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

August 2, 2011

Date of Report (Date of earliest event reported)

HCP, Inc.

(Exact name of registrant as specified in its charter)

Maryland	001-08895	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 August 2, 2011, HCP, Inc. (“HCP”) issued a press release setting forth its financial results for the three and six months ended June 30, 2011.  The press release refers 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 set forth in this Current Report on Form 8-K and the related information in the exhibits attached hereto are being furnished to, and shall not be deemed filed with, the Securities Exchange Commission (“SEC”) 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 (the “Securities Act”), or the Exchange Act, regardless of any general incorporation language in any filing, except as shall be expressly set forth by specific reference therein.

Item 9.01               Financial Statements and Exhibits.

(d)           Exhibits.  The following exhibits are being filed herewith:

No.	Description
99.1 *	Text of the Press Release dated August 2, 2011.
99.2 *	HCP, Inc. Supplemental Information Package dated June 30, 2011.

* Exhibits 99.1 and 99.2, respectively, are being furnished to, and shall not be deemed filed with, the SEC for purposes of Section 18 of 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 or the Exchange Act, regardless of any general incorporation language in any filing, except as shall be expressly set forth by specific reference therein.

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: August 2, 2011	By:	/s/ Timothy M. Schoen
		Timothy M. Schoen
		Executive Vice President - Chief Financial Officer

3

EXHIBIT INDEX

No.	Description
99.1 *	Text of the Press Release dated August 2, 2011.
99.2 *	HCP, Inc. Supplemental Information Package dated June 30, 2011.

* Exhibits 99.1 and 99.2, respectively, are being furnished to, and shall not be deemed filed with, the SEC for purposes of Section 18 of 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 or the Exchange Act, regardless of any general incorporation language in any filing, except as shall be expressly set forth by specific reference therein.

4

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

HCP ANNOUNCES RESULTS FOR QUARTER ENDED JUNE 30, 2011

HIGHLIGHTS

--Year-over-year diluted FFO per share increased 42% to $0.78; diluted FFO as adjusted per share increased 40% to $0.77; diluted FAD per share increased 32% to $0.62; and diluted earnings per share was $0.55

--Year-over-year three- and six-month adjusted NOI Same Property Performance increased 2.6% and 4.7%, respectively

--Completed $6.1 billion acquisition of HCR ManorCare’s real estate assets

--Received $330.4 million from the early payoff of our Genesis debt investments, realizing a 40% annualized internal rate of return

--Announced a strategic venture with Brookdale Senior Living

--Other acquisitions and capital investments of $97 million

--Raised full-year 2011 adjusted NOI Same Property Performance guidance to a range of 3.0% to 4.0%

LONG BEACH, CA, August 2, 2011 – HCP (the “Company” or “we”) (NYSE:HCP) announced results for the quarter ended June 30, 2011 as follows (in thousands, except per share amounts):

	Three Months Ended June 30, 2011						Three Months Ended June 30, 2010				Per Share
	Amount			Per Share			Amount		Per Share		Change
FFO	$	317,911		$	0.78		$	161,875	$	0.55	$	0.23
Merger-related items	(5,712		)(1)	(0.01		)(2)	—		—		(0.01		)
FFO as adjusted	$	312,199		$	0.77		$	161,875	$	0.55	$	0.22
FAD	$	251,875		$	0.62		$	138,074	$	0.47	$	0.15
Net income applicable to common shares	$	222,993		$	0.55		$	79,465	$	0.27	$	0.28

(1)The net impact of $5.7 million of merger-related items attributable to the HCR ManorCare Acquisition (incurred from the 1st through the 6th of April 2011) include the following: (i) $20.7 million of income related to gains upon the reinvestment of the Company’s debt investment in HCR ManorCare and other miscellaneous items, that were partially offset by (ii) $13.0 million of direct transaction costs and (iii) $2.0 million of interest expense associated with the $2.4 billion senior unsecured notes issued on January 24, 2011, which proceeds of such offering were obtained to prefund the HCR ManorCare Acquisition.

(2)$0.01 per share of merger-related items attributable to the HCR ManorCare Acquisition include the following (incurred from the 1st through the 6th of April 2011):

(i) $0.05 per share of income related to gains upon the reinvestment of the Company’s debt investment in HCR ManorCare and other miscellaneous items that are discussed in footnote 1(i);

(ii) ($0.03) per share of direct transaction costs that is discussed in footnote 1(ii); and

(iii) ($0.01) per share of negative carry related to prefunding activities consisting of: (a) 76 million shares from our December 2010 and March 2011 common stock offerings (excludes 4.5 million shares in March 2011 related to the underwriters’ overallotment option), which issuances increased our weighted average shares by five million shares for the quarter ended June 30, 2011; and (b) the interest expense related to the $2.4 billion senior notes offering that is discussed in footnote 1(iii). Proceeds from these offerings were used to prefund a portion of the cash consideration for the HCR ManorCare Acquisition.

In addition to the merger-related items discussed above, operating results for the quarter ended June 30, 2011, include the positive impact of $0.10 per share for the following: (i) interest income of $0.09 per share or $34.8 million from the early payoff of our Genesis debt investments; and (ii) other income of $0.01 per share or $5.7 million received in connection with a litigation settlement that represents proceeds owed to the Company from a prior sale of assets.

Page 1 of 10

FFO, FFO as adjusted and FAD are supplemental non-GAAP financial measures that the Company believes are helpful in evaluating the operating performance of real estate investment trusts. See the “Funds From Operations” section of this release for additional information regarding FFO and FFO as adjusted and the “Funds Available for Distribution” section for additional information regarding FAD.

HCR MANORCARE ACQUISITION

On April 7, 2011, we completed our acquisition of substantially all of the real estate assets of privately-owned HCR ManorCare, Inc., for a purchase price of $6.1 billion. We acquired 334 post-acute, skilled nursing and assisted living facilities located in 30 states, with the highest concentrations in Ohio, Pennsylvania, Florida, Illinois and Michigan. A wholly-owned subsidiary of HCR ManorCare will continue to operate the facilities pursuant to a long-term, triple-net master lease agreement supported by a guaranty from HCR ManorCare. Additionally, we exercised our option to purchase an interest in the operations of HCR ManorCare for $95 million that represented a 9.9% equity interest at closing.

GENESIS DEBT INVESTMENT EARLY PAYOFF

On April 1, 2011, we received $330.4 million from the early repayment of our debt investments in Genesis HealthCare (“Genesis”). In conjunction with this early repayment, we recognized additional interest income of $34.8 million, which represents the unamortized discount and termination fee. These debt investments were acquired in September and October 2010 for $290 million. We realized a 40% annualized internal rate of return on these investments.

STRATEGIC VENTURE WITH BROOKDALE SENIOR LIVING

During the quarter ended June 30, 2011, we entered into definitive agreements to form a strategic venture with Brookdale Senior Living, Inc. (“Brookdale”) that includes the operation of 37 HCP-owned senior living communities previously leased to or operated by Horizon Bay Retirement Living (“Horizon Bay”). As part of this transaction, Brookdale will acquire Horizon Bay and: (i) assume an existing triple-net lease for nine communities, (ii) enter into a new triple-net lease related to four communities, (iii) assume Horizon Bay’s management of three communities, one of which was recently developed by HCP, and (iv) enter into management contracts and a joint venture agreement for a 10% interest in the real estate and operations of 21 senior living communities in a RIDEA structure.

We expect the transaction to close on September 1, 2011, although there can be no assurance that the transaction will close or, if it does, when the closing will occur. Upon the closing, Brookdale will operate 61 of our senior living communities.

OTHER INVESTMENT TRANSACTIONS

During the quarter ended June 30, 2011, we made investments of $97 million as follows: (i) acquired the 20-acre parcel of land situated at the gateway of South San Francisco for $65 million; and (ii) funded construction and other capital projects of $32 million, primarily in our life science and medical office segments.

DIVIDEND

On July 28, 2011, we announced that our Board of Directors declared a quarterly cash dividend of $0.48 per common share. The dividend will be paid on August 23, 2011 to stockholders of record as of the close of business on August 8, 2011.

OUTLOOK

For the full year 2011, we expect FFO applicable to common shares to range between $2.48 and $2.54 per share; FFO as adjusted applicable to common shares to range between $2.63 and $2.69 per share; FAD applicable to common shares to range between $2.09 and $2.15 per share; and net income applicable to common shares to range between $1.59 and $1.65 per share.

Estimates of FFO and net income applicable to common shares include the impact of the HCR ManorCare Acquisition that closed on April 7, 2011 and the corresponding merger-related items. FFO as adjusted and FAD applicable to common shares exclude the impact of merger-related items, which are as follows: (i) direct transaction costs; (ii) negative carrying costs related to prefunding the HCR ManorCare Acquisition, which were partially offset by (iii) gains upon the reinvestment of our HCR ManorCare debt investments and other miscellaneous items. See the “Projected Future Operations” section of this report for additional information regarding the above estimates.

Page 2 of 10

COMPANY INFORMATION

HCP has scheduled a conference call and webcast for Tuesday, August 2, 2011 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 June 30, 2011. The conference call is accessible by dialing (866) 362-4820 (U.S.) or (617) 597-5345 (International). The participant passcode is 87362449. The webcast is accessible via the Company’s website at www.hcpi.com. This link can be found on the “Event Calendar” page, which is under the “Investor Relations” tab. Through August 16, 2011, an archive of the webcast will be available on our website and a telephonic replay can be accessed by calling (888) 286-8010 (U.S.) or (617) 801-6888 (International) and entering passcode 25455770. 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 invests primarily in real estate serving the healthcare industry in the United States. HCP has been a publicly traded NYSE listed company since 1985 (NYSE:HCP). HCP’s portfolio of properties is distributed among distinct sectors of the healthcare industry, including senior housing, post-acute/skilled nursing, life science, medical office and hospital. 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 as adjusted applicable to common shares on a diluted basis, and FAD applicable to common shares on a diluted basis for the full-year of 2011. 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: national and local economic conditions; continued volatility in the capital markets, including changes in interest rates and the availability and cost of capital, which changes and volatility affect opportunities for profitable investment; 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; changes in the terms of the Company’s indebtedness; the Company’s ability to maintain its credit ratings; the potential impact of existing and future litigation matters, including the possibility of larger than expected litigation costs and related developments; the Company’s ability to successfully integrate the operations of acquired companies; competition for lessees and mortgagors (including new leases and mortgages and the renewal or rollover of existing leases); the Company’s ability to reposition its properties on the same or better terms if existing leases are not renewed or the Company exercises its right to replace an existing operator or tenant upon default; continuing reimbursement uncertainty in the post-acute/skilled nursing segment; competition in the senior housing segment specifically and in the healthcare industry in general; the ability of the Company’s operators and tenants from its senior housing segment to maintain or increase their occupancy levels and revenues; the ability of the Company’s lessees and mortgagors to maintain the financial strength and liquidity necessary to satisfy their respective obligations to the Company and other third parties; the bankruptcy, insolvency or financial deterioration of the Company’s operators, lessees, borrowers or other obligors; changes in healthcare laws and regulations, including the impact of future or pending healthcare reform, and other changes in the healthcare industry which affect the operations of the Company’s lessees or obligors; the Company’s ability to recruit and retain key management personnel; costs of compliance with regulations and environmental laws affecting the Company’s properties; changes in tax laws and regulations; changes in the financial position or business strategies of HCR ManorCare; the Company’s ability and willingness to maintain its qualification as a REIT; changes in rules governing financial reporting, including new accounting pronouncements; 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

Timothy M. Schoen

Executive Vice President and Chief Financial Officer

(562) 733-5309

Page 3 of 10

HCP, Inc.

Consolidated Balance Sheets

In thousands, except share and per share data

(Unaudited)

	June 30,			December 31,
	2011			2010
Assets
Real estate:
Buildings and improvements	$	8,986,880		$	8,209,806
Development costs and construction in progress	156,198			144,116
Land	1,731,589			1,573,984
Accumulated depreciation and amortization	(1,392,002		)	(1,251,142		)
Net real estate	9,482,665			8,676,764
Net investment in direct financing leases	6,649,852			609,661
Loans receivable, net	110,980			2,002,866
Investments in and advances to unconsolidated joint ventures	224,625			195,847
Accounts receivable, net of allowance of $1,190 and $5,150, respectively	24,273			34,504
Cash and cash equivalents	276,205			1,036,701
Restricted cash	44,170			36,319
Intangible assets, net	400,438			316,375
Other assets, net	479,850			422,886
Total assets	$	17,693,058		$	13,331,923
Liabilities and equity
Bank line of credit	$	—		$	—
Senior unsecured notes	5,706,998			3,318,379
Mortgage debt	1,780,665			1,235,779
Other debt	89,466			92,187
Intangible liabilities, net	137,848			148,072
Accounts payable and accrued liabilities	589,818			313,806
Deferred revenues	66,995			77,653
Total liabilities	8,371,790			5,185,876
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 407,120,455 and 370,924,887 shares issued and outstanding, respectively	407,120			370,925
Additional paid-in capital	9,328,607			8,089,982
Cumulative dividends in excess of earnings	(861,539		)	(775,476		)
Accumulated other comprehensive loss	(13,833		)	(13,237		)
Total stockholders’ equity	9,145,528			7,957,367
Joint venture partners	4,715			14,935
Non-managing member unitholders	171,025			173,745
Total noncontrolling interests	175,740			188,680
Total equity	9,321,268			8,146,047
Total liabilities and equity	$	17,693,058		$	13,331,923

Page 4 of 10

HCP, Inc.

Consolidated Statements of Income

In thousands, except per share data

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Revenues:
Rental and related revenues	$	261,573		$	230,368		$	517,736		$	454,638
Tenant recoveries	22,441			22,068			45,885			43,829
Income from direct financing leases	143,662			11,995			157,057			24,210
Interest income	60,526			36,156			98,622			71,422
Investment management fee income	504			1,290			1,111			2,598
Total revenues	488,706			301,877			820,411			596,697
Costs and expenses:
Depreciation and amortization	90,052			77,700			181,472			155,634
Interest expense	105,129			72,745			213,705			148,697
Operating	46,621			45,416			93,467			91,503
General and administrative	34,872			20,525			56,824			45,449
Impairment recoveries	—			—			—			(11,900		)
Total costs and expenses	276,674			216,386			545,468			429,383
Other income, net	7,518			181			17,830			494
Income before income taxes and equity income from investments in unconsolidated joint ventures	219,550			85,672			292,773			167,808
Income taxes	(248		)	(571		)	(285		)	(943		)
Equity income from unconsolidated joint ventures	14,950			2,486			15,748			3,869
Income from continuing operations	234,252			87,587			308,236			170,734
Discontinued operations:
Income before gain on sales of real estate, net of income taxes	—			943			—			1,897
Gain on sales of real estate, net of income taxes	—			65			—			65
Total discontinued operations	—			1,008			—			1,962
Net income	234,252			88,595			308,236			172,696
Noncontrolling interests’ share in earnings	(5,493		)	(3,494		)	(9,384		)	(6,559		)
Net income attributable to HCP, Inc.	228,759			85,101			298,852			166,137
Preferred stock dividends	(5,283		)	(5,283		)	(10,566		)	(10,566		)
Participating securities’ share in earnings	(483		)	(353		)	(1,347		)	(1,270		)
Net income applicable to common shares	$	222,993		$	79,465		$	286,939		$	154,301
Basic earnings per common share:
Continuing operations	$	0.55		$	0.27		$	0.74		$	0.52
Discontinued operations	—			—			—			—
Net income applicable to common shares	$	0.55		$	0.27		$	0.74		$	0.52
Diluted earnings per common share:
Continuing operations	$	0.55		$	0.27		$	0.73		$	0.52
Discontinued operations	—			—			—			—
Net income applicable to common shares	$	0.55		$	0.27		$	0.73		$	0.52
Weighted average shares used to calculate earnings per common share:
Basic	406,193			294,880			389,249			294,056
Diluted	411,710			296,037			391,100			295,067

Page 5 of 10

HCP, Inc.

