pooled	Amount		%	Amount		%	Units	Occupancy %	CFC/DSC	CFC/DSC
Sunrise Senior Living	101	99	$	2,225,321	54	$	111,857	43	11,730	90.6	1.14 x	1.41 x
Brookdale	24	92	675,054		16	50,875		20	4,826	93.7	1.31 x	1.54 x
Aegis Senior Living	12	67	258,008		6	16,840		7	966	88.4	1.02 x	1.18 x
Emeritus Corporation	26	88	245,518		6	20,614		8	2,344	90.9	1.21 x	1.47 x
Capital Senior Living	15	73	176,517		4	10,865		4	1,530	86.2	1.14 x	1.29 x
Harbor Retirement Associates	10	90	160,555		4	7,668		3	1,069	81.5	1.08 x	1.42 x
Atria Senior Living Group	6	100	88,076		2	6,884		3	854	85.5	0.96 x	1.11 x
Other	46	50	322,572		8	31,408		12	2,512	81.7	1.03 x	1.29 x
	240	84	$	4,151,621	100	$	257,011	100	25,831	89.7	1.16 x	1.40 x

Geographic Concentration

	Property	Investment			Rental Revenues & Interest Income					EBITDAR	EBITDARM
State	Count	Amount		%	Amount		%	Units	Occupancy %	CFC/DSC	CFC/DSC
CA	28	$	582,955	14	$	33,542	13	3,178	86.3	1.10 x	1.36 x
FL	30	479,199		12	32,630		13	3,819	89.1	1.22 x	1.50 x
TX	30	384,445		9	28,136		11	3,257	87.8	1.20 x	1.40 x
NJ	13	280,589		7	14,710		6	1,223	94.0	1.11 x	1.33 x
VA	10	278,945		7	13,713		5	1,336	91.8	1.13 x	1.34 x
IL	11	187,218		5	10,583		4	912	91.3	1.24 x	1.47 x
MD	9	182,087		4	11,755		5	828	90.6	1.04 x	1.28 x
CO	5	168,931		4	9,903		4	893	92.4	1.35 x	1.65 x
MI	8	154,261		4	10,760		4	938	88.0	0.78 x	1.02 x
AL	4	140,332		3	9,580		4	683	94.4	1.11 x	1.28 x
PA	2	137,400		3	9,168		3	542	95.8	1.55 x	1.80 x
WA	8	132,609		3	6,133		2	573	84.5	0.72 x	0.92 x
Other	82	1,042,650		25	66,398		26	7,649	90.3	1.22 x	1.48 x
	240	$	4,151,621	100	$	257,011	100	25,831	89.7	1.16 x	1.40 x

See Reporting Definitions and Supplemental Financial Measures Disclosures
	25

Consolidated Senior Housing Portfolio

Dollars in thousands

Portfolio Trends

	Same Property Portfolio																Total Portfolio
	As of and for the Quarter Ended								As of and for the Year to Date Ended								As of and for the Twelve Months Ended
	09/30/08			06/30/08			Change %		09/30/08			09/30/07			Change %		09/30/08		06/30/08		09/30/07(1)
Total senior housing:
Property count	203			203					203			203					240		240		249
Investment	$	3,463,974		$	3,461,639		0.1		$	3,463,974		$	3,458,777		0.2		$	4,151,621	$	4,149,152	$	4,166,175
Units	22,206			22,210			—		22,206			22,242			(0.2	)	25,831		25,838		26,171
Occupancy %	89.4			90.0			(0.6	)	89.4			89.4			—		89.7		90.1		88.3
EBITDAR	$	305,126		$	304,402		0.2		$	305,126		$	248,404		22.8		$	353,040	$	350,645	$	314,407
EBITDAR CFC/DSC	1.16 x			1.19 x			(2.5	)	1.16 x			1.06 x			9.4		1.16 x		1.19 x		1.06 x
EBITDARM	$	367,842		$	366,039		0.5		$	367,842		$	292,752		25.6		$	427,826	$	423,938	$	369,988
EBITDARM CFC/DSC	1.40 x			1.43 x			(2.1	)	1.40 x			1.25 x			12.0		1.40 x		1.43 x		1.25 x
NOI:
Rental revenues	$	70,275		$	69,113		1.7		$	209,872		$	215,709		(2.7	)
Operating expenses	(3,406		)	(3,101		)	9.8		(9,925		)	(10,599		)	(6.4	)
	$	66,869		$	66,012		1.3		$	199,947		$	205,110		(2.5	)
Adjusted NOI:
Straight-line rents	(3,015		)	(3,197		)	(5.7	)	(9,783		)	(18,977		)	(48.4	)
Above market rents, net	37			37			—		110			110			—
	$	63,891		$	62,852		1.7		$	190,274		$	186,243		2.2

(1)   Amounts are reflected as originally reported.
See Reporting Definitions and Supplemental Financial Measures Disclosures
	26

Consolidated Senior Housing Portfolio

Dollars in thousands

Lease Expirations and Secured Loan Maturities

	Total				Assisted Living			Independent Living			CCRCs
		Annualized Revenues				Annualized			Annualized			Annualized
Year	Properties	Amount		%	Properties	Revenues		Properties	Revenues		Properties	Revenues
2008 (Three months)	1	$	72	—	1	$	72	—	$	—	—	$	—
2009	2	294		—	2	294		—	—		—	—
2010	4	659		—	4	659		—	—		—	—
2011	4	1,103		—	3	785		1	318		—	—
2012	4	1,075		—	4	1,075		—	—		—	—
2013	6	24,585		8	—	—		1	4,130		5	20,455
2014	8	15,600		5	5	1,948		—	—		3	13,652
2015	2	3,174		1	1	617		1	2,557		—	—
2016	24	26,509		9	14	12,886		10	13,623		—	—
2017	26	31,041		10	21	19,729		3	4,389		2	6,923
Thereafter	159	205,981		67	144	164,427		13	27,698		2	13,856
	240	$	310,093	100	199	$	202,492	29	$	52,715	12	$	54,886

See Reporting Definitions and Supplemental Financial Measures Disclosures
	27

Consolidated Life Science Portfolio

As of and for the nine months ended September 30, 2008, dollars and square feet in thousands

Owned Property	Property			Rental		Operating		Average	Square
Portfolio	Count	Investment		Revenues(1)		Expenses		Age (Years)	Feet	Occupancy %
San Francisco	73	$	2,243,340	$	146,731	$	23,703	16	4,269	87.0
San Diego	17	488,430		24,980		6,244		17	1,383	90.9
Utah	9	90,273		8,996		1,467		9	580	100.0
	99	$	2,822,043	$	180,707	$	31,414	15	6,232	89.1

Portfolio
Diversification
Tenant Concentration	Square Feet		Annualized Revenues
Tenant	Amount	%	Amount		%
Genentech	794	14	$	33,425	18
Amgen	433	8	25,118		13
Rigel Pharmaceuticals	147	3	13,983		8
Takeda	283	5	13,922		7
Exelixis, Inc.	295	5	12,136		7
General Atomics	281	5	5,044		3
ARUP	319	6	4,885		3
Sequenom	83	1	4,457		2
Myriad Genetics	225	4	4,406		2
Fibrogen	106	2	4,119		2
Other	2,586	47	64,664		35
	5,552	100	$	186,159	100

(1) Excludes $12.6 million of rent, $9.5 million from San Francisco and $3.1 million from San Diego, collected on leases where the respective tenant improvement build out are not complete (deferred rent). These leases are included in occupied square feet and annualized revenues when determining occupancy and tenant concentration.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	28

Consolidated Life Science Portfolio

Dollars and square feet in thousands

Portfolio Trends

	Same Property Portfolio																Total Portfolio
	As of and for the Quarter Ended								As of and for the Year to Date Ended								As of and for the Twelve Months Ended
	09/30/08			06/30/08			Change %		09/30/08			09/30/07			Change %		09/30/08		06/30/08(1)		09/30/07(1)
Total life science:
Property count	13			13					13			13					99		99		93
Investment	$	167,988		$	166,924		0.6		$	167,988		$	150,968		11.3		$	2,822,043	$	2,729,716	$	2,652,190
Square feet	894			898			(0.4	)	894			921			(2.9	)	6,232		6,171		5,910
Occupancy %	100.0			91.2			8.8		100.0			88.5			11.5		89.1		88.1		83.4
NOI:
Rental revenues	$	5,826		$	5,935		(1.8	)	$	15,058		$	12,796		17.7
Operating expenses	(1,388		)	(1,508		)	(8.0	)	(3,771		)	(3,298		)	14.3
	$	4,438		$	4,427		0.2		$	11,287		$	9,498		18.8
Adjusted NOI:
Straight-line rents	(731		)	(682		)	7.2		(1,260		)	(851		)	48.1
Below market rents, net	(95		)	(95		)	—		(284		)	(284		)	—
	$	3,612		$	3,650		(1.0	)	$	9,743		$	8,363		16.5

