1
Earnings Release and
Supplemental Report
first quarter 2018
Cypress MOB
Cypress, TX
2
Earnings Release 3
Overview 8
Consolidated Financial Statements 9
Portfolio Summary 13
Same Property Portfolio 15
Capitalization and Indebtedness 16
Investment Summary 19
Developments and Redevelopments 20
Capital Expenditures 22
Portfolio Diversification 23
Expirations and Maturities 25
Triple-net Master Lease Profile 26
Portfolio
Senior Housing Triple-net 27
Senior Housing Operating Portfolio 30
Life Science 34
Medical Office 37
Other 40
Guidance 46
Glossary and Debt Ratios 47
Company Information 53
Forward-Looking Statements & Risk Factors 54
Discussion and Reconciliation of Non-GAAP Financial Measures
TABLE OF
Contents
3
HCP Announces Results for the Quarter Ended March 31, 2018
IRVINE, CA, May 3, 2018 -- HCP, Inc. (NYSE:HCP) announced results for the first quarter ended March 31, 2018.
FIRST QUARTER 2018 FINANCIAL PERFORMANCE AND RECENT HIGHLIGHTS
– Net income, FFO and FFO as adjusted per common share were $0.08, $0.47 and $0.48, respectively
– Announced transaction to exit U.K. holdings; initial transaction structured as joint venture with exit rights to sell remaining interest by no later than 2020
– Completed sale of six assets to Brookdale Senior Living, Inc. ("Brookdale") for $275 million
– As previously announced, agreed to transition 24 assets to Atria Senior Living (“Atria”); 13 assets transitioned to date
– As previously announced, closed on the sale of our Tandem mezzanine loan investment for $112 million
– Completed 150,000 square feet of leasing at our $62 million Ridgeview development, bringing the project to 100% leased
– Scott Brinker joined HCP as Executive Vice President and Chief Investment Officer
– Appointed two new independent directors; Brian Cartwright named Chairman of the Board
– Published our 7th annual Sustainability Report, a comprehensive assessment highlighting our Environmental, Social and Governance ("ESG") goals and achievements
– Reaffirmed full-year 2018 FFO as adjusted and SPP Cash NOI guidance ranges
FIRST QUARTER COMPARISON
(1) For the three months ended March 31, 2018, represents the impairment recovery upon sale of our Tandem Health Care mezzanine loan ("Tandem Mezzanine Loan") in March 2018. For the three
months ended March 31, 2017, represents the impairment recovery upon the sale of our Four Seasons Health Care senior notes in the first quarter of 2017.
(2) For the three months ended March 31, 2018, relates to the departure of our former Executive Chairman, including $6 million of cash severance and $3 million of equity award vestings.
Three Months Ended
March 31, 2018
Three Months Ended
March 31, 2017
(in thousands, except per share amounts) Amount
Diluted
Per Share Amount
Diluted
Per Share
Per Share
Change
Net income (loss) $ 39,841 $ 0.08 $ 460,375 $ 0.97 $ (0.89)
FFO $ 219,434 $ 0.47 $ 288,249 $ 0.61 $ (0.14)
Transaction-related items 1,942 — 1,057 — —
Other impairments (recoveries), net(1) (3,298) (0.01) (50,895) (0.10) 0.09
Severance and related charges(2) 8,738 0.02 — — 0.02
Litigation costs 406 — 1,838 — —
Foreign currency remeasurement losses (gains) 130 — (77) — —
FFO as adjusted $ 227,352 $ 0.48 $ 240,172 $ 0.51 $ (0.03)
FAD $ 201,736 $ 218,555
FFO, FFO as adjusted, FAD, and SPP Cash NOI are supplemental non-GAAP financial measures that we believe are useful in evaluating the operating performance of real estate investment trusts. See
“March 31, 2018 Discussion and Reconciliation of Non-GAAP Financial Measures” for definitions, discussions of their uses and inherent limitations, and reconciliations to the most directly comparable
financial measures calculated and presented in accordance with GAAP on the Investor Relations section of our website at http://ir.hcpi.com/financial-reconciliation.
4
SAME PROPERTY PORTFOLIO OPERATING SUMMARY
The tables below outline the year-over-year three-month SPP Cash NOI growth and the components of our senior housing operating portfolio ("SHOP") SPP Cash NOI growth for the first quarter:
Three-Month SPP Cash NOI Growth
Senior housing triple-net 0.5%
SHOP (6.4%)
Life science 0.4%
Medical office 1.6%
Other non-reportable segments ("Other") 1.2%
Total Portfolio (0.2%)
TRANSACTION UPDATES
U.K. PORTFOLIO TRANSACTION
In May, we entered into definitive agreements with an institutional investor to create a joint venture through which we will sell a 51% interest in our U.K. holdings based on a total portfolio value of
£394 million. We expect to receive approximately £315 million of proceeds inclusive of the sale of our 51% interest and third party property-level debt. As part of the agreement, we have the ability
to sell our remaining 49% interest in the joint venture to the institutional investor by no later than 2020.
ACQUISITION AND DISPOSITION TRANSACTIONS WITH BROOKDALE
In November 2017, we announced a series of acquisitions and dispositions between HCP and Brookdale. To date, we have closed the following transactions:
• We sold the first of six assets to Brookdale for $32 million in January 2018 and the remaining five assets for $243 million in April 2018.
• We acquired Brookdale's 10% interest in the RIDEA III joint venture for $32 million in December 2017 and Brookdale’s 10% interest in the RIDEA I joint venture for $63 million in March 2018.
OPERATOR TRANSITIONS
In March, we announced an agreement to transition management of a portfolio of 24 HCP-owned senior housing communities from Brookdale to Atria. We have completed transitions on 13 communities
and expect the remainder of the properties to transition during the second quarter, subject to obtaining the required regulatory approvals. Additionally, we transitioned one community to another
existing operator, Sonata Senior Living ("Sonata").
In addition to Atria and Sonata, we are finalizing agreements with other operators to transition additional Brookdale managed communities and anticipate completing these transitions during 2018.
TANDEM DEBT INVESTMENT
As previously announced, in March, we sold our Tandem Mezzanine Loan investment for $112 million resulting in an impairment recovery of $3 million. This disposition ends our exposure to both
stand-alone post-acute/skilled-nursing assets and highly-leveraged mezzanine investments.
Components of SHOP SPP Cash NOI Growth
Core
Portfolio(1)
Transition/Sale
Portfolio(2) Total
Property count 35 34 69
SPP Cash NOI Growth (0.6%) (12.3%) (6.4%)
(1) Includes 18 properties managed by Brookdale and 17 properties managed by five operators
that are not expected to undergo a transition or sale during 2018.
(2) Represents properties managed by Brookdale that have transitioned or are expected to transition
to new operators or sell in 2018.
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DEVELOPMENT UPDATES
HAYDEN LEASING AND DEVELOPMENT
Since acquiring the Hayden Research Campus ("Hayden") in December 2017, leasing velocity has been strong with the two-building life science campus now 97% leased, up from 66% at the time
of acquisition. The new tenants are a combination of venture-backed early-stage and publicly-traded mid-stage biotechnology companies, both of which are expanding from their current locations
in the Cambridge and suburban Boston submarkets.
Given strong market fundamentals, in March we acquired development rights at Hayden for $21 million. The planned 214,000 square foot Class A development will enhance our scale in a leading
life science market.
RIDGEVIEW
In April, we signed two leases totaling 150,000 square feet with General Atomics, a major defense contractor headquartered in San Diego, at our Ridgeview development located in the San Diego
suburb of Poway, California. The $62 million, 300,000 square foot development is now 100% leased to General Atomics.
BALANCE SHEET
At March 31, 2018, we had $1.0 billion of liquidity from a combination of cash and availability under our $2.0 billion credit facility. Additionally, we have no major senior notes or secured debt
maturities until 2019.
On April 6, 2018, we repaid $290 million on our credit facility, primarily using proceeds from asset sales to Brookdale.
EXECUTIVE LEADERSHIP AND BOARD OF DIRECTORS
Scott Brinker joined HCP as Executive Vice President and Chief Investment Officer, effective March 1, 2018.
As previously announced, HCP appointed Lydia Kennard and Kent Griffin as new independent directors and named Brian Cartwright Chairman of the Board. A copy of the press release is available
in the Investor Relations section of our website at http://ir.hcpi.com.
DIVIDEND
On April 26, 2018, our Board declared a quarterly cash dividend of $0.37 per common share. The dividend will be paid on May 22, 2018 to stockholders of record as of the close of business on
May 7, 2018.
SUSTAINABILITY
In April, we published our 7th annual Corporate Sustainability Report highlighting the environmental, social, and governance aspects of our operations. More information about HCP's sustainability
efforts, including a link to our Sustainability Report, can be found on our website at www.hcpi.com/sustainable-growth.
6
(1) Effective 2018, unconsolidated joint ventures, including our CCRC joint venture, were removed from our same property portfolio in order to better align with how management views our business.
COMPANY INFORMATION
HCP has scheduled a conference call and webcast for Thursday, May 3, 2018, at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) to present its performance and operating results for the quarter ended
March 31, 2018. The conference call is accessible by dialing (888) 317-6003 (U.S.) or (412) 317-6061 (International). The conference ID number is 0310687. You may also access the conference call
via webcast in the Investor Relations section of our website at http://ir.hcpi.com. Through May 18, 2018, an archive of the webcast will be available on our website, and a telephonic replay can be
accessed by dialing (877) 344-7529 (U.S.) or (412) 317-0088 (International) and entering conference ID number 10118904. Our Supplemental Report for the current period is available, with this earnings
release, in the Investor Relations section of our website.
ABOUT HCP
HCP, Inc. is a fully integrated real estate investment trust (REIT) that invests in real estate serving the healthcare industry in the United States. HCP owns a large-scale portfolio primarily diversified
across life science, medical office and senior housing. Recognized as a global leader in sustainability, HCP has been a publicly-traded company since 1985 and was the first healthcare REIT selected
to the S&P 500 index. For more information regarding HCP, visit www.hcpi.com.
2018 GUIDANCE
For full year 2018, we are reaffirming the following guidance ranges:
• Net income per share of $0.79 to $0.85
• FFO per share of $1.73 to $1.79
• FFO as adjusted per share of $1.77 to $1.83
• SPP Cash NOI to increase 0.25% to 1.75%
These estimates do not reflect the potential impact from any unannounced future transactions other than capital recycling activities. For additional detail, assumptions, and information regarding these
estimates, refer to the “Projected Full Year 2018 SPP Cash NOI” table below, the 2018 Guidance section of our corresponding Supplemental Report, and Discussion and Reconciliation of Non-GAAP
Financial Measures, both available in the Investor Relations section of our website at http://ir.hcpi.com.
Projected Full Year 2018 SPP Cash NOI(1)
Low High
Senior housing triple-net 0.50% 1.50%
SHOP (4.00%) 0.00%
Life science 0.25% 1.25%
Medical office 1.75% 2.75%
Other 0.50% 1.50%
SPP Growth 0.25% 1.75%
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FORWARD-LOOKING STATEMENTS
Statements in this release that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Forward-looking statements include, among other things, statements regarding our and our officers’ intent, belief or expectation as identified by the use of words
such as “may,” “will,” “project,” “expect,” “believe,” “intend,” “anticipate,” “seek,” “forecast,” “plan,” “potential,” “estimate,” “could,” “would,” “should” and other comparable and derivative terms
or the negatives thereof. Examples of forward-looking statements include, among other things, (i) all statements under the heading “2018 Guidance,” including without limitation with respect to
expected net income, FFO per share, FFO as adjusted per share, SPP Cash NOI and other financial projections and assumptions, including those in the “Projected Full Year 2018 SPP Cash NOI” table
in this release, as well as comparable statements included in other sections of this release; (ii) statements regarding the payment of a quarterly cash dividend; and (iii) statements regarding timing,
outcomes and other details relating to current, pending or contemplated acquisitions, dispositions, transitions, developments, redevelopments, joint venture transactions, capital recycling and financing
activities, and other transactions discussed in this release, including without limitation those described under the headings "Transaction Updates" and "Development Updates." Forward-looking
statements reflect our current expectations and views about future events and are subject to risks and uncertainties that could significantly affect our future financial condition and results of operations.
While forward-looking statements reflect our good faith belief and assumptions we believe to be reasonable based upon current information, we can give no assurance that our expectations or forecasts
will be attained. Further, we cannot guarantee the accuracy of any such forward-looking statement contained in this release, and such forward-looking statements are subject to known and unknown
risks and uncertainties that are difficult to predict. These risks and uncertainties include, but are not limited to: our reliance on a concentration of a small number of tenants and operators for a significant
percentage of our revenues; the financial condition of our existing and future tenants, operators and borrowers, including potential bankruptcies and downturns in their businesses, and their legal and
regulatory proceedings, which results in uncertainties regarding our ability to continue to realize the full benefit of such tenants' and operators' leases and borrowers' loans; the ability of our existing
and future tenants, operators and borrowers to conduct their respective businesses in a manner sufficient to maintain or increase their revenues and to generate sufficient income to make rent and
loan payments to us and our ability to recover investments made, if applicable, in their operations; competition for the acquisition and financing of suitable healthcare properties as well as competition
for tenants and operators, including with respect to new leases and mortgages and the renewal or rollover of existing leases; our concentration in the healthcare property sector, particularly in senior
housing, life sciences and medical office buildings, which makes our profitability more vulnerable to a downturn in a specific sector than if we were investing in multiple industries; our ability to identify
replacement tenants and operators and the potential renovation costs and regulatory approvals associated therewith; the risks associated with property development and redevelopment, including
costs above original estimates, project delays and lower occupancy rates and rents than expected; the risks associated with our investments in joint ventures and unconsolidated entities, including our
lack of sole decision making authority and our reliance on our partners' financial condition and continued cooperation; our ability to achieve the benefits of acquisitions and other investments, including
those discussed above, within expected time frames or at all, or within expected cost projections; the potential impact on us and our tenants, operators and borrowers from current and future litigation
matters, including the possibility of larger than expected litigation costs, adverse results and related developments; operational risks associated with third party management contracts, including the
additional regulation and liabilities of our RIDEA lease structures; the effect on us and our tenants and operators of legislation, executive orders and other legal requirements, including compliance with
the Americans with Disabilities Act, fire, safety and health regulations, environmental laws, the Affordable Care Act, licensure, certification and inspection requirements, and laws addressing entitlement
programs and related services, including Medicare and Medicaid, which may result in future reductions in reimbursements or fines for noncompliance; changes in federal, state or local laws and
regulations, including those affecting the healthcare industry that affect our costs of compliance or increase the costs, or otherwise affect the operations, of our tenants and operators; our ability to
foreclose on collateral securing our real estate-related loans; volatility or uncertainty in the capital markets, the availability and cost of capital as impacted by interest rates, changes in our credit ratings,
and the value of our common stock, and other conditions that may adversely impact our ability to fund our obligations or consummate transactions, or reduce the earnings from potential transactions;
changes in global, national and local economic or other conditions, including currency exchange rates; our ability to manage our indebtedness level and changes in the terms of such indebtedness;
competition for skilled management and other key personnel; the potential impact of uninsured or underinsured losses; our reliance on information technology systems and the potential impact of
system failures, disruptions or breaches; the ability to maintain our qualification as a real estate investment trust; and other risks and uncertainties described from time to time in our Securities and
Exchange Commission filings. Except as required by law, we do not undertake, and hereby disclaim, any obligation to update any forward-looking statements, which speak only as of the date on which
they are made.