Consolidated Statements of Cash Flows

In thousands

(Unaudited)

	Six Months Ended June 30,
	2011			2010
Cash flows from operating activities:
Net income	$	308,236		$	172,696
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	181,472			155,634
Discontinued operations	—			1,249
Amortization of above and below market lease intangibles, net	(2,093		)	(3,708		)
Stock-based compensation	10,205			7,688
Amortization of debt premiums, discounts and issuance costs, net	18,402			5,304
Straight-line rents	(32,912		)	(21,695		)
Interest accretion	(41,858		)	(30,742		)
Deferred rental revenues	(1,077		)	(2,022		)
Equity income from unconsolidated joint ventures	(15,748		)	(3,869		)
Distributions of earnings from unconsolidated joint ventures	1,569			3,648
Gain upon consolidation of joint venture	(7,769		)	(65		)
Marketable securities gains, net	—			(35		)
Gain upon settlement of loans receivable	(22,812		)	—
Derivative (gains) losses, net	(3,308		)	723
Impairment recoveries	—			(11,900		)
Changes in:
Accounts receivable, net	8,822			4,456
Other assets	(4,010		)	1,375
Accounts payable and accrued liabilities	35,696			(2,640		)
Net cash provided by operating activities	432,815			276,097
Cash flows from investing activities:
Cash used in the HCR ManorCare Acquisition, net of cash acquired	(3,801,624		)	—
Cash used in the HCP Ventures II purchase, net of cash acquired	(135,550		)	—
Other acquisitions and development of real estate	(148,032		)	(157,176		)
Leasing costs and tenant and capital improvements	(20,940		)	(16,545		)
Purchase of an interest in and contributions to unconsolidated joint ventures	(95,000		)	(264		)
Distributions in excess of earnings from unconsolidated joint ventures	1,558			1,723
Proceeds from the sale of securities	—			242
Principal repayments on loans receivable	303,720			25,586
Investments in loans receivable	(360,932		)	(8,081		)
Increase in restricted cash	(7,851		)	(6,817		)
Net cash used in investing activities	(4,264,651		)	(161,332		)
Cash flows from financing activities:
Repayment of term loan	—			(200,000		)
Repayments of mortgage debt	(141,684		)	(87,720		)
Issuance of senior unsecured notes	2,400,000			—
Debt issuance costs	(42,852		)	—
Net proceeds from the issuance of common stock and exercise of options	1,281,575			440,589
Dividends paid on common and preferred stock	(384,915		)	(284,753		)
Sale (purchase) of noncontrolling interests	(33,618		)	8,395
Distributions to noncontrolling interests	(7,166		)	(7,275		)
Net cash provided by (used in) financing activities	3,071,340			(130,764		)
Net decrease in cash and cash equivalents	(760,496		)	(15,999		)
Cash and cash equivalents, beginning of period	1,036,701			112,259
Cash and cash equivalents, end of period	$	276,205		$	96,260

Page 6 of 10

HCP, Inc.

Funds From Operations (1)

In thousands, except per share data

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Net income applicable to common shares	$	222,993		$	79,465		$	286,939		$	154,301
Depreciation and amortization of real estate, in-place lease and other intangibles:
Continuing operations	90,052			77,700			181,472			155,634
Discontinued operations	—			212			—			1,249
Direct financing lease (“DFL”) depreciation	2,633			—			3,005			—
Gain on sales of real estate	—			(65		)	—			(65		)
Gain upon consolidation of joint venture	270			—			(7,769		)	—
Equity income from unconsolidated joint ventures	(14,950		)	(2,486		)	(15,748		)	(3,869		)
FFO from unconsolidated joint ventures	17,519			7,636			20,834			14,496
Noncontrolling interests’ and participating securities’ share in earnings	5,976			3,847			10,731			7,829
Noncontrolling interests’ and participating securities’ share in FFO	(6,582		)	(4,434		)	(11,806		)	(9,023		)
FFO applicable to common shares	$	317,911		$	161,875		$	467,658		$	320,552
Distributions on dilutive convertible units	2,964			1,637			6,018			3,244
Diluted FFO applicable to common shares	$	320,875		$	163,512		$	473,676		$	323,796
Diluted FFO per common share	$	0.78		$	0.55		$	1.19		$	1.08
Weighted average shares used to calculate diluted FFO per share	413,996			299,474			397,060			298,525
Impact of adjustments to FFO:
Impairment recoveries	$	—		$	—		$	—		$	(11,900	)
Merger-related items	(5,712		)	—			26,596		(2)	—
	$	(5,712	)	$	—		$	26,596		$	(11,900	)
FFO as adjusted applicable to common shares	$	312,199		$	161,875		$	494,254		$	308,652
Distributions on dilutive convertible units and other	2,975			1,637			5,915			3,285
Diluted FFO as adjusted applicable to common shares	$	315,174		$	163,512		$	500,169		$	311,937
Per common share impact of adjustments on diluted FFO	$	(0.01	)	$	—		$	0.16	(3)	$	(0.04	)
Diluted FFO as adjusted per common share	$	0.77		$	0.55		$	1.35		$	1.04
Weighted average shares used to calculate diluted FFO as adjusted per share	408,985			299,474			371,004		(3)	298,525

(1)The Company believes FFO 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 utilizes 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 applicable to common shares (computed in accordance with U.S. generally accepted accounting principles or “GAAP”), excluding gains or losses from real estate dispositions and upon changes in control of joint ventures, plus real estate and DFL 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 GAAP, 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.

FFO as adjusted represents FFO before the impact of impairments, impairment recoveries and merger-related items (defined below). Management believes FFO as adjusted is a useful alternative measurement. This measure is a modification of the NAREIT definition of FFO and should not be used as an alternative to net income.

(2)$26.6 million of merger-related items attributable to the HCR ManorCare Acquisition (incurred from January 1st through April 6th 2011) include the following: (i) $26.8 million of direct transaction costs, (ii) $23.9 million of interest expense associated with the $2.4 billion senior notes issued on January 24, 2011, which proceeds of such offering were obtained to prefund the HCR ManorCare Acquisition, which increases were partially offset by (iii) $24.1 million of income related to gains upon the reinvestment of the Company’s debt investment in HCR ManorCare and other miscellaneous items.

(3)$0.16 per share of merger-related items attributable to the HCR ManorCare Acquisition include the following:

(i)$0.07 per share of direct transaction costs that are discussed in footnote 2(i);

(ii)($0.07) per share of income related to gains upon the reinvestment of the Company’s debt investment in HCR ManorCare debt and other miscellaneous items that is discussed in footnote 2(iii); and

(iii)$0.16 per share of negative carry related to prefunding activities consisting of: (a) 76 million shares from our December 2010 and March 2011 common stock offerings (excludes 4.5 million shares in March 2011 related to the underwriters’ overallotment option), which issuances increased our weighted average shares by 26 million shares for the six months ended June 30, 2011; and  (b)  $0.07 per share for the interest expense related to the $2.4 billion senior notes discussed in footnote 2(ii). Proceeds from these offerings were used to prefund a portion of the cash consideration for the HCR ManorCare Acquisition.

Page 7 of 10

HCP, Inc.

Funds Available for Distribution (1)

In thousands, except per share data

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
FFO as adjusted applicable to common shares	$	312,199		$	161,875		$	494,254		$	308,652
Amortization of above and below market lease intangibles, net	(1,187		)	(1,804		)	(2,093		)	(3,708		)
Stock-based compensation	5,103			4,182			10,205			7,688
Amortization of debt premiums, discounts and issuance costs, net (2)	3,391			1,836			6,349			5,304
Straight-line rents	(15,612		)	(8,419		)	(32,912		)	(21,695		)
DFL interest accretion (3)	(22,262		)	(2,569		)	(24,937		)	(5,408		)
DFL depreciation	(2,633		)	—			(3,005		)	—
Deferred revenues – tenant improvement related	(767		)	(929		)	(1,643		)	(1,857		)
Deferred revenues – additional rents (SAB 104)	(1,416		)	(1,668		)	566			(165		)
Leasing costs and tenant and capital improvements	(11,447		)	(11,925		)	(20,940		)	(16,545		)
Joint venture and other FAD adjustments (3)	(13,494		)	(2,505		)	(14,347		)	(4,543		)
FAD applicable to common shares	$	251,875		$	138,074		$	411,497		$	267,723
Distributions on dilutive convertible units	2,964			1,637			2,616			—
Diluted FAD applicable to common shares	$	254,839		$	139,711		$	414,113		$	267,723
Diluted FAD per common share	$	0.62		$	0.47		$	1.12		$	0.91
Weighted average shares used to calculate diluted FAD per common share	408,985			299,474			368,704			295,067

(1)Funds Available for Distribution is defined as FFO as adjusted after excluding the impact of the following: (i) straight-line rents; (ii) amortization of acquired above/below market lease intangibles; (iii) amortization of debt premiums, discounts and issuance costs; (iv) amortization of stock–based compensation expense; (v) accretion and depreciation related to direct financing leases; and (vi) deferred revenues. Further, FAD is computed after deducting recurring capital expenditures, including leasing costs and second generation tenant and capital improvements and includes similar adjustments to compute the Company’s share of FAD from its unconsolidated joint ventures. Other REITs or real estate companies may use different methodologies for calculating FAD, and accordingly, HCP’s FAD may not be comparable to those reported by other REITs. Although HCP’s FAD computation may not be comparable to that of other REITs, management believes FAD provides a meaningful supplemental measure of the Company’s ability to fund its ongoing dividend payments. In addition, management believes that in order to further understand and analyze the Company’s liquidity, FAD should be compared with cash flows as determined in accordance with GAAP and presented in its consolidated financial statements. FAD does not represent cash generated from operating activities determined in accordance with GAAP, and FAD should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of the Company’s performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of the Company’s liquidity.

(2)Excludes $0.1 million related to the amortization of deferred issuance costs of the $2.4 billion senior notes issued in January 2011, which costs are included in merger-related items for the three months ended June 30, 2011. Excludes $11.3 million related to the write-off of unamortized loan fees for the Company’s bridge loan commitment and $0.8 million related to the amortization of deferred issuance costs of the senior notes discussed above, which costs are included in merger-related items for the six months ended June 30, 2011.

(3)For both the three and six months ended June 30, 2011, DFL interest accretion includes an reduction of $13.3 million, and Joint venture and other FAD adjustments include a contribution of $14.5 million, as a result of HCP’s equity interest in the operations of HCR ManorCare, Inc. (“HCR ManorCare OpCo”). The Company’s joint venture interest in HCR ManorCare OpCo is accounted for using the equity method and results in an ongoing reduction of DFL income, proportional to HCP’s ownership in HCR ManorCare OpCo. Further, the Company’s share of earnings from HCR ManorCare OpCo (equity income) increases for the corresponding reduction of related lease expense recognized at the HCR ManorCare OpCo level.

Page 8 of 10

HCP, Inc.

Net Operating Income and Same Property Performance (1) (2)

Dollars in thousands

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Net income	$	234,252		$	88,595		$	308,236		$	172,696
Interest income	(60,526		)	(36,156		)	(98,622		)	(71,422		)
Investment management fee income	(504		)	(1,290		)	(1,111		)	(2,598		)
Depreciation and amortization	90,052			77,700			181,472			155,634
Interest expense	105,129			72,745			213,705			148,697
General and administrative	34,872			20,525			56,824			45,449
Impairment recoveries	—			—			—			(11,900		)
Other income, net	(7,518		)	(181		)	(17,830		)	(494		)
Income taxes	248			571			285			943
Equity income from unconsolidated joint ventures	(14,950		)	(2,486		)	(15,748		)	(3,869		)
Total discontinued operations, net of income taxes	—			(1,008		)	—			(1,962		)
NOI(1)	$	381,055		$	219,015		$	627,211		$	431,174
Straight-line rents	(15,612		)	(8,419		)	(32,912		)	(21,695		)
DFL interest accretion	(22,262		)	(2,569		)	(24,937		)	(5,408		)
Amortization of above and below market lease intangibles, net	(1,187		)	(1,804		)	(2,093		)	(3,708		)
Lease termination fees	(1,589		)	(1,589		)	(3,178		)	(3,573		)
NOI adjustments related to discontinued operations	—			10			—			21
Adjusted NOI(1)	$	340,405		$	204,644		$	564,091		$	396,811
Non-SPP adjusted NOI (1) (2)	(129,459		)	858			(147,075		)	1,644
Same property portfolio adjusted NOI(1) (2)	$	210,946		$	205,502		$	417,016		$	398,455
Adjusted NOI % change – SPP	2.6%						4.7%

(1)The Company believes Net Operating Income from Continuing Operations (“NOI”) provides investors relevant and useful information because it measures the operating performance of the Company’s leased properties (i.e., real estate and DFLs) at the property level on an unleveraged basis. NOI is used to evaluate the operating performance of leased properties and SPP. 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.

NOI is defined as rental revenues, including tenant reimbursements and income from direct financing leases, less property level operating expenses. NOI excludes interest income, investment management fee income, depreciation and amortization, interest expense, general and administrative expenses, impairments, impairment recoveries, other income, net, income tax expenses, equity income from unconsolidated joint ventures and discontinued operations. NOI, as adjusted, is calculated as NOI eliminating the effects of straight-line rents, DFL interest accretion, amortization of above and below market lease intangibles, and lease termination fees. NOI, as adjusted, is sometimes referred to as “adjusted NOI” or “cash basis NOI.”

(2)Same property statistics allow management to evaluate the performance of the Company’s leased property portfolio under a consistent population, which eliminates the changes in the composition of our portfolio of properties. The Company identifies its SPP as stabilized properties that are, and remained, in operations for the duration of the year-over-year comparison periods presented. Accordingly, it takes a stabilized property a minimum of 12 months in operations to be included in the Company’s same property portfolio. SPP NOI excludes certain non-property specific operating expenses that are allocated to each operating segment on a consolidated basis.