⁽¹⁾Amounts are reflected as originally reported, except for occupancy which were revised to conform to current presentation.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	29

Consolidated Life Science Portfolio

Dollars and square feet in thousands

Lease Expirations

	Total					San Francisco			San Diego			Utah
	Square Feet		Annualized Revenues			Square	Annualized		Square	Annualized		Square	Annualized
Year	Amount	%	Amount		%	Feet	Revenues		Feet	Revenues		Feet	Revenues
2008 (Three months)(1)	33	1	$	335	—	33	$	335	—	$	—	—	$	—
2009	465	8	10,310		6	230	5,692		160	3,604		75	1,014
2010	558	10	12,260		7	284	7,097		142	3,176		132	1,987
2011	410	7	13,655		7	380	12,707		30	948		—	—
2012	176	3	4,112		2	108	2,493		32	1,070		36	549
2013	198	4	6,850		4	198	6,850		—	—		—	—
2014	250	4	5,398		3	250	5,398		—	—		—	—
2015	595	11	17,752		9	213	8,017		311	8,539		71	1,196
2016	197	4	5,748		3	197	5,748		—	—		—	—
2017	733	13	23,474		13	226	10,127		353	10,522		154	2,825
Thereafter	1,937	35	86,265		46	1,596	80,037		229	3,959		112	2,269
	5,552	100	$	186,159	100	3,715	$	144,501	1,257	$	31,818	580	$	9,840

⁽¹⁾Includes month-to-month and hold-over leases.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	30

Consolidated Life Science Portfolio

Square feet in thousands

Leasing Activity

			Annualized			Tenant
	Leased		Base Rent			Improvements	Leasing	Average	Renewal Rate
	Square		Per		% Change	Per Square	Costs Per	Lease Term	Year-to-
	Feet(1)		Square Foot		In Rents	Foot	Square Foot	(Months)	Date(2)
Leased Square Feet as of December 31, 2007	5,623		$	29.62
Expirations	(17	)	12.28
Renewals, amendments and extensions	17		13.59		10.7	2.41	1.01	14	100.0
New leases	18		36.04			40.04	3.51	52
Terminations	(81	)	12.42
Leased Square Feet as of March 31, 2008	5,560		$	31.67
Acquisitions/Developments	82		45.16
Expirations	(27	)	13.60
Renewals, amendments and extensions	7		14.00		3.0	—	0.42	12	54.5
New leases	60		29.77			31.68	9.56	79
Terminations	(7	)	12.00
Leased Square Feet as of June 30, 2008	5,675		$	32.51
Acquisitions/Developments	147		45.16
Dispositions and redevelopments	(41	)	15.44
Expirations	(184	)	23.80
Renewals, amendments and extensions	140		28.74		11.7	3.26	4.11	40	71.9
New leases	—
Terminations	(149	)	19.82
Leased Square Feet as of September 30, 2008	5,588		$	33.53

⁽¹⁾Represents square feet subject to executed lease agreements.

⁽²⁾Renewal rates were revised to conform to current presentation.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	31

Consolidated Medical Office Portfolio

As of and for the nine months ended September 30, 2008, dollars and square feet in thousands

Owned Property	Property			Rental		Operating		Average
Portfolio	Count	Investment		Revenues		Expenses		Age (Years)	Square Feet	Occupancy %
On-Campus	144	$	1,703,983	$	185,829	$	82,182	17	10,793	89.9
Off-Campus	46	458,672		46,589		19,786		16	2,352	91.4
	190	$	2,162,655	$	232,418	$	101,968	17	13,145	90.2

Portfolio Diversification

Geographic Concentration

	Property	Investment			Square Feet			Rental Revenues			Operating Expenses
State	Count	Amount		%	Amount	%	Occupancy %	Amount		%	Amount		%
TX	45	$	627,945	29	4,074	31	89.9	$	65,333	28	$	33,937	33
CA	16	259,609		12	952	7	84.2	25,720		11	13,832		14
CO	16	187,199		9	1,031	8	82.8	18,404		8	8,413		8
WA	7	175,140		8	687	5	97.9	20,788		9	7,965		8
TN	17	144,142		7	1,521	12	91.7	19,593		8	8,085		8
FL	19	140,902		6	1,024	8	91.3	17,343		8	8,278		8
UT	22	130,304		6	939	7	92.7	13,157		6	3,307		3
KY	6	99,531		5	640	5	92.0	9,718		4	3,244		3
NV	8	83,821		4	541	4	86.0	10,134		4	3,916		4
Other	34	314,062		14	1,736	13	92.8	32,228		14	10,991		11
	190	$	2,162,655	100	13,145	100	90.2	$	232,418	100	$	101,968	100

See Reporting Definitions and Supplemental Financial Measures Disclosures
	32

Consolidated Medical Office Portfolio

Dollars and square feet in thousands

Portfolio Trends

	Same Property Portfolio																Total Portfolio
	As of and for the Quarter Ended								As of and for the Year to Date Ended								As of and for the Twelve Months Ended
	09/30/08			06/30/08			Change %		09/30/08			09/30/07			Change %		09/30/08		06/30/08(1)		09/30/07(1)
Total medical office:
Property count	186			186					186			186					190		192		204
Investment	$	1,906,458		$	1,898,857		0.4		$	1,906,458		$	1,880,419		1.4		$	2,162,655	$	2,160,156	$	2,199,637
Square feet	12,171			12,154			0.1		12,171			12,128			0.4		13,145		13,204		13,752
Occupancy %	90.4			91.0			(0.6	)	90.4			90.5			(0.1	)	90.2		90.3		90.6
NOI:
Rental revenues	$	70,614		$	70,412		0.3		$	210,552		$	209,898		0.3
Operating expenses	(29,360		)	(27,615		)	6.3		(83,523		)	(82,432		)	1.3
	$	41,254		$	42,797		(3.6	)	$	127,029		$	127,466		(0.3	)
Adjusted NOI:
Straight-line rents	(1,025		)	(1,003		)	2.2		(3,110		)	(5,320		)	(41.5	)
Below market rents, net	(238		)	(239		)	(0.4	)	(700		)	(1,281		)	(45.4	)
	$	39,991		$	41,555		(3.8	)	$	123,219		$	120,865		1.9

⁽¹⁾ Amounts are reflected as originally reported, except occupancy which were revised to conform to current presentation.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	33

Consolidated Medical Office Portfolio

Dollars and square feet in thousands

Lease Expirations

	Total					On-Campus			Off-Campus
	Square Feet		Annualized Revenues				Annualized			Annualized
	Amount	%	Amount		%	Square Feet	Revenues		Square Feet	Revenues
2008 (Three months)(1)	825	7	$	18,311	8	665	$	13,179	160	$	5,132
2009	1,752	15	35,917		15	1,432	29,497		320	6,420
2010	1,853	16	37,594		16	1,690	33,309		163	4,285
2011	1,264	11	27,079		11	1,067	22,947		197	4,132
2012	1,470	12	29,786		13	1,267	25,781		203	4,005
2013	1,150	10	19,801		8	876	15,159		274	4,642
2014	651	5	15,427		6	575	13,695		76	1,732
2015	590	5	11,491		5	435	8,335		155	3,156
2016	381	3	7,860		3	312	6,415		69	1,445
2017	461	4	9,981		4	390	8,617		71	1,364
Thereafter	1,456	12	24,956		11	994	15,552		462	9,404
	11,853	100	$	238,203	100	9,703	$	192,486	2,150	$	45,717

(1) Includes month-to-month and hold-over leases.
See Reporting Definitions and Supplemental Financial Measures Disclosures
	34