CONTACT
Andrew Johns
Vice President – Finance and Investor Relations
949-407-0400
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Overview(1)
As of and for the quarter ended March 31, 2018, dollars, square feet and shares in thousands, except per share data
1Q18
Full Year
2018 Guidance
(May 3, 2018)(2)
Financial Metrics
Diluted earnings per common share $0.08 $0.79 - $0.85
Diluted FFO per common share $0.47 $1.73 - $1.79
Diluted FFO as adjusted per common share $0.48 $1.77 - $1.83
Dividends per common share $0.37 $1.48
Rental and related revenues $472,832
NOI $300,280
Cash NOI $290,593
Portfolio Income(3) $318,695
Same Property Portfolio Cash NOI Growth
Senior housing triple-net 0.5% 0.50% - 1.50%
SHOP (6.4%) (4.00%) - 0.00%
Life science 0.4% 0.25% - 1.25%
Medical office 1.6% 1.75% - 2.75%
Other 1.2% 0.50% - 1.50%
Total (0.2%) 0.25% - 1.75%
1Q18 1Q18
Capitalization Debt Ratios
Common stock outstanding and DownREIT units 476,342 Financial Leverage 45.9%
Total Market Equity $ 11,065,425 Secured Debt Ratio 1.7%
Enterprise Debt $ 8,316,600 Net Debt to Adjusted EBITDA 6.7x
Adjusted Fixed Charge Coverage 3.8x
Property
Count Capacity Occupancy
Portfolio Statistics
Senior housing triple-net 181 18,331 Units 86.2%
SHOP 100 13,580 Units 85.5%
Life science 131 7,782 Sq. Ft. 93.4%
Medical office 254 18,472 Sq. Ft. 92.0%
Other 167 (4) N/A N/A
Total 833 N/A N/A
The Numbers
(1) Reconciliations, definitions and important discussions
regarding the usefulness and limitations of the non-GAAP
financial measures used in this report can be found at
http://ir.hcpi.com/financial-reconciliation. Totals throughout
this Earnings Release and Supplemental Report may not add
due to rounding.
(2) The current guidance has not changed from the February 13,
2018 guidance.
(3) Includes our share of unconsolidated joint ventures ("JVs")
and activity from assets sold and held for sale during the
periods presented.
(4) Effective this quarter, our 84 properties in unconsolidated
JVs are reported in the Other non-reportable segment. The
unconsolidated JVs include 49 assets in our RIDEA II JV that
are held for sale, 15 assets in our CCRC JV, 10 assets in our
Other SHOP JV portfolio, 4 life science assets, 3 medical
office buildings and 3 post/acute skilled facilities. See page
43 for further details.
9
March 31, 2018 December 31, 2017
Assets
Real estate:
Buildings and improvements $ 11,532,338 $ 11,239,732
Development costs and construction in progress 344,948 447,976
Land 1,808,210 1,785,865
Accumulated depreciation and amortization (2,826,325) (2,741,695)
Net real estate 10,859,171 10,731,878
Net investment in direct financing leases 713,463 714,352
Loans receivable, net 47,012 313,326
Investments in and advances to unconsolidated joint ventures 863,775 800,840
Accounts receivable, net of allowance of $4,516 and $4,425, respectively 51,468 40,733
Cash and cash equivalents 86,021 55,306
Restricted cash 31,947 26,897
Intangible assets, net 395,298 410,082
Assets held for sale, net 436,155 417,014
Other assets, net 583,261 578,033
Total assets $ 14,067,571 $ 14,088,461
Liabilities and Equity
Bank line of credit $ 1,092,357 $ 1,017,076
Term loan 236,878 228,288
Senior unsecured notes 6,398,976 6,396,451
Mortgage debt 143,524 144,486
Other debt 93,856 94,165
Intangible liabilities, net 52,576 52,579
Liabilities of assets held for sale, net 8,564 14,031
Accounts payable and accrued liabilities 391,942 401,738
Deferred revenue 167,975 144,709
Total liabilities 8,586,648 8,493,523
Commitments and contingencies
Common stock, $1.00 par value: 750,000,000 shares authorized; 469,725,220 and 469,435,678
shares issued and outstanding, respectively 469,725 469,436
Additional paid-in capital 8,183,166 8,226,113
Cumulative dividends in excess of earnings (3,425,293) (3,370,520)
Accumulated other comprehensive income (loss) (21,307) (24,024)
Total stockholders' equity 5,206,291 5,301,005
Joint venture partners 97,744 117,045
Non-managing member unitholders 176,888 176,888
Total noncontrolling interests 274,632 293,933
Total equity 5,480,923 5,594,938
Total liabilities and equity $ 14,067,571 $ 14,088,461
HCP, Inc.
Consolidated Balance Sheets
In thousands, except share and per share data
(unaudited)
10
HCP, Inc.
Consolidated Statements of Operations
In thousands, except per share data
(unaudited)
Three Months Ended March 31,
2018 2017
Revenues:
Rental and related revenues $ 279,578 $ 286,218
Tenant recoveries 37,174 33,675
Resident fees and services 142,814 140,232
Income from direct financing leases 13,266 13,712
Interest income 6,365 18,331
Total revenues 479,197 492,168
Costs and expenses:
Interest expense 75,102 86,718
Depreciation and amortization 143,250 136,554
Operating 172,552 159,081
General and administrative 29,175 22,478
Transaction costs 2,195 1,057
Total costs and expenses 422,274 405,888
Other income (expense):
Gain (loss) on sales of real estate, net 20,815 317,258
Other income (expense), net (40,407) 51,208
Total other income (expense), net (19,592) 368,466
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures 37,331 454,746
Income tax benefit (expense) 5,336 6,162
Equity income (loss) from unconsolidated joint ventures 570 3,269
Net income (loss) 43,237 464,177
Noncontrolling interests' share in earnings (3,005) (3,032)
Net income (loss) attributable to HCP, Inc. 40,232 461,145
Participating securities' share in earnings (391) (770)
Net income (loss) applicable to common shares $ 39,841 $ 460,375
Earnings per common share:
Basic $ 0.08 $ 0.98
Diluted $ 0.08 $ 0.97
Weighted average shares outstanding:
Basic 469,557 468,299
Diluted 469,695 475,173
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HCP, Inc.
Funds From Operations
In thousands, except per share data
(unaudited)
Three Months Ended March 31,
2018 2017
Net income (loss) applicable to common shares $ 39,841 $ 460,375
Real estate related depreciation and amortization 143,250 136,554
Real estate related depreciation and amortization on unconsolidated joint ventures 17,388 15,039
Real estate related depreciation and amortization on noncontrolling interests and other (2,543) (3,972)
Other depreciation and amortization 1,296 3,010
Loss (gain) on sales of real estate, net (20,815) (317,258)
Loss (gain) upon consolidation of real estate, net(1) 41,017 —
Taxes associated with real estate dispositions(2) — (5,499)
FFO applicable to common shares 219,434 288,249
Distributions on dilutive convertible units — 2,803
Diluted FFO applicable to common shares $ 219,434 $ 291,052
Diluted FFO per common share $ 0.47 $ 0.61
Weighted average shares outstanding - diluted FFO 469,695 475,173
Impact of adjustments to FFO:
Transaction-related items $ 1,942 $ 1,057
Other impairments (recoveries), net(3) (3,298) (50,895)
Severance and related charges(4) 8,738 —
Litigation costs 406 1,838
Foreign currency remeasurement losses (gains) 130 (77)
Total adjustments 7,918 (48,077)
FFO as adjusted applicable to common shares 227,352 240,172
Distributions on dilutive convertible units and other 1,711 2,877
Diluted FFO as adjusted applicable to common shares $ 229,063 $ 243,049
Diluted FFO as adjusted per common share $ 0.48 $ 0.51
Weighted average shares outstanding - diluted FFO as adjusted 474,363 475,173
(1) For the three months ended March 31, 2018, represents the loss on consolidation of seven U.K. care homes.
(2) For the three months ended March 31, 2017, represents income tax benefit associated with the disposition of real estate assets
in our RIDEA II transaction.
(3) For the three months ended March 31, 2018, represents the impairment recovery upon sale of our Tandem Health Care mezzanine
loan ("Tandem Mezzanine Loan") in March 2018. For the three months ended March 31, 2017, represents the impairment
recovery upon the sale of our Four Seasons Health Care senior notes in the first quarter of 2017.
(4) For the three months ended March 31, 2018, relates to the departure of our former Executive Chairman, including $6 million
of cash severance and $3 million of equity award vestings.
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HCP, Inc.
Funds Available for Distribution
In thousands
(unaudited)
Three Months Ended March 31,
2018 2017
FFO as adjusted applicable to common shares $ 227,352 $ 240,172
Amortization of deferred compensation(1) 3,420 3,765
Amortization of deferred financing costs 3,336 3,858
Straight-line rents (10,686) (7,396)
FAD capital expenditures(2) (19,118) (22,077)
Lease restructure payments 299 540
CCRC entrance fees(3) 3,027 3,649
Deferred income taxes (2,140) (2,374)
Other FAD adjustments (3,754) (1,582)
FAD applicable to common shares 201,736 218,555
Distributions on dilutive convertible units — 2,803
Diluted FAD applicable to common shares $ 201,736 $ 221,358
(1) Excludes $3 million related to the acceleration of deferred compensation for restricted stock units that vested upon the departure
of our former Executive Chairman, which is included in severance and related charges for the three months ended March 31, 2018.
(2) Excludes our share of recurring capital expenditures, leasing costs, and tenant and capital improvements from unconsolidated joint
ventures (reported in "Other FAD adjustments").
(3) Represents our 49% share of non-refundable entrance fees as the fees are collected by our CCRC JV, net of reserves and CCRC JV
entrance fee amortization.
13
Hospitals 6%
Debt Investments 2%
UK 3% Unconsolidated
JVs 7%
SHOP 13%
Senior
housing
triple-net
22%
Life science 23%
Medical
office
24%
Portfolio Summary
As of and for the quarter ended March 31, 2018, dollars in thousands
Property
Count Age
Portfolio
Investment
Portfolio
Income
Private
Pay %(1)
Wholly Owned Property Portfolio
Senior housing triple-net 181 20 $ 3,572,999 $ 71,379 93.0
SHOP 100 22 2,600,444 41,317 97.0
Life science 120 21 4,186,495 74,062 100.0
Medical office 249 22 4,191,450 76,168 100.0
Other 83 32 1,088,829 27,668 80.4
733 22 $ 15,640,218 $ 290,593 96.0
Debt Investments
Other — N/A $ 65,826 $ 6,365 —
Developments
Life science 8 N/A $ 193,353 $ — —
Redevelopments
Life science 3 N/A $ 72,161 $ — —
Medical office 5 N/A 84,120 — —
8 N/A $ 156,280 $ — —
Total
Senior housing triple-net 181 20 $ 3,572,999 $ 71,379 93.0
SHOP 100 22 2,600,444 41,317 97.0
Life science 131 21 4,452,009 74,062 100.0
Medical office 254 22 4,275,570 76,168 100.0
Other 83 32 1,154,656 34,033 80.4
749 22 $ 16,055,677 $ 296,958 96.0
HCP's Share of Unconsolidated JVs(2)
Other(3) 84 23 $ 1,375,484 $ 21,737 84.4
Total Portfolio 833 22 $ 17,431,161 $ 318,695 95.0
(1) Self-pay and private insurance (including managed care) revenues as a percentage of total property revenues for the most recent trailing 12 months available, weighted based on current
quarter Portfolio Income including assets sold in the quarter. Revenues for medical office buildings are considered 100% private pay.
(2) HCP’s pro rata share information is prepared on a basis consistent with the comparable consolidated amounts by applying our actual ownership percentage for the period, and is
intended to reflect our proportionate economic interest in the financial position and operating results of properties in our portfolio.
(3) Effective this quarter, our 84 properties in unconsolidated JVs are reported in the Other non-reportable segment. The unconsolidated JVs include 49 assets in our RIDEA II JV that are
held for sale, 15 assets in our CCRC JV, 10 assets in our Other SHOP JV portfolio, 4 life science assets, 3 medical office buildings and 3 post/acute skilled facilities. See page 43 for
further details.
PORTFOLIO INCOME
$318.7M
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NOI and Cash NOI Summary
For the quarter ended March 31, 2018, dollars in thousands
NOI SUMMARY
Rental and
Operating
Revenues
Operating
Expenses NOI
Wholly-Owned
Senior housing triple-net $ 74,289 $ (1,045) $ 73,243
SHOP 144,670 (101,746) 42,925
Life science 99,622 (21,809) 77,813
Medical office 123,935 (46,696) 77,238
Other 30,316 (1,256) 29,060
$ 472,832 $ (172,552) $ 300,280
CASH NOI SUMMARY
Cash Rental and
Operating
Revenues
Cash
Operating
Expenses Cash NOI
Wholly-Owned
Senior housing triple-net $ 72,411 $ (1,032) $ 71,379
SHOP 142,318 (101,001) 41,317
Life science 95,852 (21,789) 74,062
Medical office 121,946 (45,779) 76,168
Other 28,924 (1,256) 27,668
$ 461,451 $ (170,858) $ 290,593
15
Same Property Portfolio
As of March 31, 2018, dollars in thousands
SAME PROPERTY PORTFOLIO RECONCILIATION
Senior Housing
Triple-net SHOP
Life
Science
Medical
Office Other Total
Total Property Count 181 100 131 254 167 833
Unconsolidated JVs(1) — — — — (84) (84)
Acquisitions — (2) (4) (14) — (20)
Assets in Development — — (8) — — (8)
Assets in Redevelopment — — (3) (5) — (8)
Assets held for sale (2) (7) (4) — — (13)
Senior housing triple-net to SHOP conversions — (19) — — — (19)
Completed Developments and Redevelopments — (2) (4) (10) — (16)
Assets impacted by casualty event — (1) — — — (1)
UK consolidation of real estate(2) — — — — (7) (7)
Three-Month SPP Property Count 179 69 108 225 76 657
THREE-MONTH SPP
% of
Property
Portfolio
based on
Investment
Year-Over-Year Sequential
Property
Count Investment
Occupancy Growth Occupancy Growth
1Q18 1Q17 SPP NOI SPP CashNOI 1Q18 4Q17 SPP NOI
SPP Cash
NOI
Senior housing triple-net 179 $ 3,524,509 99 86.4% 87.7% 4.2% 0.5% 86.4% 86.4% (3) (6.3%)
SHOP 69 2,010,790 77 86.5% 88.4% (8.1%) (6.4%) 86.5% 87.0% (3) 5.0%
Life science 108 3,192,948 76 94.3% 96.1% 1.2% 0.4% 94.3% 95.6% (2.3%) (0.7%)
Medical office 225 3,467,207 83 92.2% 92.6% 1.1% 1.6% 92.2% 92.0% (0.4%) (0.7%)
Other 76 969,707 89 N/A N/A 2.2% 1.2% N/A N/A 2.2% 2.1%
Total 657 $ 13,165,161 84 0.7% (0.2%) (3) (1.3%)
(1) Effective this quarter, our 84 properties in unconsolidated JVs are reported in the Other non-reportable segment. The unconsolidated JVs include 49 assets in our RIDEA II JV that
are held for sale, 15 assets in our CCRC JV, 10 assets in our Other SHOP JV portfolio, 4 life science assets, 3 medical office buildings and 3 post/acute skilled facilities. See page 43
for further details.
(2) In March 2018, we consolidated seven care homes that were the underlying security for a £105 million bridge loan to Maria Mallaband. These properties are not included in the SPP
population as they have not been held in a consistent reporting structure for the full period in both comparison periods.
(3) Not meaningful as 4Q17 includes the following non-cash adjustments related to the Brookdale Transaction: revenue reduction related to lease terminations for senior housing triple-
net and operating expense related to management contract terminations for SHOP. Refer to the 4Q17 Earnings Release and Supplemental Report for additional information.