Page 9 of 10

HCP, Inc.

Projected Future Operations (1)

(Unaudited)

	2011
	Low		High
Diluted earnings per common share	$  1.59		$  1.65
Real estate depreciation and amortization	0.87		0.87
DFL depreciation	0.02		0.02
Gain upon consolidation of joint venture	(0.02	)	(0.02	)
Joint venture FFO adjustments	0.02		0.02
Diluted FFO per common share	$  2.48		$  2.54
Merger-related items (2)	0.15		0.15
Diluted FFO as adjusted per common share	$  2.63		$  2.69
Amortization of above and below market lease intangibles, net	(0.01	)	(0.01	)
Stock-based compensation	0.05		0.05
Amortization of debt premiums, discounts and issuance costs, net	0.04		0.04
Straight-line rents	(0.15	)	(0.15	)
DFL interest accretion (3)	(0.19	)	(0.19	)
DFL depreciation	(0.02	)	(0.02	)
Deferred revenues	(0.01	)	(0.01	)
Leasing costs and tenant and capital improvements	(0.14	)	(0.14	)
Joint venture FAD adjustments (3)	(0.11	)	(0.11	)
Diluted FAD per common share	$  2.09		$  2.15

(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 items, property dispositions and the earnings impact of the events referenced in this release. Except as otherwise noted, these estimates do not reflect the potential impact of future acquisitions, impairments, impairment recoveries, the future bankruptcy or insolvency of the Company’s operators, lessees, borrowers or other obligors, the effect of any future restructuring of the Company’s contractual relationships with such entities, ineffectiveness related to our cash flow hedges, offerings of debt or existing and future litigation matters including the possibility of larger than expected litigation costs and related developments. 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. Except as otherwise required by law, management assumes no, and hereby disclaims any, obligation to update any of the foregoing projections as a result of new information or new or future developments.

(2)  Merger-related items of $0.15 per share related to the HCR ManorCare Acquisition include the following:

(i)  $0.07 per share of direct transaction costs, including professional fees and amortization of costs associated with the bridge loan commitment;

(ii) $0.14 per share of negative carry related to prefunding the transaction, which includes the impact of: (a) 76 million shares from our December 2010 and March 2011 common stock offerings (excludes 4.5 million shares in March 2011 related to the underwriters’ overallotment option) on the calculation of weighted average shares and (b) the additional interest expense and amortization of fees associated with the $2.4 billion senior notes offering completed on January 24, 2011. Proceeds from these offerings were used to fund the cash consideration of the HCR ManorCare Acquisition; which are partially offset by

(iii) ($0.06) per share of income related to gains upon the reinvestment of the Company’s debt investment in HCR ManorCare and other miscellaneous items.

(3)The Company’s joint venture interest in HCR ManorCare OpCo is accounted for using the equity method and results in an ongoing reduction of DFL income, proportional to HCP’s ownership in HCR ManorCare OpCo. Further, the Company’s share of earnings from HCR ManorCare OpCo (equity income) increases for the corresponding reduction of related lease expense recognized at the HCR ManorCare OpCo level. The increase in the Company’s equity income resulting from the decrease of HCR ManorCare OpCo lease expense represents additional non-cash income that is presented as a negative joint venture FAD adjustment.

Page 10 of 10

EX-99.2

Exhibit 99.2

Supplemental Information

June 30, 2011

(Unaudited)

South San Francisco, CA	Sarasota, FL
Tiverton, RI	Elk Grove, CA

Table of Contents

Company Information	1
Summary	2
Funds From Operations and Funds Available for Distribution	3
Capitalization	4
Indebtedness and Ratios	5
Investments and Dispositions	6
Development	7
Owned Portfolio
Portfolio summary	8
Portfolio concentrations	9
Same property leased portfolio	10
Lease expirations and debt investment maturities	11
Owned Senior Housing Portfolio
Investments and operator concentration	12
Trends	13
Owned Post-Acute/Skilled Nursing Portfolio
Investments and operator concentration	14
Trends and HCR ManorCare information	15
Owned Life Science Portfolio
Investments, tenant concentration and trends	16
Selected lease expirations and leasing activity	17
Owned Medical Office Portfolio
Investments and trends	18
Leasing activity	19
Owned Hospital Portfolio
Investments and operator concentration	20
Trends	21
Investment Management Platform
Summary and balance sheets	22
Statements of operations and funds from operations	23
Net operating income	24
Portfolio summary	25
Reporting Definitions and Reconciliations of Non-GAAP Measures	26-30

“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) completion dates, stabilization dates, rentable square feet and total investment for development projects in progress, and (ii) rentable square feet for land held for 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: national and local economic conditions; continued volatility in the capital markets, including changes in interest rates and the availability and cost of capital, which changes and volatility affect opportunities for profitable investment; 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; changes in the terms of the Company’s indebtedness; the Company’s ability to maintain its credit ratings; the potential impact of existing and future litigation matters, including the possibility of larger than expected litigation costs and related developments; the Company’s ability to successfully integrate the operations of acquired companies; competition for lessees and mortgagors (including new leases and mortgages and the renewal or rollover of existing leases); the Company’s ability to reposition its properties on the same or better terms if existing leases are not renewed or the Company exercises its right to replace an existing operator or tenant upon default; continuing reimbursement uncertainty in the post-acute/skilled nursing segment; competition in the senior housing segment specifically and in the healthcare industry in general; the ability of the Company’s operators and tenants from its senior housing segment to maintain or increase their occupancy levels and revenues; the ability of the Company’s lessees and mortgagors to maintain the financial strength and liquidity necessary to satisfy their respective obligations to the Company and other third parties; the bankruptcy, insolvency or financial deterioration of the Company’s operators, lessees, borrowers or other obligors; changes in healthcare laws and regulations, including the impact of future or pending healthcare reform, and other changes in the healthcare industry which affect the operations of the Company’s lessees or obligors; the Company’s ability to recruit and retain key management personnel; costs of compliance with regulations and environmental laws affecting the Company’s properties; changes in tax laws and regulations; changes in the financial position or business strategies of HCR ManorCare; the Company’s ability and willingness to maintain its qualification as a REIT; changes in rules governing financial reporting, including new accounting pronouncements; 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.

Company Information(1)

Board of Directors
James F. Flaherty III	Michael D. McKee
Chairman and Chief Executive Officer	Chief Executive Officer
HCP, Inc.	Bentall Kennedy U.S., L.P.
Christine N. Garvey	Peter L. Rhein
Former Global Head of Corporate	Partner, Sarlot & Rhein
Real Estate Services, Deutsche Bank AG
David B. Henry	Kenneth B. Roath
Vice Chairman, President and Chief	Chairman Emeritus, HCP, Inc.
Executive Officer, Kimco Realty Corporation
Lauralee E. Martin	Joseph P. Sullivan
Chief Operating and Financial Officer	Chairman of the Board of Advisors
Jones Lang LaSalle Incorporated	RAND Health
Senior Management
James F. Flaherty III	Thomas M. Klaritch
Chairman and	Executive Vice President
Chief Executive Officer	Medical Office Properties
Jonathan M. Bergschneider	James W. Mercer
Executive Vice President	Executive Vice President, General Counsel
Life Science Estates	and Corporate Secretary
Paul F. Gallagher	Timothy M. Schoen
Executive Vice President and	Executive Vice President and
Chief Investment Officer	Chief Financial Officer
Edward J. Henning	Susan M. Tate
Executive Vice President	Executive Vice President
	Asset Management and Senior Housing
Thomas D. Kirby
Executive Vice President	Kendall K. Young
Acquisitions and Valuations	Executive Vice President
Other Information
Corporate Headquarters	San Francisco Office
3760 Kilroy Airport Way, Suite 300	400 Oyster Point Boulevard, Suite 409
Long Beach, CA  90806-2473	South San Francisco, CA  94080
(562) 733-5100
Nashville Office
3000 Meridian Boulevard, Suite 200
Franklin, TN  37067

The information in this supplemental information package should be read in conjunction with the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other information filed with the Securities and Exchange Commission (“SEC”). The Reporting Definitions and Reconciliations of Non-GAAP Measures 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, 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 Timothy M. Schoen, Executive Vice President - Chief Financial Officer at (562) 733-5309.

(1)As of July 29, 2011.

1

Summary

Dollars in thousands, except per share data

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Revenues	$	488,706	$	301,877	$	820,411	$	596,697
NOI	381,055		219,015		627,211		431,174
Adjusted EBITDA	432,365		249,208		701,834		486,600
FFO applicable to common shares	317,911		161,875		467,658		320,552
FFO as adjusted applicable to common shares	312,199		161,875		494,254		308,652
FAD applicable to common shares	251,875		138,074		411,497		267,723
Net income applicable to common shares	222,993		79,465		286,939		154,301
Diluted FFO per common share	$	0.78	$	0.55	$	1.19	$	1.08
Diluted FFO as adjusted per common share	0.77		0.55		1.35		1.04
Diluted FAD per common share	0.62		0.47		1.12		0.91
Diluted EPS	0.55		0.27		0.73		0.52
FFO as adjusted payout ratio					71%		89%
Financial Leverage					40%		41%
Adjusted fixed charge coverage					2.9x		2.7x
	June 30,		December 31,
Leased properties:	2011		2010
Senior housing	317		251
Post-acute/skilled nursing	313		45
Life science	108		102
Medical office	254		253
Hospital	21		21
Total	1,013		672

Portfolio Income from Assets Under Management(1)	Assets Under Management:  $18.6 billion(2)

(1)Represents the adjusted NOI from real estate owned by HCP, the interest income from debt investments and HCP’s pro rata share of the adjusted NOI from real estate owned by the Company’s Investment Management Platform, excluding assets under development and land held for development, for the six months ended June 30, 2011.

(2)Represents the historical cost of real estate owned by HCP, the carrying amount of debt investments and 100% of the cost of real estate owned by the Company’s Investment Management Platform, excluding assets held for sale and under development and land held for development, at June 30, 2011.

See Reporting Definitions and Reconciliations of Non-GAAP Measures

2

Funds From Operations and Funds Available for Distribution

Dollars and shares in thousands, except per share data

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Net income applicable to common shares	$	222,993		$	79,465		$	286,939		$	154,301
Depreciation and amortization of real estate, in-place lease and other intangibles	90,052			77,912			181,472			156,883
DFL depreciation	2,633			—			3,005			—
Gain on sales of real estate	—			(65		)	—			(65		)
Gain upon consolidation of joint venture	270			—			(7,769		)	—
FFO from unconsolidated joint ventures	1,963			4,563			4,011			9,433
FFO applicable to common shares	$	317,911		$	161,875		$	467,658		$	320,552
Distributions on dilutive convertible units	2,964			1,637			6,018			3,244
Diluted FFO applicable to common shares	$	320,875		$	163,512		$	473,676		$	323,796
Weighted average shares used for diluted FFO per share	413,996			299,474			397,060			298,525
Diluted FFO per common share	$	0.78		$	0.55		$	1.19		$	1.08
Dividends declared per common share	$	0.48		$	0.465		$	0.96		$	0.93
FFO payout ratio	61.5%			84.5%			80.7%			86.1%
Impact of adjustments to FFO:
Impairment recoveries	$	—		$	—		$	—		$	(11,900	)
Merger-related items	(5,712		)	—			26,596		(1)	—
	$	(5,712	)	$	—		$	26,596		$	(11,900	)
FFO as adjusted applicable to common shares	$	312,199		$	161,875		$	494,254		$	308,652
Distributions on dilutive convertible units and other	2,975			1,637			5,915			3,285
Diluted FFO as adjusted applicable to common shares	$	315,174		$	163,512		$	500,169		$	311,937
Weighted average shares used for diluted FFO as adjusted per share(2)	408,985			299,474			371,004			298,525
Diluted FFO as adjusted per common share(2)	$	0.77		$	0.55		$	1.35		$	1.04
FFO as adjusted payout ratio	62.3%			84.5%			71.1%			89.4%
FFO as adjusted applicable to common shares	$	312,199		$	161,875		$	494,254		$	308,652
Amortization of above and below market lease intangibles, net	(1,187		)	(1,804		)	(2,093		)	(3,708		)
Stock-based compensation	5,103			4,182			10,205			7,688
Amortization of debt premiums, discounts and issuance costs, net(3)	3,391			1,836			6,349			5,304
Straight-line rents	(15,612		)	(8,419		)	(32,912		)	(21,695		)
DFL interest accretion(4)	(22,262		)	(2,569		)	(24,937		)	(5,408		)
DFL depreciation	(2,633		)	—			(3,005		)	—
Deferred revenues – tenant improvement related	(767		)	(929		)	(1,643		)	(1,857		)
Deferred revenues – additional rents (SAB 104)	(1,416		)	(1,668		)	566			(165		)
Leasing costs and tenant and capital improvements	(11,447		)	(11,925		)	(20,940		)	(16,545		)
Joint venture and other FAD adjustments(4)(5)	(13,494		)	(2,505		)	(14,347		)	(4,543		)
FAD applicable to common shares	$	251,875		$	138,074		$	411,497		$	267,723
Distributions on convertible units	2,964			1,637			2,616			—
Diluted FAD applicable to common shares	$	254,839		$	139,711		$	414,113		$	267,723
Weighted average shares used for diluted FAD per share	408,985			299,474			368,704			295,067
Diluted FAD per common share	$	0.62		$	0.47		$	1.12		$	0.91

(1)	$26.6 million of merger-related items attributable to the HCR ManorCare Acquisition (incurred from January 1st through April 6th 2011) include the following: (i) $26.8 million of direct transaction costs, (ii) $23.9 million of interest expense associated with the $2.4 billion senior unsecured notes issued on January 24, 2011, which proceeds of such offering were obtained to prefund the HCR ManorCare Acquisition, which increases were partially offset by (iii) $24.1 million of income related to gains upon the reinvestment of the Company’s debt investment in HCR ManorCare and other miscellaneous items.
(2)	$0.16 per share of merger-related items attributable to the HCR ManorCare Acquisition include the following:
	(i)	$0.07 per share of direct transaction costs that are discussed in footnote 1(i) above;
	(ii)	($0.07) per share of income related to gains upon the reinvestment of the Company’s debt investment in HCR ManorCare debt and other miscellaneous items that are discussed in footnote 1(iii) above; and
	(iii)	$0.16 per share of negative carry related to prefunding activities consisting of: (a) 76 million shares from the Company’s December 2010 and March 2011 common stock offerings (excludes 4.5 million shares in March 2011 related to the underwriters’ overallotment option), which issuances increased our weighted average shares by 26 million shares for the six months ended June 30, 2011; and (b) $0.07 per share for the interest expense related to the $2.4 billion senior notes discussed in footnote 1(ii) above. Proceeds from these offerings were used to prefund a portion of the cash consideration for the HCR ManorCare Acquisition.
(3)	Excludes $0.1 million related to the amortization of deferred issuance costs of the $2.4 billion senior notes issued in January 2011, which costs are included in merger-related items for the three months ended June 30, 2011. Excludes $11.3 million related to the write-off of unamortized loan fees for the Company’s bridge loan commitment and $0.8 million related to the amortization of deferred issuance costs of the senior notes discussed above, which costs are included in merger-related items for the six months ended June 30, 2011.
(4)	For both the three and six months ended June 30, 2011, DFL interest accretion includes a reduction of $13.3 million, and Joint venture and other FAD adjustments include a contribution of $14.5 million, as a result of HCP’s equity interest in the operations of HCR ManorCare, Inc. (“HCR ManorCare OpCo”). The Company’s joint venture interest in HCR ManorCare OpCo is accounted for using the equity method and results in an ongoing reduction of DFL income, proportional to HCP’s ownership in HCR ManorCare OpCo. Further, the Company’s share of earnings from HCR ManorCare OpCo (equity income) increases for the corresponding reduction of related lease expense recognized at the HCR ManorCare OpCo level.
(5)	Includes Investment Management Platform, HCP’s equity interest in HCR ManorCare OpCo and four other unconsolidated joint ventures.

