10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             

Commission file number 001-08895

HCP, Inc.

(Exact name of registrant as specified in its charter)

Maryland	33-0091377
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1920 Main Street, Suite 1200

Irvine, CA 92614

(Address of principal executive offices)

(949) 407-0700

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, $1.00 par value	HCP	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files).  YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒	Accelerated Filer ☐
Non-accelerated Filer ☐	Smaller Reporting Company ☐
	Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)  YES ☐ NO ☒

At April 30, 2019, there were 477,983,011 shares of the registrant’s $1.00 par value common stock outstanding.

HCP, INC.

INDEX

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited):
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Income (Loss)	5
	Consolidated Statements of Equity	6
	Consolidated Statements of Cash Flows	7
	Notes to the Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	52
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 6.	Exhibits	54
Signatures

2

HCP, Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

	March 31, 2019			December 31, 2018
ASSETS
Real estate:
Buildings and improvements	$	11,220,557		$	10,877,248
Development costs and construction in progress	605,165			537,643
Land	1,717,259			1,637,506
Accumulated depreciation and amortization	(2,915,798		)	(2,842,947		)
Net real estate	10,627,183			10,209,450
Net investment in direct financing leases	363,395			713,818
Loans receivable, net	86,139			62,998
Investments in and advances to unconsolidated joint ventures	531,966			540,088
Accounts receivable, net of allowance of $5,175 and $5,127, respectively	48,555			48,171
Cash and cash equivalents	120,117			110,790
Restricted cash	26,535			29,056
Intangible assets, net	275,565			305,079
Assets held for sale, net	10,842			108,086
Right-of-use asset, net	165,748			—
Other assets, net	643,456			591,017
Total assets	$	12,899,501		$	12,718,553
LIABILITIES AND EQUITY
Bank line of credit	$	276,500		$	80,103
Senior unsecured notes	5,260,622			5,258,550
Mortgage debt	137,525			138,470
Other debt	89,223			90,785
Intangible liabilities, net	49,488			54,663
Liabilities of assets held for sale, net	132			1,125
Lease liability	152,837			—
Accounts payable and accrued liabilities	352,642			391,583
Deferred revenue	181,467			190,683
Total liabilities	6,500,436			6,205,962
Commitments and contingencies
Common stock, $1.00 par value: 750,000,000 shares authorized; 477,928,816 and 477,496,499 shares issued and outstanding, respectively	477,929			477,496
Additional paid-in capital	8,405,258			8,398,847
Cumulative dividends in excess of earnings	(3,042,422		)	(2,927,196		)
Accumulated other comprehensive income (loss)	(3,883		)	(4,708		)
Total stockholders' equity	5,836,882			5,944,439
Joint venture partners	389,369			391,401
Non-managing member unitholders	172,814			176,751
Total noncontrolling interests	562,183			568,152
Total equity	6,399,065			6,512,591
Total liabilities and equity	$	12,899,501		$	12,718,553

See accompanying Notes to the Unaudited Consolidated Financial Statements.

3

HCP, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2019			2018
Revenues:
Rental and related revenues	$	294,222		$	316,752
Resident fees and services	126,695			142,814
Income from direct financing leases	13,524			13,266
Interest income	1,713			6,365
Total revenues	436,154			479,197
Costs and expenses:
Interest expense	49,327			75,102
Depreciation and amortization	131,951			143,250
Operating	168,927			172,552
General and administrative	21,355			29,175
Transaction costs	4,518			2,195
Impairments (recoveries), net	8,858			—
Total costs and expenses	384,936			422,274
Other income (expense):
Gain (loss) on sales of real estate, net	8,044			20,815
Other income (expense), net	3,133			(40,407		)
Total other income (expense), net	11,177			(19,592		)
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	62,395			37,331
Income tax benefit (expense)	3,458			5,336
Equity income (loss) from unconsolidated joint ventures	(863		)	570
Net income (loss)	64,990			43,237
Noncontrolling interests' share in earnings	(3,520		)	(3,005		)
Net income (loss) attributable to HCP, Inc.	61,470			40,232
Participating securities' share in earnings	(441		)	(391		)
Net income (loss) applicable to common shares	$	61,029		$	39,841
Earnings per common share:
Basic	$	0.13		$	0.08
Diluted	$	0.13		$	0.08
Weighted average shares outstanding:
Basic	477,766			469,557
Diluted	479,131			469,695

See accompanying Notes to the Unaudited Consolidated Financial Statements.

4

HCP, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2019			2018
Net income (loss)	$	64,990		$	43,237
Other comprehensive income (loss):
Net unrealized gains (losses) on derivatives	94			(5,164		)
Change in Supplemental Executive Retirement Plan obligation and other	69			104
Foreign currency translation adjustment	662			7,652
Reclassification adjustment realized in net income (loss)	—			125
Total other comprehensive income (loss)	825			2,717
Total comprehensive income (loss)	65,815			45,954
Total comprehensive income (loss) attributable to noncontrolling interests	(3,520		)	(3,005		)
Total comprehensive income (loss) attributable to HCP, Inc.	$	62,295		$	42,949

See accompanying Notes to the Unaudited Consolidated Financial Statements.

5

HCP, Inc.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except per share data)

(Unaudited)

	Common Stock					Additional Paid-In Capital			Cumulative Dividends In Excess Of Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity			Total Noncontrolling Interests			Total Equity
	Shares		Amount
December 31, 2018	477,496		$	477,496		$	8,398,847		$	(2,927,196	)	$	(4,708	)	$	5,944,439		$	568,152		$	6,512,591
Impact of adoption of ASU No. 2016-02(1)	—		—			—			590			—			590			—			590
January 1, 2019	477,496		477,496			8,398,847			(2,926,606		)	(4,708		)	5,945,029			568,152			6,513,181
Net income (loss)	—		—			—			61,470			—			61,470			3,520			64,990
Other comprehensive income (loss)	—		—			—			—			825			825			—			825
Issuance of common stock, net	342		342			1,190			—			—			1,532			—			1,532
Conversion of DownREIT units to common stock	184		184			3,890			—			—			4,074			(4,074		)	—
Repurchase of common stock	(95	)	(95		)	(2,824		)	—			—			(2,919		)	—			(2,919		)
Exercise of stock options	2		2			44			—			—			46			—			46
Amortization of deferred compensation	—		—			4,111			—			—			4,111			—			4,111
Common dividends ($0.37 per share)	—		—			—			(177,286		)	—			(177,286		)	—			(177,286		)
Distributions to noncontrolling interests	—		—			—			—			—			—			(5,415		)	(5,415		)
March 31, 2019	477,929		$	477,929		$	8,405,258		$	(3,042,422	)	$	(3,883	)	$	5,836,882		$	562,183		$	6,399,065

	Common Stock					Additional Paid-In Capital			Cumulative Dividends In Excess Of Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity			Total Noncontrolling Interests			Total Equity
	Shares		Amount
December 31, 2017	469,436		$	469,436		$	8,226,113		$	(3,370,520	)	$	(24,024	)	$	5,301,005		$	293,933		$	5,594,938
Impact of adoption of ASU No. 2017-05(2)	—		—			—			79,144			—			79,144			—			79,144
January 1, 2018	469,436		$	469,436		$	8,226,113		$	(3,291,376	)	$	(24,024	)	$	5,380,149		$	293,933		$	5,674,082
Net income (loss)	—		—			—			40,232			—			40,232			3,005			43,237
Other comprehensive income (loss)	—		—			—			—			2,717			2,717			—			2,717
Issuance of common stock, net	382		382			2,392			—			—			2,774			—			2,774
Repurchase of common stock	(93	)	(93		)	(2,051		)	—			—			(2,144		)	—			(2,144		)
Amortization of deferred compensation	—		—			5,919			—			—			5,919			—			5,919
Common dividends ($0.37 per share)	—		—			—			(174,149		)	—			(174,149		)	—			(174,149		)
Distributions to noncontrolling interests	—		—			—			—			—			—			(5,077		)	(5,077		)
Issuances of noncontrolling interests	—		—			—			—			—			—			995			995
Purchase of noncontrolling interests	—		—			(49,207		)	—			—			(49,207		)	(18,224		)	(67,431		)
March 31, 2018	469,725		$	469,725		$	8,183,166		$	(3,425,293	)	$	(21,307	)	$	5,206,291		$	274,632		$	5,480,923

_______________________________________

(1) On January 1, 2019, the Company adopted a series of Accounting Standards Updates (“ASUs”) related to accounting for leases, and recognized the cumulative-effect of adoption to beginning retained earnings. Refer to Note 2 for a detailed impact of adoption.

(2) On January 1, 2018, the Company adopted ASU No. 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”), and recognized the cumulative-effect of adoption to beginning retained earnings. Refer to Note 2 for a detailed impact of adoption.

See accompanying Notes to the Unaudited Consolidated Financial Statements.

6

HCP, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2019			2018
Cash flows from operating activities:
Net income (loss)	$	64,990		$	43,237
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of real estate, in-place lease and other intangibles	131,951			143,250
Amortization of deferred compensation	4,111			5,919
Amortization of deferred financing costs	2,699			3,336
Straight-line rents	(5,091		)	(10,686		)
Equity loss (income) from unconsolidated joint ventures	863			(570		)
Distributions of earnings from unconsolidated joint ventures	5,232			5,336
Deferred income tax expense (benefit)	(3,800		)	(2,394		)
Impairments (recoveries), net	8,858			(3,298		)
Loss (gain) on sales of real estate, net	(8,044		)	(20,815		)
Loss (gain) on consolidation, net	—			41,017
Other non-cash items	560			(2,401		)
Decrease (increase) in accounts receivable and other assets, net	(11,114		)	(18,082		)
Increase (decrease) in accounts payable, accrued liabilities and deferred revenue	(32,633		)	12,315
Net cash provided by (used in) operating activities	158,582			196,164
Cash flows from investing activities:
Acquisitions of real estate	(106,298		)	(22,121		)
Development and redevelopment of real estate	(136,654		)	(113,648		)
Leasing costs, tenant improvements, and recurring capital expenditures	(19,220		)	(19,246		)
Proceeds from sales of real estate, net	122,678			30,392
Contributions to unconsolidated joint ventures	(3,870		)	(3,688		)
Distributions in excess of earnings from unconsolidated joint ventures	5,497			7,257
Proceeds from sales/principal repayments on debt investments and direct financing leases	481			132,429
Investments in loans receivable, direct financing leases and other	(22,891		)	(647		)
Net cash provided by (used in) investing activities	(160,277		)	10,728
Cash flows from financing activities:
Borrowings under bank line of credit	320,000			240,000
Repayments under bank line of credit	(125,000		)	(170,000		)
Repayments and repurchase of debt, excluding bank line of credit	(2,437		)	(1,172		)
Issuance of common stock and exercise of options	1,578			2,774
Repurchase of common stock	(2,919		)	(2,144		)
Dividends paid on common stock	(177,286		)	(174,149		)
Issuance of noncontrolling interests	—			995
Distributions to and purchase of noncontrolling interests	(5,415		)	(67,542		)
Net cash provided by (used in) financing activities	8,521			(171,238		)
Effect of foreign exchanges on cash, cash equivalents and restricted cash	(20		)	111
Net increase (decrease) in cash, cash equivalents and restricted cash	6,806			35,765
Cash, cash equivalents and restricted cash, beginning of period	139,846			82,203
Cash, cash equivalents and restricted cash, end of period	$	146,652		$	117,968

See accompanying Notes to the Unaudited Consolidated Financial Statements.

7

HCP, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) 

NOTE 1.  Business

Overview

HCP, Inc., a Standard & Poor’s 500 company, is a Maryland corporation that is organized to qualify as a real estate investment trust (“REIT”) which, together with its consolidated entities (collectively, “HCP” or the “Company”), invests primarily in real estate serving the healthcare industry in the United States (“U.S.”). The Company acquires, develops, leases, owns and manages healthcare real estate. The Company’s diverse portfolio is comprised of investments in the following reportable healthcare segments: (i) senior housing triple-net; (ii) senior housing operating portfolio (“SHOP”); (iii) life science and (iv) medical office.

NOTE 2.  Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Management is required to make estimates and assumptions in the preparation of financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from management’s estimates.

The consolidated financial statements include the accounts of HCP, Inc., its wholly-owned subsidiaries, joint ventures (“JVs”) and variable interest entities (“VIEs”) that it controls through voting rights or other means. Intercompany transactions and balances have been eliminated upon consolidation. All adjustments (consisting of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows have been included. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. The accompanying unaudited interim financial information should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”).

Recent Accounting Pronouncements

Adopted

Revenue Recognition. Between May 2014 and February 2017, the Financial Accounting Standards Board (“FASB”) issued four Accounting Standards Updates (“ASUs”) changing the requirements for recognizing and reporting revenue (together, herein referred to as the “Revenue ASUs”): (i) ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), (ii) ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”), (iii) ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), and (iv) ASU No. 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”). ASU 2014-09 provides guidance for revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2016-08 is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. ASU 2016-12 provides practical expedients and improvements on the previously narrow scope of ASU 2014-09. ASU 2017-05 clarifies the scope of the FASB’s guidance on nonfinancial asset derecognition and aligns the accounting for partial sales of nonfinancial assets and in-substance nonfinancial assets with the guidance in ASU 2014-09. The Company adopted the Revenue ASUs effective January 1, 2018 and utilized a modified retrospective adoption approach, resulting in a cumulative-effect adjustment to equity of $79 million as of January 1, 2018. Under the Revenue ASUs, the Company also elected to utilize a practical expedient which allows the Company to only reassess contracts that were not completed as of the adoption date, rather than all historical contracts.