16
Capitalization
Dollars and shares in thousands, except price per share data
TOTAL CAPITALIZATION
March 31, 2018
Shares Value Total Value
Common stock (NYSE: HCP) 469,725 $ 23.23 $ 10,911,712
Convertible partnership (DownREIT) units 6,617 23.23 153,713
Total Market Equity 476,342 $ 11,065,425
Consolidated Debt N/A 7,965,591
Total Market Equity and Consolidated Debt 476,342 $ 19,031,016
HCP's share of unconsolidated JV debt N/A 351,009
Total Market Equity and Enterprise Debt 476,342 $ 19,382,025
COMMON STOCK AND EQUIVALENTS
Weighted Average Shares
Three Months Ended March 31, 2018
Shares Outstanding
March 31, 2018 Diluted EPS Diluted FFO
Diluted FFO
as adjusted
Common stock 469,725 469,557 469,557 469,557
Common stock equivalent securities:
Restricted stock units 1,787 124 124 124
Dilutive impact of options 14 14 14 14
Convertible partnership (DownREIT) units 6,617 — — 4,668
Total common stock and equivalents 478,143 469,695 469,695 474,363
17
Indebtedness and Ratios
As of March 31, 2018, dollars in thousands
DEBT MATURITIES AND SCHEDULED PRINCIPAL REPAYMENTS (AMORTIZATION)
Senior Unsecured Notes Mortgage Debt HCP's Share ofUnconsolidated JV Debt Enterprise Debt
Bank Line
of Credit(1) Term Loan(2) Amounts Rates %(3) Amounts Rates %(3)
Consolidated
Debt Amounts(4) Rates %(3) Amounts Rates %(3)
2018 $ — $ — $ — — $ 2,649 — $ 2,649 $ 22,079 4.29 $ 24,728 3.83
2019 — 237,175 450,000 (5) 3.95 3,700 — 690,875 17,660 4.21 708,535 3.22
2020 — — 800,000 2.79 3,758 5.08 803,758 11,726 4.22 815,484 2.82
2021 1,092,357 — 700,000 5.56 11,117 5.26 1,803,474 43,960 4.16 1,847,434 4.01
2022 — — 900,000 3.93 2,861 — 902,861 15,536 4.42 918,397 3.92
2023 — — 800,000 4.39 2,993 — 802,993 4,053 3.96 807,046 4.37
2024 — — 1,150,000 4.17 3,131 — 1,153,131 935 — 1,154,066 4.15
2025 — — 1,350,000 3.93 3,276 — 1,353,276 18,911 3.87 1,372,187 3.92
2026 — — — — 3,213 3.04 3,213 942 — 4,155 2.35
2027 — — — — 9,247 5.28 9,247 945 — 10,192 4.79
Thereafter — — 300,000 6.88 91,759 4.01 391,759 38,006 3.51 429,765 5.97
Subtotal $ 1,092,357 $ 237,175 $ 6,450,000 $ 137,704 $ 7,917,236 $ 174,753 $ 8,091,989
Other Debt(6) — — — — 93,856 177,423 271,279
(Discounts), premium and
debt costs, net — (297) (51,024) 5,820 (45,501) (1,167) (46,668)
Enterprise Debt $ 1,092,357 $ 236,878 $ 6,398,976 $ 143,524 $ 7,965,591 $ 351,009 $ 8,316,600
Weighted average interest
rate % 2.99 1.81 4.20 4.18 3.96 4.00 3.96
Weighted average
maturity in years 3.6 0.8 5.6 19.5 5.4 5.2 5.4
(1) Includes £105 million ($147 million) translated into U.S. dollars ("USD") at March 31, 2018. Our $2.0 billion bank line of credit has the following features: (i) initial maturity date of October
19, 2021 with two six-month committed extension options; (ii) annual interest costs of LIBOR plus 100 basis points and a facility fee of 20 basis points on our current unsecured credit rating;
and (iii) inclusion of a $750 million accordion feature which can be used to increase the facility size, subject to securing additional commitments.
(2) Represents £169 million translated into USD at March 31, 2018. Interest accrues at GBP LIBOR plus 115 basis points, subject to adjustments based on our credit rating.
(3) The rates are reported in the year in which the related debt matures.
(4) Reflects pro rata share of mortgage and other debt in our unconsolidated JVs.
(5) $450 million of senior unsecured debt matures February 2019.
(6) Represents non-interest bearing Entrance Fee deposits at certain of our senior housing facilities and demand notes that have no scheduled maturities.
18
Indebtedness and Ratios
As of March 31, 2018, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs
DEBT STRUCTURE
Weighted Average
Balance % of Total Interest Rate Years to Maturity
Secured Fixed rate $ 185,912 2 4.18% 16.1
Floating rate 126,545 2 3.92% 4.7
Combined $ 312,457 4 4.08% 11.5
Unsecured Fixed rate 6,450,000 80 4.20% 5.6
Floating rate 1,329,532 16 2.78% 3.1
Combined $ 7,779,532 96 3.95% 5.1
Total Fixed rate 6,635,912 82 4.20% 5.9
Floating rate 1,456,077 18 2.88% 3.2
Combined $ 8,091,989 100 3.96% 5.4
Other debt(1) 271,279
(Discounts), premiums and debt costs, net (46,668)
Enterprise Debt $ 8,316,600
FINANCIAL COVENANTS(2)
Bank Line of Credit
Requirement Actual Compliance
Leverage Ratio No greater than 60% 48%
Secured Debt Ratio No greater than 30% 4%
Unsecured Leverage Ratio No greater than 60% 52%
Fixed Charge Coverage Ratio (12 months) No less than 1.50x 3.6x
Tangible Net Worth (in billions) No less than $6.5 $8.6
CREDIT RATINGS (SENIOR UNSECURED DEBT)
Moody's Baa2 (Stable)
S&P Global BBB (Positive)
Fitch BBB (Stable)
(1) Represents non-interest bearing Entrance Fee deposits at certain of our senior housing facilities and demand notes that have no scheduled maturities.
(2) Calculated based on the definitions contained in the credit agreement, which may differ from similar terms used in our consolidated financial statements as provided in our Annual
Reports on Form 10-K and Quarterly Reports on Form 10-Q. Compliance with certain of these financial covenants requires the inclusion of our consolidated amounts and our
proportionate share of unconsolidated JVs.
19
Investment Summary
(1) In March 2018, we acquired the rights to develop a 214,000 square foot lab
building on our Hayden life science campus for $21.4 million.
(2) In March 2018, we also acquired Brookdale's 10% interest in the RIDEA I
JV for $62.6 million bringing our total ownership in RIDEA I to 100%.
(3) Represents the average yield calculated using Cash NOI for the 12-month
period prior to the sale and for the 12-month period ended March 31, 2018
for assets held for sale.
(4) Closed in April 2018.
(5) On November 1, 2017, we agreed to sell our remaining 40% interest in the
RIDEA II JV, with expected proceeds of $332 million. The transaction is
expected to close mid-2018.
DEBT INVESTMENT REPAYMENTS
Date GrossProceeds
Participating development financing February 2018 $ 21,498
Tandem March 2018 112,000
Total $ 133,498
DISPOSITIONS
Date Capacity
Property
Count Property Type Sales Price
Trailing
Cash Yield(3)
West Palm Beach, FL January 2018 34 Units 1 SHOP $ 3,350
Altamonte Springs, FL January 2018 137 Units 1 SHOP 32,105
Total 171 Units 2 $ 35,455 6.8%
ASSETS HELD FOR SALE
Held for Sale
Date Capacity
Property
Count Property Type
Projected
Sales Price
Trailing
Cash Yield(3)
South San Francisco, CA August 2017 337 Sq. Ft. 4 Life science $ 269,400
Various, Brookdale(4) November 2017 995 Units 5
SHOP / Senior
housing 242,753
Sterling Heights, MI December 2017 120 Units 1 SHOP 28,000
Beaumont, TX(4) March 2018 159 Units 1 SHOP 23,000
Various, NY March 2018 92 Units 2 SHOP 17,000
HCP's Share of Unconsolidated JVs
RIDEA II JV(5) November 2017 5,302 Units 49 Other 332,000
Total 62 $ 912,153 7.3%
For the three months ended March 31, 2018, dollars and square feet in thousands
INVESTMENT SUMMARY
Three Months Ended
March 31, 2018
Hayden development entitlements(1) $ 21,390
Noncontrolling interest in RIDEA I JV(2) 62,632
Development fundings 55,325
Redevelopment fundings 13,103
Total $ 152,450
20
Developments
As of March 31, 2018, dollars and square feet in thousands
DEVELOPMENT PROJECTS IN PROCESS
Project MSA Property Type
Property
Count
Construction
in Process
("CIP")
Cost to
Complete
Total at
Completion
Wholly-Owned
Ridgeview San Diego, CA Life science 3 $ 49,937 $ 12,063 $ 62,000
The Cove at Oyster Point - Phase III San Francisco, CA Life science 2 90,576 120,535 211,111
Sorrento Summit San Diego, CA Life science 1 1,239 14,761 16,000
Sierra Point - Phase I San Francisco, CA Life science 2 51,601 167,427 219,028
8 $ 193,353 $ 314,786 $ 508,139
Projected stabilized yield typically ranges from 6.0% to 8.0%
Project
Total Project
Capacity (Sq. Ft.)
% of Total
Project
Leased
Project
Start
Actual / Estimated Occupancy
Initial Stabilized
Wholly-Owned
Ridgeview 301 100 2Q16 3Q18 2Q19
The Cove at Oyster Point - Phase III 336 — 4Q16 1Q19 4Q19
Sorrento Summit 28 100 3Q17 3Q19 3Q19
Sierra Point - Phase I 215 — 4Q17 4Q19 4Q20
880 37
21
Redevelopments and Land Held for
Development(1)
LAND HELD FOR DEVELOPMENT
Project MSA Property Type
Gross Site
Acreage
Estimated
Rentable
Sq. Ft.
Investment
to Date
Wholly-Owned
Sierra Point San Francisco, CA Life science 14 365 $ 53,265
Forbes Research Center San Francisco, CA Life science 8 326 46,541
The Cove at Oyster Point - Phase IV San Francisco, CA Life science 2 164 12,998
Brittania Modular Labs III San Francisco, CA Life science 2 106 10,764
Poway II San Diego, CA Life science 26 465 42,730
Torrey Pines Science Center San Diego, CA Life science 6 93 11,611
Directors Place San Diego, CA Life science 4 82 6,081
Hayden Research Campus Lexington, MA Life science 13 214 21,390
Remaining Various Various 13 N/A 4,589
88 1,815 $ 209,969
(1) Redevelopments are excluded from SPP until they are Stabilized. See Glossary for further definition.
(2) Represents the Investment for buildings or portions of buildings placed in Redevelopment. Projects with no Investment placed in Redevelopment represent buildings that remained in operations but
were removed from SPP.
(3) An incremental $20.6 million of redevelopment capital will be invested in two joint venture assets on the Biotech Gateway campus. See Other Unconsolidated JV Capital in this report.
As of March 31, 2018, dollars and square feet in thousands
REDEVELOPMENT PROJECTS IN PROCESS
Incremental Costs
Project MSA
Property
Type
Property
Count
Redevelopments
Removed from
Operations(2)
Placed in
Service CIP
Cost to
Complete Total
Total at
Completion
Project
Start
Estimated
Completion
Wholly-Owned
Yorktown Washington, DC Medical office 1 $ — $ 578 $ 4,567 $ 1,297 $ 6,442 $ 6,442 3Q16 2Q18
3535 Market Street Philadelphia, PA Medical office 1 67,108 9,091 11,956 18,753 39,800 106,908 2Q17 3Q18
Directors Place - 4939 San Diego, CA Life science 1 19,180 — 3,938 5,104 9,042 28,222 2Q17 4Q18
Encino Los Angeles, CA Medical office 1 — 13 273 9,394 9,680 9,680 3Q17 1Q19
Summit III Nashville, TN Medical office 1 — — 160 5,840 6,000 6,000 1Q18 1Q19
Nordstrom Tower Seattle, WA Medical office 1 — — 55 7,045 7,100 7,100 1Q18 1Q19
Wateridge San Diego, CA Life science 1 7,906 — 2,077 10,580 12,657 20,563 1Q18 4Q18
Biotech Gateway(3) San Francisco, CA Life science 1 38,542 — 517 13,591 14,108 52,650 1Q18 1Q19
8 $ 132,736 $ 9,682 $ 23,543 $ 71,604 $ 104,829 $ 237,565
Projected stabilized return on incremental capital invested typically ranges from 9.0% to 12.0%
22
Capital Expenditures
For the quarter ended March 31, 2018, dollars in thousands, except per unit/square foot
Senior
Housing
Triple-net SHOP Life Science
Medical
Office Other Total
Wholly-Owned
Recurring capital expenditures $ 63 $ 3,649 $ 397 $ 2,126 $ — $ 6,236
Tenant improvements - 2nd generation — — 3,135 6,014 — 9,149
Lease commissions — — 1,682 2,162 17 3,861
FAD capital expenditures $ 63 $ 3,649 $ 5,214 $ 10,303 $ 17 $ 19,246
Revenue enhancing capital expenditures 4,740 1,584 310 601 1,150 8,385
Casualty related capital expenditures — 1,431 — — — 1,431
Initial Capital Expenditures ("ICE")(1) — (5) 894 17 — 907
Tenant improvements - 1st generation — — 13,144 12,236 — 25,379
Development — — 50,672 4,654 — 55,325
Redevelopment — 18 1,882 11,203 — 13,103
Capitalized interest — 10 2,329 1,239 — 3,578
Total capital expenditures $ 4,802 $ 6,687 $ 74,445 $ 40,253 $ 1,167 $ 127,354
Recurring capital expenditures per unit/sq. ft. (2)
$268
per Unit
$0.05
per Sq. Ft.
$0.12
per Sq. Ft. (2)
(1) Expenditures required to bring a newly acquired property up to standard. The expenditures are typically identified during underwriting and incurred within the first year of ownership.
(2) Senior housing triple-net per unit and Other per bed are not presented as they are not meaningful.
