Segment Disclosures

The Company evaluates its business and allocates resources based on its reportable business segments: (i) Senior housing triple-net, (ii) SHOP, (iii) life science and (iv) medical office. Under the medical office segment, the Company invests through the acquisition and development of medical office buildings (“MOBs”), which generally require a greater level of property management. Otherwise, the Company primarily invests, through the acquisition and development of real estate, in single tenant and operator properties. The Company has non-reportable segments that are comprised primarily of the Company’s debt investments, hospital properties and U.K. care homes. The accounting policies of the segments are the same as those in Note 2 to the Consolidated Financial Statements in the Company’s 2016 Annual Report on Form 10-K filed with the SEC, as updated by Note 2 herein. During the year ended December 31, 2016, 17 senior housing triple-net facilities were transitioned to a RIDEA structure (reported in the Company’s SHOP segment). During the six months ended June 30, 2017, one senior housing triple-net facility was transitioned to a RIDEA structure. The Company evaluates performance based upon: (i) property net operating income from continuing operations (“NOI”) and (ii) adjusted NOI of the combined consolidated and unconsolidated investments in each segment. NOI is defined as rental and related revenues, including tenant recoveries, resident fees and services, and income from DFLs, less property level operating expenses. Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL non-cash interest, amortization of market lease intangibles, non-refundable entrance fees, net of entrance fee amortization and lease termination fees and the impact of deferred community fee income and expense (“Adjustments to NOI”). The Adjustments to NOI and resulting Adjusted NOI for SHOP have been restated for prior periods presented to conform to the current period presentation for the adjustment to exclude the impact of deferred community fee income and expense, resulting in recognition as cash is received and expenses are paid.

Non-segment assets consist primarily of corporate assets, including cash and cash equivalents, restricted cash, accounts receivable, net, marketable equity securities and, if any, real estate held for sale. Interest expense, depreciation and amortization, and non-property specific revenues and expenses are not allocated to individual segments in evaluating the Company’s segment-level performance. See Note 17 for other information regarding concentrations of credit risk.

The following tables summarize information for the reportable segments (in thousands):

For the three months ended June 30, 2017:



	Senior Housing Triple-Net			SHOP			Life Science			Medical Office			Other Non-reportable			Corporate Non-segment			Total
Rental revenues⁽¹⁾	$	78,079		$	125,416		$	86,730		$	119,164		$	28,670		$	—		$	438,059
HCP share of unconsolidated JV revenues	—			81,368			2,004			496			417			—			84,285
Operating expenses	(882		)	(85,866		)	(18,744		)	(46,581		)	(1,090		)	—			(153,163		)
HCP share of unconsolidated JV operating expenses	—			(65,487		)	(429		)	(146		)	(19		)	—			(66,081		)
NOI	77,197			55,431			69,561			72,933			27,978			—			303,100
Adjustments to NOI⁽²⁾	(406		)	4,523			(91		)	(769		)	(864		)	—			2,393
Adjusted NOI	76,791			59,954			69,470			72,164			27,114			—			305,493
Addback adjustments	406			(4,523		)	91			769			864			—			(2,393		)
Interest income	—			—			—			—			20,869			—			20,869
Interest expense	(631		)	(1,166		)	(96		)	(127		)	(1,181		)	(74,587		)	(77,788		)
Depreciation and amortization	(25,519		)	(24,415		)	(31,004		)	(42,488		)	(7,325		)	—			(130,751		)
General and administrative	—			—			—			—			—			(21,286		)	(21,286		)
Acquisition and pursuit costs	—			—			—			—			—			(867		)	(867		)
Impairment	—			—			—			—			(56,682		)	—			(56,682		)
Gain (loss) on sales of real estate, net	(230		)	(232		)	1,280			(406		)	—			—			412
Other income, net	—			—			—			—			—			71			71
Income tax benefit	—			—			—			—			—			2,987			2,987
Less: HCP share of unconsolidated JV NOI	—			(15,881		)	(1,575		)	(350		)	(398		)	—			(18,204		)
Equity income (loss) from unconsolidated JVs	—			(1,065		)	763			303			239			—			240
Net income (loss)	$	50,817		$	12,672		$	38,929		$	29,865		$	(16,500	)	$	(93,682	)	$	22,101