Consolidated Medical Office Portfolio

Square feet in thousands

Leasing Activity			Annualized			Tenant
			Base Rent			Improvements		Leasing		Average
	Leased		Per		% Change	Per Square		Costs Per		Lease Term	Renewal Rate
	Square Feet		Square Foot		In Rents	Foot		Square Foot		(Months)	Year-to-Date
Leased Square Feet as of December 31, 2007	12,605		$	20.28
Expirations	(711	)	20.21
Renewals, amendments and extensions	582		20.08		5.0	$	3.72	$	1.07	38	81.8
New leases	108		17.78			24.84		4.04		54
Terminations	(27	)	20.48
Leased Square Feet as of March 31, 2008	12,557		$	20.47
Dispositions	(619	)	16.80
Expirations	(499	)	21.40
Renewals, amendments and extensions	392		24.39		15.5	2.41		0.66		37	80.5
New leases	123		20.04			25.33		3.80		66
Terminations	(36	)	21.79
Leased Square Feet as of June 30, 2008	11,918		$	20.87
Dispositions	(41	)	15.77
Expirations	(618	)	25.12
Renewals, amendments, and extensions	470		21.10		3.7	5.59		2.17		37	78.9
New leases	153		18.18			27.39		3.14		50
Terminations	(29	)	16.86
Leased Square Feet as of September 30, 2008	11,853		20.82

See Reporting Definitions and Supplemental Financial Measures Disclosures
	35

Consolidated Hospital Portfolio

As of and for the nine months ended September 30, 2008, dollars in thousands

													EBITDAR(1)				EBITDARM(1)
	Property				Rental			Operating		Average		Occupancy
Owned Property	Count	Investment			Revenues			Expenses		Age (Years)	Beds	%(1)	Amount			CFC	Amount			CFC
Acute care	8	$	511,277		$	48,311		$	2,285	31	1,937	53.7	$	112,640		2.55 x	$	129,822		2.94 x
Rehab	7	95,322			8,815			343		18	487	59.6	19,095			1.65 x	23,063			2.00 x
Specialty	2	63,710			3,686			153		24	37	N/A	15,949			3.42 x	18,561			3.98 x
LTACH	3	35,205			5,982			—		14	244	61.9	16,803			2.56 x	21,488			3.27 x
	20	$	705,514		$	66,794		$	2,781	23	2,705	56.1	$	164,487		2.46 x	$	192,934		2.88 x
													EBITDAR(1)				EBITDARM(1)
Secured Loan	Property				Interest					Average		Occupancy
Portfolio	Count	Investment			Income					Age (Years)	Beds	%(1)	Amount			DSC	Amount			DSC
Acute care	1	$		35,308	$		2,251			10	58	53.8	$		9,458	3.15 x	$		11,138	3.71 x
Other Debt					Interest
Investments		Investment			Income
Acute care		$		258,400	$		18,314
Specialty		83,709			12,779
		$		342,109	$		31,093
Total	21	$		1,082,931

(1)   Certain operators in HCP’s hospital portfolio are not required under their respective leases to provide operational data.
See Reporting Definitions and Supplemental Financial Measures Disclosures
	36

Consolidated Hospital Portfolio

As of and for the nine months ended September 30, 2008, dollars in thousands

Portfolio Diversification

Operator Concentration

	Properties		Investment			Rental Revenues & Interest Income				Occupancy	EBITDAR	EBITDARM
Operator(1)	Count	% Pooled	Amount		%	Amount		%	Beds	%	CFC/DSC	CFC/DSC
HCA	1	—	$	424,473	39	$	34,659	35	598	N/A	N/A	N/A
Tenet Healthcare Corp	6	—	339,885		32	32,125		32	1,240	55.0	2.56 x	2.95 x
Cirrus Health	2	—	130,419		12	14,998		15	37	N/A	3.42 x	3.98 x
HealthSouth	5	80	55,981		5	6,206		6	372	58.2	2.84 x	3.23 x
Other	7	71	132,173		12	12,150		12	516	53.0	1.71 x	2.25 x
	21	43	$	1,082,931	100	$	100,138	100	2,763	56.0	2.49 x	2.92 x

Geographic Concentration(1)(2)

	Property	Investment			Rental Revenues & Interest Income					EBITDAR	EBITDARM
State	Count	Amount		%	Amount		%	Beds	Occupancy %	CFC/DSC	CFC/DSC
TX	5	$	260,084	35	$	24,092	35	947	53.5	1.25 x	1.68 x
CA	3	155,983		21	13,836		20	319	39.1	1.38 x	1.67 x
GA	2	76,735		10	8,569		13	274	70.2	4.29 x	4.81 x
LA	4	65,719		9	5,101		7	343	49.4	2.21 x	2.69 x
Other	7	182,301		25	17,447		25	880	65.2	3.22 x	3.71 x
	21	$	740,822	100	$	69,045	100	2,763	56.0	2.49 x	2.92 x

(1)   Certain operators in HCP’s hospital portfolio are not required under their respective leases to provide operational data. (2)   Geographic concentration excludes Other Debt Investments as the investment and revenues associated with those assets cannot be allocated to a particular geographic region.
See Reporting Definitions and Supplemental Financial Measures Disclosures
	37

Consolidated Hospital Portfolio

Dollars in thousands

Portfolio Trends

	Same Property Portfolio																Total Portfolio
	As of and for the Quarter Ended								As of and for the Year to Date Ended								As of and for the Twelve Months Ended
	09/30/08			06/30/08			Change %		09/30/08			09/30/07			Change %		09/30/08		06/30/08(1)		09/30/07(1)
Total hospital:
Property count	14			14					14			14					21		21		37
Investment	$	464,895		$	453,971		2.4		$	464,895		$	458,310		1.4		$	1,082,931	$	1,077,322	$	1,082,798
Beds	1,748			1,766			(1.0	)	1,748			1,766			(1.0	)	2,763		2,781		4,402
Occupancy %	54.7			53.7			1.0		54.7			53.3			1.4		56.0		54.3		54.4
EBITDAR	$	151,692		$	154,328		(1.7	)	$	151,692		$	133,970		13.2		$	173,945	$	175,280	$	251,106
EBITDAR CFC/DSC	2.66 x			2.72 x			(2.2	)	2.66 x			2.69			(1.1	)	2.49 x		2.53 x		2.46
EBITDARM	$	174,645		$	177,186		(1.4	)	$	174,645		$	153,134		14.0		$	204,072	$	205,199	$	291,098
EBITDARM CFC/DSC	3.06 x			3.12 x			(1.9	)	3.06 x			3.08			(0.6	)	2.92 x		2.97 x		2.85 x
NOI:
Rental revenues	$	13,888		$	16,253		(14.6	)	$	41,943		$	42,705		(1.8	)
Operating expenses	(18		)	(37		)	(51.4	)	(55		)	(3		)	NM	(2)
	$	13,870		$	16,216		(14.5	)	$	41,888		$	42,702		(1.9	)
Adjusted NOI:
Straight-line rents	(6		)	(6		)	—		(18		)	(400		)	(95.5	)
Below market rents, net	(25		)	(25		)	—		(75		)	(75		)	—
	$	13,839		$	16,185		(14.5	)	$	41,795		$	42,227		(1.0	)

Lease Expirations and Secured Loan Maturities(3)

		Annualized Revenues
	Properties	Amount		%
2008 (Three months)	—	$	—	—
2009	2	13,961		21
2010	1	2,973		4
2011	—	—		—
2012	—	—		—
2013	1	2,400		4
2014	3	16,018		24
2015	1	369		1
2016	1	3,001		4
2017	2	4,413		6
Thereafter	9		24,704	36
	20	$	67,839	100

(1)   Amounts are reflected as originally reported. (2)   Percentage change not meaningful. (3)   Lease expirations exclude one facility in Plaquemine, LA where the lease has been terminated.
See Reporting Definitions and Supplemental Financial Measures Disclosures
	38

Consolidated Skilled Nursing Portfolio

As of and for the nine months ended September 30, 2008, dollars in thousands

Owned									Average			EBITDAR			EBITDARM
Property Portfolio	Property Count	Investment		Rental Revenues			Operating Expenses		Age (Years)	Beds	Occupancy %	Amount		CFC	Amount		CFC
Skilled nursing	48	$	254,759	$		26,969	$	—	23	5,681	86.0	$	50,875	1.47 x	$	70,270	2.03 x
									Average			EBITDAR			EBITDARM
Secured Loan Portfolio	Property Count	Investment		Interest Income					Age (Years)	Beds	Occupancy %	Amount		DSC	Amount		DSC
Skilled nursing	3	$	15,012	$	1,282				30	442	84.5	$	5,189	2.16 x	$	6,552	2.73 x
Mezzanine Loans		Investment		Interest Income
Skilled nursing		$	902,726	$		63,515
Total	51	$	1,172,497