See Reporting Definitions and Reconciliations of Non-GAAP Measures

3

Capitalization

Dollars and shares in thousands, except price data
Total Debt
	June 30, 2011		December 31, 2010		June 30, 2010
Senior unsecured notes	$	5,706,998	$	3,318,379	$	3,524,022
Mortgage and other secured debt	1,780,665		1,235,779		1,751,520
Other debt	89,466		92,187		94,956
Consolidated debt	7,577,129		4,646,345		5,370,498
HCP’s share of unconsolidated debt(1)	144,620		335,966		338,707
Total debt	$	7,721,749	$	4,982,311	$	5,709,205

Total Market Capitalization
	June 30, 2011
	Shares/Units	Value/Units		Total Value
Common stock	407,120	$	36.69	$	14,937,233
Convertible partnership units
2 for 1(2)	1,732	73.38		127,094
1 for 1(3)	2,480	36.69		90,991
	4,212			218,085
Preferred stock:
7.25% Series E (Callable at par)	4,000	25.46		101,840
7.10% Series F (Callable at par)	7,820	25.06		195,969
	11,820			297,809
Consolidated market equity				$	15,453,127
Consolidated debt				7,577,129
Consolidated market capitalization				$	23,030,256
HCP’s share of unconsolidated debt(1)				144,620
Total market capitalization				$	23,174,876

Common Stock and Equivalents
		Weighted Average Shares		Weighted Average Shares
	Shares	Three Months Ended		Six Months Ended
	Outstanding	June 30, 2011		June 30, 2011
	June 30, 2011	Diluted EPS	Diluted FFO	Diluted EPS	Diluted FFO
Common stock	407,120	406,193	406,193	389,249	389,249
Common equivalent securities:
Restricted stock and units	1,807	249	249	231	231
Dilutive impact of options	1,609	1,609	1,609	1,620	1,620
Convertible partnership units	5,945	3,659	5,945	—	5,960
Total common and equivalents	416,481	411,710	413,996	391,100	397,060

Other Information
Trading Symbol		Senior Unsecured Debt Ratings
HCP	Common Stock	Moody’s	Baa2 (stable outlook)
HCP_pe	Series E Preferred Stock	Standard & Poor’s	BBB (stable outlook)
HCP_pf	Series F Preferred Stock	Fitch	BBB+ (stable outlook)
Stock Exchange Listing
NYSE

(1)Reflects the Company’s pro rata share of amounts in the Investment Management Platform and HCR ManorCare OpCo.

(2)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.

(3)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.

See Reporting Definitions and Reconciliations of Non-GAAP Measures

   4

Indebtedness and Ratios

Dollars in thousands

Debt Maturities and Scheduled Principal Repayments (Amortization) June 30, 2011
	Bank Line of Credit(1)		Senior Unsecured Notes			Rates(2)		Mortgage Debt(3)			Rates(2)		Consolidated Debt			HCP’s Share of Unconsolidated Debt(4)			Rates(2)		Total Debt
2011 (6 months)	$	—	$	292,265		4.79	%	$	19,291		6.02	%	$	311,556		$	1,282		N/A	%	$	312,838
2012	—		250,000			6.67		73,515			5.08		323,515			9,621			5.31		333,136
2013	—		550,000			5.81		366,895			6.03		916,895			3,165			7.04		920,060
2014	—		487,000			3.27		183,234			5.74		670,234			738			N/A		670,972
2015	—		400,000			6.64		301,530			6.01		701,530			11,231			5.82		712,761
2016	—		900,000			5.07		284,963			6.92		1,184,963			46,936			6.05		1,231,899
2017	—		750,000			6.04		511,785			6.07		1,261,785			34,780			5.91		1,296,565
2018	—		600,000			6.83		5,015			5.90		605,015			—			—		605,015
2019	—		—			—		392			—		392			—			—		392
2020	—		—			—		420			—		420			—			—		420
Thereafter	—		1,500,000			5.75		48,229			5.23		1,548,229			37,107			5.00		1,585,336
Subtotal			5,729,265					1,795,269					7,524,534			144,860					7,669,394
Other debt(5)	—		—					—					89,466			—					89,466
(Discounts) and premiums, net	—		(22,267		)			(14,604		)			(36,871		)	(240		)			(37,111		)
Total debt	$	—	$	5,706,998				$	1,780,665				$	7,577,129		$	144,620				$	7,721,749
Weighted average interest rate	N/A		5.64%					6.11%					5.75%			5.84%					5.75%
Weighted average maturity in years	3.75		6.51					5.07					6.17			5.30					6.15

Ratios			Covenants
	June 30,	December 31,	The following is a summary of the financial covenants under the revolving line of credit facility at June 30, 2011.
	2011	2010
Consolidated Debt/Consolidated Gross Assets	39.8%	31.9%
Financial Leverage (Total Debt/Total Gross Assets)	39.9%	32.8%		Bank Line of Credit
			Financial Covenants(7)	Requirement	Actual Compliance
Consolidated Secured Debt/Consolidated Gross Assets	9.3%	8.5%	Leverage Ratio	No greater than 60%	41%
Total Secured Debt/Total Gross Assets	9.9%	10.4%	Secured Debt Ratio	No greater than 30%	11%
			Unsecured Leverage Ratio	No greater than 60%	39%
Fixed and variable rate ratios(6):			Fixed Charge Coverage Ratio (12 months)	No less than 1.50x	2.89x
Fixed rate Total Debt	96.1%	93.8%
Variable rate Total Debt	3.9%	6.2%
	100.0%	100.0%

(1)At June 30, 2011, the Company had $113 million of aggregate letters of credit pledged against the revolving line of credit facility, including a $103 million letter of credit as a result of the Ventas, Inc. (“Ventas”) litigation. For further information regarding the Ventas litigation see Note 12 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC.

(2)Senior unsecured notes and mortgage and other secured debt weighted-average effective rates relate to maturing amounts.

(3)Mortgage debt attributable to non-controlling interests at June 30, 2011was $2.5 million.

(4)Includes pro-rata share of mortgage and other debt in the Company’s Investment Management Platform and HCR ManorCare OpCo. At June 30, 2011, 100% of the Company’s Investment Management Platform’s mortgage debt accrues interest at fixed rates. HCR ManorCare OpCo’s debt accrues interest at LIBOR (subject to a floor of 150bps) plus 350bps.

(5)Represents non-interest bearing life care bonds and occupancy fee deposits at three of the Company’s senior housing facilities that have no scheduled maturities.

(6)$250 million of fixed-rate senior unsecured notes are presented as variable-rate debt as the interest payments under such debt have been swapped (pay float and receive fixed) and $88 million of variable-rate mortgages are presented as fixed-rate debt as the interest payments under such debt have been swapped (pay fixed and receive float).

(7)Financial covenants for the revolving line of credit facility are calculated based on the definitions contained within the agreement and may be different than similar terms in the Company’s Consolidated Financial Statements as provided in its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Compliance with certain of these financial covenants requires the inclusion of the Company’s consolidated amounts and its proportionate share of unconsolidated investees.

See Reporting Definitions and Reconciliations of Non-GAAP Measures

5

Investments and Dispositions

Dollars in thousands

Investments
				June 30, 2011
Description				Three Months Ended		Six Months Ended
HCR ManorCare real estate acquisition(1)				$	6,016,962	$	6,016,962
HCR ManorCare OpCo investment(1)				95,000		95,000
HCP Ventures II acquisition(3)				—		546,979
Acquisitions of other real estate				64,900		163,542
Total fundings for development, tenant and capital improvements(4)				31,991		53,833
Total investments				$	6,208,853	$	6,876,316
Acquisitions of other real estate for the three months ended June 30, 2011
Location	Date		Capacity		Segment	Investment
South San Francisco, CA	April 15, 2011		20 acres		Life science	$	64,900
Dispositions for the three months ended June 30, 2011
Description				Segment		Payoff/ Settlement Value, Net of Costs
Mezzanine and Mortgage Participations		Date
Genesis		April 1, 2011		Post-acute/skilled		$	330,396
HCR ManorCare(2)		April 7, 2011		Post-acute/skilled			1,630,720
Total						$	1,961,116

(1)On April 7, 2011, the Company acquired the real estate assets of privately-owned HCR ManorCare, Inc. for $6.1 billion. After reducing the purchase price by $88 million, which represents the difference between the fair value and the par value of our HCR ManorCare debt investments (at closing) that were settled as part of this acquisition, the adjusted purchase price is $6.0 billion. The adjusted purchase price of the HCR ManorCare real estate acquisition is comprised of the following: (i) $4.0 billion of cash consideration; and (ii) $2.0 billion representing the fair value of our HCR ManorCare debt investments. In conjunction with the acquisition of the real estate assets of HCR ManorCare, the Company exercised its option to purchase an equity interest in the operations of HCR ManorCare for $95 million that represented a 9.9% equity interest at closing.

(2)Settlement value of the debt investments in HCR ManorCare presented excludes the $360 million participation in the first mortgage debt that the Company purchased on January 31, 2011 as this purchase was for the sole purpose of prefunding the HCR ManorCare Acquisition.

(3)Represents 65% of the HCP Ventures II investments. On January 14, 2011, the Company acquired its partner’s 65% interest in a joint venture that owns 25 senior housing facilities with 5,621 units, becoming the sole owner of the portfolio. At closing, the Company paid approximately $136 million for the interest and assumed its partner’s share of $650 million (fair value of $635 million) of Fannie Mae secured debt with a weighted average fixed-rate of 5.66% and weighted average term to maturity of 5.3 years. At closing, the Company valued the HCP Ventures II investment at approximately $842 million.

(4)The three months ended June 30, 2011, includes the following: (i) $15.2 million of development, (ii) $7.1 million of first generation tenant and capital improvements, and (iii) $9.7 million of second generation tenant and capital improvements (excludes $1.8 million of leasing costs). The six months ended June 30, 2011, includes the following: (i) $27.1 million of development, (ii) $12.1 million of first generation tenant and capital improvements, and (iii) $14.6 million of second generation tenant and capital improvements (excludes $6.4 million of leasing costs). Investments for development include capitalized interest for the three and six months ended June 30, 2011 of $6.5 million and $12.5 million, respectively.

See Reporting Definitions and Reconciliations of Non-GAAP Measures
	6

Development

As of June 30, 2011, dollars and square feet in thousands

Redevelopment Projects in Process

			Estimated/	Estimated
			Actual	Rentable			Estimated
			Completion	Square	Investment		Total
Name of Project	Location	Segment	Date	Feet	to Date(1)(3)		Investment
Modular Labs IV	So. San Francisco, CA	Life science	4Q 2010	110	$	53,852	$	57,069
Soledad(4)	San Diego, CA	Life science	3Q 2011	28	12,135		14,932
1030 Massachusetts Avenue	Cambridge, MA	Life science	1Q 2012	66	21,373		39,992
Knoxville	Knoxville, TN	Medical office	3Q 2011	38	6,707		8,740
Westpark Plaza	Plano, TX	Medical office	1Q 2012	70	11,156		16,959
Folsom	Sacramento, CA	Medical office	1Q 2012	92	29,363		37,751
Innovation Drive	San Diego, CA	Medical office	1Q 2012	84	24,047		37,100
Fresno(5)	Fresno, CA	Hospital	4Q 2012	N/A	3,306		20,554
	Total				$	161,939	$	233,097

Land Held for Development

			Estimated
		Gross	Rentable
		Site	Square
Location	Segment	Acreage	Feet
So. San Francisco, CA	Life science	50	1,666
Carlsbad, CA	Life science	41	697
Poway, CA	Life science	72	1,261
Torrey Pines, CA	Life science	6	93
		169	3,717
Investment-to-date(2)(3)			$	359,019

Projects Placed in Service

			Date	Rentable
			Placed in	Square			Percentage
Name of Project	Location	Segment	Service	Feet	Investment(6)		Leased
500/600 Saginaw	Redwood City, CA	Life science	March 2011	88	$	43,030	—

(1)   Investment-to-date of $162 million includes the following: (i) $48 million in development costs and construction in progress, (ii) $69 million of buildings and (iii) $45 million of land.

(2)   Investment-to-date of $359 million includes the following: (i) $286 million in land and (ii) $73 million in development costs and construction in progress.

(3)   Development costs and construction in progress of $156 million presented on the Company’s consolidated balance sheet at June 30, 2011, includes the following: (i) $48 million of costs for development projects in process; (ii) $73 million of costs for land held for development; and (iii) $35 million for tenant and other facility related improvement projects in process.

(4)   Represents approximately half of the Soledad project remaining in redevelopment. The balance of the project was placed in service during the quarter ended September 30, 2010.

(5)   Represents approximately 25% of the Fresno hospital placed in redevelopment in March 2011. The balance of the hospital remains in operations.

(6)Represents the investment as of the date the respective property was placed in service.

