NOTE 4. Other Real Estate Property Investments

Acquisition of Private Pay Senior Housing Portfolio (“RIDEA III”)

On June 30, 2015, the Company and Brookdale acquired a portfolio of 35 private pay senior housing communities from Chartwell Retirement Residences, including two leasehold interests, representing 5,025 units. The portfolio was acquired in a RIDEA structure (“RIDEA III”), with Brookdale owning a 10% noncontrolling interest. Brookdale has operated these communities since 2011 and continues to manage the communities under a long-term management agreement, which is cancellable under certain conditions (subject to a fee if terminated within seven years from the acquisition date). The Company paid $770 million in cash consideration, net of cash assumed, and assumed $32 million of net liabilities and $29 million of noncontrolling interests to acquire: (i) real estate with a fair value of $771 million, (ii) lease-up intangible assets with a fair value of $53 million and (iii) working capital of $7 million. As a result of the acquisition, the Company recognized a net termination fee of $8 million in rental and related revenues, which represents the termination value of the two leasehold interests. The lease-up intangible assets recognized were attributable to the value of the acquired underlying operating resident leases of the senior housing communities that were stabilized or nearly stabilized (i.e., resident occupancy above 80%). From the acquisition date to December 31, 2015, the Company recognized revenues and earnings of $94 million and $1 million, respectively, from RIDEA III. As of December 31, 2015, the purchase price allocation is preliminary and may be subject to change.

Pro Forma Results of Operations (Unaudited)

The following unaudited pro forma consolidated results of operations assume that the RIDEA III acquisition was completed as of January 1, 2013 (in thousands, except per share amounts):


	December 31, 2015		December 31, 2014		December 31, 2013
Revenues	$	2,638,192	$	2,454,039	$	2,287,638
Net (loss) income		(531,464)		954,540		996,976
Net (loss) income applicable to HCP, Inc.		(545,776)		938,387		981,610
Basic earnings per common share	$	(1.18)	$	2.04	$	2.15
Diluted earnings per common share		(1.18)		2.04		2.15

2015 Other Real Estate Acquisitions

In addition to the RIDEA III acquisition discussed above, a summary of other real estate acquisitions for the year ended December 31, 2015 follows (in thousands):


	Consideration						Assets Acquired(1)
	Cash Paid/		Liabilities		Noncontrolling				Net
Segment	Debt Settled		Assumed		Interest		Real Estate		Intangibles
Senior housing(2)	$	268,782	$	8,298	$	4,255	$	253,802		27,533
Post-acute/skilled nursing(2)		178,707		—		—		142,528		36,179
Life science		80,946		2,054		—		68,988		14,012
Medical office(3)		384,114		12,866		—		305,091		91,889
	$	912,549	$	23,218	$	4,255	$	770,409	$	169,613

(1)

Amounts include preliminary purchase price allocations which may be subject to change.

(2)

Includes £174 million ($254 million) of the Company’s HC-One Facility (see Note 7) converted to fee ownership in a portfolio of 36 care homes located throughout the United Kingdom (“U.K.”) and includes £27 million ($42 million) of a loan originated in May 2015 converted to fee ownership in two U.K. care homes.

(3)

Includes $225 million for a medical office building (“MOB”) portfolio acquisition completed in June 2015 and placed in HCP Ventures V, LLC (“HCP Ventures V”), of which in October 2015 the Company issued a 49% noncontrolling interest in HCP Ventures V for $110 million (see Note 13).

2014 Real Estate Acquisitions

A summary of other real estate acquisitions for the year ended December 31, 2014 follows (in thousands):


	Consideration							Assets Acquired
			Debt and Other
			Liabilities		Noncontrolling					Net
Segment	Cash Paid		Assumed		Interest			Real Estate		Intangibles
Senior housing(1)	$	233,797	$	3,351	$	6,321	(2)	$	215,255		28,214
Life science		43,500		250		—			41,281		2,469
Medical office		226,173		33,677		—			226,510		33,340
	$	503,470	$	37,278	$	6,321		$	483,046	$	64,023

(1)

Includes the acquisition of a $147 million (£88 million) portfolio of 23 care homes in the UK.

(2)

Includes $5 million of non-managing member limited liability company units

Completed Developments

During the year ended December 31, 2014, the Company placed in service the following: (i) two life science facilities, (ii) a MOB and (iii) a post-acute/skilled nursing facility. These completed developments represented $41 million of gross real estate on the Company’s consolidated balance sheets as of the date they were placed in service. There were no completed developments placed in service during the year ended December 31, 2015.

Construction, Tenant and Other Capital Improvements

A summary of the Company’s funding for construction, tenant and other capital improvements follows (in thousands):


	Year Ended December 31,
Segment	2015		2014
Senior housing	$	131,405	$	45,586
Post-acute/skilled nursing		3,369		2,533
Life science		122,319		133,164
Medical office		131,021		90,027
Hospital		37		1,688
	$	388,151	$	272,998