Portfolio Diversification

	Properties		Investment			Rental Revenues & Interest Income
Operator	Count	% Pooled	Amount		%	Amount		%	Beds	Occupancy %	EBITDAR CFC/DSC	EBITDARM CFC/DSC
HCR ManorCare(1)	—	—	$	902,726	77	$	63,515	69	N/A	N/A	N/A	N/A
Formation Capital	9	100	63,100		6	5,090		6	934	95.3	1.70 x	2.19 x
Covenant Care	12	—	61,891		5	6,653		7	1,373	82.7	1.59 x	2.13 x
Sun HealthCare	6	67	38,848		3	3,347		4	841	84.3	2.13 x	2.67 x
Kindred	9	100	38,117		3	6,039		6	1,288	87.3	1.22 x	1.96 x
Trilogy Health Services	5	100	33,452		3	3,474		4	569	90.5	1.64 x	2.03 x
Other	10	—	34,363		3	3,648		4	1,118	78.8	0.79 x	1.39 x
	51	53	$	1,172,497	100	$	91,766	100	6,123	85.9	1.52 x	2.08 x

(1) For the Company’s HCR ManorCare investment, DSC is calculated as the quotient of i) Facility EBITDAR with an imputed management fee of 4% and EBITDARM for the most recent quarter(s) of available data since HCR ManorCare’s December 2007 recapitalization divided by ii) the borrower’s pro forma debt service calculated as the product of a) total outstanding senior and mezzanine debt for the relevant period(s) multiplied by b) HCR ManorCare’s hedged interest rate maximum exposure of 5.25%. Currently, the EBITDAR and EBITDARM DSC for this investment is 1.33 x and 1.69 x, respectively.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	39

Consolidated Skilled Nursing Portfolio

As of and for the nine months ended September 30, 2008, dollars in thousands

Geographic Concentration⁽¹⁾

	Property	Investment			Rental Revenues & Interest					EBITDAR	EBITDARM
State	Count	Amount		%	Amount		%	Beds	Occupancy	CFC/DSC	CFC/DSC
VA	9	$	63,100	23	$	5,090	18	934	95.3	1.70 x	2.19 x
IN	8	46,090		17	4,935		17	870	85.9	1.51 x	1.94 x
OH	8	43,263		16	5,181		18	1,120	77.9	1.31 x	1.85 x
CO	4	28,403		11	2,298		8	602	91.0	2.38 x	2.96 x
CA	3	14,347		5	1,583		6	379	86.8	1.47 x	2.16 x
NV	2	13,100		5	1,566		6	267	90.8	1.86 x	2.54 x
Other	17	61,468		23	7,598		27	1,951	82.9	1.15 x	1.81 x
	51	$	269,771	100	$	28,251	100	6,123	85.9	1.52 x	2.08 x

Portfolio Trends

	Same Property Portfolio																Total Portfolio
	As of and for the Quarter Ended								As of and for the Year to Date Ended								As of and for the Twelve Months Ended
	09/30/08			06/30/08			Change %		09/30/08			09/30/07			Change %		09/30/08		06/30/08(2)		09/30/07(2)
Total skilled nursing:
Property count	48			48					48			48					51		51		65
Investment	$	254,759		$	242,737		5.0		$	254,759		$	240,450		6.0		$	1,172,497	$	1,160,670	$	321,572
Beds	5,681			5,637			0.8		5,681			5,608			1.3		6,123		6,079		7,560
Occupancy %	86.0			85.9			0.1		86.0			84.6			1.4		85.9		85.9		84.5
EBITDAR	$	50,875		$	47,972		6.1		$	50,875		$	47,451		7.2		$	56,064	$	53,082	$	67,606
EBITAR CFC/DSC	1.47 x			1.41 x			4.3		1.47 x			1.39 x			5.8		1.52 x		1.46 x		1.51 x
EBITDARM	$	70,270		$	66,801		5.2		$	70,270		$	64,158		9.5		$	76,822	$	73,260	$	89,763
EBITDARM CFC/DSC	2.03 x			1.97 x			3.0		2.03 x			1.88 x			8.0		2.08 x		2.01x		2.00 x
NOI:
Rental revenues	$	9,161		$	9,015		1.6		$	26,969		$	26,183		3.0
Operating expenses	—			—			—		—			—			—
	$	9,161		$	9,015		1.6		$	26,969		$	26,183		3.0
Adjusted NOI:
Straight-line rents	(109		)	(138		)	(21.0	)	(406		)	(538		)	(24.5	)
Above market rents, net	—			24			(100.0	)	53			87			(39.1	)
	$	9,052		$	8,901		1.7		$	26,616		$	25,732		3.4

(1)	Geographic concentration excludes Mezzanine Loans as the investment and revenues associated with these assets cannot be allocated to a particular geographic region.
(2)	Amounts are reflected as originally reported.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	40

Consolidated Skilled Nursing Portfolio

As of and for the nine months ended September 30, 2008, dollars in thousands

Lease Expirations and Secured Loan Maturities

		Annualized Revenues
	Properties	Amount		%
2008 (Three months)	1	$	637	2
2009	5	2,440		7
2010	2	1,530		4
2011	—	—		—
2012	—	—		—
2013	10	6,899		18
2014	9	6,672		18
2015	5	3,197		9
2016	5	4,837		13
2017	9	7,953		21
Thereafter	5	2,983		8
	51	$	37,148	100

See Reporting Definitions and Supplemental Financial Measures Disclosures
	41

Unconsolidated Portfolio

As of and for the nine months ended September 30, 2008, dollars and square feet in thousands

	Property			Rental		Operating		Average			EBITDAR			EBITDARM
HCP Ventures II (35%) (1)	Count	Investment		Revenues		Expenses		Age (Years)	Units	Occupancy %	Amount		CFC	Amount		CFC
Assisted living	2	$	11,077	$	669	$	—	12	111	91.6	$	589	0.79 x	$	790	1.05 x
Independent living	20	978,522		55,615		3		19	5,074	94.3	65,197		1.01 x	72,839		1.13 x
CCRCs	3	107,668		6,298		1		13	444	91.6	6,983		0.95 x	8,004		1.09 x
	25	$	1,097,267	$	62,582	$	4	18	5,629	94.0	$	72,769	1.00 x	$	81,633	1.13 x
	Property			Rental		Operating		Average
HCP Ventures III (30%)	Count	Investment		Revenues		Expenses		Age (Years)	Square Feet	Occupancy %
On-Campus	9	$	108,135	$	10,322	$	3,318	8	606	100.0
Off-Campus	4	32,482		3,306		1,236		7	183	100.0
	13	$	140,617	$	13,628	$	4,554	8	789	100.0
	Property			Rental		Operating		Average
HCP Ventures IV (20%)	Count	Investment		Revenues		Expenses		Age (Years)	Square Feet	Occupancy %(2)
Medical office:
On-Campus	23	$	223,588	$	18,572	$	8,964	20	1,203	83.2
Off-Campus	27	322,104		26,237		10,699		17	1,368	89.2
Life science	4	23,855		1,439		216		11	111	100.0
Hospital:
LTACH	1	12,184		1,061		152		2	N/A	N/A
Rehab	1	13,965		1,039		7		2	N/A	53.2
Specialty	2	55,224		4,110		522		4	N/A	N/A
	58	$	650,920	$	52,458	$	20,560	17
	Property			Rental		Operating		Average
HCP Life Science (50%-63%)	Count	Investment		Revenues		Expenses		Age (Years)	Square Feet	Occupancy %
San Francisco	2	$	40,040	$	4,308	$	1,011	11	147	100.0
San Diego	2	39,806		3,338		387		13	131	96.8
	4	$	79,846	$	7,646	$	1,398	12	278	98.5

(1)   All facilities are operated by Horizon Bay Senior Communities.

(2)   Hospital occupancy information not provided by the respective operator/tenant.

