NOTE 3. Real Estate Property Investments

2016 Acquisitions

The following table summarizes the Company’s real estate acquisitions for the nine months ended September 30, 2016 (in thousands):


	Consideration				Assets Acquired(1)
			Mortgage and Other				Net
Segment	Cash Paid		Liabilities Assumed		Real Estate		Intangibles
SH NNN	$	76,362	$	1,200	$	71,875	$	5,687
SHOP		113,971		76,931		177,551		13,351
Life Science		49,000		—		47,400		1,600
Other		17,909		—		16,596		1,313
	$	257,242	$	78,131	$	313,422	$	21,951

(1)

The purchase price allocations are preliminary and may be subject to change. Revenues and earnings since the acquisition dates, as well as the supplementary pro forma information, assuming these acquisitions occurred as of the beginning of the prior periods, were not material.

2015 Acquisitions

Acquisition of Private Pay Senior Housing Portfolio (“RIDEA III”). On June 30, 2015, the Company and Brookdale Senior Living, Inc. (“Brookdale”) acquired a portfolio of 35 private pay senior housing communities from Chartwell Retirement Residences, including two leasehold interests, representing 5,025 units (reported within the Company’s SHOP segment). The portfolio was acquired under a RIDEA structure which is permitted by the Housing and Economic Recovery Act of 2008 (commonly referred to as “RIDEA”), 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 $776 million, (ii) lease-up intangible assets with a fair value of $48 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%).

Pro Forma Results of Operations. The following unaudited pro forma consolidated results of operations assume that the RIDEA III acquisition was completed as of January 1, 2014 (in thousands, except per share data):



	Nine Months Ended
	September 30, 2015
Revenues	$	1,963,402
Net income		56,009
Net income applicable to HCP, Inc.		46,662
Basic earnings per common share		0.10
Diluted earnings per common share		0.10

2015 Other Acquisitions. The following table summarizes the Company’s real estate acquisitions for the nine months ended September 30, 2015 (in thousands):


	Consideration							Assets Acquired(1)
	Cash Paid/			Liabilities		Noncontrolling				Net
Segment	Debt Settled			Assumed		Interest		Real Estate		Intangibles
SH NNN	$	208		$	—	$	—	$	208	$	—
SHOP		103,296			1,373		3,885		102,579		5,975
Medical office		377,351	(2)		12,849		—		349,649		40,551
Other		296,226	(3)		6,854		—		257,960		45,120
	$	777,081		$	21,076	$	3,885	$	710,396	$	91,646

(1)

Revenues and earnings since the acquisition dates, as well as the supplementary pro forma information, assuming these acquisitions occurred as of the beginning of the prior periods, were not material.

(2)

Includes $225 million for a medical office building (“MOB”) portfolio acquisition completed in June 2015 and placed in HCP Ventures V, of which, in October 2015, the Company issued a 49% noncontrolling interest for $110 million (see Note 12).

(3)

Includes £174 million ($254 million) of the Company’s HC-One Facility (see Note 6) converted to fee ownership in a portfolio of 36 care homes located throughout the United Kingdom (“U.K.”).

Construction, Tenant and Other Capital Improvements

The following table summarizes the Company’s funding for construction, tenant and other capital improvements (in thousands):


	Nine Months Ended September 30,
Segment	2016		2015
SH NNN	$	35,687	$	27,289
SHOP		55,795		49,351
Life science		152,739		80,871
Medical office		88,523		93,012
Other		6,840		3,406
	$	339,584	$	253,929