First Quarter
23
Portfolio Diversification
As of and for the quarter ended March 31, 2018, dollars in thousands
PORTFOLIO INCOME BY MSA
MSA
Property
Count
Senior Housing
Triple-net SHOP Life Science
Medical
Office Other Total % of Total
San Francisco, CA 78 $ 2,557 $ — $ 47,888 $ 775 $ — $ 51,220 16
Dallas, TX 42 2,316 1,279 — 9,572 7,118 20,284 6
Houston, TX 40 1,081 7,192 — 9,023 333 17,630 6
San Diego, CA 34 790 — 12,678 2,147 — 15,616 5
Denver, CO 23 2,120 4,430 — 5,158 — 11,709 4
Washington, DC 19 7,515 1,529 — 934 — 9,978 3
San Jose, CA 15 — — 8,725 651 — 9,376 3
Seattle, WA 13 2,785 — — 6,081 — 8,866 3
Miami, FL 23 999 5,153 — 2,162 — 8,313 3
Los Angeles, CA 11 2,501 736 — 1,392 3,660 8,289 3
Remaining 443 48,714 20,997 4,771 38,273 16,557 129,312 41
Cash NOI 741 $ 71,379 $ 41,317 $ 74,062 $ 76,168 $ 27,668 $ 290,593 91
Interest income — — — — — 6,365 6,365 2
HCP's Share of Unconsolidated JVs 82 — — — — 21,737 21,737 7
Portfolio Income 823 $ 71,379 $ 41,317 $ 74,062 $ 76,168 $ 55,770 $ 318,695 100
24
As of and for the quarter ended March 31, 2018, dollars in thousands, includes HCP's pro rata share of unconsolidated JVs
PORTFOLIO INCOME BY OPERATOR/TENANT
Tenant/Credit Exposure SHOP/Operator Exposure
Operator/Tenant
Property
Count
Senior
Housing
Triple-net
Life
Science
Medical
Office Other Total
% of
Portfolio
Income
Property
Count SHOP Other Total
% of
Portfolio
Income
Brookdale 78 $ 31,144 $ — $ — $ — $ 31,144 10 130 $ 32,857 $ 18,684 $ 51,540 16
Sunrise Senior Living 48 21,610 — — — 21,610 7 — — — — —
Amgen 7 — 12,940 — — 12,940 4 — — — — —
Google 11 — 7,840 — — 7,840 2 — — — — —
Hospital Corporation of America ("HCA")(1) 6 — — 830 5,759 6,589 2 — — — — —
Maria Mallaband Care Group 32 — — — 6,141 6,141 2 — — — — —
Remaining 469 18,625 53,282 75,337 23,898 171,142 54 42 8,460 1,289 9,749 3
Portfolio Income 651 $ 71,379 $ 74,062 $ 76,168 $ 35,797 $257,406 81 172 $ 41,317 $19,973 $ 61,289 19
PRO FORMA PORTFOLIO INCOME BY OPERATOR/TENANT(2)
Tenant/Credit Exposure SHOP/Operator Exposure
Operator/Tenant
Property
Count
Senior
Housing
Triple-net
Life
Science
Medical
Office Other Total
% of
Portfolio
Income
Property
Count SHOP Other Total
% of
Portfolio
Income
Brookdale 43 $ 18,316 $ — $ — $ — $ 18,316 6 36 $ 14,171 $ 12,481 $ 26,652 10
Sunrise Senior Living 48 21,610 — — — 21,610 8 — — — — —
Atria Senior Living — — — — — — — 27 13,180 (18) 13,162 5
Amgen 7 — 12,940 — — 12,940 5 — — — — —
Google 11 — 7,840 — — 7,840 3 — — — — —
HCA(1) 6 — — 830 5,759 6,589 2 — — — — —
Remaining 429 18,625 47,970 75,337 18,925 160,857 58 37 7,769 1,387 9,156 3
Portfolio Income 544 $ 58,551 $ 68,750 $ 76,168 $ 24,684 $228,153 82 100 $ 35,120 $13,850 $ 48,970 18
Portfolio Diversification
(1) Includes Cash NOI for 1.4 million square feet in six properties (including a hospital) that are 100% leased to HCA, and excludes 2.6 million square feet representing portions of properties leased
to HCA for which Cash NOI specific to HCA is not available. However, HCA represents 18% and 5% of Cash Rental and Operating Revenues in our medical office segment and total portfolio
including HCP's Share of Unconsolidated JVs, respectively.
(2) Pro forma to reflect the Brookdale Transaction, the sale of our remaining 40% interest in the RIDEA II JV and four life science properties that are held for sale, the sale of our U.K. holdings and
certain other previously announced sales. Pro forma Portfolio Income is further adjusted to reflect dispositions and operator transitions as if they occurred on the first day of the quarter.
25
Expirations and Maturities
As of March 31, 2018, dollars in thousands
EXCLUDES PURCHASE AND PREPAYMENT OPTIONS
Annualized Base Rent
Year Total % of Total
Senior
Housing
Triple-net Life Science
Medical
Office Other
Interest
Income
2018(1) $ 77,753 7 $ 6,226 $ 10,772 $ 60,755 $ — $ —
2019 87,902 8 2,305 32,134 53,463 — —
2020 126,713 11 39,646 19,357 58,545 8,145 1,019
2021 104,112 9 7,718 50,430 41,078 1,619 3,267
2022 81,800 7 1,513 23,029 42,379 13,974 904
2023 133,596 12 45,054 54,879 22,811 — 10,852 (2)
2024 66,692 6 18,081 4,831 21,395 22,385 —
2025 100,217 9 9,837 36,653 32,656 20,878 193
2026 36,597 3 5,746 11,011 19,840 — —
2027 49,242 4 12,157 22,426 14,659 — —
Thereafter 250,370 22 156,331 27,387 26,583 40,069 —
$ 1,114,994 100 $ 304,616 $ 292,909 $ 394,164 $ 107,070 $ 16,235
Weighted average
maturity in years 6.2 8.9 5.4 4.2 8.2 4.9
REFLECTS PURCHASE AND PREPAYMENT OPTIONS
Annualized Base Rent
Year Total % of Total
Senior
Housing
Triple-net Life Science
Medical
Office Other
Interest
Income(3)
2018(1) $ 85,818 8 $ 6,226 $ 10,772 $ 67,890 $ — $ 930
2019 86,259 8 2,305 32,134 50,202 598 1,019
2020 144,008 13 39,646 25,366 56,732 22,264 —
2021 114,710 10 7,718 50,430 52,606 1,619 2,337
2022 79,492 7 1,513 23,029 40,669 13,376 904
2023 130,559 12 45,054 54,879 19,774 — 10,852 (2)
2024 51,985 5 18,081 4,831 20,806 8,267 —
2025 101,011 9 9,837 36,653 33,450 20,878 193
2026 27,616 2 5,746 11,011 10,859 — —
2027 49,175 4 12,157 22,426 14,593 — —
Thereafter 244,362 22 156,331 21,378 26,583 40,069 —
$ 1,114,994 100 $ 304,616 $ 292,909 $ 394,164 $ 107,070 $ 16,235
(1) Includes month-to-month and
holdover leases.
(2) Represents interest income on the
Maria Mallaband bridge loan, for
which the underlying security
(seven properties) was converted
to real estate in March 2018.
(3) Reflects the earliest point at which
there is no prepayment penalty.
26
2.2
5x
2.0
0x
1.7
5x
1.5
0x
1.2
5x
1.0
0x
0.7
5x
0.5
0x0 2 4 6 8 10 12 14 16 18 20
0.3%
0.4% 1.7%0.2%
0.1%
0.4%
1.2%
1.5%0.4%
1.4%
0.1% 1.1%1.3% 2.7%
1.1%1.1% 0.3%1.7%1.0%
1.6%
1.7%0.1%
0.4%0.2% 1.3%
0.6%
2.1%
Triple-Net Master Lease Profile(1)(2)
25
13.00
x
FACILITY EBIT
D
AR CFC (TRAILING 12 MONTHS ENDED 12/31/2017
)
HIGHER RIS
K
LOWER RIS
K
HIGHER RISK LOWER RISK
TERM (YEARS TO EXPIRATION)
%
Senior Housing
Other
No Corporate Guaranty
Percent of Total Cash NOI
and Interest Income
INVESTMENT TYPE
(1) Excludes properties held for sale or sold, master leases with properties acquired
during the period required to calculate CFC and master leases that include newly
completed development that are not stabilized.
(2) Pro forma to reflect the Brookdale Transaction. In connection with the agreement,
multiple leases with Brookdale were combined into a single master lease with
varying maturities. The varying maturities are reflected in the graph based on their
renewal terms.
(3) Represents the percentage of total Cash NOI supported by a corporate guaranty.
Facility EBITDAR CFC
% of
Total Cash NOI
and Interest
Income
# of Leases/
Data Points
Weighted
Average
Maturity in
Years Guaranty(3)
Less than 1.0x 4.3 7 7.5 53.4%
1.00x - 1.25x 11.1 10 7.0 62.6%
1.26x - 1.50x 6.1 5 13.7 74.2%
1.51x and above 4.6 5 7.1 86.3%
27
Senior Housing Triple-net
As of and for the quarter ended March 31, 2018, dollars in thousands, except REVPOR
Property Portfolio
Property
Count Investment Cash NOI Units
Occupancy
%
REVPOR
Triple-Net
Facility
EBITDARM
CFC
Facility
EBITDAR
CFC
Assisted/Independent living 179 $ 3,319,810 $ 68,234 17,276 86.1 $ 5,747 1.25x 1.06x
CCRC 2 253,190 3,144 1,055 88.4 6,147 1.45x 1.23x
Total 181 $ 3,572,999 $ 71,379 18,331 86.2 $ 5,771 1.26x 1.07x
Properties
Operator Investment Cash NOI Count % Pooled Units
Occupancy
%
REVPOR
Triple-Net
Facility
EBITDARM
CFC
Facility
EBITDAR CFC
Brookdale $ 1,368,596 $ 31,144 78 97 8,057 86.4 $ 4,913 1.24x/1.46x(1) 1.07x/1.27x(1)
Sunrise Senior Living 1,365,264 21,610 48 98 5,546 86.0 7,329 1.33x 1.09x
Harbor Retirement Associates 212,661 4,749 14 100 1,343 79.2 5,836 1.23x 1.02x
Aegis Senior Living 182,152 4,530 10 80 701 93.0 8,325 1.36x 1.19x
Capital Senior Living 181,988 4,382 15 100 1,511 84.9 3,291 1.08x 0.94x
Remaining 262,339 4,964 16 56 1,173 92.7 5,763 1.13x 0.98x
Total $ 3,572,999 $ 71,379 181 93 18,331 86.2 $ 5,771 1.26x/1.33x(1) 1.07x/1.13x(1)
(1) Brookdale Facility EBITDARM and EBITDAR CFC, pro forma to reflect the Brookdale Transaction, is 1.46x and 1.27x, respectively. Total Facility EBITDARM and EBITDAR CFC, pro forma
to reflect the Brookdale Transaction, is 1.33x and 1.13x, respectively.
28
Senior Housing Triple-net
Dollars in thousands, except REVPOR
1Q17 2Q17 3Q17 4Q17 1Q18
Property count 179 179 179 179 179
Investment $ 3,500,167 $ 3,503,104 $ 3,511,361 $ 3,520,582 $ 3,524,509
Units 18,124 18,123 18,126 18,123 18,123
Occupancy % 87.7 87.1 86.2 86.4 86.4
REVPOR Triple-net $ 5,650 $ 5,753 $ 5,767 $ 5,768 $ 5,790
Facility EBITDARM CFC 1.37x 1.36x 1.33x 1.29x 1.27x/1.33x (1)
Facility EBITDAR CFC 1.16x 1.15x 1.12x 1.09x 1.08x/1.13x (1)
Rental and Operating Revenues $ 70,222 $ 71,527 $ 71,284 $ 41,748 (2) $ 73,217
Operating Expenses (128) (127) (170) (131) (146)
NOI $ 70,094 $ 71,399 $ 71,114 $ 41,617 (2) $ 73,070
Cash Rental and Operating Revenues $ 71,003 $ 73,417 $ 72,909 $ 76,160 $ 71,355
Cash Operating Expenses (115) (114) (157) (118) (133)
Cash NOI $ 70,888 $ 73,302 $ 72,752 $ 76,042 $ 71,221
Year-Over-Year Three-Month SPP Growth 0.5%
Same Property Portfolio
(1) Facility EBITDARM and EBITDAR CFC, pro forma to reflect the Brookdale Transaction, is 1.33x and 1.13x, respectively.
(2) Includes non-cash adjustments related to the Brookdale Transaction from the write-off of lease-related intangible assets, partially offset by the value associated
with the right to terminate certain triple-net leases. Refer to the 4Q17 Earnings Release and Supplemental Report for additional information.
29
Senior Housing Triple-net
As of and for the quarter ended March 31, 2018, dollars in thousands
NEW SUPPLY ANALYSIS
HCP Portfolio 5-Mile Radius(1)
MSA Units Cash NOI
% of
Triple-
net Cash
NOI
Properties/
Units Under
Construction(2)
Cash NOI
Exposed
to New
Supply(3)
5-Year 80+
Population
Growth %
2017-2022
80+
Penetration
Rate %
Qualified
Care
Giver %
Median
Household
Income
Median
Home
Value
Unemploy-
ment %
US National Average 10.6 11.4 4.7 $ 56 $ 207 5.5
Washington, DC 1,397 $ 7,515 10.5 6 / 714 $ 3,523 12.8 13.5 9.2 105 512 3.1
New York, NY 1,146 5,944 8.3 7 / 796 3,143 8.6 3.4 5.1 84 512 4.8
Seattle, WA 513 2,785 3.9 1 / 60 1,277 10.6 15.1 8.0 84 489 4.1
Portland, OR 986 2,604 3.6 3 / 356 1,121 10.9 21.5 5.8 63 305 4.9
San Francisco, CA 359 2,557 3.6 1 / 16 1,707 10.9 12.2 7.4 84 570 4.9
Los Angeles, CA 384 2,501 3.5 1 / 40 479 7.4 6.6 5.4 71 667 4.5
Chicago, IL 530 2,424 3.4 3 / 256 836 7.2 7.9 5.0 76 300 6.4
Dallas, TX 848 2,316 3.2 2 / 212 776 14.5 15.8 5.5 63 165 5.2
Denver, CO 414 2,120 3.0 2 / 216 2,120 13.2 17.7 5.5 64 349 2.9
Charlotte, NC 586 2,039 2.9 -- / -- — 16.4 19.3 5.9 62 235 5.2
Jacksonville, FL 486 1,965 2.8 -- / -- — 11.6 15.7 4.2 54 210 5.6
Atlanta, GA 560 1,671 2.3 4 / 515 791 12.9 19.1 6.3 65 288 4.2
Baltimore, MD 293 1,546 2.2 3 / 274 1,223 13.5 8.3 7.5 86 362 4.7
Austin, TX 269 1,543 2.2 1 / 206 1,543 14.1 14.8 5.1 53 378 4.2
Sebastian, FL 298 1,498 2.1 -- / -- — 7.8 8.7 3.9 47 222 10.1
Sacramento, CA 352 1,299 1.8 2 / 144 644 7.2 14.9 5.4 67 348 6.6
Detroit, MI 330 1,290 1.8 6 / 603 1,290 8.0 21.0 7.5 71 223 4.6
Providence, RI 276 1,242 1.7 -- / -- — 3.6 11.0 5.0 57 312 5.3
Nashville, TN 334 1,230 1.7 2 / 277 273 18.1 26.8 9.3 90 364 2.8
Houston, TX 308 1,081 1.5 -- / -- — 23.1 24.4 6.7 79 194 5.0
Remaining 7,662 24,207 33.9 10 / 981 4,168 8.7 11.1 5.3 58 250 5.1
Total 18,331 $ 71,379 100 54 / 5,666 $ 24,914 9.9 10.9 6.1 $ 70 $ 345 4.7
% of Total Cash NOI and Interest Income 8.4%
(1) Demographic data provided by Environmental Systems Research Institute (“ESRI”) for 2017. Construction and supply data provided by National Investment Center for Senior Housing and Care
(“NIC”) for the quarter ended March 31, 2018. Data reflects a 5-mile radius around each community and is weighted by Cash NOI. See Glossary for further discussion.
(2) Represents the number of properties and units with similar care types that are under construction.
(3) Represents total Cash NOI exposed to new construction and material expansions.
New Supply
30
SHOP
As of and for the quarter ended March 31, 2018, dollars in thousands, except REVPOR
INVESTMENTS
Property
Count Investment Cash NOI Units Occupancy %
REVPOR
SHOP
Operator
Brookdale 68 $ 1,930,870 $ 32,857 10,275 86.3 $ 3,932
Atria 14 285,290 5,629 1,820 86.1 3,979
Senior Lifestyle Corp. 7 196,572 2,015 640 78.9 5,433
Sonata 4 54,250 806 340 87.4 4,699
Remaining 7 133,462 10 505 74.9 5,298
Total 100 $ 2,600,444 $ 41,317 13,580 85.5 $ 4,069
TOTAL OPERATING PORTFOLIO
1Q17 2Q17 3Q17 4Q17 1Q18
Property count 81 81 84 102 100
Investment $ 2,311,633 $ 2,322,058 $ 2,348,506 $ 2,606,937 $ 2,600,444
Units 12,047 12,047 12,205 13,744 13,580
Occupancy % 88.6 86.8 86.6 87.3 85.5
REVPOR SHOP $ 3,987 $ 3,999 $ 3,992 $ 3,978 $ 4,069
Rental and Operating Revenues $ 140,228 $ 125,416 $ 126,040 $ 133,789 $ 144,670
Operating Expenses (94,539) (85,866) (86,821) (129,265) (1) (101,746)
NOI $ 45,689 $ 39,550 $ 39,219 $ 4,524 (1) $ 42,925
Cash Rental and Operating Revenues $ 140,238 $ 125,527 $ 126,279 $ 132,718 $ 142,318
Cash Operating Expenses (94,859) (85,965) (87,095) (94,633) (101,001)
Cash NOI $ 45,379 $ 39,562 $ 39,184 $ 38,084 $ 41,317
Cash NOI Margin % 32.4 31.5 31.0 28.7 29.0
(1) Includes non-cash adjustments related to management contract terminations in conjunction with the Brookdale Transaction. Refer to the 4Q17 Earnings
Release and Supplemental Report for additional information.