See Reporting Definitions and Supplemental Financial Measures Disclosures
	42

Unconsolidated Portfolio

As of and for the nine months ended September 30, 2008, dollars in thousands

Portfolio Diversification

Geographic Concentration

	Investment			Rental		Operating
State	Amount		%	Revenues		Expenses
TX	$	606,730	31	$	43,351	$	10,585
FL	435,016		22	27,722		4,027
IL	235,372		12	14,627		1,452
RI	200,885		10	12,596		1
CA	153,695		8	11,558		1,398
AZ	113,148		6	7,670		2,181
AL	57,981		3	5,129		1,504
TN	34,364		2	3,011		1,213
MO	33,181		2	2,512		1,026
NC	23,855		1	1,439		216
Other	74,423		3	6,699		2,913
	$	1,968,650	100	$	136,314	$	26,516

See Reporting Definitions and Supplemental Financial Measures Disclosures
	43

Reporting Definitions

Acute Care Hospitals.  Acute care hospitals offer a wide range of services such as fully-equipped operating and recovery rooms, obstetrics, radiology, intensive care, open heart surgery and coronary care, neurosurgery, neonatal intensive care, magnetic resonance imaging, nursing units, oncology, clinical laboratories, respiratory therapy, physical therapy, nuclear medicine, rehabilitation services and outpatient services.

Annualized Debt Service.  The most recent monthly interest and principal amortization due to HCP as of period end annualized for twelve months.  The Company uses Annualized Debt Service for purposes of determining Debt Service Coverage.

Annualized Revenues.  The most recent monthly base rent, income from direct financing leases and/or interest income annualized for twelve months.  Annualized Revenues do not include tenant recoveries, additional rents and non-cash revenue adjustments (i.e., straight-line rents, amortization of above and below market lease intangibles, interest accretion and deferred revenues).  The Company uses Annualized Revenues for the purpose of determining Relationship Concentrations, Lease Expirations and Secured Loan Maturities.

Assets Held for Sale.  Assets of discontinued operations in accordance with –Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

Assisting Living Facility (“ALF”).  A senior housing facility that predominantly consists of assisted living units is classified by the Company as an ALF.

Beds/Units/Square Feet.  Senior housing facilities are measured in units (e.g., studio, one or two bedroom units).  MOBs and life science facilities are measured in square feet. Hospitals and skilled nursing facilities are measured in licensed bed count.

Book Value.  The carrying amount as reported in the Company’s financial statements.

Cash Flow Coverage (“CFC”).  Facility EBITDAR or Facility EBITDARM for the most recent twelve months of available data divided by the Same Period Rent.  Cash Flow Coverage is a supplemental measure of a property’s ability to generate cash flows for the operator/tenant (not the Company) to meet the operator’s/tenant’s related rent and other obligations to the Company.  However, its usefulness is limited by, among other things, the same factors that limit the usefulness of Facility EBITDAR or Facility EBITDARM.  The coverages shown exclude newly completed facilities under start-up, vacant facilities and facilities for which data is not available or meaningful.

Consolidated Assets.  Total assets as reported in the Company’s consolidated financial statements.

Consolidated Book Capitalization.  The carrying amount of (i) Consolidated Debt, plus (ii) minority interests, plus (iii) stockholders’ equity, as reported in the Company’s consolidated financial statements.

Consolidated Debt.  The carrying amount of bank line of credit, bridge loan (if applicable), senior unsecured notes, mortgage debt and other debt as reported in the Company’s consolidated financial statements.

Consolidated Gross Assets.  The carrying amount of total assets, excluding investments in and advances to unconsolidated joint ventures, after adding back accumulated depreciation and amortization, as reported in the Company’s consolidated financial statements.

Consolidated Market Capitalization.  Consolidated Debt at Book Value plus Consolidated Market Equity.

Consolidated Market Equity.  The total number of outstanding shares of the Company’s common stock multiplied by the closing price per share of its common stock on the New York Stock Exchange as of period end, plus the total number of convertible partnership units multiplied by the closing price per share of its common stock on the New York Stock Exchange as of period end (adjusted for stock splits), plus the total number of outstanding shares of the Company’s preferred stock multiplied by the closing price of its preferred stock on the New York Stock Exchange as of period end.

Consolidated Secured Debt.  Mortgage debt secured by real estate excluding debt on assets held for sale as reported in the Company’s consolidated financial statements.

Consolidated Undepreciated Book Capitalization.  Consolidated Book Capitalization after adding back accumulated depreciation and amortization on the Company’s real estate assets, as reported in the Company’s consolidated financial statements.

Continuing Care Retirement Community (“CCRC”).  A senior housing facility which provides at least three levels of care (i.e., independent living, assisted living and skilled nursing) is classified by the Company as a CCRC.

Debt Service.  The periodic payment of interest expense and principal amortization on secured loans.

Debt Service Coverage (“DSC”).  Facility EBITDAR or Facility EBITDARM for the most recent twelve months of available data divided by Annualized Debt Service. Debt Service Coverage is a supplemental measure of the property’s ability to generate sufficient cash flows for the operator/tenant (not the Company) to meet the operator’s/tenant’s related obligations to the Company under loan agreements.  However, its usefulness is limited by the same factors that limit the usefulness of Facility EBITDAR or Facility EBITDARM.  The coverages shown exclude newly completed facilities under start-up, vacant facilities and facilities for which data is not available or meaningful.

Development.  Includes ground-up construction and redevelopments.

Direct Financing Lease (“DFL”).  The Company uses the direct finance method of accounting to record income from DFLs.  For leases accounted for as DFLs, future minimum lease payments are recorded as a receivable.  The difference between the future minimum lease payments and the estimated residual values less the cost of the properties is recorded as unearned income.  Unearned income is deferred and amortized to income over the lease terms to provide a constant yield.  Investments in DFLs are presented net of unamortized interest income.

Estimated Completion Date.Management’s estimate of the date the core and shell structure improvements are expected to be or have been completed.

44

Reporting Definitions

Facility EBITDAR (“EBITDAR”).  Earnings before interest, taxes, depreciation, amortization and rent for a particular facility accruing to the operator/tenant of the property (not the Company).  The Company uses Facility EBITDAR in determining Cash Flow Coverage and Debt Service Coverage.  Facility EBITDAR has limitations as an analytical tool.  Facility EBITDAR does not reflect historical cash expenditures or future cash requirements for facility capital expenditures or contractual commitments.  In addition, Facility EBITDAR does not represent a property’s net income or cash flow from operations and should not be considered an alternative to those indicators.  However, the Company receives periodic financial information from operators/tenants regarding the performance of the Company’s facilities under the operator’s/tenant’s management.  The Company utilizes Facility EBITDAR as a supplemental measure of the ability of those properties to generate sufficient liquidity to meet related obligations to the Company.  Facility EBITDAR includes the greater of (i) contractual management fees or (ii) an imputed management fee of 2% for acute care hospitals and 5% for skilled nursing facilities and senior housing facilities which the Company believes represents typical management fees in their respective industries.  All facility financial performance data was derived solely from information provided by operators/tenants and borrowers without independent verification by the Company.

Facility EBITDARM (“EBITDARM”).  Earnings before interest, taxes, depreciation, amortization, rent and management fees for a particular facility accruing to the operator/tenant of the property (not the Company).  The Company uses Facility EBITDARM in determining Cash Flow Coverage and Debt Service Coverage.  Facility EBITDARM has limitations as an analytical tool.  Facility EBITDARM does not reflect historical cash expenditures or future cash requirements for facility capital expenditures or contractual commitments.  In addition, Facility EBITDARM does not represent a property’s net income or cash flow from operations and should not be considered an alternative to those indicators.  However, the Company receives periodic financial information from operators/tenants regarding the performance of the Company’s facilities under the operator’s/tenant’s management.  The Company utilizes Facility EBITDARM as a supplemental measure of the ability of those properties to generate sufficient liquidity to meet related obligations to the Company.  All facility financial performance data was derived solely from information provided by operators/tenants and borrowers without independent verification by the Company.

GAAP.  U.S. generally accepted accounting principles.

HCP Life Science.  Includes three unconsolidated joint ventures between the Company and an institutional capital partner for which the Company is the managing member.  HCP Life Science includes the following partnerships: (i) Torrey Pines Science Center LP (50%), (ii) Britannia Biotech Gateway LP (55%) and (iii) LASDK LP (63%).  The unconsolidated joint ventures were acquired as part of its purchase of Slough Estates USA Inc. on August 1, 2007.

HCP Ventures II.  An unconsolidated joint venture formed on January 5, 2007 between the Company and an institutional capital partner, for which the Company is the managing member and has a 35% interest.

HCP Ventures III.  An unconsolidated joint venture formed on October 27, 2006 between the Company and an institutional capital partner, for which the Company is the managing member and has an effective 25.5% interest.