For the three months ended June 30, 2016:



	Senior Housing Triple-Net			SHOP			Life Science			Medical Office			Other Non-reportable			Corporate Non-segment			Total
Rental revenues⁽¹⁾	$	108,841		$	164,202		$	90,201		$	110,205		$	32,099		$	—		$	505,548
HCP share of unconsolidated JV revenues	—			52,855			1,898			524			407			—			55,684
Operating expenses	(1,642		)	(115,443		)	(17,961		)	(43,028		)	(1,006		)	—			(179,080		)
HCP share of unconsolidated JV operating expenses	—			(42,473		)	(400		)	(155		)	(7		)	—			(43,035		)
NOI	107,199			59,141			73,738			67,546			31,493			—			339,117
Adjustments to NOI⁽²⁾	(2,022		)	4,248			(544		)	(753		)	(214		)	—			715
Adjusted NOI	105,177			63,389			73,194			66,793			31,279			—			339,832
Addback adjustments	2,022			(4,248		)	544			753			214			—			(715		)
Interest income	—			—			—			—			32,787			—			32,787
Interest expense	(4,049		)	(7,837		)	(632		)	(1,625		)	(2,476		)	(104,714		)	(121,333		)
Depreciation and amortization	(34,202		)	(24,988		)	(32,077		)	(40,604		)	(8,048		)	—			(139,919		)
General and administrative	—			—			—			—			—			(22,779		)	(22,779		)
Acquisition and pursuit costs	—			—			—			—			—			(823		)	(823		)
Gain on sales of real estate, net	—			—			29,455			8,311			81,848			—			119,614
Other income, net	—			—			—			—			—			2,340			2,340
Income tax benefit	—			—			—			—			—			2,179			2,179
Less: HCP share of unconsolidated JV NOI	—			(10,382		)	(1,498		)	(369		)	(400		)	—			(12,649		)
Equity income (loss) from unconsolidated JVs	—			(2,482		)	776			421			218			—			(1,067		)
Discontinued operations	—			—			—			—			—			107,375			107,375
Net income (loss)	$	68,948		$	13,452		$	69,762		$	33,680		$	135,422		$	(16,422	)	$	304,842

For the six months ended June 30, 2017:



	Senior Housing Triple-Net			SHOP			Life Science			Medical Office			Other Non-reportable			Corporate Non-segment			Total
Rental revenues⁽¹⁾	$	178,112		$	265,644		$	172,050		$	237,535		$	58,555		$	—		$	911,896
HCP share of unconsolidated JV revenues	—			157,731			3,944			985			835			—			163,495
Operating expenses	(1,993		)	(180,405		)	(36,064		)	(91,444		)	(2,338		)	—			(312,244		)
HCP share of unconsolidated JV operating expenses	—			(125,014		)	(800		)	(288		)	(38		)	—			(126,140		)
NOI	176,119			117,956			139,130			146,788			57,014			—			637,007
Adjustments to NOI⁽²⁾	(2,245		)	7,679			(345		)	(1,739		)	(1,879		)	—			1,471
Adjusted NOI	173,874			125,635			138,785			145,049			55,135			—			638,478
Addback adjustments	2,245			(7,679		)	345			1,739			1,879			—			(1,471		)
Interest income	—			—			—			—			39,200			—			39,200
Interest expense	(1,258		)	(6,017		)	(200		)	(256		)	(2,923		)	(153,852		)	(164,506		)
Depreciation and amortization	(51,930		)	(50,773		)	(64,795		)	(85,217		)	(14,590		)	—			(267,305		)
General and administrative	—			—			—			—			—			(43,764		)	(43,764		)
Acquisition and pursuit costs	—			—			—			—			—			(1,924		)	(1,924		)
Impairment	—			—			—			—			(56,682		)	—			(56,682		)
Gain (loss) on sales of real estate, net	268,234			134			45,913			(406		)	3,795			—			317,670
Other income, net	—			—			—			—			—			51,279			51,279
Income tax benefit	—			—			—			—			—			9,149			9,149
Less: HCP share of unconsolidated JV NOI	—			(32,717		)	(3,144		)	(697		)	(797		)	—			(37,355		)
Equity income from unconsolidated JVs	—			927			1,533			572			477			—			3,509
Net income (loss)	$	391,165		$	29,510		$	118,437		$	60,784		$	25,494		$	(139,112	)	$	486,278