8

As the timing and recognition of the majority of the Company’s revenue is the same whether accounted for under the Revenue ASUs or lease accounting guidance (see discussion below), the impact of the Revenue ASUs, upon and subsequent to adoption, is generally limited to the following:

• Prior to the adoption of the Revenue ASUs, the Company recognized a gain on sale of real estate using the full accrual method when collectibility of the sales price was reasonably assured, the Company was not obligated to perform additional activities that may be considered significant, the initial investment from the buyer was sufficient and other profit recognition criteria had been satisfied. The Company deferred all or a portion of a gain on sale of real estate if the requirements for gain recognition were not met at the time of sale. Subsequent to adopting the Revenue ASUs on January 1, 2018, the Company began recognizing a gain on sale of real estate upon transferring control of the asset to the purchaser, which is generally satisfied at the time of sale. In conjunction with its adoption of the Revenue ASUs, the Company reassessed its historical partial sale of real estate transactions to determine which transactions, if any, were not completed contracts (i.e., the transaction did not qualify for sale treatment under previous guidance). The Company concluded that it had one such material transaction, its partial sale of RIDEA II in the first quarter of 2017 (which was not a completed sale under historical guidance as of the Company's adoption date due to a minor obligation related to the interest sold). In accordance with the Revenue ASUs, the Company recorded its retained 40% equity investment at fair value as of the sale date. As a result, the Company recorded an adjustment to equity as of January 1, 2018 (under the modified retrospective transition approach) representing a step-up in the fair value of its equity investment in RIDEA II of $107 million (to a carrying value of $121 million as of January 1, 2018) and a $30 million impairment charge to decrease the carrying value to the sales price of the investment (see Note 3). The Company completed the sale of its equity investment in June 2018 and no longer holds an economic interest in RIDEA II.

• The Company generally expects that the new guidance will result in certain transactions qualifying as sales of real estate at an earlier date than under historical accounting guidance.

• The Company, along with its joint venture partners and independent SHOP operators, provide certain ancillary services to SHOP residents that are not contemplated in the lease with each resident (i.e., guest meals, concierge services, pharmacy services, etc.). These services are provided and paid for in addition to the standard services included in each resident lease (i.e., room and board, standard meals, etc.). The Company bills residents for ancillary services one month in arrears and recognizes revenue as the services are provided, as the Company has no continuing performance obligation related to those services. Included within resident fees and services for both the three months ended March 31, 2019 and 2018 is $10 million of ancillary service revenue.

Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 (codified under Accounting Standards Codification (“ASC”) 842, Leases) amends the previous accounting for leases to: (i) require lessees to put most leases on their balance sheets (not required for short-term leases with lease terms of 12 months or less), but continue recognizing expenses on their income statements in a manner similar to requirements under prior accounting guidance, (ii) eliminate real estate specific lease provisions, and (iii) modify the classification criteria and accounting for sales-type leases for lessors. Additionally, ASU 2016-02 provides a practical expedient, which the Company elected, that allows an entity to not reassess the following upon adoption (must be elected as a group): (i) whether an expired or existing contract contains a lease arrangement, (ii) lease classification related to expired or existing lease arrangements, or (iii) whether costs incurred on expired or existing leases qualify as initial direct costs.

As a result of adopting ASU 2016-02 on January 1, 2019 using the modified retrospective transition approach, the Company recognized a cumulative-effect adjustment to equity of $1 million as of January 1, 2019. Under ASU 2016-02, the Company began capitalizing fewer costs related to the drafting and negotiation of its lease agreements. Additionally, the Company began recognizing all of its significant operating leases for which it is the lessee, including corporate office leases, equipment leases, and ground leases, on its consolidated balance sheets as a lease liability and corresponding right-of-use asset. As such, the Company recognized a lease liability of $153 million and right-of-use asset of $166 million on January 1, 2019. The aggregate lease liability is calculated as the present value of minimum lease payments, discounted using a rate that approximates the Company’s secured incremental borrowing rate, adjusted for the noncancelable term of each lease. The right-of-use asset is calculated as the aggregate lease liability, adjusted for the existing accrued straight-line rent liability balance of $20 million and net unamortized above/below market ground lease intangible assets of $33 million.

Under ASU 2016-02, a practical expedient was offered to lessees to make a policy election, which the Company elected, to not separate lease and nonlease components, but rather account for the combined components as a single lease component under ASC 842. In July 2018, the FASB issued ASU No. 2018-11, Leases - Targeted Improvements (“ASU 2018-11”), which provides lessors with a similar option to elect a practical expedient allowing them to not separate lease and nonlease components in a contract for the purpose of revenue recognition and disclosure. This practical expedient is limited to circumstances in which: (i) the timing and pattern of transfer are the same for the nonlease component and the related lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease. This practical expedient causes an entity to assess whether a contract is predominantly lease or service based and recognize the entire contract under the relevant accounting guidance (i.e.,

9

predominantly lease-based would be accounted for under ASU 2016-02 and predominantly service-based would be accounted for under the Revenue ASUs). The Company elected this practical expedient as well and, as a result, beginning January 1, 2019, the Company recognizes revenue from its senior housing triple-net, medical office, and life science segments under ASC 842 and revenue from its SHOP segment under the Revenue ASUs (codified under ASC 606, Revenue from Contracts with Customers).

In conjunction with reaching the conclusions above, the Company concluded it was appropriate (under ASC 205, Presentation of Financial Statements) to reclassify amounts previously classified as revenue from tenant recoveries (within the senior housing triple-net, life science, and medical office segments) and present them combined with rental and related revenues within the consolidated statements of operations. The Company implemented this change during the fourth quarter of 2018. Included within rental and related revenues for the three months ended March 31, 2018 is $37 million of tenant recoveries.

In December 2018, the FASB issued ASU No. 2018-20, Narrow Scope Improvements for Lessors (“ASU 2018-20”), which requires that a lessor: (i) exclude certain lessor costs paid directly by a lessee to third parties on behalf of the lessor from a lessor's measurement of variable lease revenue and associated expense (i.e., no gross up of revenue and expense for these costs), and (ii) include lessor costs that are paid by the lessor and reimbursed by the lessee in the measurement of variable lease revenue and the associated expense (i.e., gross up revenue and expense for these costs). This is consistent with the Company’s historical presentation and did not require a material change on January 1, 2019.

Other. Effective January 1, 2019, the Company adopted the following ASU, which did not have a material impact to its consolidated financial position, results of operations, cash flows or disclosures upon adoption:

• ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). The amendments in ASU 2017-12 expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. For cash flow and net investment hedges existing at the date of adoption, the Company adopted the amendments in ASU 2017-12 using the modified retrospective approach. For amendments impacting presentation and disclosure, the Company adopted ASU 2017-12 using a prospective approach.

Not Yet Adopted

Credit Losses. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 is intended to improve financial reporting by requiring timelier recognition of credit losses on loans and other financial instruments held by financial institutions and other organizations. The amendments in ASU 2016-13 eliminate the “probable” initial threshold for recognition of credit losses in current accounting guidance and, instead, reflect an entity’s current estimate of all expected credit losses over the life of the financial instrument. Previously, when credit losses were measured under current accounting guidance, an entity generally only considered past events and current conditions in measuring the incurred loss. The amendments in ASU 2016-13 broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss. ASU 2016-13 is effective for fiscal years, and interim periods within, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within, beginning after December 15, 2018. A reporting entity is required to apply the amendments in ASU 2016-13 using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. A prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. Upon adoption of ASU 2016-13, the Company is required to reassess its financing receivables, including direct financing leases (“DFLs”) and loans receivable, and expects that application of ASU 2016-13 may result in the Company recognizing credit losses at an earlier date than would otherwise be recognized under current accounting guidance. The Company is evaluating the impact of the adoption of ASU 2016-13 on January 1, 2020 to its consolidated financial position and results of operations.

Segment Reporting

The Company’s reportable segments, based on how it evaluates its business and allocates resources, are as follows: (i) senior housing triple-net, (ii) SHOP, (iii) life science and (iv) medical office. During the first quarter of 2019, as a result of a change in how operating results are reported to the Company's chief operating decision makers for the purpose of evaluating performance and allocating resources, two facilities were reclassified from other non-reportable segments to the medical office segment. Accordingly, all prior period segment information has been recast to conform to the current period presentation.

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NOTE 3.  Real Estate Transactions

2019 Real Estate Investments

Cambridge Acquisition

During the three months ended March 31, 2019, the Company acquired a life science facility for $71 million and development rights at an adjacent undeveloped land parcel for consideration of up to $27 million. The existing facility and land parcel are located in Cambridge, Massachusetts.

Discovery Portfolio Acquisition

In April 2019, the Company acquired a portfolio of nine senior housing properties for $445 million. The properties are located across Florida, Georgia and Texas and will be operated by Discovery Senior Living, LLC (“Discovery”).

Oakmont Portfolio Acquisition and Transitions

On May 1, 2019, the Company acquired three newly-built, senior housing communities for $113 million. The portfolio will be operated by Oakmont Senior Living LLC (“Oakmont”). Additionally, the Company transitioned four senior housing triple-net properties to RIDEA structures with Oakmont continuing as the operator.

2018 Real Estate Investments

MSREI MOB JV

In August 2018, the Company and Morgan Stanley Real Estate Investment (“MSREI”) formed a joint venture (the “MSREI JV”) to own a portfolio of medical office buildings (“MOBs”), which the Company owns 51% of and consolidates. To form the joint venture, MSREI contributed cash of $298 million and HCP contributed nine wholly-owned MOBs (the “Contributed Assets”). The Contributed Assets are primarily located in Texas and Florida and were valued at approximately $320 million at the time of contribution. The MSREI JV used substantially all of the cash contributed by MSREI to acquire an additional portfolio of 16 MOBs in Greenville, South Carolina (the “Greenville Portfolio”) for $285 million. Concurrent with acquiring the additional MOBs, the MSREI JV entered into 10-year leases with the anchor tenants in the Greenville Portfolio.

The Contributed Assets are accounted for at historical depreciated cost by the Company, as the assets continue to be consolidated. The Greenville Portfolio was accounted for as an asset acquisition, which required the Company to record the individual components of the acquisition at their relative fair values. As a result, the Company recorded net real estate of $276 million and net intangible assets of $20 million during the three months ended September 30, 2018 related to the Greenville Portfolio. Additionally, during the three months ended September 30, 2018, the Company recognized a noncontrolling interest of $298 million related to the interest owned by MSREI. Refer to Note 14 for a discussion of the Company’s consolidation of the MSREI JV.

Life Science JV Interest Purchase

In November 2018, the Company acquired the outstanding equity interests in three life science joint ventures (which owned four buildings) for $92 million, bringing the Company’s equity ownership to 100% for all three joint ventures. As the Company began consolidating the assets upon acquisition, it derecognized the existing investment in the joint ventures, marked the real estate to fair value (using a relative fair value allocation), and recognized a gain on consolidation of $50 million within other income (expense), net.

Sierra Point Towers Acquisition

In November 2018, the Company entered into definitive agreements to acquire two life science buildings in South San Francisco, California adjacent to the Company’s The Shore at Sierra Point development, for $245 million. The Company made a $15 million nonrefundable deposit upon completing due diligence and expects to close the transaction in the second quarter of 2019.

Other

During the three months ended March 31, 2018, the Company acquired development rights on a land parcel in the Boston suburb of Lexington, Massachusetts for $21 million. The Company commenced a life science development on the land in 2018.

Development Activities

As part of the development program with HCA Healthcare, during the first quarter of 2019, the Company signed definitive agreements to develop three additional MOBs, two of which will be on-campus, with an aggregate estimated cost of $70 million. Construction on these projects is expected to commence in the second quarter of 2019.

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Held for Sale

At March 31, 2019, two MOBs and one SHOP facility were classified as held for sale, with an aggregate carrying value of $11 million, primarily comprised of real estate assets of $10 million, net of accumulated depreciation of $5 million. At December 31, 2018, nine SHOP facilities and one undeveloped life science land parcel were classified as held for sale, with an aggregate carrying value of $108 million, primarily comprised of real estate assets of $101 million, net of accumulated depreciation of $30 million. Liabilities of assets held for sale was primarily comprised of intangible and other liabilities at both March 31, 2019 and December 31, 2018.

2019 Dispositions of Real Estate

During the quarter ended March 31, 2019, the Company sold nine SHOP assets for $68 million, two senior housing triple-net assets for $26 million, and one undeveloped life science land parcel for $35 million, resulting in total gain on sales of $8 million.

2018 Dispositions of Real Estate

Shoreline Technology Center

In November 2018, the Company sold its Shoreline Technology Center life science campus located in Mountain View, California for $1.0 billion and recognized a gain on sale of $726 million.

RIDEA II Sale Transaction

In January 2017, the Company completed the contribution of its ownership interest in RIDEA II to an unconsolidated joint venture owned by HCP and an investor group led by Columbia Pacific Advisors, LLC (“CPA”) (the “HCP/CPA JV”). Also in January 2017, RIDEA II was recapitalized with $602 million of debt, of which $360 million was provided by a third-party and $242 million was provided by HCP. In return for both transaction elements, the Company received combined proceeds of $480 million from the HCP/CPA JV and $242 million in loans receivable and retained an approximately 40% ownership interest in RIDEA II. This transaction resulted in the Company deconsolidating the net assets of RIDEA II and recognizing a net gain on sale of $99 million. Refer to Note 2 for the impact of adopting the Revenue ASUs on January 1, 2018 to the Company’s partial sale of RIDEA II in the first quarter of 2017.

In June 2018, the Company sold its remaining 40% ownership interest in RIDEA II to an investor group led by CPA for $91 million. Additionally, CPA refinanced the Company’s $242 million of loans receivable from RIDEA II, resulting in total proceeds of $332 million. The Company no longer holds an economic interest in RIDEA II.