HCP Ventures IV.  An unconsolidated joint venture formed on April 30, 2007 between the Company and an institutional capital partner, for which the Company is the managing member and has a 20% interest.

Independent Living Facility (“ILF”).  A senior housing facility that predominantly consists of independent living units is classified by the Company as an ILF.

Investment.  The carrying amount of real estate assets, including intangibles, after adding back accumulated depreciation and amortization, and the carrying amount of mortgage loans receivable.  Excludes real estate assets held for sale and classified as discontinued operations, unless otherwise specified.

Investment Management Business.  Excludes unconsolidated joint ventures outside of its unconsolidated institutional joint ventures: (i) HCP Life Science, (ii) HCP Ventures II, (iii) HCP Ventures III and (iv) HCP Ventures IV.

Life Science.  Laboratory and office space primarily for biotechnology and pharmaceutical companies, scientific research institutions, government agencies and other entities involved in the life science industry.

Long-Term Acute Care Hospitals (“LTACHs”).  LTACHs provide care for patients with complex medical conditions that require longer stays and more intensive care, monitoring or emergency back-up than that available in most skilled nursing-based programs.

Marketable Securities.  The Company classifies its existing marketable equity and debt securities as available-for-sale in accordance with provisions of Statement of Financial Accounting Standards No. 115. These securities are carried at fair market value, with unrealized gains and losses reported in stockholders’ equity as a component of accumulated other comprehensive income.

MOB.  Medical office building.

Occupancy.  For MOBs and life science facilities, occupancy represents the percentage of total rentable square feet leased where rental payments have commenced, including month-to-month leases, as of the date reported. For hospitals, skilled nursing facilities and senior housing facilities, occupancy represents the facilities’ operating occupancy for the trailing twelve months of the most recent quarter of available data.  The percentages are calculated based on licensed beds, available beds and units for hospitals, skilled nursing facilities and senior housing facilities, respectively.  The percentages shown exclude newly completed facilities under start-up, vacant facilities and facilities for which data is not available or meaningful.  All facility financial performance data were derived solely from information provided by operators/tenants and borrowers without independent verification by the Company.

Operating Portfolio.  Represents owned properties, direct financing leases, loans and marketable debt securities, and excludes properties under development.

Other Debt Investments.  Marketable debt securities and loans not secured by real estate.

Percentage Pre-leased.  Represents the percentage of a development project’s estimated square footage attributed to signed leases.

Pooled Leases.  Two or more leases to the same operator/tenant or their subsidiaries under which their obligations are combined by virtue of a master lease, or multiple master leases, a pooling agreement, or multiple pooling agreements, or cross-guaranties.  Sunrise Senior Living percentage pooled consists of 100 assets under 12 separate pools.

45

Reporting Definitions

Redevelopment projects.  Properties that require significant capital expenditures (generally more than 25% of acquired cost or existing basis) to achieve stabilization or to change the use of the properties.

Rehabilitation Hospitals (“Rehab”).  Rehabilitation hospitals provide inpatient and outpatient care for patients who have sustained traumatic injuries or illnesses, such as spinal cord injuries, strokes, head injuries, orthopedic problems, work-related disabilities and neurological diseases.

Renewal Rate.  The Company defines renewal rate as the ratio of total square feet expiring and available for lease to total renewed square feet, excluding the square feet of tenants that terminate by default or buy-out prior to the expiration of their lease.

Rental Revenues.  Represents rental and related revenues, tenant recoveries and income from direct financing leases.

Same Period Rent.  The base rent plus additional rent due to the Company over the most recent trailing twelve-month period as of period end.  The Company uses Same Period Rent for purposes of determining property-level Cash Flow Coverage.

Same Property Portfolio (“SPP”).  An important component of the Company’s evaluation of the operating performance of its properties.  The Company defines its same property portfolio each quarter as those properties that have been in operation throughout the current year and the prior year and that were also in operation at January 1st of the prior year.  Newly acquired assets, developments and redevelopments in process and assets classified in discontinued operations are excluded from the same property portfolio.  Same property statistics allow management to evaluate the NOI of its real estate portfolio as a consistent population from period to period and eliminates the effects of changes in the composition of the properties on performance measures.

Senior Housing.  ALFs, ILFs and CCRCs.  For reporting purposes, the Company’s senior housing portfolio also includes a school formerly operated as an assisted living facility and six health and wellness centers.

Specialty Hospitals.  Specialty hospitals are licensed as acute care hospitals but focus on providing care in specific areas such as cardiac, orthopedic and women’s conditions, or specific procedures such as surgery and are less likely to provide emergency services.

Square Feet Owned.  The square footage for properties owned by the Company or its consolidated joint ventures, and excludes square footage for development properties prior to completion.

Stabilization.  Assets are considered stabilized at the earlier of achieving 90% occupancy or one year from the completion of development or redevelopment

activities.

Total Book Capitalization.  Total Debt plus the carrying amount of minority interests plus the carrying amount of stockholders’ equity.

Total Debt.  Consolidated Debt at Book Value plus the Company’s pro rata share of debt from unconsolidated joint ventures.

The following table details the calculation of Total Debt:

In thousands

	September 30,		December 31,
	2008		2007
Bank lines of credit	$	—	$	951,700
Bridge loan	520,000		1,350,000
Senior unsecured notes	3,522,689		3,819,950
Mortgage debt	1,804,069		1,277,291
Mortgage debt on assets held for sale	978		3,470
Other debt	102,602		108,496
Consolidated debt	5,950,338		7,510,907
HCP’s share of unconsolidated debt(1)	347,701		340,506
Total debt	$	6,298,039	$	7,851,413

Total Gross Assets.  Consolidated Gross Assets plus the Company’s pro rata share of total assets from unconsolidated joint ventures, after adding back accumulated depreciation and amortization.

The following table details the calculation of Total Gross Assets:

In thousands

	September 30,			December 31,
	2008			2007
Consolidated total assets	$	12,031,404		$	12,521,772
Investments in and advances to unconsolidated joint ventures	(275,593		)	(248,894		)
Accumulated depreciation and amortization	940,355			722,917
Accumulated depreciation and amortization from assets held for sale	4,989			107,503
Consolidated gross assets	$	12,701,155		$	13,103,298
HCP’s share of unconsolidated total assets(1)	569,150			555,343
HCP’s share of unconsolidated accumulated depreciation and amortization(1)	41,889			17,593
Total gross assets	$	13,312,194		$	13,676,234

(1) Excludes unconsolidated joint ventures outside of the investment management business.
	46

Reporting Definitions

Total Market Capitalization.  Total Debt plus Consolidated Market Equity.

The following table details the calculation of Total Market Capitalization:

In thousands, except price data	September 30, 2008
	Shares/Units	Price		Value
Common stock	251,926	$	40.13	$	10,109,790
Convertible partnership units
2 for 1(1)	2,415	80.26		193,828
1 for 1(2)	3,218	40.13		129,138
				322,966
Preferred stock:
7.25% Series E	4,000	18.12		72,480
7.10% Series F	7,820	18.20		142,324
				214,804
Consolidated market equity				$	10,647,560
Consolidated debt				5,950,338
Consolidated market capitalization				$	16,597,898
HCP’s share of unconsolidated debt(3)				347,701
Total market capitalization				$	16,945,599

Total Secured Debt.  Consolidated secured debt plus the Company’s pro rata share of mortgage debt from unconsolidated joint ventures.

Total Undepreciated Book Capitalization.  Total Book Capitalization after adding back accumulated depreciation and amortization on the Company’s real estate assets and the Company’s pro rata share of accumulated depreciation and amortization on real estate assets in unconsolidated joint ventures.

The following table details the calculation of Total Undepreciated Book Capitalization at:

In thousands

	September 30,		December 31,
	2008		2007
Total debt	$	6,298,039	$	7,851,413
Total minority interests	248,241		339,271
Total stockholders’ equity	5,293,339		4,103,709
Total book capitalization	11,839,619		12,294,393
Accumulated depreciation and amortization	940,355		722,917
Accumulated depreciation and amortization from assets held for sale	4,989		107,503
HCP’s share of unconsolidated accumulated depreciation and amortization(3)	41,889		17,593
Total undepreciated book capitalization	$	12,826,852	$	13,142,406

Yield.  Yield is calculated as Net Operating Income, as adjusted, divided by total investment.  For acquisitions, initial yields are calculated as projected Net Operating Income, twelve months forward, as adjusted, as of the closing date divided by total acquisition cost.  The total acquisition cost basis includes the initial purchase price, the effects of adjusting assumed debt to market, lease intangible adjustments and all transaction costs.