31
(1) Units and REVPOR SHOP are based on the majority type within each community. AL includes needs-based care such as memory care.
SHOP MSA
As of and for the quarter ended March 31, 2018, dollars in thousands, except REVPOR
OPERATING PORTFOLIO METRICS
% of SHOP
Cash NOI
Units(1) REVPOR SHOP(1)
MSA Investment Cash NOI AL IL
Occupancy
% AL IL
Houston, TX $ 335,185 $ 7,192 17.4 87 1,962 93.3 $ 6,328 $ 3,150
Miami, FL 276,278 5,153 12.5 702 964 85.0 4,498 4,065
Denver, CO 297,042 4,430 10.7 154 702 93.2 4,185 4,447
Chicago, IL 197,593 2,749 6.7 — 947 85.2 — 3,709
Tampa, FL 111,973 2,174 5.3 182 424 84.6 4,092 3,904
Washington, DC 126,441 1,529 3.7 398 — 82.2 5,964 —
Sarasota, FL 87,845 1,318 3.2 259 164 76.2 3,996 5,169
Dallas, TX 71,624 1,279 3.1 286 257 86.4 3,995 2,227
Baltimore, MD 108,797 1,221 3.0 321 — 79.6 5,677 —
Phoenix, AZ 41,997 1,174 2.8 — 211 92.9 — 4,033
Memphis, TN 72,302 1,142 2.8 — 182 92.9 — 5,899
Richmond, VA 63,111 1,087 2.6 204 — 79.4 5,581 —
Albuquerque, NM 27,464 843 2.0 261 — 89.3 3,755 —
Austin, TX 38,252 755 1.8 136 — 97.0 5,074 —
Providence, RI 120,273 747 1.8 457 305 82.6 4,350 4,798
Los Angeles, CA 24,407 736 1.8 135 — 82.8 5,642 —
Boulder, CO 41,116 681 1.6 — 96 97.4 — 4,329
Riverside, CA 38,468 662 1.6 274 — 85.1 3,700 —
Sebastian, FL 21,308 547 1.3 104 — 86.4 4,629 —
Fresno, CA 39,241 493 1.2 — 172 88.9 — 3,765
Remaining 459,727 5,404 13.1 2,390 844 80.0 3,959 3,665
Total $ 2,600,444 $ 41,317 100.0 6,350 7,230 85.5 $ 4,414 $ 3,785
32
SHOP Same Property Portfolio
Dollars in thousands, except REVPOR
1Q17 2Q17 3Q17 4Q17 1Q18
Property count 69 69 69 69 69
Investment $ 1,985,065 $ 1,992,840 $ 1,994,535 $ 2,004,622 $ 2,010,790
Units 10,321 10,322 10,323 10,321 10,317
Occupancy % 88.4 86.9 86.4 87.0 86.5
REVPOR SHOP $ 3,974 $ 3,990 $ 3,980 $ 3,957 $ 4,047
Rental and Operating Revenues $ 108,782 $ 107,237 $ 106,234 $ 106,409 $ 108,944
Operating Expenses (71,067) (72,423) (71,610) (107,193) (1) (74,291)
NOI $ 37,715 $ 34,813 $ 34,624 $ (785) (1) $ 34,653
Cash Rental and Operating Revenues $ 108,807 $ 107,373 $ 106,491 $ 106,564 $ 108,318
Cash Operating Expenses (71,383) (72,540) (71,866) (73,193) (73,272)
Cash NOI $ 37,424 $ 34,833 $ 34,625 $ 33,371 $ 35,046
Cash NOI Margin % 34.4 32.4 32.5 31.3 32.4
Year-Over-Year Three-Month SPP Growth (6.4%)
(1) Includes non-cash adjustments related to management contract terminations in conjunction with the Brookdale Transaction. Refer to the 4Q17 Earnings Release
and Supplemental Report for additional information.
(2) Includes 18 properties managed by Brookdale and 17 properties managed by five operators that are not expected to undergo a transition or sale during 2018.
(3) Represents properties managed by Brookdale that have transitioned or are expected to transition to new operators or sell in 2018.
COMPONENTS OF 1Q18 SHOP SPP CASH NOI GROWTH
Core
Portfolio(2)
Transition/Sales
Portfolio(3) Total
Property count 35 34 69
SPP Cash NOI Growth (0.6%) (12.3%) (6.4%)
33
SHOP New Supply
As of and for the quarter ended March 31, 2018, dollars in thousands
NEW SUPPLY ANALYSIS
HCP Portfolio 5-Mile Radius(1)
MSA Units Cash NOI
% of
SHOP
Cash NOI
Properties/
Units Under
Construction(2)
Cash NOI
Exposed
to New
Supply(3)
5-Year 80+
Population
Growth %
2017-2022
80+
Penetration
Rate %
Qualified
Care
Giver %
Median
Household
Income
Median
Home Value
Unemploy-
ment%
US National Average 10.6 11.4 4.7 $ 56 $ 207 5.5
Houston, TX 2,049 $ 7,192 17.4 2 / 520 $ 3,304 17.6 20.4 6.7 74 295 5.6
Miami, FL 1,666 5,153 12.5 3 / 337 1,121 8.6 8.2 3.8 53 224 8.0
Denver, CO 856 4,430 10.7 2 / 194 2,316 11.2 17.0 5.1 58 308 3.1
Chicago, IL 947 2,749 6.7 1 / 68 628 7.9 13.3 8.0 86 312 4.9
Tampa, FL 606 2,174 5.3 -- / -- — 8.3 11.3 3.8 46 175 5.9
Washington, DC 398 1,529 3.7 1 / 86 34 10.0 7.8 9.7 106 444 4.0
Sarasota, FL 423 1,318 3.2 4 / 342 396 11.3 12.9 4.2 52 232 5.1
Dallas, TX 543 1,279 3.1 1 / 322 247 12.7 18.2 5.0 58 184 5.4
Baltimore, MD 321 1,221 3.0 -- / -- — 5.4 5.3 6.2 75 293 5.0
Phoenix, AZ 211 1,174 2.8 1 / 128 1,174 8.3 14.1 3.6 53 189 5.3
Memphis, TN 182 1,142 2.8 -- / -- — 12.1 22.8 7.3 72 233 4.4
Richmond, VA 204 1,087 2.6 2 / 64 1,087 6.9 33.5 8.5 83 332 3.0
Albuquerque, NM 261 843 2.0 -- / -- — 4.3 7.8 3.2 44 195 7.8
Austin, TX 136 755 1.8 1 / 86 327 25.7 24.8 5.0 53 195 4.8
Providence, RI 762 747 1.8 -- / -- — 1.3 5.5 4.4 52 244 5.2
Los Angeles, CA 135 736 1.8 -- / -- — 18.8 5.2 8.0 93 695 4.1
Boulder, CO 96 681 1.6 -- / -- — 16.4 24.2 6.2 59 557 3.4
Riverside, CA 274 662 1.6 -- / -- — 10.2 5.8 3.7 61 276 9.2
Sebastian, FL 104 547 1.3 -- / -- — 6.2 18.9 3.7 47 196 10.0
Fresno, CA 172 493 1.2 -- / -- — 3.9 12.2 4.8 57 303 6.6
Remaining 3,234 5,404 13.1 11 / 1,168 1,303 7.5 9.9 5.1 55 192 5.2
Total 13,580 $ 41,317 100.0 29 / 3,315 $ 11,937 10.3 13.4 5.6 $ 64 $ 268 5.4
% of Total Cash NOI and Interest Income 4.0%
(1) Demographic data provided by ESRI for 2017. Construction and supply data provided by NIC for the quarter ended March 31, 2018. Data reflects a 5-mile radius around each community
and is weighted by Cash NOI. See Glossary for further discussion.
(2) Represents the number of properties and units with similar care types that are under construction.
(3) Represents total Cash NOI exposed to new construction and material expansions.
34
Life Science
As of and for the quarter ended March 31, 2018, dollars and square feet in thousands
INVESTMENTS(1)
MSA
Property
Count Investment
Cash
NOI
Square
Feet
Occupancy
%
San Francisco, CA/San Jose, CA 85 $ 3,048,690 $ 56,613 4,948 95.9
San Diego, CA 28 753,627 12,678 1,925 90.8
Boston, MA 2 230,706 1,228 397 66.4 (2)
Remaining 8 153,472 3,543 512 100.0
123 $ 4,186,495 $ 74,062 7,782 93.4
SAME PROPERTY PORTFOLIO
1Q17 2Q17 3Q17 4Q17 1Q18
Property Count 108 108 108 108 108
Investment $ 3,154,670 $ 3,165,777 $ 3,171,559 $ 3,180,015 $ 3,192,948
Square Feet 6,351 6,353 6,353 6,353 6,357
Occupancy % 96.1 96.3 96.3 95.6 94.3
Rental and Operating Revenues $ 73,894 $ 75,679 $ 76,643 $ 78,290 $ 75,584
Operating Expenses (14,424) (15,910) (16,671) (16,740) (15,428)
NOI $ 59,469 $ 59,769 $ 59,972 $ 61,550 $ 60,156
Cash Rental and Operating Revenues $ 74,253 $ 76,473 $ 77,295 $ 77,255 $ 75,501
Cash Operating Expenses (14,405) (15,890) (16,651) (16,720) (15,409)
Cash NOI $ 59,848 $ 60,582 $ 60,644 $ 60,535 $ 60,092
Year-Over-Year Three-Month SPP Growth % 0.4%
(1) Excludes eight properties that are in Development.
(2) Represents the Hayden Campus which is 97% leased as of March 2018. Occupancy relating to recently leased space is projected to occur by the end of 2018.
35
Public Biotech /
Medical Device
45%
University,
Government,
Research 4%
Office and
R&D 17%
Pharma
18%PrivateBiotech /
Medical Device
16%
Life Science
As of March 31, 2018, dollars and square feet in thousands
SELECTED LEASE EXPIRATION DATA (NEXT 5 YEARS)(1)
Total
San Francisco /
San Jose San Diego Boston Remaining
Year
Leased
Square
Feet %
Annualized
Base Rent %
Square
Feet
Annualized
Base Rent
Square
Feet
Annualized
Base Rent
Square
Feet
Annualized
Base Rent
Square
Feet
Annualized
Base Rent
2018(2) 320 5 $ 10,772 4 249 $ 9,314 36 $ 879 — $ — 36 $ 579
2019 832 12 32,134 11 329 10,147 423 18,707 80 3,279 — —
2020 549 8 19,357 7 317 11,832 232 7,525 — — — —
2021 948 14 50,430 17 844 47,142 104 3,287 — — — —
2022 631 9 23,029 8 368 15,597 193 5,569 — — 70 1,864
Thereafter 3,652 53 157,187 54 2,303 117,958 760 20,114 184 7,172 406 11,943
6,932 100 $ 292,909 100 4,409 $ 211,990 1,748 $ 56,082 263 $ 10,451 512 $ 14,386
TENANT CONCENTRATION(1)
Remaining
Lease Term
in Years
Leased Square Feet Annualized Base Rent
Amount
% of
Total Amount
% of
Total
Credit
Rating
Amgen 4.5 684 10 $ 49,454 17 A
Google 4.4 729 11 31,230 11 AA+
Takeda 1.1 166 2 9,482 3 A-
Rigel Pharmaceuticals 4.8 147 2 8,992 3 —
AstraZeneca Pharmaceuticals 9.0 156 2 8,371 3 BBB+
Myriad Genetics 7.2 310 4 7,798 3 —
Shire 10.6 184 3 7,172 2 BBB-
Five Prime 9.8 115 2 6,789 2 —
General Atomics 13.2 397 6 6,068 2 —
Duke University 11.5 166 2 6,009 2 AA+
Remaining 5.0 3,878 56 151,545 52
5.4 6,932 100 $ 292,909 100
(1) Excludes 337,000 square feet and annualized base rent of $21 million related to the purchase option exercised by Genentech that is expected to close in July 2018.
(2) Includes month-to-month and holdover leases.
3636
Life Science
Square feet in thousands
LEASING ACTIVITY
Leased
Square Feet
Annualized
Base Rent
Per Sq. Ft.
% Change in
Cash Rents
HCP Tenant
Improvements
per Sq. Ft.
Leasing Costs
per Sq. Ft.
Average Lease
Term (Months)
Retention
Rate YTD
Leased Square Feet as of December 31, 2017 7,237 $ 43.17
Developments 115 58.80
Expirations (164) 31.96
Renewals, amendments and extensions 20 19.18 3.6 $ 2.45 $ 0.98 24 12.2%
New leases 65 47.74 63.19 13.61 80
Terminations (4) 34.09
Leased Square Feet as of March 31, 2018 7,269 $ 43.17
Pointe Grand II
South San Francisco, CA
37
Medical Office
As of and for the quarter ended March 31, 2018, dollars and square feet in thousands
PORTFOLIO BY MARKET
Square Feet
On-campus(1) Off-campus(2) Total
MSA
Property
Count Investment Cash NOI
Occupancy
% Multi-tenant Single-tenant Multi-tenant Single-tenant Multi-tenant Single-tenant % of Total
Dallas, TX 27 $ 551,088 $ 9,572 89.8 1,860 34 326 54 2,186 88 12
Houston, TX 29 552,467 9,023 93.3 1,136 1,425 287 — 1,423 1,425 15
Seattle, WA 6 216,371 6,081 93.9 667 — — — 667 — 4
Denver, CO 16 277,239 5,158 89.7 1,022 — 35 — 1,058 — 6
Nashville, TN 14 162,254 5,148 95.6 1,288 10 — — 1,288 10 7
Louisville, KY 11 213,008 4,033 93.6 566 17 447 15 1,013 32 6
Philadelphia, PA 3 274,655 3,633 89.0 705 — 213 90 918 90 5
Salt Lake City, UT 13 145,907 3,418 96.5 434 63 154 116 587 179 4
Phoenix, AZ 13 173,727 3,099 89.1 519 — 208 — 727 — 4
Miami, FL 10 96,116 2,162 85.5 498 — — 30 498 30 3
San Diego, CA 5 109,451 2,147 96.6 — 176 155 — 155 176 2
Las Vegas, NV 7 120,495 1,648 82.3 536 — — — 536 — 3
Kansas City, MO 3 77,716 1,505 95.9 260 — — 8 260 8 1
Los Angeles, CA 5 88,475 1,392 81.1 106 — 174 — 280 — 2
Ogden, UT 9 62,984 1,278 89.7 269 — 13 68 282 68 2
San Antonio, TX 4 69,923 1,156 78.5 353 — — — 353 — 2
Sacramento, CA 2 74,483 1,001 94.4 — — 29 92 29 92 1
Washington, DC 3 58,603 934 80.0 55 29 99 — 154 29 1
Baltimore, MD 3 31,392 804 96.3 — 63 38 58 38 121 1
San Francisco, CA 1 41,946 775 100.0 — — — 104 — 104 1
Remaining 70 793,151 12,201 95.4 1,565 1,273 404 325 1,969 1,598 19
254 $ 4,191,450 $ 76,168 92.0 11,840 3,090 2,582 960 14,422 4,050 100
(1) Includes 6.5 million square feet subject to ground leases with average expirations of 55 years and renewal options generally ranging from 10 to 25 years.
(2) Includes medical office buildings that are off-campus, adjacent (within 0.25 miles of a hospital campus) and anchored (50% or more leased by a health system).