U.K. Portfolio

In June 2018, the Company entered into a joint venture with an institutional investor (the “U.K. JV”) through which the Company sold a 51% interest in substantially all United Kingdom (“U.K.”) assets previously owned by the Company (the “U.K. Portfolio”) based on a total value of £382 million ($507 million). The Company retained a 49% noncontrolling interest in the joint venture and received gross proceeds of $402 million, including proceeds from the refinancing of the Company’s previously held intercompany loans. Upon closing the U.K. JV, the Company deconsolidated the U.K. Portfolio, recognized its retained noncontrolling interest investment at fair value ($105 million) and recognized a gain on sale of $11 million, net of $17 million of cumulative foreign currency translation reclassified from other comprehensive income. The U.K. JV provides numerous mechanisms by which the joint venture partner can acquire the Company’s remaining interest in the U.K. JV. The fair value of the Company’s retained noncontrolling interest investment is based on Level 2 measurements within the fair value hierarchy.

Additionally, in August 2018, the Company sold its remaining £11 million U.K. development loan at par.

Other

During the quarter ended March 31, 2018, the Company sold two SHOP assets for $35 million, resulting in total gain on sales of $21 million.

During the quarter ended June 30, 2018, the Company sold eight SHOP assets for $268 million and two senior housing triple-net assets for $35 million, resulting in total gain on sales of $25 million.

During the quarter ended September 30, 2018, the Company sold four life science assets for $269 million, 11 SHOP assets for $76 million and two MOBs for $21 million, resulting in total gain on sales of $95 million.

During the quarter ended December 31, 2018, the Company sold two SHOP facilities for $15 million, two MOBs for $4 million, and one undeveloped land parcel for $3 million, resulting in no material gain or loss on sales.

Additionally, during 2018, the Company sold 19 senior housing assets to a third-party buyer for $377 million, resulting in a gain on sale of $40 million.

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Impairments of Real Estate

2019

During the three months ended March 31, 2019, the Company determined that the carrying value of two MOBs that are candidates for potential future sale was no longer recoverable due to the Company’s shortened intended hold period under the held-for-use impairment model. Accordingly, the Company wrote-down the carrying amount of these two assets to their respective fair value, which resulted in an aggregate impairment charge of $9 million. The fair value of the assets was based on forecasted sales prices which are considered to be Level 2 measurements within the fair value hierarchy.

Brookdale MTCA Transactions

In November 2017, the Company and Brookdale Senior Living, Inc. (“Brookdale”) entered into a Master Transactions and Cooperation Agreement (the “MTCA”) to provide the Company with the ability to significantly reduce its concentration of assets leased to and/or managed by Brookdale (the “Brookdale Transactions”). In connection with the overall transaction pursuant to the MTCA, the Company and Brookdale, and certain of their respective subsidiaries, agreed to the following:

• The Company, which owned 90% of the interests in its RIDEA I and RIDEA III joint ventures with Brookdale at the time the MTCA was executed, agreed to purchase Brookdale’s 10% noncontrolling interest in each joint venture for an aggregate purchase price of $95 million. At the time the MTCA was executed, these joint ventures collectively owned and operated 58 independent living, assisted living, memory care and/or skilled nursing facilities (the “RIDEA Facilities”). The Company completed its acquisitions of the RIDEA III noncontrolling interest for $32 million in December 2017 and the RIDEA I noncontrolling interest for $63 million in March 2018;

• The Company received the right to sell, or transition to other operators, 32 of the 78 total assets under an Amended and Restated Master Lease and Security Agreement (the “Amended Master Lease”) with Brookdale and 36 of the RIDEA Facilities (and terminate related management agreements with an affiliate of Brookdale without penalty), certain of which were sold during 2018 and 2019 and are included in the disposition transactions discussed above;

• The Company provided an aggregate $5 million annual reduction in rent on three assets, effective January 1, 2018; and

• Brookdale agreed to purchase two of the assets under the Amended Master Lease for $35 million and four of the RIDEA Facilities for $240 million, all of which were sold in 2018 and are included in the 2018 disposition transactions discussed above.

Additionally, during 2018, the Company terminated the previous management agreements or leases with Brookdale on 37 assets contemplated under the MTCA and completed the transition of 20 SHOP assets and 17 senior housing triple-net assets to other managers.

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NOTE 4.  Leases

Lease Income

The following table summarizes the Company’s lease income:

	Three Months Ended March 31,
	2019		2018
Operating lease income	$	294,222	$	316,752
Interest income on direct financing leases	13,524		13,266

Direct Financing Leases

Net investment in DFLs consists of the following (dollars in thousands):

	March 31, 2019
Present value of minimum lease payments receivable	$	273,629
Present value of estimated residual value	114,364
Less deferred selling profits	(24,598		)
Net investment in direct financing leases	$	363,395
Properties subject to direct financing leases	15

	December 31, 2018
Minimum lease payments receivable	$	1,013,976
Estimated residual value	507,484
Less unearned income	(807,642		)
Net investment in direct financing leases	$	713,818
Properties subject to direct financing leases	29

Direct Financing Lease Internal Ratings

The following table summarizes the Company’s internal ratings for DFLs at March 31, 2019 (dollars in thousands):

	Carrying Amount		Percentage of DFL Portfolio	Internal Ratings
Segment				Performing DFLs		Watch List DFLs		Workout DFLs
Senior housing triple-net	$	278,791	77	$	278,791	$	—	$	—
Other non-reportable segments	84,604		23	84,604		—		—
	$	363,395	100	$	363,395	$	—	$	—

Beginning September 30, 2013, the Company placed a 14-property senior housing triple-net DFL (the “DFL Watchlist Portfolio”) on nonaccrual status and “Watch List” status. The Company determined that the collection of all rental payments was and continues to be no longer reasonably assured; therefore, rental revenue for the DFL Watchlist Portfolio is being recognized on a cash basis. During the three months ended March 31, 2019 and 2018, the Company recognized income from DFLs of $4 million and $3 million, respectively. During the three months ended March 31, 2019 and 2018, the Company received cash payments of $5 million from the DFL Watchlist Portfolio. The carrying value of the DFL Watchlist Portfolio was zero and $351 million at March 31, 2019 and December 31, 2018, respectively.

Direct Financing Lease Transition

During the first quarter of 2019, the Company transitioned the DFL Watchlist Portfolio to a RIDEA structure, requiring the Company to recognize net assets equal to the lower of the net assets’ fair value or the carrying value of the net investment in the DFL. As a result, the Company derecognized the $351 million carrying value of the net investment in DFL related to the 14 properties and recognized a combination of net real estate ($331 million) and net intangibles assets ($20 million) for the same aggregate amount,

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with no gain or loss recognized. As a result of the transaction, the 14 properties were transitioned from the senior housing triple-net segment to the SHOP segment during the first quarter of 2019.

Direct Financing Lease Receivable Maturities

The following table summarizes future minimum lease payments contractually due under DFLs at March 31, 2019 (in thousands):

Year	Amount
2019 (nine months)	$	29,365
2020	32,558
2021	31,989
2022	25,346
2023	24,774
Thereafter	416,286
Undiscounted minimum lease payments receivable	560,318
Less: imputed interest	(286,689		)
Present value of minimum lease payments receivable	$	273,629

The following table summarizes future minimum lease payments contractually due under DFLs at December 31, 2018 (in thousands):

Year	Amount
2019	$	114,970
2020	63,308
2021	63,687
2022	58,135
2023	58,570
Thereafter	655,306
	$	1,013,976

Residual Value Risk

Quarterly, the Company reviews the estimated unguaranteed residual value of assets under DFLs to determine if there have been any material changes compared to the prior quarter. As needed, the Company and/or the related tenants will invest necessary funds to maintain the residual value of each asset.

Operating Leases

Future Minimum Rents

The following table summarizes future minimum lease payments to be received, excluding operating expense reimbursements, from tenants under non-cancelable operating leases as of March 31, 2019 (in thousands):

Year	Amount
2019 (nine months)	$	733,816
2020	952,756
2021	884,923
2022	782,066
2023	703,054
Thereafter	2,505,848
	$	6,562,463

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The following table summarizes future minimum lease payments to be received, excluding operating expense reimbursements, from tenants under non-cancelable operating leases as of December 31, 2018 (in thousands):

Year	Amount
2019	$	971,417
2020	928,102
2021	853,451
2022	751,972
2023	675,537
Thereafter	2,320,847
	$	6,501,326

Lease Costs

The following tables provide information regarding the Company’s leases to which it is the lessee, such as corporate offices and ground leases (dollars in thousands):

	Three Months Ended March 31,
Lease Expense Information:	2019		2018
Total lease expense(1)	$	4,803	$	5,024

_______________________________________

(1) Lease expense related to corporate assets is included in general and administrative expenses and lease expense related to ground leases is included within operating expenses in the Company’s consolidated statements of operations.

	Three Months Ended March 31,
Supplemental Cash Flow Information:	2019		2018
Cash paid for amounts included in the measurement of lease liability:
Operating cash flows for operating leases	$	3,963	$	4,253
ROU asset obtained in exchange for new lease liability:
Operating leases	$	880	$	—

Weighted Average Lease Term and Discount Rate:	March 31, 2019
Weighted average remaining lease term (years):
Operating leases	52
Weighted average discount rate:
Operating leases	4.36	%

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The following table summarizes future minimum lease obligations under non-cancelable ground and other operating leases as of March 31, 2019 (in thousands):

Year	Amount
2019 (nine months)	$	5,937
2020	7,816
2021	7,888
2022	8,028
2023	8,198
Thereafter	471,083
Undiscounted minimum lease payments payable	508,950
Less: imputed interest	(356,113		)
Present value of lease liability	$	152,837

The following table summarizes future minimum lease obligations under non-cancelable ground and other operating leases as of December 31, 2018 (in thousands):

Year	Amount
2019	$	5,597
2020	5,687
2021	5,776
2022	5,862
2023	5,983
Thereafter	466,130
	$	495,035

Depreciation Expense

While the Company leases the majority of its property, plant, and equipment to various tenants under operating leases and DFLs, in certain situations, the Company owns and operates property, plant, and equipment for general corporate purposes. Corporate assets are recorded within other assets, net within the Company’s consolidated balance sheets and depreciation expense for those assets is recorded in general and administrative expenses in the Company’s consolidated statements of operations. Included within other assets, net as of both March 31, 2019 and December 31, 2018 is $3 million and $2 million, respectively, of accumulated depreciation related to corporate assets. Included within general and administrative expenses for the three months ended March 31, 2019 and 2018 is $0.4 million and $0.2 million, respectively, of depreciation expense related to corporate assets.

NOTE 5.  Loans Receivable

The following table summarizes the Company’s loans receivable (in thousands):

	March 31, 2019								December 31, 2018
	Real Estate Secured		Other Secured			Total			Real Estate Secured		Other Secured			Total
Mezzanine	$	—	$	20,545		$	20,545		$	—	$	21,013		$	21,013
Participating development loans and other(1)	65,635		—			65,635			42,037		—			42,037
Unamortized discounts, fees and costs	—		(41		)	(41		)	—		(52		)	(52		)
	$	65,635	$	20,504		$	86,139		$	42,037	$	20,961		$	62,998

_______________________________________

(1) At March 31, 2019, the Company had $53 million remaining of commitments to fund a $115 million senior living development project.

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Loans Receivable Internal Ratings

The following table summarizes the Company’s internal ratings for loans receivable at March 31, 2019 (dollars in thousands):

	Carrying Amount		Percentage of Loan Portfolio	Internal Ratings
Investment Type				Performing Loans		Watch List Loans		Workout Loans
Real estate secured	$	65,635	76	$	65,635	$	—	$	—
Other secured	20,504		24	20,504		—		—
	$	86,139	100	$	86,139	$	—	$	—

U.K. Bridge Loan

In 2016, the Company provided a £105 million ($131 million at closing) bridge loan to MMCG (the “U.K. Bridge Loan”) to fund the acquisition of a portfolio of seven care homes in the U.K. Under the U.K. Bridge Loan, the Company retained a three year call option to acquire those seven care homes at a future date for £105 million, subject to certain conditions precedent being met. In March 2018, upon resolution of all conditions precedent, the Company began the process of exercising its call option to acquire the seven care homes and concluded that it should consolidate the real estate. As a result, the Company derecognized the outstanding loan receivable of £105 million and recognized a £29 million ($41 million) loss on consolidation. Refer to Note 14 for the complete impact of consolidating the seven care homes during the first quarter of 2018.

In June 2018, the Company completed the process of exercising the above-mentioned call option. The seven care homes acquired through the call option were included in the U.K. JV transaction (see Note 3).

NOTE 6.  Investments in and Advances to Unconsolidated Joint Ventures

The Company owns interests in the following entities that are accounted for under the equity method (dollars in thousands): 

			Carrying Amount
			March 31,		December 31,
Entity(1)	Property Count	Ownership %	2019		2018
CCRC JV	15	49	$	358,172	$	365,764
U.K. JV(2)	68	49	102,692		101,735
MBK JV	5	50	34,935		35,435
Other SHOP JVs(3)	5	50 - 90	24,684		25,493
Medical Office JVs(4)	3	20 - 67	10,039		10,160
K&Y JVs(5)	3	80	1,431		1,430
Advances to unconsolidated joint ventures, net			13		71
			$	531,966	$	540,088

_______________________________________

(1) These entities are not consolidated because the Company does not control, through voting rights or other means, the joint ventures.

(2) See Note 3 for discussion of the formation of the U.K. JV and the Company’s equity method investment.