(1)Each convertible partnership unit is exchangeable for an amount of cash approximating the then-current market value of two shares of the Company’s common stock at the time of conversion or, at the Company’s   election, two shares of the Company’s common stock.

(2)Each convertible partnership unit is exchangeable for an amount of cash approximating the then-current market value of one share of the Company’s common stock at the time of conversion or, at the Company’s   election, one share of the Company’s common stock.

(3)Excludes unconsolidated joint ventures outside of the investment management business.

47

Supplemental Financial Measures Disclosures

Adjusted Fixed Charge Coverage.  Adjusted EBITDA divided by Fixed Charges.  The Company uses Adjusted Fixed Charge Coverage, a non-GAAP financial measure, as a measure of liquidity. The Company believes Adjusted Fixed Charge Coverage provides investors, particularly fixed income investors, relevant and useful information because it measures the Company’s ability to meet its interest payments on outstanding debt and pay dividends to its preferred stockholders. The Company’s various debt agreements contain covenants that require the Company to maintain ratios similar to Adjusted Fixed Charge Coverage and credit rating agencies utilize similar ratios in evaluating and determining the credit rating on certain debt instruments of the Company.  However, since this ratio is derived from Adjusted EBITDA and Fixed Charges, its usefulness is limited by the same factors that limit the usefulness of Adjusted EBITDA and Fixed Charges.  Further, the Company’s computation of Adjusted Fixed Charge Coverage may not be comparable to similar fixed charge coverage ratios reported by other companies.

The following table details the calculation of Adjusted Fixed Charge Coverage:

In thousands

	Three months ended						Nine Months ended
	September 30,						September 30,
	2008			2007			2008			2007
Net income	$	125,417		$	322,148		$	408,124		$	538,720
Interest expense:
Continuing operations	83,249			103,707			265,054			254,434
Discontinued operations	15			202			166			1,931
Income taxes:
Continuing operations	866			(318		)	4,385			(860		)
Discontinued operations	2			369			92			1,891
Depreciation and amortization of real estate, in-place lease and other intangibles:
Continuing operations	77,659			70,418			233,920			184,132
Discontinued operations	47			3,886			5,832			17,748
Equity income from unconsolidated joint ventures	(1,227		)	(1,242		)	(3,736		)	(3,758		)
HCP’s share of EBITDA from Investment Management Business	10,760			10,246			32,430			26,882
Other joint venture adjustments	655			608			1,880			1,609
EBITDA	297,443			510,024			948,147			1,022,729
Minority interests’ share in earnings	5,803			6,018			17,055			17,992
Gains on sales of real estate and real estate interest	(27,416		)	(286,153		)	(227,810		)	(402,410		)
Adjusted EBITDA	$	275,830		$	229,889		$	737,392		$	638,311
Interest expense:
Continuing operations	$	83,249		$	103,707		$	265,054		$	254,434
Discontinued operations	15			202			166			1,931
HCP’s share of interest expense from Investment Management Business	5,217			5,136			15,540			13,570
Capitalized interest	5,579			3,851			22,479			4,024
Preferred stock dividends	5,282			5,282			15,848			15,848
Fixed charges	$	99,342		$	118,178		$	319,087		$	289,807
Adjusted fixed charge coverage	2.8 x			1.9 x			2.3 x			2.2 x

48

Supplemental Financial Measures Disclosures

EBITDA and Adjusted EBITDA.  The real estate industry uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP financial measure, as a measure of both operating performance and liquidity.  Adjusted EBITDA is calculated as EBITDA excluding minority interests’ share in earnings, impairments and gains or losses from real estate dispositions. The Company uses EBITDA and Adjusted EBITDA to measure both its operating performance and liquidity.  The Company considers Adjusted EBITDA to provide investors relevant and useful information because it permits investors to view income from its operations on an unleveraged basis before the effects of taxes, non-cash depreciation and amortization, impairments and gains or losses from real estate dispositions.  By excluding interest expense, Adjusted EBITDA allows investors to measure the Company’s operating performance independent of its capital structure and indebtedness and, therefore, allows for a more meaningful comparison of its operating performance between quarters as well as annual periods and to compare its operating performance to that of other companies, both in the real estate industry and in other industries.  The Company considers Adjusted EBITDA to be a useful supplemental measure for reviewing its comparative performance with other companies because, by excluding non-cash depreciation expense, Adjusted EBITDA can help the investing public compare the performance of a real estate company to that of companies in other industries. As a liquidity measure, the Company believes that EBITDA and Adjusted EBITDA help investors analyze the Company’s ability to meet its interest payments on outstanding debt and to make preferred dividend payments.  The Company’s various debt agreements contain covenants that require the Company to maintain ratios similar to Adjusted Fixed Charge Coverage and credit rating agencies utilize similar ratios in evaluating and determining the credit rating on certain debt instruments of the Company.  The Company believes investors should consider EBITDA and Adjusted EBITDA, in conjunction with net income (the primary measure of the Company’s performance) and the other required GAAP measures of its performance and liquidity, to improve their understanding of the Company’s operating results and liquidity, and to make more meaningful comparisons of its performance between periods and as against other companies.  By excluding interest, taxes, depreciation and amortization, impairments and gains or losses from real estate dispositions when assessing the Company’s financial performance, an investor is assessing the earnings generated by the Company’s operations, but not taking into account the eliminated expenses or gains or losses from real estate dispositions incurred in connection with such operations.  As a result, EBITDA and Adjusted EBITDA have limitations as analytical tools and should be used in conjunction with the Company’s required GAAP presentations.  EBITDA and Adjusted EBITDA do not reflect the Company’s historical cash expenditures or future cash requirements for capital expenditures or contractual commitments.  Also, EBITDA and Adjusted EBITDA do not reflect the cash required to make interest and principal payments on the Company’s outstanding debt.  While Adjusted EBITDA is a relevant and widely used measure of operating performance and liquidity, it does not represent net income or cash flow from operations as defined by GAAP and it should not be considered as an alternative to those indicators in evaluating operating performance or liquidity.  Further, the Company’s computation of EBITDA and Adjusted EBITDA may not be comparable to similar measures reported by other companies.

The following table reconciles Adjusted EBITDA from net cash provided by operating activities:

In thousands

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Net cash provided by operating activities	$	182,689		$	93,226		$	455,383		$	309,821
Changes in:
Accounts receivable	(1,909		)	(1,286		)	(14,881		)	2,626
Other assets	12,059			15,053			6,660			18,384
Accounts payable and accrued liabilities	(16,823		)	3,592			(10,776		)	3,128
Marketable securities losses (gains), net	36			—			(2,746		)	4,874
Derivative losses, net	557			—			(1,803		)	—
Impairments	(3,710		)	—			(13,425		)	—
Gains on sales of real estate and real estate interest	27,416			286,153			227,810			402,410
Minority interests’ share in earnings	(5,803		)	(6,018		)	(17,055		)	(17,992		)
Distributions of earnings from unconsolidated joint ventures	(1,663		)	(1,081		)	(3,736		)	(3,148		)
Equity income from unconsolidated joint ventures	1,227			1,242			3,736			3,758
Deferred rental revenue	(2,948		)	(5,266		)	(16,227		)	(8,937		)
Interest accretion	7,108			2,265			20,134			6,428
Straight-line rents	9,112			19,088			28,645			39,467
Recovery of loan losses	—			176			—			386
Amortization of debt issuance costs	(3,064		)	(9,631		)	(9,226		)	(15,274		)
Stock-based compensation	(3,152		)	(2,674		)	(10,637		)	(8,516		)
Amortization of below market lease intangibles, net	1,991			1,613			6,020			3,185
Depreciation and amortization of real estate, in-place lease and other intangibles:
Continuing operations	(77,659		)	(70,418		)	(233,920		)	(184,132		)
Discontinued operations	(47		)	(3,886		)	(5,832		)	(17,748		)
Net income	125,417			322,148			408,124			538,720
Interest expense:
Continuing operations	83,249			103,707			265,054			254,434
Discontinued operations	15			202			166			1,931
Income taxes:
Continuing operations	866			(318		)	4,385			(860		)
Discontinued operations	2			369			92			1,891
Depreciation and amortization of real estate, in-place lease and other intangibles:
Continuing operations	77,659			70,418			233,920			184,132
Discontinued operations	47			3,886			5,832			17,748
Equity income from unconsolidated joint ventures	(1,227		)	(1,242		)	(3,736		)	(3,758		)
HCP’s share of EBITDA from Investment Management Business	10,760			10,246			32,430			26,882
Other joint venture adjustments	655			608			1,880			1,609
EBITDA	297,443			510,024			948,147			1,022,729
Minority interests’ share in earnings	5,803			6,018			17,055			17,992
Gains on sales of real estate and real estate interest	(27,416		)	(286,153		)	(227,810		)	(402,410		)
Adjusted EBITDA	$	275,830		$	229,889		$	737,392		$	638,311