See Reporting Definitions and Reconciliations of Non-GAAP Measures
	7

Owned Portfolio Summary

As of and for the six months ended June 30, 2011, dollars and square feet in thousands, unless otherwise indicated

Portfolio Summary by Investment Product

Leased	Property					Age			Occupancy	EBITDAR(1)			EBITDARM(1)
Properties	Count	Investment		NOI		(Years)	Capacity		%	Amount		CFC	Amount		CFC
Senior housing	317	$	5,899,283	$	240,812	15	36,424	Units	86.3	$	449,890	1.11 x	$	534,985	1.32 x
Post-acute/skilled	313	5,480,734		132,911		32	41,773	Beds	87.5	61,545		1.69 x	81,209		2.24 x
Life science	104	3,251,372		118,524		16	6,798	Sq. Ft.	89.2	N/A		N/A	N/A		N/A
Medical office	188	2,272,818		95,889		19	13,097	Sq. Ft.	91.1	N/A		N/A	N/A		N/A
Hospital	17	648,386		39,075		25	2,361	Beds	54.5	305,868		4.62 x	338,984		5.12 x
	939	$	17,552,593	$	627,211	22
Secured				Interest
Loans		Investment		Income
Senior housing		$	1,250	$	7
Post-acute/skilled(2)		9,887		87,207
Hospital		14,099		735
		$	25,236	$	87,949
Mezzanine				Interest
Loans		Investment		Income
Post-acute/skilled(2)		$	—	$	10,673
Hospital(3)		85,744		—
		$	85,744	$	10,673
Total		$	17,663,573	$	725,833

Portfolio NOI, Adjusted NOI and Interest Income

	Three Months Ended June 30, 2011
											Adjusted NOI
	Rental		Operating				Adjusted		Interest		and Interest
Segment	Revenues		Expenses		NOI(4)		NOI		Income(5)		Income
Senior housing	$	130,131	$	775	$	129,356	$	114,093	$	7	$	114,100
Post-acute/skilled	123,545		54		123,491		106,055		60,189		166,244
Life science	71,527		12,590		58,937		53,137		—		53,137
Medical office	80,184		31,980		48,204		46,678		—		46,678
Hospital	22,289		1,222		21,067		20,442		330		20,772
	$	427,676	$	46,621	$	381,055	$	340,405	$	60,526	$	400,931
	Six Months Ended June 30, 2011
											Adjusted NOI
	Rental		Operating				Adjusted		Interest		and Interest
Segment	Revenues		Expenses		NOI(4)		NOI		Income(5)		Income
Senior housing	$	242,577	$	1,765	$	240,812	$	212,130	$	7	$	212,137
Post-acute/skilled	132,985		74		132,911		115,153		97,880		213,033
Life science	143,952		25,428		118,524		106,760		—		106,760
Medical office	159,900		64,011		95,889		92,250		—		92,250
Hospital	41,264		2,189		39,075		37,798		735		38,533
	$	720,678	$	93,467	$	627,211	$	564,091	$	98,622	$	662,713

(1)EBITDAR, EBITDARM and their respective CFC are not presented for HCR ManorCare as these metrics for the disaggregated HCR ManorCare senior housing and post-acute/skilled nursing portfolios are not meaningful because the combined portfolio is cross-collaterized under a single master lease. See HCR ManorCare Leased Portfolio Summary on page 15 of this report.

(2)On April 7, 2011, the Company completed the acquisition of HCR ManorCare’s real estate assets. At closing of the HCR ManorCare Acquisition, the Company’s debt investments in HCR ManorCare were extinguished. For additional information regarding the HCR ManorCare Acquisition see Note 3 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC. Includes $43 million of interest income related to debt investments in Genesis HealthCare that were prepaid on April 1, 2011. For additional information regarding the Genesis HealthCare debt investments see Note 7 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC.

(3)Represents a secured loan to Cirrus Group, LLC that was placed on non-accrual status effective January 1, 2011. At June 30, 2011, the combined carrying value ($86 million) and related accrued interest ($6 million) of this loan was $92 million. For additional information regarding the senior loan to Cirrus Group, LLC see Note 7 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC.

(4)NOI attributable to non-controlling interests for the three and six months ended June 30, 2011 was $1.0 million and $2.1 million, respectively.

(5)Includes loan accretion for the three and six months ended June 30, 2011 of $1.2 million and $18.5 million, respectively.

See Reporting Definitions and Reconciliations of Non-GAAP Measures
	8

Owned Portfolio Concentrations

As of and for the six months ended June 30, 2011, dollars in thousands

Geographic Diversification of Leased Properties

	Total	Senior		Post-Acute/		Life		Medical						% of
Investment by State	Properties	Housing		Skilled		Science		Office		Hospital		Total		Total
CA	149	$	641,252	$	262,107	$	3,131,893	$	212,191	$	128,545	$	4,375,988	25
TX	97	695,853		101,459		—		685,153		227,241		1,709,706		10
FL	95	816,877		523,770		—		151,150		62,450		1,554,247		9
PA	54	256,408		1,163,925		—		—		—		1,420,333		8
IL	51	495,790		675,637		—		13,481		—		1,184,908		7
OH	72	211,397		659,887		—		9,101		—		880,385		5
MI	38	174,809		557,284		—		—		—		732,093		4
MD	34	295,442		222,753		—		29,428		—		547,623		3
VA	29	318,362		171,463		—		40,769		—		530,594		3
NJ	21	373,296		95,966		—		—		—		469,262		3
Other	299	1,619,797		1,046,483		119,479		1,131,545		230,150		4,147,454		23
Total	939	$	5,899,283	$	5,480,734	$	3,251,372	$	2,272,818	$	648,386	$	17,552,593	100
	Total	Senior		Post-Acute/		Life		Medical						% of
NOI by State	Properties	Housing		Skilled		Science		Office		Hospital		Total		Total
CA	149	$	33,549	$	6,417	$	112,037	$	6,596	$	8,353	$	166,952	27
TX	97	27,672		2,060		—		26,059		12,341		68,132		11
FL	95	33,174		11,461		—		6,837		3,951		55,423		9
PA	54	7,459		26,042		—		—		—		33,501		5
IL	51	18,033		14,589		—		646		—		33,268		5
OH	72	6,960		17,368		—		313		—		24,641		4
VA	29	11,556		5,806		—		1,779		—		19,141		3
MI	38	7,090		11,853		—		—		—		18,943		3
CO	26	8,199		2,183		—		7,618		688		18,688		3
MD	34	10,719		4,936		—		1,540		—		17,195		3
Other	294	76,401		30,196		6,487		44,501		13,742		171,327		27
Total	939	$	240,812	$	132,911	$	118,524	$	95,889	$	39,075	$	627,211	100

Operator/Tenant Diversification

	Primary	Annualized Revenues(1)
Company	Segment	Amount		%
HCR ManorCare	Post-acute/skilled	$	472,500	33
Emeritus Corporation	Senior housing	93,651		6
Sunrise Senior Living	Senior housing	84,093		6
Horizon Bay(2)	Senior housing	70,960		5
Brookdale(2)	Senior housing	65,891		5
HCA	Hospital	46,230		3
Amgen	Life science	40,936		3
Genentech	Life science	37,088		3
Takeda	Life science	17,164		1
Tenet	Hospital	16,018		1
Other		499,702		34
		$	1,444,233	100

(1)The most recent monthly base rent (including additional rent floors), income from direct financing leases and/or interest income annualized for 12 months. For additional details regarding “annualized revenues,” see reporting definitions.

(2)On June 1, 2011, the Company announced it has entered into definitive agreements, subject to customary closing conditions, to form a strategic venture with Brookdale Senior Living, Inc. (“Brookdale”) that includes the operation of 37 HCP-owned senior living communities leased to or operated by Horizon Bay Retirement Living (“Horizon Bay”) to Brookdale. As part of this transaction, Brookdale will acquire Horizon Bay, assume an existing triple-net lease for 9 of these senior living communities and assume Horizon Bay’s management of 3 communities, one of which was recently developed by HCP.

See Reporting Definitions and Reconciliations of Non-GAAP Measures
	9

Owned Same Property Leased Portfolio

As of June 30, 2011, dollars and square feet in thousands

			Senior			Post-Acute/			Life			Medical
	Total		Housing(1)			Skilled			Science			Office		Hospital
Property count	558		220			45			95			182		16
Investment	$	10,188,438	$	4,105,356		$	244,738		$	3,052,205		$	2,177,498	$	608,641
Percent of leased portfolio (by investment)	58.0%		69.6%			4.5%			93.9%			95.8%		93.9%
Capacity			25,095 Units			5,286 Beds			6,320 Sq. Ft.			12,708 Sq. Ft		2,361 Beds
Year-Over-Year Three-Month SPP
Occupancy:
June 30, 2011			86.0%			85.5%			92.0%			90.8%		56.2%
June 30, 2010			85.2%			85.7%			89.8%			90.7%		61.9%
% change			0.8%			(0.2%		)	2.2%			0.1%		(5.7%		)
NOI % change	5.1%		10.7%			2.5%			0.9%			3.7%		(2.4%		)
Adjusted NOI:
June 30, 2011	$	210,946	$	83,207		$	9,219		$	52,348		$	46,315	$	19,857
June 30, 2010	$	205,502	$	77,964		$	8,971		$	54,679		$	44,589	$	19,299
Adjusted NOI % change	2.6%		6.7%			2.8%			(4.3%		)	3.9%		2.9%
Sequential Three-Month SPP
Occupancy:
June 30, 2011			86.0%			85.5%			92.0%			90.8%		56.2%
March 31, 2011			86.5%			85.1%			91.8%			90.7%		51.3%
% change			(0.5%		)	0.4%			0.2%			0.1%		4.9%
NOI % change	1.3%		(0.6%		)	0.6%			(0.4%		)	0.9%		18.4%
Adjusted NOI:
June 30, 2011	$	210,946	$	83,207		$	9,219		$	52,348		$	46,315	$	19,857
March 31, 2011	$	206,474	$	82,939		$	9,102		$	52,482		$	45,273	$	16,678
Adjusted NOI % change	2.2%		0.3%			1.3%			(0.3%		)	2.3%		19.1%
Year-Over-Year Six-Month SPP
NOI % change	6.0%		12.2%			2.3%			1.3%			3.4%		1.0%
Adjusted NOI:
June 30, 2011	$	417,016	$	165,742		$	18,321		$	104,830		$	91,588	$	36,535
June 30, 2010	$	398,455	$	153,325		$	17,856		$	104,646		$	89,053	$	33,575
Adjusted NOI % change	4.7%		8.1%			2.6%			0.2%			2.8%		8.8%

(1)Senior housing three-month SPP includes one facility acquired in the quarter ended March 31, 2010 with an investment value of $8.9 million, 85 units and three month occupancy as of June 30, 2011 of 90.8% (one quarter in arrears). This facility is excluded from the six-month senior housing SPP metrics as its results of operations are not included for the full comparable period.

See Reporting Definitions and Reconciliations of Non-GAAP Measures
	10

Owned Portfolio Lease Expirations and Debt Investment Maturities

At June 30, 2011, dollars and square feet in thousands

			Expiration Year(1)
Segment	Total		2011(2)		2012		2013		2014		2015		2016		2017		2018		2019		2020		Thereafter
Lease Expirations
Senior housing:
Properties	317		—		1		2		5		1		17		12		49		37		33		160
Annualized revenues	$	452,955	$	—	$	331	$	11,257	$	4,925	$	199	$	24,195	$	19,657	$	91,233	$	73,336	$	49,603	$	178,219
Post-acute/skilled:
Properties	313		—		—		—		9		1		6		9		3		12		4		269
Annualized revenues	$	452,255	$	—	$	—	$	—	$	7,062	$	429	$	5,742	$	8,193	$	1,650	$	9,838	$	2,996	$	416,345
Life science:
Square feet	6,066		299		160		364		381		1,004		277		748		486		58		881		1,408
Annualized revenues	$	220,713	$	10,579	$	3,629	$	10,103	$	9,741	$	29,058	$	7,876	$	25,684	$	24,511	$	2,649	$	40,131	$	56,752
Medical office:
Square feet	11,927		988		1,467		1,719		1,482		1,344		937		691		875		670		829		925
Annualized revenues	$	252,030	$	22,087	$	32,461	$	31,842	$	33,260	$	29,991	$	18,189	$	14,715	$	17,452	$	13,609	$	18,684	$	19,740
Hospital:
Properties	17		—		—		1		3		—		—		2		—		4		—		7
Annualized revenues	$	65,070	$	—	$	—	$	2,553	$	16,018	$	—	$	—	$	4,547	$	—	$	6,273	$	—	$	35,679
Total annualized revenues	$	1,443,023	$	32,666	$	36,421	$	55,755	$	71,006	$	59,677	$	56,002	$	72,796	$	134,846	$	105,705	$	111,414	$	706,735
Debt Investment Maturities
Senior housing:
Annualized revenues	$	81	$	—	$	—	$	—	$	—	$	—	$	81	$	—	$	—	$	—	$	—	$	—
Post-acute/skilled:
Annualized revenues	$	1,129	$	—	$	—	$	958	$	171	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Hospital(3):
Annualized revenues	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total annualized revenues	$	1,210	$	—	$	—	$	958	$	171	$	—	$	81	$	—	$	—	$	—	$	—	$	—

(1)The most recent monthly base rent (including additional rent floors), income from direct financing leases and/or interest income annualized for 12 months. For additional details regarding “annualized revenues,” see reporting definitions.

(2)Includes month-to-month and holdover leases.

(3)Effective January 1, 2011, a secured loan to Cirrus Group, LLC was placed on non-accrual status. During the three and six months ended June 30, 2011, no revenues were recognized for this loan; consequently, no annualized revenue amounts for this loan are presented. For additional information regarding the senior loan to Cirrus Group, LLC see Note 7 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC.

See Reporting Definitions and Reconciliations of Non-GAAP Measures
	11

Owned Senior Housing Portfolio

As of and for the six months ended June 30, 2011, dollars in thousands

Investments

Operating	Property					Average		Occupancy	EBITDAR			EBITDARM
Leases	Count	Investment		NOI		Age (Years)	Units	%	Amount		CFC	Amount		CFC
Assisted living	167	$	2,454,596	$	114,586	13	14,969	86.0	$	220,038	1.19 x	$	264,270	1.43 x
Independent living	45	1,409,487		55,701		20	9,591	87.5	113,675		0.90 x	129,319		1.03 x
CCRCs	12	606,449		27,571		22	3,770	89.0	69,000		1.26 x	82,057		1.50 x
	224	$	4,470,532	$	197,858	15	28,330	86.9	$	402,713	1.10 x	$	475,646	1.30 x

Direct Financing	Property					Average		Occupancy	EBITDAR(1)			EBITDARM(1)
Leases	Count	Investment		NOI		Age (Years)	Units	%	Amount		CFC	Amount		CFC
Assisted living	27	$	614,522	$	26,862	14	3,141	85.8	$	47,177	1.17 x	$	59,339	1.48 x
HCR ManorCare(1)	66	814,229		16,092		15	4,953	83.0	N/A		N/A	N/A		N/A
	93	1,428,751		42,954		15	8,094	84.1
Leased Properties	317	$	5,899,283	$	240,812	15	36,424	86.3	$	449,890	1.11 x	$	534,985	1.32 x

Secured			Interest
Loans	Investment		Income
Assisted living	$	1,250	$	7
Total	$	5,900,533	$	240,819

Operator Concentration(2)

						NOI and
	Properties		Investment			Interest Income				Occupancy	EBITDAR	EBITDARM
Operator	Count	% Pooled	Amount		%	Amount		%	Units	%	CFC(1)	CFC(1)
Sunrise Senior Living(3)(4)	48	98	$	1,312,331	22	$	48,694	20	5,568	87.7	1.24 x	1.50 x
Emeritus Corporation(3)	69	96	1,134,711		19	64,496		27	7,742	87.4	1.18 x	1.38 x
Horizon Bay Senior Communities	36	97	1,002,778		17	35,956		15	6,906	90.8	0.83 x	0.95 x
HCR ManorCare(1)	66	100	814,229		14	16,092		7	4,953	83.0	N/A	N/A
Brookdale	24	92	675,813		11	34,700		14	4,809	87.2	1.31 x	1.54 x
Harbor Retirement Associates	14	100	210,849		4	8,091		3	1,346	84.6	1.13 x	1.43 x
Aegis Senior Living	10	80	182,152		3	7,864		3	702	86.0	1.00 x	1.17 x
Other(3)	50	94	567,670		10	24,926		11	4,398	82.4	1.10 x	1.35 x
	317	96	$	5,900,533	100	$	240,819	100	36,424	86.3	1.11 x	1.32 x

(1)EBITDAR, EBITDARM and their respective CFC are not presented for HCR ManorCare as these metrics for the disaggregated HCR ManorCare senior housing and post-acute/skilled nursing portfolios are not meaningful because the combined portfolio is cross-collaterized under a single master lease. See HCR ManorCare Leased Portfolio Summary on page 15 of this report.