(3) Includes four unconsolidated SHOP joint ventures (and the Company’s ownership percentage): (i) Vintage Park Development JV (85%); (ii) Waldwick JV (85%); (iii) Otay Ranch JV (90%); and (iv) MBK Development JV (50%).

(4) Includes three unconsolidated medical office joint ventures (and the Company’s ownership percentage): HCP Ventures IV, LLC (20%); HCP Ventures III, LLC (30%); and Suburban Properties, LLC (67%).

(5) At March 31, 2019, includes two unconsolidated joint ventures. At December 31, 2018, includes three unconsolidated joint ventures.

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NOTE 7.  Intangibles

Intangible assets primarily consist of lease-up intangibles and above market tenant lease intangibles. Intangible liabilities primarily consist of below market lease intangibles. The following tables summarize the Company’s intangible lease assets and liabilities (in thousands):

Intangible lease assets	March 31, 2019			December 31, 2018
Gross intangible lease assets	$	491,998		$	556,114
Accumulated depreciation and amortization	(216,433		)	(251,035		)
Intangible assets, net	$	275,565		$	305,079

Intangible lease liabilities	March 31, 2019			December 31, 2018
Gross intangible lease liabilities	$	82,777		$	94,444
Accumulated depreciation and amortization	(33,289		)	(39,781		)
Intangible liabilities, net	$	49,488		$	54,663

On January 1, 2019, in conjunction with the adoption of ASU 2016-12 (see Note 2), the Company reclassified $39 million of intangible assets, net and $6 million of intangible liabilities, net related to above and below market ground leases to right-of-use asset, net.

NOTE 8.  Debt

Bank Line of Credit and Term Loan

The Company’s $2.0 billion unsecured revolving line of credit facility (the “Facility”) matures on October 19, 2021 and contains two, six months extension options. Borrowings under the Facility accrue interest at LIBOR plus a margin that depends on the Company’s credit ratings. The Company pays a facility fee on the entire revolving commitment that depends on its credit ratings. Based on the Company’s credit ratings at March 31, 2019, the margin on the Facility was 0.875% and the facility fee was 0.15%. The Facility also includes a feature that allows the Company to increase the borrowing capacity by an aggregate amount of up to $750 million, subject to securing additional commitments. At March 31, 2019, the Company had $277 million, including £55 million ($72 million), outstanding under the Facility, with a weighted average effective interest rate of 3.20%.

The Facility contains certain financial restrictions and other customary requirements, including cross-default provisions to other indebtedness. Among other things, these covenants, using terms defined in the agreements: (i) limit the ratio of Consolidated Total Indebtedness to Consolidated Total Asset Value to 60%; (ii) limit the ratio of Secured Debt to Consolidated Total Asset Value to 30%; (iii) limit the ratio of Unsecured Debt to Consolidated Unencumbered Asset Value to 60%; (iv) require a minimum Fixed Charge Coverage ratio of 1.5 times; and (v) require a Minimum Consolidated Tangible Net Worth of $6.5 billion. At March 31, 2019, the Company believes it was in compliance with each of these restrictions and requirements of the Facility.

On July 3, 2018, the Company exercised its one-time right under its term loan to repay the outstanding British pound sterling (“GBP”) balance and re-borrow in U.S. Dollars (“USD”) with all other key terms unchanged, which resulted in repayment of the £169 million balance and re-borrowing of $224 million. In November 2018, the Company repaid the $224 million unsecured term loan, bringing the total term loan balance to zero.

Senior Unsecured Notes

At March 31, 2019, the Company had senior unsecured notes outstanding with an aggregate principal balance of $5.3 billion. The senior unsecured notes contain certain covenants including limitations on debt, maintenance of unencumbered assets, cross-acceleration provisions and other customary terms. The Company believes it was in compliance with these covenants at March 31, 2019.

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There were no senior unsecured notes payoffs during the three months ended March 31, 2019. The following table summarizes the Company’s senior unsecured notes payoffs during the year ended December 31, 2018 (dollars in thousands):

Date	Amount		Coupon Rate
July 16, 2018(1)	$	700,000	5.375	%
November 8, 2018	$	450,000	3.750	%

_______________________________________

(1) The Company recorded a $44 million loss on debt extinguishment related to the repurchase of senior notes.

There were no senior unsecured notes issuances during the three months ended March 31, 2019 or year ended December 31, 2018.

Mortgage Debt

At March 31, 2019, the Company had $132 million in aggregate principal of mortgage debt outstanding, which is secured by 15 healthcare facilities with an aggregate carrying value of $276 million.

Mortgage debt generally requires monthly principal and interest payments, is collateralized by real estate assets and is generally non-recourse. Mortgage debt typically restricts transfer of the encumbered assets, prohibits additional liens, restricts prepayment, requires payment of real estate taxes, requires maintenance of the assets in good condition, requires insurance on the assets and includes conditions to obtain lender consent to enter into or terminate material leases. Some of the mortgage debt may require tenants or operators to maintain compliance with the applicable leases or operating agreements of such real estate assets.

Debt Maturities

The following table summarizes the Company’s stated debt maturities and scheduled principal repayments at March 31, 2019 (in thousands):

Year	Bank Line of Credit(1)		Senior Unsecured Notes(2)			Mortgage Debt(3)		Total(4)
2019 (nine months)	$	—	$	—		$	2,686	$	2,686
2020	—		800,000			3,609		803,609
2021	276,500		—			10,957		287,457
2022	—		900,000			2,691		902,691
2023	—		800,000			2,811		802,811
Thereafter	—		2,800,000			109,705		2,909,705
	276,500		5,300,000			132,459		5,708,959
(Discounts), premium and debt costs, net	—		(39,378		)	5,066		(34,312		)
	$	276,500	$	5,260,622		$	137,525	$	5,674,647

_______________________________________

(1) Includes £55 million translated into USD.

(2) Effective interest rates on the notes ranged from 2.79% to 6.87% with a weighted average effective interest rate of 4.03% and a weighted average maturity of five years.

(3) Effective interest rates on the mortgage debt ranged from 2.47% to 5.91% with a weighted average effective interest rate of 4.19% and a weighted average maturity of 19 years.

(4) Excludes $89 million of other debt that have no scheduled maturities.

NOTE 9.  Commitments and Contingencies

Legal Proceedings

From time to time, the Company is a party to, or has a significant relationship to, legal proceedings, lawsuits and other claims. Except as described below, the Company is not aware of any legal proceedings or claims that it believes may have, individually or taken together, a material adverse effect on the Company’s financial condition, results of operations or cash flows. The Company’s policy is to expense legal costs as they are incurred.

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Class Action. On May 9, 2016, a purported stockholder of the Company filed a putative class action complaint, Boynton Beach Firefighters’ Pension Fund v. HCP, Inc., et al., Case No. 3:16-cv-01106-JJH, in the U.S. District Court for the Northern District of Ohio against the Company, certain of its officers, HCR ManorCare, Inc. (“HCRMC”), and certain of its officers, asserting violations of the federal securities laws. The suit asserts claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and alleges that the Company made certain false or misleading statements relating to the value of and risks concerning its investment in HCRMC by allegedly failing to disclose that HCRMC had engaged in billing fraud, as alleged by the U.S. Department of Justice (“DoJ”) in a suit against HCRMC arising from the False Claims Act that the DoJ voluntarily dismissed with prejudice. The plaintiff in the class action suit demands compensatory damages (in an unspecified amount), costs and expenses (including attorneys’ fees and expert fees), and equitable, injunctive, or other relief as the Court deems just and proper. On November 28, 2017, the Court appointed Societe Generale Securities GmbH (SGSS Germany) and the City of Birmingham Retirement and Relief Systems (Birmingham) as Co-Lead Plaintiffs in the class action. The motion to dismiss was fully briefed on May 21, 2018 and oral arguments were held on October 23, 2018. Subsequently, on December 6, 2018, HCRMC and its officers were voluntarily dismissed from the class action lawsuit without prejudice to such claims being refiled. The Company believes the suit to be without merit and intends to vigorously defend against it.

Derivative Actions. On June 16, 2016 and July 5, 2016, purported stockholders of the Company filed two derivative actions, respectively, Subodh v. HCR ManorCare Inc., et al., Case No. 30-2016-00858497-CU-PT-CXC and Stearns v. HCR ManorCare, Inc., et al., Case No. 30-2016-00861646-CU-MC-CJC, in the Superior Court of California, County of Orange, against certain of the Company’s current and former directors and officers and HCRMC. The Company is named as a nominal defendant. As both derivative actions contained substantially the same allegations, they have been consolidated into a single action (the “California derivative action”). The consolidated action alleges that the defendants engaged in various acts of wrongdoing, including, among other things, breaching fiduciary duties by publicly making false or misleading statements of fact regarding HCRMC’s finances and prospects, and failing to maintain adequate internal controls. On April 18, 2017, the Court approved the parties’ stipulation to stay the case pending disposition of the motion to dismiss the class action litigation.

On April 10, 2017, a purported stockholder of the Company filed a derivative action, Weldon v. Martin et al., Case No. 3:17-cv-755, in federal court in the Northern District of Ohio, Western Division, against certain of the Company’s current and former directors and officers and HCRMC. The Company is named as a nominal defendant. The Weldon complaint asserts similar claims to those asserted in the California derivative action. In addition, the complaint asserts a claim under Section 14(a) of the Exchange Act, alleging that the Company made false statements in its 2016 proxy statement by not disclosing that the Company’s performance issues in 2015 were the direct result of alleged billing fraud at HCRMC. On April 18, 2017, the Court re-assigned and transferred this action to the judge presiding over the related federal securities class action. On July 11, 2017, the Court approved a stipulation by the parties to stay the case pending disposition of the motion to dismiss the class action.

On July 21, 2017, a purported stockholder of the Company filed another derivative action, Kelley v. HCR ManorCare, Inc., et al., Case No. 8:17-cv-01259, in federal court in the Central District of California, against certain of the Company’s current and former directors and officers and HCRMC. The Company is named as a nominal defendant. The Kelley complaint asserts similar claims to those asserted in Weldon and in the California derivative action. Like Weldon, the Kelley complaint also additionally alleges that the Company made false statements in its 2016 proxy statement, and asserts a claim for a violation of Section 14(a) of the Exchange Act. On November 28, 2017, the federal court in the Central District of California granted Defendants’ motion to transfer the action to the Northern District of Ohio (i.e., the court where the class action and other federal derivative action are pending). The Court in the Northern District of Ohio is currently considering whether to consolidate the Weldon and Kelley actions, appointment of lead plaintiffs and counsel, and whether the stay in Weldon should continue as to either or both actions.

The Company’s Board of Directors received letters dated August 17, 2016, April 19, 2017, and April 20, 2017 from private law firms acting on behalf of clients who are purported stockholders of the Company, each asserting allegations similar to those made in the California derivative action matters discussed above. Each letter demands that the Board of Directors take action to assert the Company’s rights. The Board of Directors completed its evaluation and rejected the demand letters in December of 2017.

The Company believes that the plaintiffs lack standing or the lawsuits and demands are without merit, but cannot predict the outcome of these proceedings or reasonably estimate any potential loss at this time. Accordingly, no loss contingency has been recorded for these matters as of March 31, 2019, as the likelihood of loss is not considered probable or estimable.

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NOTE 10.  Equity

At-The-Market Equity Offering Program

In June 2015, the Company established an at-the-market equity offering program (“ATM Program”) to sell shares of its common stock from time to time through a consortium of banks acting as sales agents or directly to the banks acting as principals. In May 2018, the Company renewed its ATM Program (the “2018 ATM Program”). During the year ended December 31, 2018, the Company issued 5.4 million shares of common stock at a weighted average net price of $28.27 for net proceeds of $154 million.

In February 2019, the Company terminated the 2018 ATM Program and established a new ATM Program (the “2019 ATM Program) pursuant to which shares of common stock having an aggregate gross sales price of up to $1.0 billion may be sold (i) by the Company through a consortium of banks acting as sales agents or directly to the banks acting as principals, or (ii) by a consortium of banks acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement. The use of a forward sale agreement would allow the Company to lock in a share price on the sale of shares at the time the agreement is effective, but defer receiving the proceeds from the sale of shares until a later date.

During the three months ended March 31, 2019, the Company utilized the forward provisions under the 2019 ATM Program to allow for the sale of up to an aggregate of 3.6 million shares of its common stock at an initial weighted average net price of $31.19 per share, after commissions. Each forward sale has a one year term, during which time the Company must settle the forward sale by delivery of physical shares of common stock to the forward seller or, at the Company’s election, in cash or net shares. The forward sale price that the Company expects to receive upon settlement will be the initial forward price established upon the effective date, subject to adjustments for: (i) accrued interest, (ii) the forward purchasers’ stock borrowing costs, and (iii) certain fixed price reductions during the term of the agreement. At March 31, 2019, no shares had been issued to settle any of the forward sales, all of which remain outstanding.

At March 31, 2019, approximately $888 million of our common stock remained available for sale under the 2019 ATM Program.

Subsequent to March 31, 2019, the Company utilized the forward provisions under the 2019 ATM Program to allow for the sale of up to an additional 1.5 million shares of its common stock at an initial weighted average net price of $30.63 per share, after commissions. Each forward sale has a one year term, during which time the Company must settle the forward sale by delivery of physical shares of common stock to the forward seller or, at the Company’s election, in cash or net shares.

2018 Forward Equity Offering

In December 2018, the Company entered into a forward sales agreement to sell up to an aggregate of 15.25 million shares of its common stock (including shares issued through the exercise of underwriters’ options) at an initial net price of $28.60 per share, after underwriting discounts and commissions. The agreement has a one year term that expires on December 13, 2019 during which time the Company may settle the forward sales agreement by delivery of physical shares of common stock to the forward seller or, at the Company’s election, by settling in cash or net shares. The forward sale price that the Company expects to receive upon settlement of the agreement will be the initial net price of $28.60, subject to adjustments for: (i) accrued interest, (ii) the forward purchasers’ stock borrowing costs, and (iii) certain fixed price reductions during the term of the agreement. At March 31, 2019, no shares have been issued under the forward sales agreement, which remains outstanding.