49

Supplemental Financial Measures Disclosures

Financial Leverage.Total Debt divided by Total Gross Assets. The Company believes that its Financial Leverage is a meaningful supplemental measure of its financial position, which enables both management and investors to analyze its leverage and to compare its leverage to that of other companies.  The Company believes that the ratio of consolidated debt to consolidated gross assets is the most directly comparable GAAP measure to Financial Leverage.  The Company’s computation of its Financial Leverage may not be identical to the computations of financial leverage reported by other companies.  The Company’s share of total debt is not intended to reflect its actual liability or ability to access assets should there be a default under any or all of such loans or a liquidation of the joint ventures.

Fixed Charges.  Total interest expense plus capitalized interest plus preferred stock dividends.  The Company uses Fixed Charges to measure its interest payments on outstanding debt and dividends to its preferred stockholders for purposes of presenting Fixed Charge Coverage and Adjusted Fixed Charge Coverage.  However, the usefulness of Fixed Charges is limited as, among other things, it does not include all contractual obligations.  The Company’s computation of Fixed Charges should not be considered an alternative to fixed charges as defined by Item 503(d) of Regulation S-K and may not be comparable to fixed charges reported by other companies.

Funds From Operations (“FFO”).  The Company believes that net income as defined by GAAP is the most appropriate earnings measure.  The Company also believes that Funds From Operations, or FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), FFO applicable to common shares, Diluted FFO applicable to common shares, and Basic and Diluted FFO per common share are important non-GAAP supplemental measures of operating performance for a real estate investment trust.  Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time.  However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a real estate investment trust that use historical cost accounting for depreciation could be less informative.  Thus, NAREIT created FFO as a supplemental measure of operating performance for real estate investment trusts that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined as net income, computed in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization, with adjustments to derive the Company’s pro rata share of FFO from consolidated and unconsolidated joint ventures.  Adjustments for joint ventures are calculated to reflect FFO on the same basis.  The Company believes that the use of FFO, combined with the required GAAP presentations, improves the understanding of operating results of real estate investment trusts among investors and makes comparisons of operating results among such companies more meaningful.  The Company considers FFO to be a useful measure for reviewing comparative operating and financial performance because, by excluding gains or losses related to sales of previously depreciated operating real estate assets and real estate depreciation and amortization, FFO can help investors compare the operating performance of a real estate investment trust between periods or as compared to other companies. While FFO is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. FFO also does not consider the costs associated with capital expenditures related to the Company’s real estate assets nor is FFO necessarily indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of FFO may not be comparable to FFO reported by other real estate investment trusts that

do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently from the Company. For a reconciliation of FFO to net income, please refer to the slide in this supplemental information package captioned “Consolidated Funds From Operations.”

FFO Payout Ratio per Common Share.  Dividends declared per common share divided by Diluted FFO per common share for a given period.  The Company believes the FFO Payout Ratio per Common Share provides investors relevant and useful information because it measures the portion of FFO being declared as dividends to common stockholders.  FFO Payout Ratio per Common Share is subject to the same limitations noted in the definition of FFO above.

Net Operating Income from Continuing Operations (“NOI”).  A non-GAAP supplemental financial measure used to evaluate the operating performance of real estate properties and SPP.  The Company defines NOI as rental revenues, including tenant reimbursements and income from direct financing leases, less property level operating expenses. NOI excludes gain on sale of real estate interest, depreciation and amortization, general and administrative expenses, impairments, interest expense and discontinued operations.  The Company believes NOI provides investors relevant and useful information because it measures the operating performance of the Company’s real estate at the property level on an unleveraged basis.  NOI, as adjusted, is calculated as NOI eliminating the effects of straight-line rents, amortization of above and below market lease intangibles, and lease termination fees. NOI, as adjusted, is sometimes referred as “adjusted NOI” or “cash basis NOI.”  The Company uses NOI and NOI, as adjusted, to make decisions about resource allocations, to assess and compare property level performance, and evaluate SPP.  The Company believes that net income is the most directly comparable GAAP measure to NOI.  NOI should not be viewed as an alternative measure of operating performance to net income as defined by GAAP since it does not reflect the aforementioned excluded items.  Further, NOI may not be comparable to that of other real estate investment trusts, as they may use different methodologies for calculating NOI.

The following table reconciles NOI from net income:

In thousands	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Net income	$	125,417		$	322,148		$	408,124		$	538,720
Investment management fee income	(1,523		)	(1,602		)	(4,448		)	(12,062		)
Depreciation and amortization	77,659			70,418			233,920			184,132
General and administrative	17,541			16,499			56,913			53,894
Impairments	3,710			—			13,425			—
Gain on sale of real estate interest	—			—			—			(10,141		)
Interest and other income, net	(62,312		)	(21,538		)	(128,378		)	(54,724		)
Interest expense	83,249			103,707			265,054			254,434
Income taxes	866			(318		)	4,385			(860		)
Equity income from unconsolidated joint ventures	(1,227		)	(1,242		)	(3,736		)	(3,758		)
Minority interests’ share in earnings	5,803			6,018			17,055			17,992
Total discontinued operations, net of taxes	(30,614		)	(302,027		)	(245,835		)	(449,107		)
Net operating income (“NOI”)	$	218,569		$	192,063		$	616,479		$	518,520

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Supplemental Financial Measures Disclosures

The information in this supplemental information package should be read in conjunction with the Company’s Annual Report on Form 10-K, as amended, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other information filed with the SEC.  The Reporting Definitions and Supplemental Financial Measures Disclosures are an integral part of the information presented herein.

On the Company’s internet website, www.hcpi.com, you can access, free of charge, its Annual Report on Form 10-K, as amended, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.  The information contained on its website is not incorporated by reference into, and should not be considered a part of, this supplemental information package.  In addition, the SEC maintains an internet website that contains reports, proxy and information statements, and other information regarding issuers, including HCP, that file electronically with the SEC at www.sec.gov.

For more information, contact Mark A. Wallace, Executive Vice President, Chief Financial Officer and Treasurer at (562) 733-5100.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this supplemental information which are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include among other things the Company’s estimate of (i) yields, (ii) completion dates, stabilization dates, rentable square feet and total investment for development projects in progress, and (iii) rentable square feet for land held for future development. These statements are made as of the date hereof and are subject to known and unknown risks, uncertainties, assumptions and other factors—many of which are out of the Company’s control and difficult to forecast—that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks and uncertainties include but are not limited to: the Company’s ability to access external sources of capital when desired and on reasonable terms; the Company’s ability to manage its indebtedness levels; the Company’s ability to maintain its credit ratings; the Company’s ability to achieve its expected benefits from acquisitions, including integrating and preserving the goodwill of those companies; competition for lessees and mortgagors (including new leases and mortgages and the renewal or rollover of existing leases); continuing reimbursement uncertainty in the skilled nursing segment; competition in the senior housing segment specifically and in the healthcare industry in general; the Company’s ability to acquire, sell or lease facilities and the timing of acquisitions, sales and leasings; the Company’s ability to realize the benefits of its mezzanine investments; changes in the financial condition of the Company’s lessees and obligors; changes in healthcare laws and regulations and other changes in the healthcare industry which affect the operations of the Company’s lessees or obligors; changes in the Company’s management; litigation claims and developments; costs of compliance with building regulations; changes in tax laws and regulations; changes in rules governing financial reporting, including new accounting pronouncements; changes in economic conditions, including changes in interest rates and the availability and cost of capital, which affect opportunities for profitable investments; and other risks described from time to time in the Company’s Securities and Exchange Commission filings.  The Company assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements as a result of new information or new or future developments, except as otherwise required by law.

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