(2)Property count, units and occupancy are presented for leased properties and excludes secured loans.

(3)On November 1, 2010, the Company transitioned 27 assets formerly operated by Sunrise Senior Living to Emeritus Corporation. For these transitioned assets, occupancy and CFC are disclosed under “other” until the requisite periods have elapsed to allow us to report such measures completely under the new operator.

(4)Sunrise Senior Living percentage pooled consists of 47 assets under 6 separate pools.

See Reporting Definitions and Reconciliations of Non-GAAP Measures
	12

Owned Senior Housing Portfolio

Dollars in thousands

Portfolio Trends

	Same Property Leased Portfolio															Total Leased Portfolio
										As of and for the
	As of and for the Quarter Ended									YTD Period Ended						As of and for the Twelve Months Ended
	06/30/11			03/31/11			06/30/10(1)			06/30/11			06/30/10			06/30/11(2)		03/31/11(3)		06/30/10(3)
Property count	220			220			220			219			219			317		251		233
Investment	$	4,105,356		$	4,100,266		$	4,079,993		$	4,096,419		$	4,071,056		$	5,899,283	$	5,079,835	$	4,201,684
Units	25,095			25,101			25,037			25,010			24,952			36,424		31,465		25,965
3-Month Occupancy %	86.0			86.5			85.2			86.0			85.2			85.9		87.2		84.9
12-Month Occupancy %	86.1			85.9			85.7			86.0			85.7			86.3		86.8		85.3
EBITDAR	$	380,586		$	374,124		354,356			$	379,436		$	354,356		$	449,890	$	443,130	$	356,238
EBITDAR CFC	1.20 x			1.19 x			1.15 x			1.20 x			1.15 x			1.11 x		1.11 x		1.15 x
EBITDARM	$	455,479		$	448,800		426,710			$	454,122		$	426,710		$	534,985	$	527,629	$	429,188
EBITDARM CFC	1.43 x			1.43 x			1.39 x			1.43 x			1.39 x			1.32 x		1.32 x		1.38 x
NOI:
Rental and related revenues	$	81,864		$	82,915		$	74,194		$	164,334		$	146,203
DFL income	13,499			13,395			11,995			26,893			24,210
Operating expenses(4)	(100		)	(516		)	(118		)	(613		)	(496		)
	$	95,263		$	95,794		$	86,071		$	190,614		$	169,917
Adjusted NOI:
Straight-line rents	(9,077		)	(9,549		)	(4,753		)	(18,586		)	(9,613		)
Below market lease intangibles, net	(631		)	(631		)	(785		)	(1,262		)	(1,571		)
DFL interest accretion	(2,348		)	(2,675		)	(2,569		)	(5,024		)	(5,408		)
	$	83,207		$	82,939		$	77,964		$	165,742		$	153,325

(1)   Occupancy, EBITDAR and EBITDARM exclude one facility acquired in the quarter ended March 31, 2010 as those metrics are reported one quarter in arrears, and therefore are not applicable for this facility.

(2)   EBITDAR, EBITDARM and their respective CFC are not presented for HCR ManorCare as these metrics for the disaggregated HCR ManorCare senior housing and post-acute/skilled nursing portfolios are not meaningful because the combined portfolio is cross-collaterized under a single master lease. See HCR ManorCare Leased Portfolio Summary on page 15 of this report.

(3)   Amounts presented conform to current presentation without giving effect to discontinued operations.

(4)   Excludes certain non-property specific operating expenses allocated to certain segments.

See Reporting Definitions and Reconciliations of Non-GAAP Measures

13

Owned Post-Acute/Skilled Nursing Portfolio

As of and for the six months ended June 30, 2011, dollars in thousands, unless otherwise indicated

Investments
						Average
Leased	Property					Age		Occupancy	EBITDAR			EBITDARM
Properties	Count	Investment		NOI		(Years)	Beds	%	Amount		CFC	Amount		CFC
Operating leases	45	$	244,738	$	18,890	27	5,286	85.3	$	61,545	1.69 x	$	81,209	2.24 x
HCR ManorCare DFLs(1)	268	5,235,996		114,021		33	36,487	87.9	N/A		N/A	N/A		N/A
Leased properties	313	$	5,480,734	$	132,911	32	41,773	87.5
Secured and
Mezzanine				Interest
Loans		Investment		Income
HCR ManorCare(2)		$	—	$	54,303
Genesis HealthCare(3)		—		43,007
Other		9,887		570
		$	9,887	$	97,880
Total		$	5,490,621	$	230,791

Operator Concentration(4)
						NOI and
	Properties		Investment			Interest Income				Occupancy	EBITDAR	EBITDARM
Operator	Count	% Pooled	Amount		%	Amount		%	Beds	%	CFC(1)	CFC(1)
HCR ManorCare(1)(2)	268	100	$	5,235,996	95	$	168,324	73	36,487	87.9	N/A	N/A
Formation Capital	9	100	63,102		1	3,428		1	934	94.6	2.20 x	2.71 x
Covenant Care	12	100	62,318		1	5,319		2	1,328	83.3	1.77 x	2.33 x
Kindred	9	100	38,117		1	4,071		2	1,288	85.8	1.34 x	1.96 x
Trilogy Health Services	5	100	33,351		1	2,757		1	546	89.8	1.62 x	2.03 x
Other(5)	10	60	57,737		1	46,892		21	1,190	77.7	1.57 x	2.17 x
	313	99	$	5,490,621	100	$	230,791	100	41,773	87.5	1.69 x	2.24 x

(1)EBITDAR, EBITDARM and their respective CFC are not presented for HCR ManorCare as these metrics for the disaggregated HCR ManorCare senior housing and post-acute/skilled nursing portfolios are not meaningful because the combined portfolio is cross-collaterized under a single master lease. See HCR ManorCare Leased Portfolio Summary on page 15 of this report.

(2)On April 7, 2011, the Company completed the acquisition of HCR ManorCare’s real estate assets. At closing of the HCR ManorCare Acquisition, the Company’s debt investments in HCR ManorCare were extinguished. For additional information regarding the HCR ManorCare Acquisition see Note 3 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC.

(3)On April 1, 2011, the Company’s debt investments in Genesis HealthCare were prepaid.

(4)Property count, beds and occupancy are presented for leased properties and exclude secured and mezzanine loans.

(5)Other includes $43 million in interest income related to debt investments in Genesis HealthCare that were prepaid April 1, 2011. For additional information regarding Genesis HealthCare see Note 7 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC.

See Reporting Definitions and Reconciliations of Non-GAAP Measures

14

Owned Post-Acute/Skilled Nursing Portfolio

Dollars in thousands, except HCR ManorCare information

Portfolio Trends
	Same Property Leased Portfolio															Total Leased Portfolio
	As of and for the Quarter Ended									As of and for the YTD Period Ended						As of and for the Twelve Months Ended
	06/30/11			03/31/11			06/30/10			06/30/11			06/30/10			06/30/11(1)		03/31/11(2)		06/30/10(2)
Property count	45			45			45			45			45			313		45		48
Investment	$	244,738		$	244,738		$	244,738		$	244,738		$	244,738		$	5,480,734	$	244,738	$	255,084
Beds	5,286			5,286			5,331			5,286			5,331			41,773		5,286		5,628
3-Month Occupancy %	85.5			85.1			85.7			85.5			85.7			88.2		85.1		85.6
12-Month Occupancy %	85.3			85.4			85.3			85.3			85.3			87.5		85.4		85.4
EBITDAR	$	61,545		$	58,173		$	53,298		$	61,545		$	53,298		61,545		58,173		55,188
EBITDAR CFC	1.69 x			1.61 x			1.49 x			1.69 x			1.49 x			1.69 x		1.61 x		1.49 x
EBITDARM	$	81,209		$	77,479		$	72,929		$	81,209		$	72,929		81,209		77,479		75,863
EBITDARM CFC	2.24 x			2.14 x			2.04 x			2.24 x			2.04 x			2.24 x		2.14 x		2.05 x
Quality Mix	63.8%			62.2%			61.5%			63.8%			61.5%			68.1%		62.2%		61.5%
NOI:
Rental revenues	$	9,507		$	9,440		$	9,299		$	18,947		$	18,569
Operating expenses(3)	(26		)	(15		)	(47		)	(41		)	(92		)
	9,481			9,425			9,252			18,906			18,477
Adjusted NOI:
Straight-line rents	(262		)	(323		)	(281		)	(585		)	(621		)
	$	9,219		$	9,102		$	8,971		$	18,321		$	17,856

HCR ManorCare Leased Portfolio Summary
As of and for the six months ended June 30, 2011, dollars in thousands
Investment	Property					Adjusted			EBITDAR			EBITDARM
Summary	Count	Investment(4)		NOI(5)		NOI		Occupancy	Amount		CFC	Amount		CFC
Assisted living	66	$	814,229	$	16,092	$	13,397	83.0%	N/A		N/A	N/A		N/A
Post-acute/skilled	268	5,235,996		114,021		96,847		87.9%	N/A		N/A	N/A		N/A
Total	334	$	6,050,225	$	130,113	$	110,244	87.3%	$	604,307	1.28 x	$	781,373	1.65 x
	06/30/11	03/31/11		06/30/10
Quality mix	70.8%	70.9%		72.0%
HCR ManorCare OpCo (guarantor) fixed charge coverage(6)						1.57 x

(1)EBITDAR, EBITDARM, their respective CFC and quality mix are not presented for HCR ManorCare as these metrics for the disaggregated HCR ManorCare senior housing and post-acute/skilled nursing portfolios are not meaningful because the combined portfolio is cross-collaterized under a single master lease. For additional information see HCR ManorCare Leased Portfolio Summary.

(2)Amounts presented conform to current presentation, without giving effect to discontinued operations.

(3)Excludes certain non-property specific operating expenses allocated to certain segments.

(4)The Company’s total investment in HCR ManorCare includes aggregated accumulated accretion of $33.3 million as of June 30, 2011.

(5)Senior housing and post-acute/skilled NOI includes reductions of $1.6 million and $11.7 million, respectively, related to HCP’s equity interest in HCR ManorCare OpCo.

(6)HCR ManorCare OpCo (guarantor) fixed charge coverage is based on EBITDAR for the trailing 12 months, is one quarter in arrears from the date presented and includes home health and hospice EBITDAR and corporate general and administrative expenses, excluding HCR ManorCare’s non-recurring expenses associated with the sale of its real estate to HCP. The fixed charges include the most recent monthly cash rent annualized and cash interest expense based on the trailing 12 months and are one quarter in arrears from the date presented.

See Reporting Definitions and Reconciliations of Non-GAAP Measures

15

Owned Life Science Portfolio

As of and for the six months ended June 30, 2011, unless otherwise indicated, dollars and square feet in thousands
Investments
	Property						Average	Square
Leased Properties	Count		Investment		NOI		Age (Years)	Feet		Occupancy %
San Francisco		74	$	2,559,306	$	89,602	17		4,576	89.4
San Diego		20		572,587		22,435	18		1,553	86.5
Utah		10		119,479		6,487	11		669	94.6
		104	$	3,251,372	$	118,524	16		6,798	89.2

Tenant Concentration

	Annualized Revenues				Square Feet
Tenant	Amount		%		Amount		%
Amgen	$	40,936		19		684		11
Genentech		37,088		17		794		13
Takeda		17,164		8		324		5
Rigel Pharmaceuticals		12,799		6		147		2
Exelixis, Inc.		12,726		6		295		5
Myriad Genetics		7,082		3		310		5
Google		6,461		3		248		4
General Atomics		5,520		3		281		5
ARUP		5,418		2		324		5
Alexza Pharmaceuticals, Inc.		5,159		2		107		2
Other		70,360		31		2,552		43
	$	220,713		100		6,066		100

Portfolio Trends

	Same Property Leased Portfolio															Total Leased Portfolio
										As of and for the
	As of and for the Quarter Ended									YTD Period Ended						At the Period Ended
	06/30/11			03/31/11			06/30/10			06/30/11			06/30/10			06/30/11		03/31/11(1)		06/30/10(1)
Property count	95			95			95			95			95			104		104		96
Investment	$	3,052,205		$	3,048,538		$	3,034,633		$	3,052,205		$	3,034,633		$	3,251,372	$	3,247,606	$	3,086,012
Square feet	6,320			6,319			6,321			6,320			6,321			6,798		6,797		6,399
Occupancy %	92.0			91.8			89.8			92.0			89.8			89.2		89.0		88.7
NOI:
Rental and related revenues	$	59,421		$	59,191		$	59,092		$	118,612		$	117,668
Tenant recoveries	9,320			10,049			9,596			19,369			19,236
Operating expenses(2)	(10,728		)	(11,023		)	(11,195		)	(21,751		)	(22,208		)
	$	58,013		$	58,217		$	57,493		$	116,230		$	114,696
Adjusted NOI:
Straight-line rents	(3,740		)	(4,109		)	(971		)	(7,849		)	(6,362		)
Below market lease intangibles, net	(336		)	(37		)	(254		)	(373		)	(510		)
Lease termination fees	(1,589		)	(1,589		)	(1,589		)	(3,178		)	(3,178		)
	$	52,348		$	52,482		$	54,679		$	104,830		$	104,646

(1)Amounts are presented as originally reported, without giving effect to discontinued operations.

(2)Excludes certain non-property specific operating expenses allocated to certain segments and activities of assets that have been placed in redevelopment.