In December 2018, contemporaneous with the forward equity offering discussed above, the Company completed an offering of 2 million shares of common stock at a net price of $28.60 per share, resulting in net proceeds of $57 million.

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the Company’s accumulated other comprehensive income (loss) (in thousands):

	March 31, 2019			December 31, 2018
Cumulative foreign currency translation adjustment(1)	$	(1,021	)	$	(1,683	)
Unrealized gains (losses) on derivatives, net	(373		)	(467		)
Supplemental Executive Retirement plan minimum liability and other	(2,489		)	(2,558		)
Total accumulated other comprehensive income (loss)	$	(3,883	)	$	(4,708	)

_______________________________________

(1) See Note 3 for a discussion of the U.K. JV transaction.

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NOTE 11.  Segment Disclosures

The Company evaluates its business and allocates resources based on its reportable business segments: (i) senior housing triple-net, (ii) SHOP, (iii) life science and (iv) medical office. The Company has non-reportable segments that are comprised primarily of the Company’s debt investments, hospital properties, unconsolidated joint ventures, and U.K. investments. The accounting policies of the segments are the same as those in Note 2 to the Consolidated Financial Statements in the Company’s 2018 Annual Report on Form 10-K filed with the SEC, as updated by Note 2 herein.

During the first quarter of 2019, as a result of a change in how operating results are reported to the chief operating decision makers for the purpose of evaluating performance and allocating resources, the Company reclassified operating results related to two facilities from its other non-reportable segment to its medical office segment. Accordingly, all prior period segment information has been recast to conform to current period presentation.

During the three months ended March 31, 2019, 18 senior housing triple-net facilities were transferred to the Company’s SHOP segment as a result of terminating the triple-net leases and transitioning the assets to a RIDEA structure. During the three months ended March 31, 2018, there were no transfers of assets between segments. When an asset is transferred from one segment to another, the results associated with that asset are included in the original segment until the date of transfer. Results generated after the transfer date are included in the new segment.

The Company evaluates performance based upon: (i) property NOI and (ii) Adjusted NOI. NOI is defined as real estate revenues (inclusive of rental and related revenues, resident fees and services, and income from direct financing leases), less property level operating expenses (which exclude transition costs); NOI excludes all other financial statement amounts included in net income (loss). Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL non-cash interest, amortization of market lease intangibles, termination fees, actuarial reserves for insurance claims that have been incurred but not reported, and the impact of deferred community fee income and expense.

NOI and Adjusted NOI exclude the Company’s share of income (loss) from unconsolidated joint ventures, which is recognized as equity income (loss) from unconsolidated joint ventures in the consolidated statements of operations.

Non-segment assets consist of assets in the Company's other non-reportable segments and corporate non-segment assets. Corporate non-segment assets consist primarily of corporate assets, including cash and cash equivalents, restricted cash, accounts receivable, net, marketable equity securities and, if any, real estate assets and liabilities held for sale. See Note 15 for other information regarding concentrations of credit risk.

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

For the three months ended March 31, 2019:

	Senior Housing Triple-Net			SHOP			Life Science			Medical Office			Other Non-reportable			Corporate Non-segment			Total
Real estate revenues(1)	$	58,892		$	126,181		$	94,473		$	142,195		$	12,700		$	—		$	434,441
Operating expenses	(993		)	(96,948		)	(21,992		)	(48,987		)	(7		)	—			(168,927		)
NOI	57,899			29,233			72,481			93,208			12,693			—			265,514
Adjustments to NOI(2)	564			1,152			(2,478		)	(1,771		)	195			—			(2,338		)
Adjusted NOI	58,463			30,385			70,003			91,437			12,888			—			263,176
Addback adjustments	(564		)	(1,152		)	2,478			1,771			(195		)	—			2,338
Interest income	—			—			—			—			1,713			—			1,713
Interest expense	(589		)	(663		)	(73		)	(111		)	—			(47,891		)	(49,327		)
Depreciation and amortization	(16,683		)	(24,086		)	(36,246		)	(53,101		)	(1,835		)	—			(131,951		)
General and administrative	—			—			—			—			—			(21,355		)	(21,355		)
Transaction costs	—			—			—			—			—			(4,518		)	(4,518		)
Recoveries (impairments), net	—			—			—			(8,858		)	—			—			(8,858		)
Gain (loss) on sales of real estate, net	3,557			4,487			—			—			—			—			8,044
Other income (expense), net	—			—			—			—			—			3,133			3,133
Income tax benefit (expense)	—			—			—			—			—			3,458			3,458
Equity income (loss) from unconsolidated joint ventures	—			—			—			—			(863		)	—			(863		)
Net income (loss)	$	44,184		$	8,971		$	36,162		$	31,138		$	11,708		$	(67,173	)	$	64,990

_______________________________________

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

(2) Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, net and termination fees.

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For the three months ended March 31, 2018:

	Senior Housing Triple-Net			SHOP			Life Science			Medical Office			Other Non-reportable			Corporate Non-segment			Total
Real estate revenues(1)	$	74,289		$	144,670		$	99,622		$	133,220		$	21,031		$	—		$	472,832
Operating expenses	(1,045		)	(101,746		)	(21,809		)	(47,878		)	(74		)	—			(172,552		)
NOI	73,244			42,924			77,813			85,342			20,957			—			300,280
Adjustments to NOI(2)	(1,865		)	(1,607		)	(3,751		)	(1,932		)	(531		)	—			(9,686		)
Adjusted NOI	71,379			41,317			74,062			83,410			20,426			—			290,594
Addback adjustments	1,865			1,607			3,751			1,932			531			—			9,686
Interest income	—			—			—			—			6,365			—			6,365
Interest expense	(600		)	(988		)	(83		)	(120		)	(728		)	(72,583		)	(75,102		)
Depreciation and amortization	(21,906		)	(27,628		)	(36,080		)	(47,198		)	(10,438		)	—			(143,250		)
General and administrative	—			—			—			—			—			(29,175		)	(29,175		)
Transaction costs	—			—			—			—			—			(2,195		)	(2,195		)
Gain (loss) on sales of real estate, net	—			20,815			—			—			—			—			20,815
Other income (expense), net	—			—			—			—			(40,567		)	160			(40,407		)
Income tax benefit (expense)	—			—			—			—			—			5,336			5,336
Equity income (loss) from unconsolidated joint ventures	—			—			—			—			570			—			570
Net income (loss)	$	50,738		$	35,123		$	41,650		$	38,024		$	(23,841	)	$	(98,457	)	$	43,237

_______________________________________

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

(2) Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, net and termination fees.

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

	Three Months Ended March 31,
Segment	2019		2018
Senior housing triple-net	$	58,892	$	74,289
SHOP	126,181		144,670
Life science	94,473		99,622
Medical office	142,195		133,220
Other non-reportable segments	14,413		27,396
Total revenues	$	436,154	$	479,197

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

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NOTE 12.  Earnings Per Common Share

Basic income (loss) per common share (“EPS”) is computed based upon the weighted average number of common shares outstanding. Diluted income (loss) per common share is computed based upon the weighted average number of common shares outstanding plus the impact of forward equity sales agreements using the treasury stock method and common shares issuable from the assumed conversion of DownREIT units, stock options, certain performance restricted stock units and unvested restricted stock units. Only those instruments having a dilutive impact on our basic income (loss) per share are included in diluted income (loss) per share during the periods presented.

Restricted stock and certain performance restricted stock units are considered participating securities, because dividend payments are not forfeited even if the underlying award does not vest, and require use of the two-class method when computing basic and diluted earnings per share.

During the first quarter of 2019, the Company utilized the forward sale provisions under the 2019 ATM Program to sell up to an aggregate of 3.6 million shares with a one year term. Additionally, in December 2018, the Company entered into a forward equity sales agreement to sell up to an aggregate of 15.25 million shares of its common stock by no later than December 13, 2019. The Company expects to settle the forward sales with shares of common stock prior to their respective expiration dates. See Note 10 for further details.

The Company considered the potential dilution resulting from the forward agreements to the calculation of earnings per share. At inception, the agreements do not have an effect on the computation of basic EPS as no shares are delivered until settlement. However, the Company uses the treasury stock method to determine the dilution, if any, resulting from the forward sales agreements during the period of time prior to settlement. The aggregate effect on the Company’s diluted weighted-average common shares for the three months ended March 31, 2019, was 1.1 million weighted-average incremental shares from the forward equity sales agreements. 

The following table illustrates the computation of basic and diluted earnings per share (in thousands, except per share amounts):

	Three Months Ended March 31,
	2019			2018
Numerator
Net income (loss)	$	64,990		$	43,237
Noncontrolling interests' share in earnings	(3,520		)	(3,005		)
Net income (loss) attributable to HCP, Inc.	61,470			40,232
Less: Participating securities' share in earnings	(441		)	(391		)
Net income (loss) applicable to common shares	$	61,029		$	39,841
Denominator
Basic weighted average shares outstanding	477,766			469,557
Dilutive potential common shares - equity awards	272			138
Dilutive potential common shares - forward equity agreements	1,093			—
Diluted weighted average common shares	479,131			469,695
Basic earnings per common share
Basic	$	0.13		$	0.08
Diluted	$	0.13		$	0.08

For the three months ended March 31, 2019 and 2018, 6 million and 7 million shares, respectively, issuable upon conversion of DownREIT units were not included because they are anti-dilutive. Additionally, for the three months ended March 31, 2019, 18 million shares of common stock issuable pursuant to the settlement of forward equity sales agreements were not included because they are anti-dilutive (see discussion above). For all periods presented in the above table, approximately 1 million shares of common stock subject to outstanding equity awards (restricted stock units and stock options) were not included because they are anti-dilutive.

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NOTE 13.  Supplemental Cash Flow Information

The following table provides supplemental cash flow information (in thousands):

	Three Months Ended March 31,
	2019			2018
Supplemental cash flow information:
Interest paid, net of capitalized interest	$	53,475		$	92,701
Income taxes paid (refunded)	(769		)	340
Capitalized interest	8,369			3,578
Supplemental schedule of non-cash investing and financing activities:
Accrued construction costs	94,904			62,160
Derecognition of U.K. Bridge Loan receivable	—			147,474
Consolidation of net assets related to U.K. Bridge Loan	—			106,457
Vesting of restricted stock units and conversion of non-managing member units into common stock	4,341			258
Conversion of DFLs to real estate	350,540			—

See discussion related to the U.K. Bridge Loan in Notes 5 and 14.

The following table summarizes cash, cash equivalents and restricted cash (in thousands):

	March 31,
	2019		2018
Cash and cash equivalents	$	120,117	$	86,021
Restricted cash	26,535		31,947
Cash, cash equivalents and restricted cash	$	146,652	$	117,968

NOTE 14.  Variable Interest Entities

Unconsolidated Variable Interest Entities

At March 31, 2019, the Company had investments in: (i) 30 properties leased to VIE tenants, (ii) four unconsolidated VIE joint ventures, (iii) marketable debt securities of one VIE, and (iv) one loan to a VIE borrower. The Company has determined that it is not the primary beneficiary of and therefore does not consolidate these VIEs because it does not have the ability to control the activities that most significantly impact their economic performance. Except for the Company’s equity interest in the unconsolidated joint ventures (CCRC OpCo, Vintage Park Development JV, Waldwick JV and the LLC investment discussed below), it has no formal involvement in these VIEs beyond its investments.

The Company leases 30 properties to a total of four tenants that have also been identified as VIEs (“VIE tenants”). These VIE tenants are “thinly capitalized” entities that rely on the operating cash flows generated from the senior housing facilities to pay operating expenses, including the rent obligations under their leases.

The Company holds a 49% ownership interest in CCRC OpCo, a joint venture entity formed in August 2014 that operates senior housing properties in a RIDEA structure and has been identified as a VIE. The equity members of CCRC OpCo “lack power” because they share certain operating rights with Brookdale, as manager of the CCRCs. The assets of CCRC OpCo primarily consist of the CCRCs that it owns and leases, resident fees receivable, notes receivable, and cash and cash equivalents; its obligations primarily consist of operating lease obligations to CCRC PropCo, debt service payments and capital expenditures for the properties, and accounts payable and expense accruals associated with the cost of its CCRCs’ operations. Assets generated by the CCRC operations (primarily rents from CCRC residents) of CCRC OpCo may only be used to settle its contractual obligations (primarily from debt service payments, capital expenditures, and rental costs and operating expenses incurred to manage such facilities).

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The Company holds an 85% ownership interest in a joint venture (Vintage Park Development JV), which has been identified as a VIE as power is shared with a member that does not have a substantive equity investment at risk. The assets of the joint venture primarily consist of a leased property (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of debt-service payments. Any assets generated by the joint venture may only be used to settle its respective contractual obligations (primarily debt service payments).

The Company holds an 85% ownership interest in a development joint venture (Waldwick JV), which has been identified as a VIE as power is shared with a member that does not have a substantive equity investment at risk. The assets of the joint venture primarily consist of an in-progress senior housing facility development project that it owns and cash and cash equivalents; its obligations primarily consist of accounts payable and expense accruals associated with the cost of its development obligations. Any assets generated by the joint venture may only be used to settle its respective contractual obligations (primarily development expenses and debt service payments).