38
Medical Office
As of and for the quarter ended March 31, 2018, square feet in thousands
SQUARE FEET BY HEALTH SYSTEM
Square Feet Directly Leased by Health System
Health System
Health
System
Rank(1)
Credit
Rating On-Campus Anchored(2) Adjacent(2) Off-Campus Total % of Total % Square Feet
% of Annualized
Base Rent
HCA 2 Ba2 7,283 60 236 — 7,579 41.0 16.6 18.8
Memorial Hermann Health System 41 A1 1,570 80 — — 1,650 8.9 9.1 4.6
Community Health Systems, Inc. 6 Caa1 1,284 51 — — 1,334 7.2 7.2 4.7
Norton Healthcare 103 — 583 15 328 — 927 5.0 3.1 3.1
Jefferson Health 53 A2 705 — — — 705 3.8 2.2 2.3
Providence Health & Services 3 Aa3 563 — — — 563 3.1 1.5 2.3
Steward Health Care N/A — 547 — — — 547 3.0 1.8 1.7
HonorHealth 129 A2 421 — — — 421 2.3 0.9 1.1
Remaining - credit rated 1,637 887 437 — 2,961 16.0
Non-credit rated 336 93 198 1,156 1,783 9.7
Total 14,930 1,185 1,200 1,156 18,472 100.0 42.4 38.6
% of Total 80.8 6.4 6.5 6.3
Total Healthcare Affiliated 93.7%
LEASING ACTIVITY
Leased
Square Feet
Annualized
Base Rent
Per Sq. Ft.
% Change in
Cash Rents(3)
HCP Tenant
Improvements
per Sq. Ft.
Leasing Costs
per Sq. Ft.
Average
Lease Term
(Months)
Retention
Rate YTD
Leased Square Feet as of December 31, 2017 16,945 $ 22.98
Expirations (592) 23.77
Renewals, amendments and extensions 465 25.34 3.9 $ 8.83 $ 3.64 57 78.5%
New leases 180 23.66 32.61 6.99 82
Terminations (9) 24.37
Leased Square Feet as of March 31, 2018 16,989 $ 23.21
(1) Ranked by revenue based on the 2016 Modern Healthcare’s Healthcare Systems Financial Database. Systems denoted as N/A are not reported.
(2) Denotes whether the medical office building is adjacent (within 0.25 miles) to a hospital campus or anchored (50% or more is leased to a health system).
(3) For comparative purposes, reflects adjustments for leases that converted to a different lease type upon renewal, amendment or extension of the original lease.
39
Medical Office
As of and for the quarter ended March 31, 2018, dollars and square feet in thousands
SELECTED LEASE EXPIRATION DATA (NEXT 5 YEARS)
Total On-Campus Off-Campus
Year
Leased
Square Feet %
Annualized
Base Rent % Square Feet
Annualized
Base Rent Square Feet
Annualized
Base Rent
2018(1) 2,507 15 $ 60,755 15 2,063 $ 51,228 444 $ 9,527
2019 2,167 13 53,463 14 1,715 42,000 452 11,464
2020 2,271 13 58,545 15 1,985 52,034 286 6,511
2021 1,620 10 41,078 10 1,346 34,308 275 6,771
2022 1,702 10 42,379 11 1,288 31,857 414 10,522
Thereafter 6,721 40 137,944 35 5,370 106,667 1,351 31,277
16,989 100 $ 394,164 100 13,767 $ 318,092 3,222 $ 76,072
SAME PROPERTY PORTFOLIO
1Q17 2Q17 3Q17 4Q17 1Q18
Property Count 225 225 225 225 225
Investment $ 3,396,606 $ 3,412,125 $ 3,422,648 $ 3,443,446 $ 3,467,207
Square feet 16,400 16,295 16,295 16,295 16,301
Occupancy % 92.6 92.5 92.3 92.0 92.2
Rental and Operating Revenues $ 103,240 $ 104,320 $ 105,182 $ 104,689 $ 104,626
Operating Expenses (37,202) (38,544) (38,934) (37,653) (37,845)
NOI $ 66,039 $ 65,776 $ 66,248 $ 67,036 $ 66,780
Cash Rental and Operating Revenues $ 101,980 $ 103,396 $ 104,458 $ 103,910 $ 103,660
Cash Operating Expenses (36,619) (37,961) (38,356) (37,069) (37,273)
Cash NOI $ 65,361 $ 65,435 $ 66,102 $ 66,841 $ 66,387
Year-Over-Year Three-Month SPP Growth % 1.6%
(1) Includes month-to-month and holdover leases.
40
(1) Certain operators in our hospital portfolio are not required under their respective leases to provide operational data.
(2) In March 2018, we consolidated seven care homes that were the underlying security for a £105 million bridge loan to Maria Mallaband and accordingly reported the investment for
these seven assets within the Leased Properties table above. However, the interest income earned on the investment during the quarter of $2.6 million remains included in the Debt
Investments table.
(3) The remaining Maria Mallaband debt investment of $14.8 million outstanding as of March 31, 2018, relates to a care home development loan.
(4) Includes $2.1 million related to a participation interest in a development loan that was repaid in February 2018.
Other
As of and for the quarter ended March 31, 2018, dollars in thousands
LEASED PROPERTIES
Type/Operator
Property
Count Investment Cash NOI Beds
Occupancy
%(1)
Facility
EBITDARM
CFC(1)
Facility
EBITDAR
CFC(1)
Hospitals
Acute care 4 $ 342,183 $ 13,433 1,438 44.5 9.04x 8.49x
Remaining 10 189,876 6,004 696 49.8 3.11x 2.84x
14 $ 532,060 $ 19,437 2,134 47.7 7.11x 6.65x
United Kingdom
Maria Mallaband 32 $ 290,847 (2) $ 3,162 1,600 87.2 1.48x 1.24x
HC-One 36 248,013 4,755 2,040 92.8 1.52x 1.25x
68 $ 538,861 $ 7,917 3,640 90.8 1.50x 1.25x
Post-acute/skilled
Wholly-Owned 1 $ 17,909 $ 314 120 93.4 1.97x 1.59x
Total Leased Properties 83 $ 1,088,829 $ 27,668
DEBT INVESTMENTS
Investment
Interest
Income Yield
Weighted
Average
Maturity in
Years
Maria Mallaband - UK $ 14,757 (3) $ 2,979 (2) 7.5% 5.4
Remaining 51,069 3,387 (4) 8.5% 3.8
Total Debt Investments $ 65,826 $ 6,365
Wholly-owned
41
(1) Certain operators in our hospital portfolio are not
required under their respective leases to provide
operational data.
Other Same Property Portfolio - Wholly-owned
As of and for the quarter ended March 31, 2018, dollars in thousands
HOSPITALS
1Q17 2Q17 3Q17 4Q17 1Q18
Property count 14 14 14 14 14
Investment $ 530,910 $ 530,910 $ 530,910 $ 530,910 $ 532,060
Beds 2,134 2,134 2,134 2,134 2,134
Occupancy %(1) 51.2 52.1 50.7 48.6 47.7
Facility EBITDARM CFC(1) 6.68x 6.50x 6.52x 6.83x 7.11x
Facility EBITDAR CFC(1) 6.24x 6.06x 6.08x 6.38x 6.65x
Rental and Operating Revenues $ 20,877 $ 20,460 $ 20,548 $ 20,783 $ 21,370
Operating Expenses (1,205) (1,047) (1,094) (1,226) (1,176)
NOI $ 19,672 $ 19,413 $ 19,454 $ 19,557 $ 20,194
Cash Rental and Operating Revenues $ 20,627 $ 20,295 $ 19,929 $ 20,169 $ 20,680
Cash Operating Expenses (1,205) (1,047) (1,094) (1,226) (1,176)
Cash NOI $ 19,422 $ 19,248 $ 18,835 $ 18,943 $ 19,503
Year-Over-Year Three-Month SPP Growth 0.4%
UNITED KINGDOM
1Q17 2Q17 3Q17 4Q17 1Q18
Property count 61 61 61 61 61
Investment $ 373,799 $ 388,275 $ 401,165 $ 404,695 $ 419,739
Beds 3,198 3,184 3,183 3,183 3,183
Occupancy % 92.8 91.1 91.8 91.2 90.8
Facility EBITDARM CFC 1.56x 1.57x 1.57x 1.53x 1.50x
Facility EBITDAR CFC 1.31x 1.31x 1.31x 1.27x 1.25x
Rental and Operating Revenues $ 7,592 $ 7,891 $ 8,101 $ 8,216 $ 8,619
FX adjustment 935 693 515 403 —
NOI $ 8,527 $ 8,584 $ 8,616 $ 8,619 $ 8,619
Cash Rental and Operating Revenues $ 6,830 $ 7,191 $ 7,435 $ 7,546 $ 7,917
FX adjustment 841 631 471 369 —
Cash NOI $ 7,671 $ 7,822 $ 7,906 $ 7,915 $ 7,917
Year-Over-Year Three-Month SPP Growth 3.2%
42
Other
As of and for the quarter ended March 31, 2018, dollars in thousands
TOTAL OTHER(1)
1Q17 2Q17 3Q17 4Q17 1Q18
Property count 76 76 76 76 76
Investment $ 922,617 $ 937,093 $ 949,984 $ 953,513 $ 969,707
Rental and Operating Revenues $ 28,777 $ 28,659 $ 28,957 $ 29,311 $ 30,303
Operating Expenses (1,205) (1,047) (1,094) (1,226) (1,176)
FX adjustment 935 693 515 403 —
NOI $ 28,507 $ 28,305 $ 28,378 $ 28,488 $ 29,127
Cash Rental and Operating Revenues $ 27,765 $ 27,793 $ 27,673 $ 28,027 $ 28,911
Cash Operating Expenses (1,205) (1,047) (1,094) (1,226) (1,176)
FX adjustment 841 631 471 369 —
Cash NOI $ 27,401 $ 27,377 $ 27,049 $ 27,170 $ 27,735
Year-Over-Year Three-Month SPP Growth 1.2%
(1) Includes one domestic post-acute/skilled property.
Same Property Portfolio - Wholly-owned
43
(1) Excludes land held for development and includes two senior housing developments and two life science redevelopments.
(2) Includes $13.2 million related to non-refundable Entrance Fees (net of reserve for early terminations) included in FAD as the fees are collected by our CCRC JV, partially offset
by $7.0 million related to non-refundable Entrance Fee amortization recognized on an FFO basis over the estimated stay of the residents. See Entrance Fees in Glossary.
(3) HCP's pro rata share excludes activity related to $436 million of debt funded by HCP.
Other Unconsolidated JVs(1)
As of and for the quarter ended March 31, 2018, dollars and square feet in thousands
SELECTED FINANCIAL DATA AT 100% Total CCRC JV RIDEA II JV
Other SHOP
JVs Life Science
Medical
Office Remaining
Joint ventures' Investment $ 2,913,758 $ 1,457,135 $ 1,027,917 $ 212,320 $ 156,745 $ 50,065 $ 9,576
Joint ventures' mortgage debt 1,341,285 622,360 593,046 122,726 — — 3,153
Property count 84 15 49 10 4 3 3
Capacity 7,257 Units 5,302 Units 921 Units 278 Sq. Ft. 294 Sq. Ft. 360 Beds
Occupancy % 86.4 81.5 91.2 96.3 78.0 79.2
Total revenues $ 188,804 $ 104,235 $ 70,952 $ 9,236 $ 2,259 $ 1,652 $ 470
Operating expenses (147,160) (83,677) (55,881) (6,160) (611) (811) (20)
NOI $ 41,644 $ 20,558 $ 15,071 $ 3,076 $ 1,648 $ 841 $ 450
Depreciation and amortization (37,157) (24,091) (10,123) (1,721) (576) (527) (119)
General and administrative expenses 190 470 (101) (9) (23) (135) (12)
Interest expense and other (13,957) (6,447) (6,638) (830) 49 — (91)
Net income (loss) $ (9,280) $ (9,510) $ (1,791) $ 516 $ 1,098 $ 179 $ 228
Depreciation and amortization 37,157 24,091 10,123 1,721 576 527 119
FFO $ 27,877 $ 14,581 $ 8,332 $ 2,237 $ 1,674 $ 706 $ 347
Non-refundable Entrance Fee sales, net(2) 6,177 6,177 — — — — —
Non-cash adjustments to NOI (337) (594) 269 (12) (35) 35 —
Non-cash adjustments to net income 584 249 256 67 — — 12
FAD capital expenditures (6,183) (3,410) (2,585) (45) (14) (129) —
FAD $ 28,118 $ 17,003 $ 6,272 $ 2,247 $ 1,625 $ 612 $ 359
HCP's SHARE OF UNCONSOLIDATED JVs
HCP's ownership percentage 49% 40% - 45% 45% - 90% 50% - 63% 20% - 67% 80%
HCP's net equity investment(3) $ 425,389 $ 199,191 $ 88,773 $ 58,716 $ 65,016 $ 12,395 $ 1,298
Mortgage debt(3) 173,586 104,456 — 69,130 — — —
NOI 19,438 10,073 6,036 1,539 1,014 416 360
Cash NOI 21,737 12,300 6,144 1,529 984 421 359
Net income (loss)(3) 570 (2,133) 1,949 62 313 197 182
FFO(3) 17,958 9,240 6,017 1,004 1,030 391 276
FAD(3) 18,172 10,382 5,131 1,013 990 370 286
44
Other Unconsolidated JV Capital
Represents HCP's pro rata share of unconsolidated JVs for the quarter ended March 31, 2018, dollars in thousands
Three Months Ended
March 31, 2018
FAD capital expenditures $ 2,776
Revenue enhancing capital expenditures 2,797
Development 3,694
Redevelopment 150
Capitalized interest 63
Total capital expenditures $ 9,480
DEVELOPMENT PROJECTS IN PROCESS
Actual / Estimated
Occupancy
Project MSA Property Type
Property
Count CIP
Cost to
Complete
Total at
Completion Units
Project
Start Initial Stabilized
Otay Ranch San Diego, CA Senior housing 1 $ 11,311 $ 16,533 $ 27,844 111 2Q17 3Q18 4Q20
Waldwick New York, NY Senior housing 1 4,797 21,095 25,892 79 3Q17 4Q18 4Q20
2 $ 16,108 $ 37,628 $ 53,736 190
LAND HELD FOR DEVELOPMENT
Project MSA Property Type
Gross Site
Acreage
Estimated
Rentable
Units
Investment
to Date
Oakmont Village Santa Rosa, CA Senior housing 3 74 $ 2,292
Brandywine Philadelphia, PA Senior housing 8 67 797
11 141 $ 3,089
REDEVELOPMENT PROJECTS IN PROCESS
Incremental Costs
Project MSA Property Type
Property
Count
Redevelopments
Removed from
Operations CIP
Cost to
Complete Total
Total at
Completion
Project
Start
Estimated
Completion
Biotech Gateway San Francisco, CA Life Science 2 $ 41,363 $ 135 $ 20,502 $ 20,637 $ 62,000 1Q18 1Q19
45
Other CCRC JV
Dollars in thousands, except REVPOR
CCRC JV
1Q17 2Q17 3Q17 4Q17 1Q18
Property count 15 15 15 15 15
Units 7,198 7,245 7,249 7,250 7,257
Occupancy % 85.7 85.2 84.9 85.7 86.4
REVPOR(1) $ 5,060 $ 5,065 $ 5,094 $ 5,153 $ 5,099
HCP's SHARE OF CCRC JV
Investment $ 694,762 $ 700,776 $ 705,554 $ 709,625 $ 713,996
Cash Rental and Operating Revenues excluding Cash NREFs, net $ 45,871 $ 45,761 $ 46,074 $ 47,063 $ 46,982
Cash NREFs, net(2) 6,353 7,716 8,090 9,892 6,235
Cash Operating Expenses (39,121) (40,601) (40,044) (41,103) (40,916)
Cash NOI $ 13,102 $ 12,876 $ 14,120 $ 15,852 $ 12,300
Margin % including NREFs, net 24.9 24.0 25.9 27.7 23.0
(1) The 3-month average Cash Rental and Operating Revenues per occupied unit excluding Cash NREFs, net for the period presented.