See Reporting Definitions and Reconciliations of Non-GAAP Measures

16

Owned Life Science Portfolio

Dollars and square feet in thousands, except dollars per square foot

Selected Lease Expirations Data (next 3 years):

	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
2011(1)	299	5	$	10,579	5	256	$	8,878	43	$	1,701	—	$	—
2012	160	3	3,629		2	80	1,227		80	2,402		—	—
2013	364	6	10,103		5	304	8,909		60	1,194		—	—
Thereafter	5,243	86	196,402		88	3,449	147,370		1,160	36,531		634	12,501
	6,066	100	$	220,713	100	4,089	$	166,384	1,343	$	41,828	634	$	12,501

Leasing Activity	Leased		Annualized		%		HCP Tenant		Leasing		Average	Retention
	Square		Base Rent Per		Change		Improvements		Costs Per		Lease Term	Rate
	Feet		Square Foot(2)		In Rents		Per Square Foot		Square Foot		(Months)	YTD
Leased Square Feet as of December 31, 2010	5,876		$	36.20
Acquisitions	140		33.30
Expirations	(197	)	19.60
Renewals, amendments and extensions	112		18.83		(1.5	)	$	6.70	$	3.14	28	57.0
New leases and expansions	120		19.62				12.86		10.29		74
Leased Square Feet as of March 31, 2011	6,051		$	36.23
Expirations	(4	)	24.00
Renewals, amendments and extensions	4		24.00		—		$	—	$	—	12	57.8
New leases and expansions	15		12.93				25.47		7.17		59
Leased Square Feet as of June 30, 2011	6,066		$	36.39

(1)  Includes month-to-month and holdover leases.

(2)  Represents actual base rents.

See Reporting Definitions and Reconciliations of Non-GAAP Measures

17

Owned Medical Office Portfolio

As of and for the six months ended June 30, 2011, dollars and square feet in thousands

Investments

	Property					Average
Leased Properties	Count	Investment		NOI		Age (Years)	Square Feet	Occupancy %
On-Campus	143	$	1,818,327	$	76,701	19	10,841	91.2
Off-Campus	45	454,491		19,188		18	2,256	90.2
	188	$	2,272,818	$	95,889	19	13,097	91.1

Portfolio Trends

	Same Property Leased Portfolio															Total Leased Portfolio
	As of and for the Quarter Ended									As of and for the YTD Period Ended						At the Period Ended
	06/30/11			03/31/11			06/30/10			06/30/11			06/30/10			06/30/11		03/31/11(1)		06/30/10(1)
Property count	182			182			182			182			182			188		188		184
Investment	$	2,177,498		$	2,167,315		$	2,137,639		$	2,177,498		$	2,137,639		$	2,272,818	$	2,262,456	$	2,150,549
Square feet	12,708			12,707			12,699			12,708			12,699			13,097		13,097		12,788
Occupancy %	90.8			90.7			90.7			90.8			90.7			91.1		91.0		90.8
NOI:
Rental and related revenues	$	66,108		$	65,824		$	64,882		$	131,932		$	129,370
Tenant recoveries	11,300			11,512			11,902			22,812			23,484
Operating expenses(2)	(29,717		)	(30,091		)	(30,783		)	(59,808		)	(61,000		)
	$	47,691		$	47,245		$	46,001		$	94,936		$	91,854
Adjusted NOI:
Straight-line rents	(1,343		)	(1,976		)	(865		)	(3,319		)	(1,609		)
Above (below) market lease intangibles, net	(33		)	4			(547		)	(29		)	(1,192		)
	$	46,315		$	45,273		$	44,589		$	91,588		$	89,053

(1)Amounts are presented as originally reported, without giving effect to discontinued operations.

(2)Excludes certain non-property specific operating expenses allocated to certain segments and activities of assets that have been placed in redevelopment.

See Reporting Definitions and Reconciliations of Non-GAAP Measures

18

Owned Medical Office Portfolio

Square feet in thousands

Leasing Activity

	Leased		Annualized		%	HCP Tenant		Leasing		Average	Retention
	Square		Base Rent Per		Change	Improvements		Costs Per		Lease Term	Rate
	Feet		Square Foot(1)		In Rents(2)	Per Square Foot		Square Foot		(Months)	YTD
Leased Square Feet as of December 31, 2010	11,798		$	21.82
Acquisitions	132		18.74
Expirations	(569	)	24.57
Renewals, amendments and extensions	462		23.43		1.0	$	6.16	$	4.46	85	81.2
New leases	111		21.44			18.94		5.09		84
Terminations	(16	)	13.91
Leased Square Feet as of March 31, 2011	11,918		$	21.86
Expirations	(321	)	21.97
Renewals, amendments and extensions	254		22.06		1.1	$	5.91	$	2.32	50	80.4
New leases	82		20.68			20.36		4.12		59
Terminations	(6	)	16.81
Leased Square Feet as of June 30, 2011	11,927		$	21.94

(1)Represents actual base rents.

(2)For comparative purposes, the calculation reflects adjustments for leases that converted to a different lease type upon renewal, amendment or extension of the original lease.

See Reporting Definitions and Reconciliations of Non-GAAP Measures
	19

Owned Hospital Portfolio

As of and for the six months ended June 30, 2011, dollars in thousands, unless otherwise indicated

Investments

Leased	Property					Average		Occupancy	EBITDAR(1)			EBITDARM(1)
Properties	Count	Investment		NOI		Age (Years)	Beds	%(1)	Amount		CFC	Amount		CFC
Acute care	5	$	452,672	$	28,492	34	1,578	55.8	$	251,826	5.54 x	$	275,593	6.07 x
Rehab	7	96,784		3,987		21	502	58.8	27,366		3.16 x	31,232		3.61 x
Specialty	2	63,725		2,565		27	37	—	21,335		4.16 x	23,662		4.61 x
LTACH	3	35,205		4,031		17	244	43.5	5,341		0.76 x	8,497		1.20 x
	17	$	648,386	$	39,075	25	2,361	54.5	$	305,868	4.62 x	$	338,984	5.12 x

Secured			Interest
Loans	Investment		Income
Acute care	$	14,099	$	735
Mezzanine			Interest
Loans	Investment		Income
Specialty(2)	$	85,744	$	—
Total	$	748,229	$	39,810

Operator Concentration(3)

						NOI and
	Properties		Investment			InterestIncome
Operator(1)	Count	% Pooled	Amount		%	Amount		%	Beds
Tenet Healthcare Corp	3	—	$	196,709	26	$	11,584	29	756
HCA	1	—	167,164		22	10,184		26	668
Cirrus Health	2	—	149,469		20	2,566		6	37
Hoag Memorial Hospital Presbyterian	1	—	88,800		12	6,728		17	154
Other	10	70	146,087		20	8,748		22	746
	17	41	$	748,229	100	$	39,810	100	2,361

(1)Certain operators in HCP’s hospital portfolio are not required under their respective leases to provide operational data.

(2)Represents a secured loan to Cirrus Group, LLC that was placed on non-accrual status effective January 1, 2011. At June 30, 2011, the combined carrying value ($86 million) and related accrued interest ($6 million) of this loan was $92 million. For additional information regarding the senior loan to Cirrus Group, LLC see Note 7 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC.

(3)Property count and beds are presented for leased properties and exclude secured and mezzanine loans.

See Reporting Definitions and Reconciliations of Non-GAAP Measures

  20

Owned Hospital Portfolio

Dollars in thousands

Portfolio Trends
	Same Property Leased Portfolio															Total Leased Portfolio
	As of and for the Quarter Ended									As of and for the YTD Period Ended						As of and for the Twelve Months Ended
	06/30/11			03/31/11			06/30/10			06/30/11			06/30/10			06/30/11		03/31/11(1)		06/30/10(1)
Property count	16			16			16			16			16			17		17		17
Investment	$	608,641		$	608,641		$	606,747		$	608,641		$	606,747		$	648,386	$	648,386	$	646,456
Beds	2,361			2,361			2,338			2,361			2,338			2,361		2,361		2,345
3-Month Occupancy %	56.2			51.3			61.9			56.2			61.9			56.2		51.3		62.6
12-Month Occupancy %	54.5			55.7			58.9			54.5			58.9			54.5		55.7		59.0
EBITDAR	$	296,542		$	295,822		$	309,926		$	296,542		$	309,926		$	305,868	$	307,286	$	322,969
EBITDAR CFC	4.68 x			4.65 x			4.95 x			4.68 x			4.95 x			4.62 x		4.62 x		4.93 x
EBITDARM	$	328,263		$	327,367		$	341,719		$	328,263		$	341,719		$	338,984	$	340,306	$	356,438
EBITDARM CFC	5.18 x			5.15 x			5.46 x			5.18 x			5.46 x			5.12 x		5.12 x		5.44 x
NOI:
Rental and related revenues	$	21,524		$	18,111		$	21,376		$	39,635		$	39,870
Operating expenses	(1,221		)	(965		)	(576		)	(2,186		)	(2,786		)
	$	20,303		$	17,146		$	20,800		$	37,449		$	37,084
Adjusted NOI:
Straight-line rents	(254		)	(275		)	(1,308		)	(529		)	(3,124		)
Below market lease intangibles, net	(192		)	(193		)	(193		)	(385		)	(385		)
	$	19,857		$	16,678		$	19,299		$	36,535		$	33,575

(1)Amounts presented conform to current presentation without giving effect to discontinued operations.

See Reporting Definitions and Reconciliations of Non-GAAP Measures

21

Investment Management Platform

As of and for the six months ended June 30, 2011, dollars in thousands

									HCP’s
Unconsolidated		Date	HCP’s		Joint		HCP’s Net		Investment		Initial
Institutional	Primary	Established/	Ownership		Venture’s		Equity		Management		Term
Joint Ventures	Segment	Acquired	Percentage		Investment		Investment(1)		Fee Income(2)		(in years)
HCP Ventures III	Medical office	October-06		30%(3)	$	142,379	$	9,359	$	199	10
HCP Ventures IV	Medical office	April-07		20%	649,107		36,793		840		10
HCP Life Science	Life science	August-07	50%-63%		143,763		66,058		2		97-98
					$	935,249	$	112,210	$	1,041

Balance Sheets(4)
	June 30, 2011						December 31, 2010
	Medical Office			Life Science			Medical Office			Life Science
ASSETS
Real estate:
Buildings and improvements	$	670,676		$	28,535		$	665,925		$	37,489
Land	67,968			8,271			67,897			8,271
Accumulated depreciation and amortization	(104,851		)	(15,104		)	(94,901		)	(23,428		)
Net real estate	633,793			21,702			638,921			22,332
Cash and cash equivalents and restricted cash	14,545			2,519			15,275			1,876
Intangible assets, net	39,424			—			42,805			—
Other assets, net	21,193			1,615			20,112			1,684
Total assets	$	708,955		$	25,836		$	717,113		$	25,892
LIABILITIES AND MEMBERS’ CAPITAL
Mortgage debt	$	468,057		$	8,256		$	469,061		$	9,882
Intangible liabilities, net	11,713			—			12,523			—
Accounts payable, accrued liabilities and deferred revenue	13,967			1,019			12,458			1,016
Total liabilities	493,737			9,275			494,042			10,898
HCP’s capital	34,366			8,913			36,158			7,918
Partners’ capital	180,852			7,648			186,913			7,076
Total liabilities and members’ capital	$	708,955		$	25,836		$	717,113		$	25,892

(1)	The carrying value of investments in unconsolidated joint ventures is based on the amount we paid to purchase the joint venture interest, which is different from the Company’s capital balance as reflected at the joint venture level as the records of the unconsolidated joint venture are reflected at their historical cost. These differences in basis are generally amortized over the lives of the related assets and liabilities and included in the Company’s share of equity in earnings of the respective joint venture.
(2)	Investment management fee income presented on the Company’s consolidated income statement for the six months ended June 30, 2011 of $1.1 million includes $70,000 from HCP Ventures II, an unconsolidated senior housing joint venture. On January 14, 2011, the Company acquired its partner’s 65% interest, becoming the sole owner of the portfolio. For additional information see Note 8 to the Condensed Consolidated Financial Statements for the quarter ended June 30, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC.
(3)	The Company owns an 85% interest in HCP Birmingham Portfolio LLC, which owns a 30% interest in HCP Ventures III.
(4)	Financial information is combined by primary segment of each joint venture (i.e., HCP Ventures III and HCP Ventures IV are combined under the medical office columns).

See Reporting Definitions and Reconciliations of Non-GAAP Measures
	22

Investment Management Platform

 In thousands

Statement of Operations and Funds From Operations(1)
	Three Months Ended June 30, 2011						Three Months Ended June 30, 2010
	Medical Office			Life Science			Medical Office			Life Science
Revenues:
Rental and related revenues	$	15,413		$	2,696		$	17,130		$	3,032
Tenant recoveries		3,925			304			4,327			376
Total revenues		19,338			3,000			21,457			3,408
Costs and expenses:
Depreciation and amortization		7,121			379			7,612			612
Operating		8,204			362			8,258			395
General and administrative		710			24			1,042			12
Total costs and expenses		16,035			765			16,912			1,019
Other income (expense):
Other income, net		—			—			6			—
Interest expense		(6,743	)		(157	)		(6,858	)		(217	)
Net income (loss)	$	(3,440	)	$	2,078		$	(2,307	)	$	2,172
Depreciation and amortization		7,121			379			7,612			612
FFO	$	3,681		$	2,457		$	5,305		$	2,784
HCP’s pro rata share of FFO	$	855		$	1,433		$	1,176		$	1,640
Selected supplemental cash flow information:
Amortization of above and below market lease intangibles, net	$	(141	)	$	—		$	(81	)	$	—
Amortization of debt issuance costs, net		189			9			189			9
Straight-line rents		(248	)		47			(750	)		92
Leasing costs and tenant and capital improvements		(2,718	)		(154	)		(1,986	)		(495	)
	Six Months Ended June 30, 2011						Six Months Ended June 30, 2010
	Medical Office			Life Science			Medical Office			Life Science
Revenues:
Rental and related revenues	$	31,725		$	5,393		$	34,396		$	4,832
Tenant recoveries		8,023			638			8,751			728
Total revenues		39,748			6,031			43,147			5,560
Costs and expenses:
Depreciation and amortization		14,138			902			16,877			1,223
Operating		16,331			717			16,597			778
General and administrative		1,577			39			1,991			42
Total costs and expenses		32,046			1,658			35,465			2,043
Other income (expense):
Other income, net		2			—			8			—
Interest expense		(13,426	)		(326	)		(13,708	)		(441	)
Net income (loss)	$	(5,722	)	$	4,047		$	(6,018	)	$	3,076
Depreciation and amortization		14,138			902			16,877			1,223
FFO	$	8,416		$	4,949		$	10,859		$	4,299
HCP’s pro rata share of FFO	$	1,927		$	2,883		$	2,432		$	2,487
Selected supplemental cash flow information:
Amortization of above and below market lease intangibles, net	$	(266	)	$	—		$	(51	)	$	—
Amortization of debt issuance costs, net		379			17			379			17
Straight-line rents		(556	)		4			(699	)		151
Leasing costs and tenant and capital improvements		(4,035	)		(475	)		(3,115	)		(663	)

(1)   Financial information is combined by primary segment of each joint venture (i.e., HCP Ventures III and HCP Ventures IV are combined under the medical office columns).