The Company holds a limited partner ownership interest in an unconsolidated LLC that has been identified as a VIE. The Company’s involvement in the entity is limited to its equity investment as a limited partner, and it does not have any substantive participating rights or kick-out rights over the general partner. The assets and liabilities of the entity primarily consist of those associated with its senior housing real estate and development activities. Any assets generated by the entity may only be used to settle its contractual obligations (primarily development expenses and debt service payments).

The Company holds commercial mortgage-backed securities (“CMBS”) issued by Federal Home Loan Mortgage Corporation (commonly referred to as Freddie MAC) through a special purpose entity that has been identified as a VIE because it is “thinly capitalized.” The CMBS issued by the VIE are backed by mortgage debt obligations on real estate assets.

The Company provided seller financing of $10 million related to its sale of seven senior housing triple-net facilities. The financing was provided in the form of a secured five year mezzanine loan to a “thinly capitalized” borrower created to acquire the facilities.

The classification of the related assets and liabilities and the maximum loss exposure as a result of the Company’s involvement with these VIEs at March 31, 2019 was as follows (in thousands):

VIE Type	Asset/Liability Type	Maximum Loss Exposure and Carrying Amount(1)
VIE tenants - DFLs(2)	Net investment in DFLs	$	249,803
VIE tenants - operating leases(2)	Lease intangibles, net and straight-line rent receivables	6,909
CCRC OpCo	Investments in unconsolidated joint ventures	175,011
Unconsolidated development joint ventures	Investments in unconsolidated joint ventures	15,206
Loan - seller financing	Loans receivable, net	10,000
CMBS and LLC investment	Marketable debt and LLC investment	34,397

_______________________________________

(1) The Company’s maximum loss exposure represents the aggregate carrying amount of such investments (including accrued interest).

(2) The Company’s maximum loss exposure may be mitigated by re-leasing the underlying properties to new tenants upon an event of default.

At March 31, 2019, the Company had not provided, and is not required to provide, financial support through a liquidity arrangement or otherwise, to its unconsolidated VIEs, including circumstances in which it could be exposed to further losses (e.g., cash shortfalls).

See Notes 4, 5 and 6 for additional descriptions of the nature, purpose and operating activities of the Company’s unconsolidated VIEs and interests therein.

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Consolidated Variable Interest Entities

HCP, Inc.’s consolidated total assets and total liabilities at March 31, 2019 and December 31, 2018 include certain assets of VIEs that can only be used to settle the liabilities of the related VIE. The VIE creditors do not have recourse to HCP, Inc. Total assets and total liabilities include VIE assets and liabilities as follows (in thousands):

	March 31, 2019			December 31, 2018
Assets
Buildings and improvements	$	2,001,875		$	1,949,582
Development costs and construction in progress	43,481			39,584
Land	196,484			151,746
Accumulated depreciation and amortization	(424,325		)	(398,143		)
Net real estate	1,817,515			1,742,769
Investments in and advances to unconsolidated joint ventures	1,534			1,550
Accounts receivable, net	6,811			7,904
Cash and cash equivalents	32,831			23,772
Restricted cash	3,386			3,399
Intangible assets, net	96,197			111,333
Right-of-use asset, net	93,796			—
Other assets, net	44,312			43,149
Total assets	$	2,096,382		$	1,933,876
Liabilities
Mortgage debt	44,500			44,598
Intangible liabilities, net	17,014			19,128
Lease liability	90,043			—
Accounts payable and accrued liabilities	56,542			66,736
Deferred revenue	23,536			24,215
Total liabilities	$	231,635		$	154,677

HCP Ventures V, LLC.  The Company holds a 51% ownership interest in and is the managing member of a joint venture entity formed in October 2015 that owns and leases MOBs (“HCP Ventures V”). The Company classifies HCP Ventures V as a VIE due to the non-managing member lacking substantive participation rights in the management of HCP Ventures V or kick-out rights over the managing member. The Company consolidates HCP Ventures V as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of HCP Ventures V primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of capital expenditures for the properties. Assets generated by HCP Ventures V may only be used to settle its contractual obligations (primarily from capital expenditures).

Vintage Park JV.  The Company holds a 90% ownership interest in and is the managing member of a joint venture entity formed in January 2015 (“Vintage Park JV”) that owns an 85% interest in an unconsolidated development VIE. The Company classifies Vintage Park JV as a VIE due to the non-managing member lacking substantive participation rights in the management of the Vintage Park JV or kick-out rights over the managing member. The Company consolidates Vintage Park JV as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of Vintage Park JV primarily consist of an investment in the Vintage Park Development JV and cash and cash equivalents; its obligations primarily consist of funding the ongoing development of the Vintage Park Development JV. Assets generated by the Vintage Park JV may only be used to settle its contractual obligations (primarily from the funding of the Vintage Park Development JV).

Watertown JV.  The Company holds a 95% ownership interest in and is the managing member of joint venture entities formed in November 2017 that own and operate a senior housing property in a RIDEA structure (“Watertown JV”). Watertown PropCo is a VIE as the Company and the non-managing member share in control of the entity, but substantially all of the entity's activities are performed on behalf of the Company. Watertown OpCo is a VIE as the non-managing member, through its equity interest, lacks substantive participation rights in the management of Watertown OpCo or kick-out rights over the managing member. The Company consolidates Watertown PropCo and Watertown OpCo as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of Watertown PropCo primarily consist of a leased

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property (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of notes payable to a non-VIE consolidated subsidiary of the Company. The assets of Watertown OpCo primarily consist of leasehold interests in a senior housing facility (operating lease), resident fees receivable, and cash and cash equivalents; its obligations primarily consist of lease payments to Watertown PropCo and operating expenses of its senior housing facilities (accounts payable and accrued expenses). Assets generated by the senior housing operations (primarily from senior housing resident rents) of the Watertown structure may only be used to settle its contractual obligations (primarily from the rental costs, operating expenses incurred to manage such facilities and debt costs).

Life Science JVs.  The Company holds a 99% ownership interest in multiple joint venture entities that own and lease life science assets (the “Life Science JVs”). The Life Science JVs are VIEs as the members share in control of the entities, but substantially all of the activities are performed on behalf of the Company. The Company consolidates the Life Science JVs as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the Life Science JVs primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the Life Science JVs may only be used to settle their contractual obligations (primarily from capital expenditures).

MSREI MOB JV. The Company holds a 51% ownership interest in, and is the managing member of, a joint venture entity formed in August 2018 that owns and leases MOBs (the “MSREI JV” - see Note 3). The MSREI JV is a VIE due to the non-managing member lacking substantive participation rights in the management of the joint venture or kick-out rights over the managing member. The Company consolidates the MSREI JV as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of the MSREI JV primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of capital expenditures for the properties. Assets generated by the MSREI JV may only be used to settle its contractual obligations (primarily from capital expenditures).

Consolidated Lessee. The Company leases one senior housing property to a lessee entity under a cash flow lease through which the Company receives monthly rent equal to the residual cash flows of the property. The lessee entity is classified as a VIE as it is a "thinly capitalized" entity. The Company consolidates the lessee entity as it has the ability to control the activities that most significantly impact the economic performance of the lessee entity. The lessee entity’s assets primarily consist of leasehold interests in a senior housing facility (operating leases), resident fees receivable, and cash and cash equivalents; its obligations primarily consist of lease payments to the Company and operating expenses of the senior housing facility (accounts payable and accrued expenses). Assets generated by the senior housing operations (primarily from senior housing resident rents) may only be used to settle its contractual obligations (primarily from the rental costs, operating expenses incurred to manage such facilities and debt costs).

DownREITs.  The Company holds a controlling ownership interest in and is the managing member of five limited liability companies (“DownREITs”). The Company classifies the DownREITs as VIEs due to the non-managing members lacking substantive participation rights in the management of the DownREITs or kick-out rights over the managing member. The Company consolidates the DownREITs as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the DownREITs primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the DownREITs (primarily from resident rents) may only be used to settle their contractual obligations (primarily from debt service and capital expenditures).

Other Consolidated Real Estate Partnerships.  The Company holds a controlling ownership interest in and is the general partner (or managing member) of multiple partnerships that own and lease real estate assets (the “Partnerships”). The Company classifies the Partnerships as VIEs due to the limited partners (non-managing members) lacking substantive participation rights in the management of the Partnerships or kick-out rights over the general partner (managing member). The Company consolidates the Partnerships as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the Partnerships primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the Partnerships (primarily from resident rents) may only be used to settle their contractual obligations (primarily from debt service and capital expenditures).

Other consolidated VIEs.  The Company made a loan to an entity that entered into a tax credit structure (“Tax Credit Subsidiary”) and a loan to an entity that made an investment in a development joint venture (“Development JV”) both of which are considered VIEs. The Company consolidates the Tax Credit Subsidiary and Development JV as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIEs’ economic performance. The assets and liabilities of the Tax Credit Subsidiary and Development JV substantially consist of a development in progress, notes receivable, prepaid expenses, notes payable, and accounts payable and accrued liabilities generated from their operating activities. Any assets generated by the operating activities of the Tax Credit Subsidiary and Development JV may only be used to settle their contractual obligations.

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U.K. Bridge Loan. In 2016, the Company provided a £105 million ($131 million at closing) bridge loan to MMCG to fund the acquisition of a portfolio of seven care homes in the U.K. MMCG created a special purpose entity to acquire the portfolio and funded it entirely using the Company’s bridge loan. As such, the special purpose entity had historically been identified as a VIE because it was “thinly capitalized.” The Company retained a three year call option to acquire all the shares of the special purpose entity, which it could only exercise upon the occurrence of certain events. During the quarter ended March 31, 2018, the Company concluded that the conditions required to exercise the call option had been met and initiated the call option process to acquire the special purpose entity. In conjunction with initiating the process to legally exercise its call option and the satisfaction of required contingencies, the Company concluded that it was the primary beneficiary of the special purpose entity and therefore, should consolidate the entity. As such, during the quarter ended March 31, 2018, the Company derecognized the previously outstanding loan receivable, recognized the special purpose entity’s assets and liabilities at their respective fair values, and recognized a £29 million ($41 million) loss on consolidation, net of a tax benefit of £2 million ($3 million), to account for the difference between the carrying value of the loan receivable and the fair value of net assets and liabilities assumed. The loss on consolidation was recognized within other income (expense), net and the tax benefit was recognized within income tax benefit (expense). The fair value of net assets and liabilities consolidated during the first quarter of 2018 consisted of £81 million ($114 million) of net real estate, £4 million ($5 million) of intangible assets, and £9 million ($13 million) of net deferred tax liabilities.

In June 2018, the Company completed the exercise of the above-mentioned call option and formally acquired full ownership of the special purpose entity. As such, the Company reconsidered whether the special purpose entity was a VIE and concluded that it was no longer “thinly capitalized” as the previously outstanding bridge loan converted to equity at risk and, therefore, was no longer a VIE. The real estate assets held by the special purpose entity were contributed to the U.K. JV formed by the Company in June 2018 (see Note 3).

NOTE 15.  Concentration of Credit Risk

Concentrations of credit risk arise when one or more tenants, operators or obligors related to the Company’s investments are engaged in similar business activities or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions. The Company regularly monitors various segments of its portfolio to assess potential concentrations of credit risks.

The following tables provide information regarding the Company’s concentrations of credit risk with respect to certain tenants:

	Percentage of Total Assets
	Total Company		Senior Housing Triple-Net
	March 31,	December 31,	March 31,	December 31,
Tenant	2019	2018	2019	2018
Brookdale(1)	6	6	31	27

	Percentage of Revenues
	Total Company		Senior Housing Triple-Net
	Three Months Ended March 31,		Three Months Ended March 31,
Tenant	2019	2018	2019	2018
Brookdale(1)	4	7	32	43

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(1) Excludes senior housing facilities operated by Brookdale in the Company’s SHOP segment as discussed below. Percentages of segment and total company revenues include partial-year revenue earned from senior housing triple-net facilities that were sold during 2018.

At both March 31, 2019 and December 31, 2018, Brookdale managed or operated, in the Company’s SHOP segment, approximately 7% of the Company’s real estate investments (based on total assets). Because an operator manages the Company’s facilities in exchange for the receipt of a management fee, the Company is not directly exposed to the credit risk of its operators in the same manner or to the same extent as its triple-net tenants. At March 31, 2019, Brookdale provided comprehensive facility management and accounting services with respect to 27 of the Company’s consolidated SHOP facilities and 16 SHOP facilities owned by its unconsolidated joint ventures, for which the Company or joint venture pay annual management fees pursuant to long-term management agreements. Most of the management agreements have terms ranging from 10 to 15 years, with three to four 5-year renewal periods. The base management fees are 4.5% to 5.0% of gross revenues (as defined) generated by the RIDEA properties. In addition, there are incentive management fees payable to Brookdale if operating results of the RIDEA properties exceed pre-established EBITDAR (as defined) thresholds.

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To mitigate the credit risk of leasing properties to certain senior housing and post-acute/skilled nursing operators, leases with operators are often combined into portfolios that contain cross-default terms, so that if a tenant of any of the properties in a portfolio defaults on its obligations under its lease, the Company may pursue its remedies under the lease with respect to any of the properties in the portfolio. Certain portfolios also contain terms whereby the net operating profits of the properties are combined for the purpose of securing the funding of rental payments due under each lease.

NOTE 16.  Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets are immaterial at March 31, 2019.

The table below summarizes the carrying amounts and fair values of the Company’s financial instruments (in thousands):

	March 31, 2019(3)				December 31, 2018(3)
	Carrying Value		Fair Value		Carrying Value		Fair Value
Loans receivable, net(2)	$	86,139	$	86,139	$	62,998	$	62,998
Marketable debt securities(2)	19,337		19,337		19,202		19,202
Bank line of credit(2)	276,500		276,500		80,103		80,103
Senior unsecured notes(1)	5,260,622		5,484,915		5,258,550		5,302,485
Mortgage debt(2)	137,525		133,652		138,470		136,161
Other debt(2)	89,223		89,223		90,785		90,785
Interest-rate swap liabilities(2)	1,217		1,217		1,310		1,310

_______________________________________

(1) Level 1: Fair value calculated based on quoted prices in active markets.