(2) Represents non-refundable entrance fees, net of a 15% reserve for statutory refunds due to early terminations and related management fees. See Entrance Fees in Glossary.
46
(1) The current guidance has not changed from the February 13, 2018 guidance, with the exception of
net dispositions, which were modified to reflect the pending U.K. JV. See footnote (5) below for
further discussion.
(2) SPP Cash NOI guidance includes $9.0 million related to non-comparable items identified below.
Excluding these items, SPP Cash NOI guidance would be 2.00% at the mid-point.
(3) FAD capital expenditures exclude approximately $13 to $15 million related to HCP's share of FAD
capital expenditures in unconsolidated JVs, which are included below in Other adjustments.
(4) HCP's Share of Unconsolidated JVs Cash NOI guidance consists of the following:
(5) Base case assumes that proceeds from dispositions are used to repay approximately $1.5 billion
of debt at a blended rate of approximately 4%. The remaining proceeds are assumed to be
reinvested into a combination of capital expenditures and investments. Major disposition
assumptions consist of the following:
(A) Represents base case assumptions. Actual timing could fluctuate due to various factors.
(B) 6.5% cap rate based on trailing twelve month EBITDAR at time of announcement.
(C) Upon closing the JV our remaining equity investment is expected to be approximately $100 million,
assuming the JV secures third party property level debt.
(D) 6.5% - 7.5% cap rate based on trailing twelve month EBITDAR and estimated proceeds at time of
announcement.
2018 Guidance
Projected full year 2018, dollars in millions, except per share amounts
Full Year
2018 Guidance
(May 3, 2018)(1)
Net income, FFO and FFO as Adjusted per Share Guidance
Diluted earnings per common share $0.79 - $0.85
Diluted FFO per common share $1.73 - $1.79
Diluted FFO as adjusted per common share $1.77 - $1.83
Annualized dividend per share $1.48
Year-Over-Year SPP Cash NOI Guidance(2)
Senior housing triple-net 0.50% - 1.50%
SHOP (4.00%) - 0.00%
Life science 0.25% - 1.25%
Medical office 1.75% - 2.75%
Other 0.50% - 1.50%
Total Portfolio 0.25% - 1.75%
Other Supplemental Information - Cash Addition (Reduction)
Amortization of deferred compensation $17 - $19
Amortization of deferred financing costs $12 - $14
Straight-line rents ($16) - ($20)
FAD capital expenditures(3) ($104) - ($110)
CCRC Entrance Fees, net $17 - $20
Deferred income taxes ($8) - ($12)
Other adjustments(3) ($16) - ($20)
Capital Expenditures (excluding FAD Capital Expenditures)
1st generation tenant improvements / ICE $55 - $58
Casualty related capital $16 - $18
Revenue enhancing $45 - $50
Development and Redevelopment $330 - $370
HCP's Share of Unconsolidated JVs Development and
Redevelopment $45 - $55
HCP's Share of Unconsolidated JVs revenue enhancing
and other $20 - $25
Other Items
Interest income $9 - $11
General and administrative (excluding severance and
related charges) $82 - $87
Interest expense $255 - $275
HCP's Share of Unconsolidated JVs Cash NOI(4) $76 - $84
HCP's Share of Unconsolidated JVs FFO $55 - $63
Net dispositions(5) $1.7B - $2.3B @ 6.9%
Joint Venture
HCP's Share of
Cash NOI Comments
RIDEA II JV $8 - $12 Expected to sell mid-2018
CCRC JV $56 - $59
Other JVs $12 - $13
Total $76 - $84
2018 Guidance
Mid-point
Mid-point Excluding
Non-comparable
Items Comments
Senior housing
triple-net 1.00% 2.00%
SPP includes $2.5M of the
$5.0M total rent reduction
related to the Brookdale
Transaction
Life science 0.75% 3.75% Renewal of 147K sf lease inSouth San Francisco - ($6.5M)
Total Portfolio 1.00% 2.00%
2018
Transaction Timing(A) Proceeds Cash Yield
Brookdale sales - 4 SHOP / 2 NNN Closed $275 7.4%(B)
U.K. JV(C) Mid-Year $425 - $450 6.5%
RIDEA II JV Q2 $332 6.8%
Genentech PO 7/1/2018 $269 8.0%
BKD 3rd Party Transactions - SHOP / NNN Mid-Year $600 - $700 6.8% - 8.0%(D)
47
Glossary
Adjusted Fixed Charge Coverage*
Adjusted EBITDA divided by Fixed Charges. Adjusted Fixed Charge Coverage is a supplemental
measure of liquidity and our ability to meet interest payments on our outstanding debt and pay
dividends to our preferred stockholders, if applicable. Our various debt agreements contain
covenants that require us 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 of
our debt instruments. Adjusted Fixed Charge Coverage is subject to the same limitations and
qualifications as Adjusted EBITDA and Fixed Charges.
Annualized Base Rent
The most recent month’s (or subsequent month’s if acquired in the most recent month) base rent
including additional rent floors, cash income from DFLs and/or interest income annualized for 12
months. Annualized Base Rent excludes properties in our SHOP and properties sold or held for
sale during the quarter. Further, Annualized Base Rent does not include tenant recoveries, additional
rents in excess of floors and non-cash revenue adjustments (i.e., straight-line rents, amortization
of market lease intangibles, DFL non-cash interest and deferred revenues). We use Annualized
Base Rent for the purpose of determining Lease Expirations and Debt Investment Maturities.
Cash Flow Coverage (“CFC”)*
Facility EBITDAR or Facility EBITDARM divided by the aggregate of base rent and any additional
rent due to us for the trailing 12-month period one quarter in arrears from the period presented.
CFC is a supplemental measure of a property’s ability to generate cash flows for the operator/
tenant (not HCP) to meet the operator’s/tenant’s related rent and other obligations to us. However,
CFC is subject to the same limitations and qualifications as Facility EBITDAR or Facility EBITDARM.
CFC is not presented for: (i) properties operated under a RIDEA structure; or (ii) newly completed
facilities under lease-up, facilities acquired or transitioned to new operators during the relevant
trailing 12-month period, vacant facilities and facilities for which data is not available or meaningful.
Cash Operating Expenses*
Cash operating expenses represents property level operating expenses (which exclude transition
costs) after eliminating the effects of straight-line rents, lease termination fees and the impact of
deferred community fee expense.
Cash Rental and Operating Revenues*
Cash rental and operating revenue represents rental and related revenues, tenant recoveries,
resident fees and services and income from DFLs after eliminating the effects of straight-line rents,
DFL non-cash interest, amortization of market lease intangibles, lease termination fees and the
impact of deferred community fee income.
Consolidated Debt
The carrying amount of bank line of credit and term loans (if applicable), senior unsecured notes,
mortgage debt and other debt, as reported in our consolidated financial statements.
Consolidated Gross Assets*
The carrying amount of total assets, excluding investments in and advances to our unconsolidated
JVs, after adding back accumulated depreciation and amortization, as reported in our consolidated
financial statements. Consolidated Gross Assets is a supplemental measure of our financial
position, which, when used in conjunction with debt-related measures, enables both management
and investors to analyze our leverage and to compare our leverage to that of other companies.
Consolidated Secured Debt
Mortgage and other debt secured by real estate, as reported in our 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).
Debt Investments
Loans secured by a direct interest in real estate and mezzanine loans.
Development
Includes ground-up construction. Newly completed developments, are considered Stabilized at
the earlier of lease-up (typically when the tenant(s) controls the physical use of 80% of the space)
or 24 months from the date the property is placed in service.
Direct Financing Lease (“DFL”)
Lease for which future minimum lease payments are recorded as a receivable and 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.
EBITDA and Adjusted EBITDA*
Earnings before interest, taxes, depreciation and amortization to HCP. Adjusted EBITDA is defined
as EBITDA excluding impairments (recoveries), gains or losses from sales of depreciable property,
transaction-related items, prepayment costs (benefits) associated with early retirement or payment
of debt, severance and related charges, litigation costs (recoveries), losses (gains) upon
consolidation and deconsolidation, casualty-related charges (recoveries) and foreign currency
remeasurement losses (gains). EBITDA and Adjusted EBITDA include our pro rata share our
unconsolidated JVs presented on the same basis.
Enterprise Debt*
Consolidated Debt plus our pro rata share of total debt from our unconsolidated JVs. Enterprise
Debt is a supplemental measure of our financial position, which enables both management and
investors to analyze our leverage and to compare our leverage to that of other companies. Our pro
rata share of total debt from our unconsolidated JVs is not intended to reflect our actual liability
or ability to access assets should there be a default under any or all such loans or a liquidation of
the JVs.
Enterprise Gross Assets*
Consolidated Gross Assets plus our pro rata share of total gross assets from our unconsolidated
JVs, after adding back accumulated depreciation and amortization. Enterprise Gross Assets is a
supplemental measure of our financial position, which, when used in conjunction with debt-related
measures, enables both management and investors to analyze our leverage and to compare our
leverage to that of other companies.
48
Glossary
Financial Leverage*
Enterprise Debt divided by Enterprise Gross Assets. Financial Leverage is a supplemental measure
of our financial position, which enables both management and investors to analyze our leverage
and to compare our leverage to that of other companies.
Fixed Charges*
Total interest expense plus capitalized interest plus preferred stock dividends (if applicable). Fixed
Charges also includes our pro rata share of the interest expense plus capitalized interest plus
preferred stock dividends (if applicable) held from our unconsolidated JVs. Fixed Charges is a
supplemental measure of our interest payments on outstanding debt and dividends to preferred
stockholders for purposes of presenting Fixed Charge Coverage and Adjusted Fixed Charge
Coverage. Fixed Charges is subject to limitations and qualifications, as, among other things, it does
not include all contractual obligations.
Funds Available for Distribution (“FAD”)*
See the “Funds Available for Distribution” definition included in the accompanying Discussion and
Reconciliations of Non-GAAP Financial Measures for information regarding FAD.
Funds From Operations (“FFO”) and FFO as Adjusted*
See the “Funds From Operations” definition included in the accompanying Discussion and
Reconciliations of Non-GAAP Financial Measures for information regarding FFO and FFO as
adjusted.
HCP’s Share of Unconsolidated JVs
HCP’s pro rata share information is prepared on a basis consistent with the comparable
consolidated amounts by applying our actual ownership percentage for the period, and is intended
to reflect our proportionate economic interest in the financial position and operating results of
properties in our portfolio.
Healthcare Affiliated
Represents properties that are on-campus or adjacent to a healthcare system and properties that
are leased 50% or more to a healthcare system.
Initial Capital Expenditures (“ICE”)
Expenditures required to bring a newly acquired property up to standard. The expenditures are
typically identified during underwriting and incurred within the first year of ownership.
Investment and Portfolio Investment*
Represents: (i) the carrying amount of real estate assets and intangibles, after adding back
accumulated depreciation and amortization; and (ii) the carrying amount of DFLs and Debt
Investments. Portfolio Investment also includes our pro rata share of the real estate assets and
intangibles held in our unconsolidated JVs, presented on the same basis as Investment, less the
value attributable to refundable Entrance Fee liabilities. Investment and Portfolio Investment
exclude land held for development.
Enterprise Secured Debt*
Consolidated Secured Debt plus our pro rata share of mortgage debt from our unconsolidated JVs.
Enterprise Secured Debt is a supplemental measure of our financial position, which enables both
management and investors to analyze our leverage and to compare our leverage to that of other
companies. Our pro rata share of Enterprise Secured Debt from our unconsolidated JVs is not
intended to reflect our actual liability or ability to access assets should there be a default under
any or all such loans or a liquidation of the JVs.
Entrance Fees
Certain of our communities have residency agreements which require the resident to pay an upfront
entrance fee prior to taking occupancy at the community. For net income, NOI and FFO, the non-
refundable portion of the entrance fee is recorded as deferred entrance fee revenue and amortized
over the estimated stay of the resident based on an actuarial valuation. For Cash NOI and FAD,
the non-refundable entrance fees are recognized upon receipt, net of a reserve for statutory refunds
due to early terminations. The refundable portion of a resident’s entrance fee is generally refundable
within a certain number of months or days following contract termination or upon the sale of the
unit. All refundable amounts due to residents at any time in the future are classified as liabilities.
Estimated / Actual Completion Date
For Developments, management’s estimate of the period the core and shell structure improvements
are expected to be or have been completed. For Redevelopments, management’s estimate of the
period in which major construction activity in relation to the scope of the project has been or will
be substantially completed.
Facility EBITDA*
EBITDA for a particular facility (not HCP), for the trailing 12 months and one quarter in arrears from
the date reported. We use Facility EBITDA in determining Debt Service Coverage. Facility EBITDA
is subject to the same limitations as EBITDA. In addition, Facility EBITDA does not represent a
borrower’s net income or cash flow from operations and should not be considered an alternative
to those indicators. We receive periodic financial information from most borrowers regarding the
performance under the loan agreement. We utilize Facility EBITDA as a supplemental measure of
the borrower’s ability to generate sufficient liquidity to meet their obligations to us. Facility EBITDA
includes a management fee as specified in the borrower loan agreements with us. All borrower
financial performance data was derived solely from information provided by borrowers without
independent verification by us.
Facility EBITDAR and Facility EBITDARM*
Earnings before interest, taxes, depreciation, amortization and rent (and management fees), as
applicable, for a particular facility accruing to the operator/tenant of the property (HCP as lessor),
for the trailing 12 months and one quarter in arrears from the date reported. We use Facility EBITDAR
or Facility EBITDARM in determining CFC and as a supplemental measure of the ability of the
property to generate sufficient liquidity to meet related obligations to us. Facility EBITDAR includes:
(i) contractual management fees; (ii) an imputed management fee of 5% of revenues for senior
housing facilities and post-acute/skilled facilities, or (iii) an imputed management fee of 2% of
revenues for hospitals. All facility financial performance data was derived solely from information
provided by operators/tenants without independent verification by us. Facility EBITDAR and Facility
EBITDARM are subject to the same limitations and qualifications as Facility EBITDA. Facility
EBITDAR and Facility EBITDARM are not presented for: (i) properties operated under a RIDEA
structure; or (ii) newly completed facilities under lease-up, facilities acquired or transitioned to new
operators during the relevant trailing 12-month period, vacant facilities and facilities for which data
is not available or meaningful.
49
Glossary
Metropolitan Statistical Areas (“MSA”)
Metropolitan Statistical Areas are geographic entities delineated by the Office of Management and
Budget for use by Federal Statistical agencies in collecting, tabulating, and publishing Federal
statistics. A metro area contains a core urban area of 50,000 or more population, consists of one
or more counties and includes the counties containing the core urban area, as well as any adjacent
counties that have a high degree of social and economic integration (as measured by commuting
to work) with the urban core.
Net Debt*
Enterprise Debt less the carrying amount of cash and cash equivalents as reporting in our
consolidated financial statements and our pro rata share of cash and cash equivalents from our
unconsolidated JVs. Net Debt is a supplemental measure of our financial position, which enables
both management and investors to analyze our leverage and to compare our leverage to that of
other companies.
Net Debt to Adjusted EBITDA*
Net Debt divided by Adjusted EBITDA is a supplemental measure of our ability to decrease our
debt. Because we may not be able to use our cash to reduce our debt on a dollar-for-dollar basis,
this measure may have material limitations.
Net Operating Income from Continuing Operations (“NOI”) and Cash
NOI*
NOI is defined as rental and related revenues, including tenant recoveries, resident fees and
services, and income from DFLs, less property level operating expenses (which exclude transition
costs); NOI excludes all other financial statement amounts included in net income (loss). Cash NOI
is calculated as NOI after eliminating the effects of straight-line rents, DFL non-cash interest,
amortization of market lease intangibles, termination fees, and the impact of deferred community
fee income and expense.