For the six months ended June 30, 2016:



	Senior Housing Triple-Net			SHOP			Life Science			Medical Office			Other Non-reportable			Corporate Non-segment			Total
Rental revenues⁽¹⁾	$	215,731		$	329,964		$	179,149		$	218,228		$	64,904		$	—		$	1,007,976
HCP share of unconsolidated JV revenues	—			103,284			3,708			1,003			814			—			108,809
Operating expenses	(3,716		)	(229,446		)	(34,704		)	(84,977		)	(2,194		)	—			(355,037		)
HCP share of unconsolidated JV operating expenses	—			(83,668		)	(774		)	(304		)	(10		)	—			(84,756		)
NOI	212,015			120,134			147,379			133,950			63,514			—			676,992
Adjustments to NOI⁽²⁾	(7,466		)	8,642			(1,217		)	(1,548		)	(785		)	—			(2,374		)
Adjusted NOI	204,549			128,776			146,162			132,402			62,729			—			674,618
Addback adjustments	7,466			(8,642		)	1,217			1,548			785			—			2,374
Interest income	—			—			—			—			50,816			—			50,816
Interest expense	(8,215		)	(15,690		)	(1,270		)	(3,291		)	(4,805		)	(210,124		)	(243,395		)
Depreciation and amortization	(67,707		)	(51,286		)	(65,674		)	(79,322		)	(15,785		)	—			(279,774		)
General and administrative	—			—			—			—			—			(48,230		)	(48,230		)
Acquisition and pursuit costs	—			—			—			—			—			(3,298		)	(3,298		)
Gain on sales of real estate, net	—			—			29,455			8,311			81,848			—			119,614
Other income, net	—			—			—			—			—			3,632			3,632
Income tax expense	—			—			—			—			—			(1,525		)	(1,525		)
Less: HCP share of unconsolidated JV NOI	—			(19,616		)	(2,934		)	(699		)	(804		)	—			(24,053		)
Equity income (loss) from unconsolidated JVs	—			(4,960		)	1,485			1,079			421			—			(1,975		)
Discontinued operations	—			—			—			—			—			175,783			175,783
Net income (loss)	$	136,093		$	28,582		$	108,441		$	60,028		$	175,205		$	(83,762	)	$	424,587

_______________________________________


(1)	Represents rental and related revenues, tenant recoveries, resident fees and services, and income from DFLs.


(2)	Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, the deferral of community fees, net of amortization, lease termination fees and non-refundable entrance fees as the fees are collected by the Company’s CCRC JV, net of CCRC JV entrance fee amortization.

The following table summarizes the Company’s revenues by segment (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
Segment	2017		2016		2017		2016
Senior housing triple-net	$	78,079	$	108,841	$	178,112	$	215,731
SHOP	125,416		164,202		265,644		329,964
Life science	86,730		90,201		172,050		179,149
Medical office	119,164		110,205		237,535		218,228
Other non-reportable segments	49,539		64,886		97,755		115,720
Total revenues	$	458,928	$	538,335	$	951,096	$	1,058,792

See Notes 3 and 4 for significant transactions impacting the Company’s segment assets during the periods presented.