(2) Level 2: Fair value based on (i) for marketable debt securities, quoted prices for similar or identical instruments in active or inactive markets, respectively, or (ii) for loans receivable, net, mortgage debt and swaps, calculated utilizing standardized pricing models in which significant inputs or value drivers are observable in active markets. For bank line of credit, term loan and other debt, the carrying values are a reasonable estimate of fair value because the borrowings are primarily based on market interest rates and the Company’s credit rating.

(3) During the three months ended March 31, 2019 and year ended December 31, 2018, there were no material transfers of financial assets or liabilities within the fair value hierarchy.

NOTE 17.  Derivative Financial Instruments

The following table summarizes the Company’s outstanding swap contracts at March 31, 2019 (dollars in thousands):

Date Entered	Maturity Date	Hedge Designation	Notional		Pay Rate	Receive Rate	Fair Value(1)
Interest rate:
July 2005(2)	July 2020	Cash Flow	$	43,000	3.82%	BMA Swap Index	$	(1,217	)

______________________________________

(1) Derivative liabilities are recorded in accounts payable and accrued liabilities on the consolidated balance sheets.

(2) Represents three interest-rate swap contracts, which hedge fluctuations in interest payments on variable-rate secured debt due to overall changes in hedged cash flows.

The Company uses derivative instruments to mitigate the effects of interest rate fluctuations on specific forecasted transactions as well as recognized financial obligations or assets. Utilizing derivative instruments allows the Company to manage the risk of fluctuations in interest rates related to the potential impact these changes could have on future earnings and forecasted cash flows. The Company does not use derivative instruments for speculative or trading purposes. Assuming a one percentage point shift in the underlying interest rate curve, the estimated change in fair value of each of the underlying derivative instruments would not exceed $1 million.

At March 31, 2019, £55 million of the Company’s GBP-denominated borrowings under the Facility are designated as a hedge of a portion of the Company’s net investments in GBP-functional currency unconsolidated subsidiaries to mitigate its exposure to fluctuations in the GBP to USD exchange rate. For instruments that are designated and qualify as net investment hedges, the variability in the foreign currency to USD exchange rate of the instrument is recorded as part of the cumulative translation adjustment component of accumulated other comprehensive income (loss). Accordingly, the remeasurement value of the designated £55 million GBP-denominated borrowings due primarily to fluctuations in the GBP to USD exchange rate are reported in accumulated

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other comprehensive income (loss) as the hedging relationship is considered to be effective. The balance in accumulated other comprehensive income (loss) will be reclassified to earnings when the Company sells its remaining investment in the U.K.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

All references in this report to “HCP,” “we,” “us” or “our” mean HCP, Inc., together with its consolidated subsidiaries. Unless the context suggests otherwise, references to “HCP, Inc.” mean the parent company without its subsidiaries.

Cautionary Language Regarding Forward-Looking Statements

Statements in this Quarterly Report on Form 10-Q that are not historical factual statements 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 (the “Exchange Act”). 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. 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. As more fully set forth under Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, risks and uncertainties that may cause our actual results to differ materially from the expectations contained in the forward-looking statements include, among other things:

• our reliance on a concentration of a small number of tenants and operators for a significant percentage of our revenues and net operating income;

• 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 manage their expenses in order to generate sufficient income to make rent and loan payments to us and our ability to recover investments made, if applicable, in their operations;

• 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;

• 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;

• 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 potential impact of uninsured or underinsured losses;

• 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;

• 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 ability to achieve the benefits of acquisitions or other investments 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;

• 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;

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• 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 and 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;

• our reliance on information technology systems and the potential impact of system failures, disruptions or breaches; and

• our ability to maintain our qualification as a real estate investment trust (“REIT”).

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 set forth in this Item 2 is intended to provide readers with an understanding of our financial condition, changes in financial condition and results of operations. We will discuss and provide our analysis in the following order:

• Executive Summary

• 2019 Transaction Overview

• Dividends

• Results of Operations

• Liquidity and Capital Resources

• Off-Balance Sheet Arrangements

• Non-GAAP Financial Measures Reconciliations

• Critical Accounting Policies

• Recent Accounting Pronouncements

Executive Summary

HCP, Inc., a Standard & Poor’s (“S&P”) 500 company, invests primarily in real estate serving the healthcare industry in the United States. We are a Maryland corporation organized in 1985 and qualify as a self-administered real estate investment trust (“REIT”). We acquire, develop, lease, own and manage healthcare real estate. At March 31, 2019, our portfolio of investments, including properties in our unconsolidated joint ventures (“JVs”), consisted of interests in 734 properties.  

We invest and manage our real estate portfolio for the long-term to maximize the benefit to our stockholders and support the growth of our dividends. The core elements of our strategy are to: (i) acquire, develop, lease, own and manage a diversified portfolio of quality healthcare properties across multiple geographic locations and business segments, including senior housing, life science, and medical office, among others; (ii) maintain an investment grade balance sheet with adequate liquidity and long-term fixed rate debt financing with staggered maturities in order to support the longer-term nature of our investments, while reducing our exposure to interest rate volatility and refinancing risk at any point in the interest rate or credit cycles; (iii) align ourselves with leading healthcare companies, operators and service providers which, over the long-term, should result in higher relative rental rates, net operating cash flows and appreciation of property values; and (iv) pursue operational excellence to maximize the value of our investments.

We believe our real estate portfolio holds the potential for increased future cash flows as it is well-maintained and in desirable locations. Our strategy for maximizing the benefits from these opportunities is to: (i) work with new or existing tenants and operators to address their space and capital needs; and (ii) provide high-quality property management services in order to motivate tenants to renew, expand or relocate into our properties.

The delivery of healthcare services requires real estate and, as a result, tenants and operators depend on real estate, in part, to maintain and grow their businesses. We believe that the healthcare real estate market provides investment opportunities due to the: (i) compelling long-term demographics driving the demand for healthcare services; (ii) specialized nature of healthcare real estate investing; and (iii) ongoing consolidation of the fragmented healthcare real estate sector.

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We primarily invest in healthcare real estate through long-term ownership, acquisitions and development. We both wholly-own investments and co-invest through joint ventures with institutional or development investors. When consistent with our investment strategies, we may occasionally provide real estate secured financing to healthcare real estate developers or owners. Additionally, we may opportunistically acquire other real estate entities or their assets.

We monitor, but do not limit, our investments based on the percentage of our total assets that may be invested in any one property type, investment vehicle or geographic location, the number of properties that may be leased to a single tenant or operator, or loans that may be made to a single borrower. In allocating capital, we target opportunities with the most attractive risk/reward profile for our portfolio as a whole. We may take additional measures to mitigate risk, including diversifying our investments (by sector, geography, tenant or operator), structuring transactions as master leases, requiring tenant or operator insurance and indemnifications, and obtaining credit enhancements in the form of guarantees, letters of credit or security deposits.

Our REIT qualification requires us to distribute at least 90% of our REIT taxable income (excluding net capital gains); therefore, we do not retain a significant amount of capital. As a result, we regularly access the public equity and debt markets to raise the funds necessary to finance acquisitions and debt investments, develop and redevelop properties, and refinance maturing debt.

We maintain a disciplined balance sheet by actively managing our debt to equity levels and maintaining multiple sources of liquidity. Our debt obligations are primarily long-term fixed rate with staggered maturities.

We finance our investments based on our evaluation of available sources of funding. For short-term purposes, we may utilize our revolving line of credit facility, arrange for other short-term borrowings from banks or other sources, or issue equity securities pursuant to our at-the-market equity offering program. We arrange for longer-term financing by offering debt and equity securities, placing mortgage debt and obtaining capital from institutional lenders and joint venture partners.

2019 Transaction Overview

Discovery Portfolio Acquisition

• In April 2019, we acquired a portfolio of nine senior housing properties, with a total of 1,242 units, for $445 million. The properties are located across Florida, Georgia and Texas and will be operated by Discovery Senior Living, LLC (“Discovery”).

Oakmont Portfolio Acquisition and Transitions

• On May 1, 2019, we acquired three newly-built, senior housing communities for $113 million. The portfolio will be operated by Oakmont Senior Living LLC (“Oakmont”) and includes 132 assisted living units and 68 memory care units with an average occupancy of 96%. Additionally, the Company transitioned four senior housing triple-net properties to RIDEA structures with Oakmont continuing as the operator.

Other Real Estate Transactions

• In January and February 2019, we acquired a life science facility for $71 million and development rights at an adjacent undeveloped land parcel for consideration of up to $27 million. The existing facility and land parcel are located in Cambridge, Massachusetts.

• During the first quarter of 2019, the Company transitioned 18 senior housing triple-net assets, including a 14-property direct financing lease (“DFL”) portfolio, to a RIDEA structure, with Sunrise Senior Living, LLC (“Sunrise”) as the operator. The Company expects to transition an additional 17-property DFL portfolio to a RIDEA structure with Sunrise later in 2019.

• During the quarter ended March 31, 2019, we sold nine senior housing operating portfolio (“SHOP”) assets for $68 million, two senior housing triple-net assets for $26 million and an undeveloped life science land parcel for $35 million.

• In 2018, we entered into definitive agreements to acquire two life science buildings in South San Francisco, California, adjacent to The Shore at Sierra Point development, for $245 million. We expect to close the transaction during the second quarter of 2019.

Financing Activities

• In February 2019, we terminated our previous at-the-market equity program established in February 2018 (the “2018 ATM Program”) and established a new ATM Program (the “2019 ATM Program) pursuant to which shares of common stock having an aggregate gross sales price of up to $1.0 billion may be sold (i) by the Company through a consortium of banks acting as sales agents or directly to the banks acting as principals, or (ii) by a consortium of banks acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement.

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During the three months ended March 31, 2019, we utilized the forward provisions under the 2019 ATM Program to allow for the sale of up to an aggregate of 3.6 million shares of our common stock at an initial weighted average net price of $31.19 per share, after commissions. Each forward sale has a one year term.

Subsequent to March 31, 2019, we utilized the forward provisions under the 2019 ATM Program to allow for the sale of up to an additional 1.5 million shares of our common stock at an initial weighted average net price of $30.63 per share, after commissions.

Development Activities

• As part of the previously-announced development program with HCA Healthcare, during the first quarter of 2019, we signed definitive agreements to develop three additional medical office buildings (“MOBs”), two of which are on-campus, with an aggregate estimated cost of $70 million. Construction on these projects is expected to commence in the second quarter of 2019.

Dividends

The following table summarizes our common stock cash dividends declared in 2019:

Declaration Date	Record Date	Amount Per Share		Dividend Payment Date
January 30	February 19	$	0.37	February 28
April 25	May 6	0.37		May 21

Results of Operations

We evaluate our business and allocate resources among our reportable business segments: (i) senior housing triple-net, (ii) SHOP, (iii) life science and (iv) medical office. Under the life science and medical office segments, we invest through the acquisition and development of life science facilities and medical office buildings, which generally require a greater level of property management. Our senior housing facilities are managed utilizing triple-net leases and RIDEA structures. We have other non-reportable segments that are comprised primarily of our debt investments, hospital properties, unconsolidated joint ventures and United Kingdom (“U.K.”) investments. We evaluate performance based upon: (i) property net operating income from continuing operations (“NOI”) and (ii) Adjusted NOI (cash NOI) in each segment. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2 of our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”), as updated by Note 2 herein.

Non-GAAP Financial Measures

Net Operating Income

NOI and Adjusted NOI are non-U.S. generally accepted accounting principles (“GAAP”) supplemental financial measures used to evaluate the operating performance of real estate. NOI is defined as real estate revenues (inclusive of rental and related revenues, resident fees and services, and income from direct financing leases), less property level operating expenses (which exclude transition costs); NOI excludes all other financial statement amounts included in net income (loss) as presented in Note 11 to the Consolidated Financial Statements. Management believes NOI provides relevant and useful information because it reflects only income and operating expense items that are incurred at the property level and presents them on an unlevered basis. Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL non-cash interest, amortization of market lease intangibles, termination fees, actuarial reserves for insurance claims that have been incurred but not reported, and the impact of deferred community fee income and expense. Adjusted NOI is oftentimes referred to as “Cash NOI.” NOI and Adjusted NOI exclude our share of income (loss) generated by unconsolidated joint ventures, which is recognized in equity income (loss) from unconsolidated joint ventures in the consolidated statements of operations. We use NOI and Adjusted NOI to make decisions about resource allocations, to assess and compare property level performance, and to evaluate our same property portfolio (“SPP”), as described below. We believe that net income (loss) is the most directly comparable GAAP measure to NOI and Adjusted NOI. NOI and Adjusted NOI should not be viewed as alternative measures of operating performance to net income (loss) as defined by GAAP since they do not reflect various excluded items. Further, our definitions of NOI and Adjusted NOI may not be comparable to the definitions used by other REITs or real estate companies, as they may use different methodologies for calculating NOI and Adjusted NOI. For a reconciliation of NOI and Adjusted NOI to net income (loss) by segment, refer to Note 11 to the Consolidated Financial Statements.

Operating expenses generally relate to leased medical office and life science properties and SHOP facilities. We generally recover all or a portion of our leased medical office and life science property expenses through tenant recoveries. We present expenses as operating or general and administrative based on the underlying nature of the expense.

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Same Property Portfolio

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). For a reconciliation of SPP to total portfolio Adjusted NOI and other relevant disclosures by segment, refer to our Segment Analysis below.