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 triple-net facilities, post-
acute/skilled facilities and hospitals, Occupancy represents the facilities’ average operating
Occupancy for the trailing three-month period ended one quarter in arrears from the date reported.
For SHOP properties, Occupancy represents the facilities’ average operating Occupancy for the
most recent calendar quarter (year-to-date for year-to-date SPP) available weighted to reflect HCP’s
share. The percentages are calculated based on units for senior housing facilities and available
beds for post-acute/skilled facilities and hospitals. The percentages shown exclude newly
completed facilities under lease-up, facilities acquired or transitioned to new operators during the
relevant period, vacant facilities and facilities for which data is not available or meaningful. All
facility financial performance data was derived solely from information provided by operators/
tenants and borrowers without independent verification by us.
Penetration Rate
Reflects the number of available senior housing units as a percentage of total population age 80
and older. This measurement is an indicator of market demand for new development and expansion
projects.
Pooled Leases
Two or more leases to the same operator/tenant or their subsidiaries under which their obligations
are combined by virtue of cross default protection, a pooling agreement or multiple pooling
agreements, or cross-guaranties.
Portfolio Income*
Cash NOI plus interest income plus our pro rata share of Cash NOI from our unconsolidated JVs.
Qualified Care Giver
Qualified Care Giver represents a household consisting of individuals between 45 and 64 years of
age with income of $100,000 or more. Qualified Care Giver % is the ratio of Qualified Care Givers
to the total population, which provides an indication of senior housing demand due to the role
adult children have in the senior housing selection process.
Redevelopment
Properties that incur major capital expenditures to significantly improve, change the use, or
reposition the property pursuant to a formal redevelopment plan. Newly completed
redevelopments, are considered Stabilized at the earlier of lease-up (typically when the tenant(s)
controls the physical use of 80% of the space) or 24 months from the date the property is placed
in service.
Rental and Operating Revenues*
Includes rental related revenues, tenant recoveries, resident fees and services and income from
DFLs.
Retention Rate
The ratio of total renewed square feet to the total square feet expiring and available for lease,
excluding the square feet for tenant leases terminated for default or buy-out prior to the expiration
of the lease.
REVPOR SHOP*
The 3-month average Rental and Operating Revenues per occupied unit for the most recent period
available. REVPOR SHOP excludes newly completed assets under lease-up, assets sold, acquired
or transitioned to a new operating structure (such as triple-net to SHOP) during the relevant period,
assets in redevelopment, and assets that experienced a casualty event that significantly impacted
operations.
REVPOR Triple-net
The 3-month average facility revenue per occupied unit, one quarter in arrears from the period
presented. Facility revenue consists primarily of resident rents generated at triple-net communities,
which are not included in our financial results. Facility revenues are derived solely from information
provided by operators/tenants without independent verification by us. REVPOR Triple-net excludes
vacant facilities, newly completed assets under lease-up, assets sold, acquired or transitioned to
a new operating structure (such as triple-net to SHOP) during the relevant period.
RIDEA
A structure whereby a taxable REIT subsidiary is permitted to rent a healthcare facility from its
parent REIT and hire an independent contractor to operate the facility.
50
Glossary
Same Property Portfolio (“SPP”)*
SPP NOI and Adjusted (Cash) NOI information allows us to evaluate the performance of our property
portfolio under a consistent population by eliminating changes in the composition of our
consolidated portfolio of properties. SPP NOI excludes certain non-property specific operating
expenses that are allocated to each operating segment on a consolidated basis. Properties are
included in SPP once they are stabilized for the full period in both comparison periods. Newly
acquired operating assets are generally considered stabilized at the earlier of lease-up (typically
when the tenant(s) control(s) the physical use of at least 80% of the space) or 12 months from the
acquisition date. Newly completed developments and redevelopments are considered stabilized
at the earlier of lease-up or 24 months from the date the property is placed in service. Properties
that experience a change in reporting structure, such as a transition from a triple-net lease to a
RIDEA reporting structure, are considered stabilized after 12 months in operations under a
consistent reporting structure. A property is removed from SPP when it is classified as held for
sale, sold, placed into redevelopment, experiences a casualty event that significantly impacts
operations or changes its reporting structure (such as triple-net to SHOP).
Secured Debt Ratio*
Enterprise Secured Debt divided by Enterprise Gross Assets. Secured Debt Ratio is a supplemental
measure of our financial position, which enables both management and investors to analyze our
leverage and to compare our leverage to that of other companies.
Square Feet (Sq. Ft.)
The square footage for properties, excluding square footage for development or redevelopment
properties prior to completion.
Stabilized / Stabilization
Newly acquired operating assets are generally considered Stabilized at the earlier of lease-up
(typically when the tenant(s) control(s) the physical use of at least 80% of the space) or 12 months
from the acquisition date. Newly completed developments and redevelopments are considered
Stabilized at the earlier of lease-up or 24 months from the date the property is placed in service.
Properties that experience a change in reporting structure, such as a transition from a triple-net
lease to a RIDEA reporting structure, are considered stabilized after 12 months in operations under
a consistent reporting structure.
Total Market Equity
The total number of outstanding shares of our common stock multiplied by the closing price per
share of our 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 our common
stock on the New York Stock Exchange as of period end (adjusted for stock splits).
Units/Square Feet/Beds
Senior housing facilities are measured in available units (e.g., studio, one or two bedroom units).
Life science facilities and medical office buildings are measured in square feet. Post-acute/skilled
facilities and hospitals are measured in available beds.
* Non-GAAP Supplemental Measures
Reconciliations, definitions and important discussions regarding the usefulness and limitations of the Non-GAAP Financial Measures used in this report can be found at
http://ir.hcpi.com/financial-reconciliation.
51
Debt Ratios Adjusted EBITDA and AdjustedFixed Charge Coverage
Dollars in thousands
Three Months Ended
March 31, 2018
Net income $ 43,237
Interest expense 75,102
Income tax expense (benefit) (5,336)
Depreciation and amortization 143,250
Other depreciation and amortization 1,296
HCP’s share of unconsolidated JVs:
Interest expense 1,714
Income tax expense (benefit) 33
Depreciation and amortization 17,388
Other JV adjustments (295)
EBITDA $ 276,389
Loss (gain) on sales of real estate, net (20,815)
Loss (gain) upon consolidation, net 41,017
Transaction-related items 1,942
Other impairments (recoveries), net (3,298)
Severance and related charges 8,738
Litigation costs (recoveries) 406
Foreign currency remeasurement losses (gains) 130
Adjusted EBITDA $ 304,509
ADJUSTED FIXED CHARGE COVERAGE
Interest expense 75,102
HCP’s share of unconsolidated JV interest expense 1,714
Capitalized interest 3,578
Fixed Charges $ 80,394
Adjusted Fixed Charge Coverage 3.8x
52
Debt Ratios
As of and for the quarter ended March 31, 2018, dollars in thousands
ENTERPRISE DEBT AND NET DEBT
March 31, 2018
Bank line of credit(1) $ 1,092,357
Term loan(2) 236,878
Senior unsecured notes 6,398,976
Mortgage debt 143,524
Other debt 93,856
Consolidated Debt $ 7,965,591
HCP's share of unconsolidated JV mortgage debt 173,586
HCP's share of unconsolidated JV other debt 177,423
Enterprise Debt $ 8,316,600
Cash and cash equivalents (86,021)
HCP's share of unconsolidated JV cash and cash equivalents (37,974)
Net Debt $ 8,192,605
(1) Includes £105 million translated into USD.
(2) Represents £169 million translated into USD.
(3) Represents the current quarter Adjusted EBITDA
multiplied by a factor of four.
FINANCIAL LEVERAGE
March 31, 2018
Enterprise Debt $ 8,316,600
Enterprise Gross Assets 18,123,476
Financial Leverage 45.9%
SECURED DEBT RATIO
March 31, 2018
Mortgage debt $ 143,524
HCP's share of unconsolidated JV mortgage debt 173,586
Enterprise Secured Debt $ 317,110
Enterprise Gross Assets 18,123,476
Secured Debt Ratio 1.7%
NET DEBT TO ADJUSTED EBITDA
Three Months Ended
March 31, 2018
Net Debt $ 8,192,605
Adjusted EBITDA(3) 1,218,036
Net Debt to Adjusted EBITDA 6.7x
53
COMPANY
Information
BOARD OF DIRECTORS
BRIAN G. CARTWRIGHT
Chairman of the Board, HCP, Inc.
Former General Counsel
U.S. Securities and Exchange Commission
THOMAS M. HERZOG
President and Chief Executive Officer, HCP, Inc.
CHRISTINE N. GARVEY
Former Global Head of Corporate
Real Estate Services, Deutsche Bank AG
R. KENT GRIFFIN, JR.
Former President and Chief Operating Officer,
BioMed Realty Trust, Inc.
EXECUTIVE MANAGEMENT
THOMAS M. HERZOG
President and Chief Executive Officer
SCOTT M. BRINKER
Executive Vice President
Chief Investment Officer
THOMAS M. KLARITCH
Executive Vice President
Chief Operating Officer
TROY E. MCHENRY
Executive Vice President
General Counsel and Corporate Secretary
PETER A. SCOTT
Executive Vice President
Chief Financial Officer
DAVID B. HENRY
Former Vice Chairman and Chief Executive Officer,
Kimco Realty Corporation
LYDIA H. KENNARD
President and Chief Executive Officer,
KDG Construction Consulting
PETER L. RHEIN
Partner,
Sarlot & Rhein
JOSEPH P. SULLIVAN
Chairman Emeritus, Board of Advisors,
RAND Health; Former Chief Executive Officer,
American Health Properties, Inc.
KENDALL K. YOUNG
Executive Vice President
Senior Managing Director
Senior Housing Properties
SHAWN G. JOHNSTON
Senior Vice President
Chief Accounting Officer
GLENN T. PRESTON
Senior Vice President
Senior Managing Director
Medical Office Properties
54
Forward-Looking Statements
& Risk Factors
Statements contained in this supplemental report which are not historical facts are "forward-
looking statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-
looking statements include, among other things, statements regarding our and our officers’
intent, belief or expectation as identified by the use of words such as “may,” “will,” “project,”
“expect,” “believe,” “intend,” “anticipate,” “seek,” “forecast,” “plan,” “potential,”
“estimate,” “could,” “would,” “should” and other comparable and derivative terms or the
negatives thereof. Examples of forward-looking statements include, among other things, (i)
the Company’s pending or contemplated acquisitions, dispositions, transitions, development
and redevelopment projects or other transactions, including with respect to closing dates,
completion dates, stabilization dates, rentable square feet, costs to complete, occupancy,
yield, lease coverage ratios, total investment and return on investment, (ii) portfolio
diversification and operator/tenant concentration on a pro forma basis, (iii) future new supply
and demographics, and (iv) the Company’s 2018 guidance and assumptions with respect
thereto. Forward-looking statements reflect our current expectations and views about future
events and are subject to risks and uncertainties that could significantly affect our future
financial condition and results of operations. While forward-looking statements reflect our
good faith belief and assumptions we believe to be reasonable based upon current
information, we can give no assurance that our expectations or forecasts will be attained.
Further, we cannot guarantee the accuracy of any such forward-looking statement contained
in this supplemental report, and such forward-looking statements are subject to known and
unknown risks and uncertainties that are difficult to predict. These risks and uncertainties
include, but are not limited to: the Company’s reliance on a concentration of a small number
of tenants and operators for a significant percentage of its revenues, the financial condition
of the Company’s existing and future tenants, operators and borrowers, including potential
bankruptcies and downturns in their businesses, and their legal and regulatory proceedings,
which results in uncertainties regarding the Company’s ability to continue to realize the full
benefit of such tenants’ and operators’ leases and borrowers’ loans; the ability of the
Company’s existing and future tenants, operators and borrowers to conduct their respective
businesses in a manner sufficient to maintain or increase their revenues and to generate
sufficient income to make rent and loan payments to the Company and the Company’s ability
to recover investments made, if applicable, in their operations; competition for tenants and
operators, including with respect to new leases and mortgages and the renewal or rollover
of existing leases; the Company’s concentration in the healthcare property sector, particularly
in senior housing, life sciences, medical office buildings and hospitals, which makes its
profitability more vulnerable to a downturn in a specific sector than if the Company were
investing in multiple industries; availability of suitable properties to acquire at favorable prices,
the competition for the acquisition and financing of those properties and the costs of
associated property development; the Company’s ability to negotiate the same or better
terms with new tenants or operators if existing leases are not renewed or the Company
exercises its right to foreclose on loan collateral or replace an existing tenant or operator
upon default; the risks associated with the Company’s investments in JVs and unconsolidated
entities, including its lack of sole decision making authority and its reliance on its partners’
financial condition and continued cooperation; the Company’s ability to achieve the benefits
of acquisitions and other investments within expected time frames or at all, or within expected
cost projections; operational risks associated with third party management contracts,
including the additional regulation and liabilities of RIDEA lease structures; the potential
impact on the Company
Continued
Hayden
Boston, MA
55
and its tenants, operators and borrowers from current and future litigation matters, including
the possibility of larger than expected litigation costs, adverse results and related
developments; the effect on the Company’s tenants and operators of legislation, executive
orders and other legal requirements, including the Affordable Care Act and licensure,
certification and inspection requirements as well as laws addressing entitlement programs
and related services, including Medicare and Medicaid, which may result in future reductions
in reimbursements; changes in federal, state or local laws and regulations, including those
affecting the healthcare industry that affect the Company’s costs of compliance or increase
the costs, or otherwise affect the operations, of its tenants and operators; volatility or
uncertainty in the capital markets, the availability and cost of capital as impacted by interest
rates, changes in the Company’s credit ratings, and the value of its common stock, and
other conditions that may adversely impact the Company’s ability to fund its obligations or
consummate transactions, or reduce the earnings from potential transactions; changes in
global, national and local economic and other conditions, including currency exchange rates;
the Company’s ability to manage its indebtedness level and changes in the terms of such
indebtedness; competition for skilled management and other key personnel; the Company’s
ability to maintain its qualification as a real estate investment trust; and other risks and
uncertainties described from time to time in the Company’s Securities and Exchange
Commission (SEC) filings. Except as required by law, we do not undertake, and hereby
disclaim, any obligation to update any forward-looking statements, which speak only as of
the date on which they are made.
The information in this supplemental report should be read in conjunction with the
Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K and other information filed with the SEC. The Reporting Definitions (and
Reconciliations of Non-GAAP Financial Measures) are an integral part of the information
presented herein. You can access these documents on the Company’s website,
www.hcpi.com, free of charge, as well as 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 the Company’s website is not incorporated by reference into, and should not
be considered a part of, this supplemental report.
In addition, the SEC maintains a website that contains reports, proxy and information
statements, and other information regarding issuers, including the Company, that file
electronically with the SEC at www.sec.gov.
This supplemental report also includes market and industry data that the Company has
obtained from market research, publicly available information and industry publications.
The accuracy and completeness of such information are not guaranteed. The market and
industry data is often based on industry surveys and preparers’ experience in the industry.
Similarly, although the Company believes that the surveys and market research that others
have performed are reliable, it has not independently verified this information.
For more information, contact Andrew Johns, Vice President - Investor Relations, at
(949) 407-0400.
Forward-Looking Statements
& Risk Factors (continued)
Hayden
Boston, MA
56
CORPORATE HEADQUARTERS
1920 MAIN STREET, SUITE 1200
IRVINE, CA 92614
(949) 407-0700
SAN FRANCISCO OFFICE
950 TOWER LANE, SUITE 1650
FOSTER CITY, CA 94404
NASHVILLE OFFICE
3000 MERIDIAN BOULEVARD, SUITE 200
FRANKLIN, TN 37067