See Reporting Definitions and Reconciliations of Non-GAAP Measures

23

Investment Management Platform

  In thousands

Net Operating Income(1)
	Three Months Ended June 30, 2011					Three Months Ended June 30, 2010
	Medical Office			Life Science		Medical Office			Life Science
Net income (loss)	$	(3,440	)	$	2,078	$	(2,307	)	$	2,172
Depreciation and amortization		7,121			379		7,612			612
General and administrative		710			24		1,042			12
Other income, net		—			—		(6	)		—
Interest expense		6,743			157		6,858			217
NOI	$	11,134		$	2,638	$	13,199		$	3,013
Straight-line rents		(248	)		47		(750	)		92
Amortization of above (below) market lease intangibles, net		(141	)		—		(81	)		—
Adjusted NOI	$	10,745		$	2,685	$	12,368		$	3,105
HCP’s pro rata share of NOI	$	2,504		$	1,537	$	2,917		$	1,772
HCP’s pro rata share of adjusted NOI	$	2,416		$	1,563	$	2,735		$	1,818
	Six Months Ended June 30, 2011					Six Months Ended June 30, 2010
	Medical Office			Life Science		Medical Office			Life Science
Net income (loss)	$	(5,722	)	$	4,047	$	(6,018	)	$	3,076
Depreciation and amortization		14,138			902		16,877			1,223
General and administrative		1,577			39		1,991			42
Other income, net		(2	)		—		(8	)		—
Interest expense		13,426			326		13,708			441
NOI	$	23,417		$	5,314	$	26,550		$	4,782
Straight-line rents		(556	)		4		(699	)		151
Amortization of above (below) market lease intangibles, net		(266	)		—		(51	)		—
Lease termination fees		(31	)		—		(429	)		—
Adjusted NOI	$	22,564		$	5,318	$	25,371		$	4,933
HCP’s pro rata share of NOI	$	5,246		$	3,093	$	5,895		$	2,766
HCP’s pro rata share of adjusted NOI	$	5,054		$	3,100	$	5,619		$	2,842

(1)   Financial information is combined by primary segment of each joint venture (i.e., HCP Ventures III and HCP Ventures IV are combined under the medical office columns).

See Reporting Definitions and Reconciliations of Non-GAAP Measures

24

Investment Management Platform

As of and for the six months ended June 30, 2011, dollars and square feet in thousands

	Property					Adjusted		Average	Square
HCP Ventures III	Count	Investment		NOI		NOI		Age (Years)	Feet	Occupancy%
Medical office:
On-Campus	9	$	109,282	$	4,508	$	4,323	11	619	98.7
Off-Campus	4	33,097		1,115		1,082		10	183	84.1
	13	$	142,379	$	5,623	$	5,405	10	802	95.4

	Property					Adjusted		Average	Square
HCP Ventures IV	Count(1)	Investment		NOI		NOI		Age (Years)	Feet	Occupancy%(2)
Medical office:
On-Campus	22	$	212,111	$	5,295	$	5,279	23	1,103	73.0
Off-Campus	31	355,613		9,708		9,383		19	1,483	84.3
Hospital:
LTACH	1	12,193		195		195		5	N/A
Rehab	1	13,965		625		552		5	N/A
Specialty	2	55,225		1,971		1,750		7	N/A
	57	$	649,107	$	17,794	$	17,159	20

	Property					Adjusted		Average	Square
HCP Life Science	Count	Investment		NOI		NOI		Age (Years)	Feet	Occupancy%
San Francisco	2	$	74,523	$	2,364	$	2,453	14	147	100.0
San Diego	2	69,240		2,950		2,865		15	131	90.3
	4	$	143,763	$	5,314	$	5,318	15	278	95.4
Total	74	$	935,249	$	28,731	$	27,882

(1)During 2010, one medical office building was placed into redevelopment; its statistics are not included in the medical office information.

(2)Certain operators in the Investment Management Platform hospital portfolio are not required under their respective leases to provide operational data.

See Reporting Definitions and Reconciliations of Non-GAAP Measures

25

Reporting Definitions and Reconciliations of Non-GAAP Measures

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 June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Adjusted EBITDA	$	432,365	$	249,208	$	701,834	$	486,600
Interest expense:
Continuing operations	105,129		72,745		213,705		148,697
Discontinued operations	—		2		—		6
HCP’s share of interest expense from the Investment Management Platform	1,584		4,981		3,159		9,940
Capitalized interest	6,550		5,154		12,538		10,204
Preferred stock dividends	5,283		5,283		10,566		10,566
Fixed charges	$	118,546	$	88,165	$	239,968	$	179,413
Adjusted fixed charge coverage	3.6 x		2.8 x		2.9 x		2.7 x

Annualized Debt Service.  The most recent monthly interest and principal amortization due to HCP as of period end annualized for 12 months. The Company uses Annualized Debt Service for purposes of determining Debt Service Coverage.

Annualized Revenues.  The most recent monthly base rent (including additional rent floors), income from direct financing leases and/or interest income annualized for 12 months. Annualized Revenues do not include tenant recoveries, additional rents in excess of floors 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 Debt Investment 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.

Assisted 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). Life science facilities and medical office buildings are measured in square feet. Post-acute/skilled nursing facilities and hospitals are measured in licensed bed count.

Cash Flow Coverage (“CFC”).  Facility EBITDAR or Facility EBITDARM for the most recent 12 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 Debt.  The carrying amount of bank line of credit, bridge and term loans (if applicable), senior unsecured notes, mortgage and other secured 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 and other secured debt secured by real estate excluding debt on assets held for sale 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 Investments.  Loans secured by a direct interest in real estate and mezzanine loans.

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

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.

  26

Reporting Definitions and Reconciliations of Non-GAAP Measures

Estimated Completion Date.For development projects, management’s estimate of the date the core and shell structure improvements are expected to be or have been completed. For redevelopment projects, management’s estimate of the time in which major construction activity in relation to the scope of the project has been substantially completed.

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 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, impairment recoveries, 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. 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 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. 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. 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 income:

In thousands

	Three Months Ended June 30						Six Months Ended June 30,
	2011			2010			2011			2010
Net income	$	234,252		$	88,595		$	308,236		$	172,696
Interest expense:
Continuing operations	105,129			72,745			213,705			148,697
Discontinued operations	—			2			—			6
Income taxes:
Continuing operations	248			571			285			943
Discontinued operations	—			6			—			21
Depreciation and amortization of real estate, in-place lease and other intangibles:
Continuing operations	90,052			77,700			181,472			155,634
Discontinued operations	—			212			—			1,249
Equity income from unconsolidated joint ventures	(14,950		)	(2,486		)	(15,748		)	(3,869		)
HCP’s share of EBITDA from the Investment Management Platform	3,872			11,388			7,969			22,098
Other joint venture adjustments	13,492			540			13,684			1,090
EBITDA	$	432,095		$	249,273		$	709,603		$	498,565
Impairment recoveries	—			—			—			(11,900		)
Gain on sales of real estate	—			(65		)	—			(65		)
Gain upon consolidation of joint venture	270			—			(7,769		)	—
Adjusted EBITDA	$	432,365		$	249,208		$	701,834		$	486,600

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), for the trailing 12 months and one quarter in arrears from the date presented. 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 5% for senior housing facilities and post-acute/skilled nursing facilities and 2% for acute care hospitals 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), for the trailing 12 months and one quarter in arrears from the date presented.  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.

  27

Reporting Definitions and Reconciliations of Non-GAAP Measures

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 Available for Distribution (“FAD”).  Funds Available for Distribution is defined as FFO as adjusted after excluding the impact of the following: (i) straight-line rents; (ii) amortization of acquired above/below market lease intangibles; (iii) amortization of debt premiums, discounts and issuance costs; (iv) amortization of stock—based compensation expense; (v) accretion and depreciation related to direct financing leases; and (vi) deferred revenues. Further, FAD is computed after deducting recurring capital expenditures, including leasing costs and second generation tenant and capital improvements and includes similar adjustments to compute the Company’s share of FAD from its unconsolidated joint ventures. Other REITs or real estate companies may use different methodologies for calculating FAD, and accordingly, HCP’s FAD may not be comparable to those reported by other REITs. Although HCP’s FAD computation may not be comparable to that of other REITs, management believes FAD provides a meaningful supplemental measure of the Company’s ability to fund its ongoing dividend payments. In addition, management believes that in order to further understand and analyze the Company’s liquidity, FAD should be compared with cash flows as determined in accordance with GAAP and presented in its consolidated financial statements. FAD does not represent cash generated from operating activities determined in accordance with GAAP, and FAD should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of the Company’s performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of the Company’s liquidity.

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 utilizes 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 and upon changes in control of joint ventures, plus real estate and DFL 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 and DFL 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 as adjusted represents FFO before the impact of impairments, impairment recoveries and merger-related items.  Merger-related items include estimated acquisition pursuit costs that consist primarily of professional fees and the impact of common stock offering which increases the weighted average shares outstanding, when such proceeds will be used to fund a portion of the cash consideration of the Company’s pending acquisitions.  Management believes FFO as adjusted is a useful alternative measurement.  This measure is a modification of the NAREIT definition of FFO and should not be used as an alternative to net income.

FFO Payout Ratio.  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.

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 the Company’s purchase of Slough Estates USA Inc. on August 1, 2007.

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.

  28

Reporting Definitions and Reconciliations of Non-GAAP Measures

Investment.  Represents (i) the carrying amount of real estate assets, including intangibles, after adding back accumulated depreciation and amortization, excluding assets held for sale and classified as discontinued operations and (ii) the carrying amount of DFLs and debt investments.

Investment Management Platform.  Includes the following unconsolidated joint ventures: (i) HCP Life Science, (ii) HCP Ventures III and (iii) 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.

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 interest income, investment management fee income, depreciation and amortization, interest expense, general and administrative expenses, impairments, impairment recoveries, other income, net, income taxes, equity income from unconsolidated joint ventures 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, DFL interest accretion, amortization of above and below market lease intangibles, and lease termination fees. NOI, as adjusted, is sometimes referred to 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 June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Net income	$	234,252		$	88,595		$	308,236		$	172,696
Interest income	(60,526		)	(36,156		)	(98,622		)	(71,422		)
Investment management fee income	(504		)	(1,290		)	(1,111		)	(2,598		)
Depreciation and amortization	90,052			77,700			181,472			155,634
Interest expense	105,129			72,745			213,705			148,697
General and administrative	34,872			20,525			56,824			45,449
Impairment recoveries	—			—			—			(11,900		)
Other income, net	(7,518		)	(181		)	(17,830		)	(494		)
Income taxes	248			571			285			943
Equity income from unconsolidated joint ventures	(14,950		)	(2,486		)	(15,748		)	(3,869		)
Total discontinued operations, net of taxes	—			(1,008		)	—			(1,962		)
NOI	$	381,055		$	219,015		$	627,211		$	431,174
Straight-line rents	(15,612		)	(8,419		)	(32,912		)	(21,695		)
DFL interest accretion	(22,262		)	(2,569		)	(24,937		)	(5,408		)
Amortization of above and below market lease intangibles, net	(1,187		)	(1,804		)	(2,093		)	(3,708		)
Lease termination fees	(1,589		)	(1,589		)	(3,178		)	(3,573		)
NOI adjustments related to discontinued operations	—			10			—			21
Adjusted NOI	$	340,405		$	204,644		$	564,091		$	396,811

Occupancy.  For life science facilities and medical office buildings, occupancy represents the percentage of total rentable square feet leased where rental payments have commenced, including month-to-month leases, as of the end of the period reported. For senior housing facilities, post-acute/skilled nursing facilities and hospitals, occupancy represents the facilities’ average operating occupancy for the trailing 12 months and one quarter in arrears from the date reported. The percentages are calculated based on licensed beds, available beds and units for senior housing facilities, post-acute/skilled nursing facilities and hospitals, respectively. The percentages shown exclude newly completed facilities under lease-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. For the same property portfolio, occupancy for senior housing facilities, post-acute/skilled nursing facilities and hospitals are presented based on the average operating occupancy for trailing three-month period one quarter in arrears from the date reported.

Owned Portfolio.  Represents owned properties subject to operating leases and DFLs and debt investments, and excludes properties under development, including redevelopment, and land held for development.

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 47 assets under 6 separate pools.

Quality Mix.  Represents non-medicaid revenues as a percent of total revenues for the trailing 12 months and is one quarter in arrears from the period presented.

Redevelopment Projects.  Properties that require significant capital expenditures (generally more than 25% of acquisition 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.

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

  29

Reporting Definitions and Reconciliations of Non-GAAP Measures

Retention Rate.  The Company defines retention rate as the ratio of total square feet expiring and available for lease to total renewed square feet, excluding the square feet for tenant leases terminated for default or buy-out prior to the expiration of their lease.

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”).  Same property statistics allow management to evaluate the performance of the Company’s leased property portfolio under a consistent population, which eliminates the changes in the composition of the Company’s portfolio of properties. The Company identifies its same property portfolio as stabilized properties that are, and remained, in operations for the duration of the year-over-year comparison periods presented.  Accordingly, it takes a stabilized property a minimum of 12 months in operations to be included in the Company’s same property portfolio.  SPP NOI excludes certain non-property specific operating expenses that are allocated to each operating segment on a consolidated basis.

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.

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.  The square footage for properties, excluding square footage for development or redevelopment properties prior to completion.

Stabilized.  Newly acquired operating assets are generally considered stabilized at the earlier of lease up (typically when the tenant(s) controls the physical use of 80% of the space) or 12 months from the acquisition date. Newly completed developments, including redevelopments, are considered stabilized at the earlier of lease-up or 24 months from the date the property is placed in service.

Total Debt.  Consolidated Debt at Book Value plus the Company’s pro rata share of debt from the Investment Management Platform.

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

The following table details the calculation of Total Gross Assets:

In thousands

	June 30, 2011			December 31, 2010			June 30, 2010
Consolidated total assets	$	17,693,058		$	13,331,923		$	12,244,643
Investments in and advances to unconsolidated joint ventures	(224,625		)	(195,847		)	(265,436		)
Accumulated depreciation and amortization	1,578,111			1,446,134			1,356,697
Accumulated depreciation and amortization from assets held for sale	—			—			12,592
Consolidated gross assets	$	19,046,544		$	14,582,210		$	13,348,496
HCP’s share of unconsolidated total assets(1)	297,427			515,182			541,916
HCP’s share of unconsolidated accumulated depreciation and amortization(1)	26,524			71,977			65,126
Total gross assets	$	19,370,495		$	15,169,369		$	13,955,538

Total Market Capitalization.  Total Debt plus Consolidated Market Equity.

Total Secured Debt.  Consolidated secured debt plus the Company’s pro rata share of mortgage debt from the Investment Management Platform.

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, 12 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)Reflects the Company’s pro rata share of amounts from the Investment Management Platform and its equity interest in HCR ManorCare OpCo.

  30