Funds From Operations (“FFO”)

FFO encompasses NAREIT FFO and FFO as adjusted, each of which is described in detail below. We believe FFO applicable to common shares, diluted FFO applicable to common shares, and diluted FFO per common share are important supplemental non-GAAP measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets utilizes straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. The term FFO was designed by the REIT industry to address this issue.

NAREIT FFO. FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), is net income (loss) applicable to common shares (computed in accordance with GAAP), excluding gains or losses from sales of depreciable property, including any current and deferred taxes directly associated with sales of depreciable property, impairments of, or related to, depreciable real estate, plus real estate and other real estate-related depreciation and amortization, and adjustments to compute our share of NAREIT FFO and FFO as adjusted (see below) from joint ventures. Adjustments for joint ventures are calculated to reflect our pro-rata share of both our consolidated and unconsolidated joint ventures. We reflect our share of NAREIT FFO for unconsolidated joint ventures by applying our actual ownership percentage for the period to the applicable reconciling items on an entity by entity basis. For consolidated joint ventures in which we do not own 100%, we reflect our share of the equity by adjusting our NAREIT FFO to remove the third party ownership share of the applicable reconciling items based on actual ownership percentage for the applicable periods. Our pro-rata share information is prepared on a basis consistent with the comparable consolidated amounts, is intended to reflect our proportionate economic interest in the operating results of properties in our portfolio and is calculated by applying our actual ownership percentage for the period. We do not control the unconsolidated joint ventures, and the pro-rata presentations of reconciling items included in NAREIT FFO do not represent our legal claim to such items. The joint venture members or partners are entitled to profit or loss allocations and distributions of cash flows according to the joint venture agreements, which provide for such allocations generally according to their invested capital.

The presentation of pro-rata information has limitations, which include, but are not limited to, the following: (i) the amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage determined when applying the equity method of accounting and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses and (ii) other companies in our industry may calculate their pro-rata interest differently, limiting the usefulness as a comparative measure. Because of these limitations, the pro-rata financial information should not be considered independently or as a substitute for our financial statements as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP financial statements, using the pro-rata financial information as a supplement.

NAREIT FFO does not represent cash generated from operating activities in accordance with GAAP, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income (loss). We compute NAREIT FFO in accordance with the current NAREIT definition; however, other REITs may report NAREIT FFO differently or have a different interpretation of the current NAREIT definition from ours.

FFO as adjusted. In addition, we present NAREIT FFO on an adjusted basis before the impact of non-comparable items including, but not limited to, transaction-related items, impairments (recoveries) of non-depreciable assets, losses (gains) from the sale of non-depreciable assets, severance and related charges, prepayment costs (benefits) associated with early retirement or payment of debt, litigation costs (recoveries), casualty-related charges (recoveries), foreign currency remeasurement losses (gains) and changes in tax legislation (“FFO as adjusted”). Transaction-related items include transaction expenses and gains/charges incurred as a result of mergers and acquisitions and lease amendment or termination activities. Prepayment costs (benefits) associated with early retirement of debt include the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of debt. Management believes

38

that FFO as adjusted provides a meaningful supplemental measurement of our FFO run-rate and is frequently used by analysts, investors and other interested parties in the evaluation of our performance as a REIT. At the same time that NAREIT created and defined its FFO measure for the REIT industry, it also recognized that “management of each of its member companies has the responsibility and authority to publish financial information that it regards as useful to the financial community.” We believe stockholders, potential investors and financial analysts who review our operating performance are best served by an FFO run-rate earnings measure that includes certain other adjustments to net income (loss), in addition to adjustments made to arrive at the NAREIT defined measure of FFO. FFO as adjusted is used by management in analyzing our business and the performance of our properties, and we believe it is important that stockholders, potential investors and financial analysts understand this measure used by management. We use FFO as adjusted to: (i) evaluate our performance in comparison with expected results and results of previous periods, relative to resource allocation decisions, (ii) evaluate the performance of our management, (iii) budget and forecast future results to assist in the allocation of resources, (iv) assess our performance as compared with similar real estate companies and the industry in general and (v) evaluate how a specific potential investment will impact our future results. Other REITs or real estate companies may use different methodologies for calculating an adjusted FFO measure, and accordingly, our FFO as adjusted may not be comparable to those reported by other REITs. For a reconciliation of net income (loss) to NAREIT FFO and FFO as adjusted and other relevant disclosure, refer to “Non-GAAP Financial Measures Reconciliations” below.

Funds Available for Distribution (“FAD”)

FAD is defined as FFO as adjusted after excluding the impact of the following: (i) amortization of deferred compensation expense, (ii) amortization of deferred financing costs, net, (iii) straight-line rents, (iv) deferred income taxes, (v) amortization of acquired market lease intangibles, net, (vi) non-cash interest related to DFLs and lease incentive amortization (reduction of straight-line rents), (vii) actuarial reserves for insurance claims that have been incurred but not reported, and (viii) deferred revenues, excluding amounts amortized into rental income that are associated with tenant funded improvements owned/recognized by us and up-front cash payments made by tenants to reduce their contractual rents. Also, FAD: (i) is computed after deducting recurring capital expenditures, including second generation leasing costs and second generation tenant and capital improvements, and (ii) includes lease restructure payments and adjustments to compute our share of FAD from our unconsolidated joint ventures and those related to CCRC non-refundable entrance fees. Certain prior period amounts in the “Non-GAAP Financial Measures Reconciliation” below for FAD have been reclassified to conform to the current period presentation. More specifically, recurring capital expenditures, including second generation leasing costs and second generation tenant and capital improvements ("FAD capital expenditures") excludes our share from unconsolidated joint ventures (reported in “other FAD adjustments”). Adjustments for joint ventures are calculated to reflect our pro-rata share of both our consolidated and unconsolidated joint ventures. We reflect our share of FAD for unconsolidated joint ventures by applying our actual ownership percentage for the period to the applicable reconciling items on an entity by entity basis. We reflect our share for consolidated joint ventures in which we do not own 100% of the equity by adjusting our FAD to remove the third party ownership share of the applicable reconciling items based on actual ownership percentage for the applicable periods (reported in “other FAD adjustments”). See FFO for further disclosure regarding our use of pro-rata share information and its limitations. Other REITs or real estate companies may use different methodologies for calculating FAD, and accordingly, our FAD may not be comparable to those reported by other REITs. Although our FAD computation may not be comparable to that of other REITs, management believes FAD provides a meaningful supplemental measure of our performance and is frequently used by analysts, investors, and other interested parties in the evaluation of our performance as a REIT. We believe FAD is an alternative run-rate earnings measure that improves the understanding of our operating results among investors and makes comparisons with: (i) expected results, (ii) results of previous periods and (iii) results among REITs more meaningful. FAD does not represent cash generated from operating activities determined in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs as it excludes the following items which generally flow through our cash flows from operating activities: (i) adjustments for changes in working capital or the actual timing of the payment of income or expense items that are accrued in the period, (ii) transaction-related costs, (iii) litigation settlement expenses, (iv) severance-related expenses and (v) actual cash receipts from interest income recognized on loans receivable (in contrast to our FAD adjustment to exclude non-cash interest and depreciation related to our investments in direct financing leases). Furthermore, FAD is adjusted for recurring capital expenditures, which are generally not considered when determining cash flows from operations or liquidity. FAD is a non-GAAP supplemental financial measure and should not be considered as an alternative to net income (loss) determined in accordance with GAAP. For a reconciliation of net income (loss) to FAD and other relevant disclosure, refer to “Non-GAAP Financial Measures Reconciliations” below.

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Comparison of the Three Months Ended March 31, 2019 to the Three Months Ended March 31, 2018

Overview

Three Months Ended March 31, 2019 and 2018

The following table summarizes results for the three months ended March 31, 2019 and 2018 (dollars in thousands):

	Three Months Ended March 31,
	2019		2018		Change
Net income (loss) applicable to common shares	$	61,029	$	39,841	$	21,188
NAREIT FFO	206,036		219,434		(13,398		)
FFO as adjusted	212,025		227,352		(15,327		)
FAD	191,471		201,736		(10,265		)

Net income applicable to common shares (“EPS”) increased primarily as a result of the following:

• a one-time loss on consolidation of seven care homes in the U.K. during the first quarter of 2018;

• a reduction in interest expense as a result of debt repayments during 2018 and a lower average balance under our revolving credit facility;

• decreased depreciation and amortization expense as a result of dispositions of real estate throughout 2018 and 2019 partially offset by: (i) assets acquired during 2018 and 2019 and (ii) development and redevelopment projects placed into service during 2018;

• increased NOI from: (i) 2018 and 2019 acquisitions, (ii) development and redevelopment projects placed in service during 2018, and (iii) new leasing activity during 2018 and 2019; and

• a reduction in severance and related charges.

The increase in EPS was partially offset by:

• a reduction in net gain on sales of real estate during the first quarter of 2019 compared to the first quarter of 2018;

• a reduction in NOI in our SHOP segment, primarily as a result of occupancy declines and higher labor costs;

• impairment charges related to two MOBs during the first quarter of 2019; and

• a reduction in income as a result of: (i) asset sales during 2018 and 2019 and (ii) selling interests into the U.K. JV and MSREI JV during 2018 (see Note 3 to the Consolidated Financial Statements).

NAREIT FFO decreased primarily as a result of the aforementioned events impacting EPS, except for the following, which are excluded from NAREIT FFO:

• depreciation and amortization expense;

• impairments of MOBs;

• gain on sales of real estate, including related tax impacts; and

• loss on consolidation of real estate.

FFO as adjusted decreased primarily as a result of the aforementioned events impacting NAREIT FFO, except for the following, which is excluded from FFO as adjusted:

• severance and related charges.

FAD decreased primarily as a result of the aforementioned events impacting FFO as adjusted, except for the impact of straight-line rents, which is excluded from FAD.

Segment Analysis 

The tables below provide selected operating information for our SPP and total property portfolio for each of our business segments. Our SPP for the three months ended March 31, 2019 consists of 522 properties representing properties acquired or placed in service and stabilized on or prior to January 1, 2018 and that remained in operation under a consistent reporting structure through March 31, 2019. Our total property portfolio consists of 635 and 749 properties at March 31, 2019 and 2018, respectively.

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Senior Housing Triple-Net

The following table summarizes results at and for the three months ended March 31, 2019 and 2018 (dollars in thousands, except per unit data):

	SPP									Total Portfolio(1)
	Three Months Ended March 31,									Three Months Ended March 31,
	2019			2018			Change			2019			2018			Change
Real estate revenues(2)	$	56,049		$	55,560		$	489		$	58,892		$	74,289		$	(15,397	)
Operating expenses	(88		)	(92		)	4			(993		)	(1,045		)	52
NOI	55,961			55,468			493			57,899			73,244			(15,345		)
Adjustments to NOI	(1,839		)	(2,633		)	794			564			(1,865		)	2,429
Adjusted NOI	$	54,122		$	52,835		$	1,287		58,463			71,379			(12,916		)
Non-SPP adjusted NOI										(4,341		)	(18,544		)	14,203
SPP adjusted NOI										$	54,122		$	52,835		$	1,287
Adjusted NOI % change							2.4		%
Property count(3)	126			126						126			181
Average capacity (units)(4)	12,940			12,943						14,642			18,331
Average annual rent per unit	$	16,757		$	16,357					$	16,243		$	15,803

_______________________________________

(1) Total Portfolio includes results of operations from disposed properties and properties that transitioned segments through the disposition or transition date.

(2) Represents rental and related revenues and income from DFLs.

(3) From our 2018 presentation of SPP, we removed 13 senior housing triple-net properties that were sold and 40 senior housing triple-net properties that were transitioned to SHOP.

(4) Represents average capacity as reported by the respective tenants or operators for the three-month period.

SPP NOI and Adjusted NOI increased primarily as a result of annual rent escalations. 

Total Portfolio NOI and Adjusted NOI decreased primarily as a result of the following Non-SPP impacts:

• the transfer of 22 and 18 senior housing triple-net facilities to our SHOP segment during 2018 and 2019, respectively, and

• senior housing triple-net facilities sold during 2018 and 2019.

The decrease in Total Portfolio NOI and Adjusted NOI is partially offset by the aforementioned increases to SPP.

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Senior Housing Operating Portfolio

The following table summarizes results at and for the three months ended March 31, 2019 and 2018 (dollars in thousands, except per unit data):

	SPP									Total Portfolio(1)
	Three Months Ended March 31,									Three Months Ended March 31,
	2019			2018			Change			2019			2018			Change
Resident fees and services	$	70,165		$	70,838		$	(673	)	$	126,181		$	144,670		$	(18,489	)
Operating expenses	(48,690		)	(47,524		)	(1,166		)	(96,948		)	(101,746		)	4,798
NOI	21,475			23,314			(1,839		)	29,233			42,924			(13,691		)
Adjustments to NOI	169			123			46			1,152			(1,607		)	2,759
Adjusted NOI	$	21,644		$	23,437		$	(1,793	)	30,385			41,317			(10,932		)
Non-SPP adjusted NOI										(8,741		)	(17,880		)	9,139
SPP adjusted NOI										$	21,644		$	23,437		$	(1,793	)
Adjusted NOI % change							(7.7		)%
Property count(2)	50			50						102			100
Average capacity (units)(3)	6,405			6,404						11,271			13,597
Average annual rent per unit	$	44,056		$	43,840					$	45,123		$	41,867

_______________________________________

(1) Total Portfolio includes results of operations from disposed properties and properties that transitioned segments through the disposition or transition date.

(2) From our 2018 presentation of SPP, we removed 13 SHOP properties that were sold and 10 SHOP properties that were placed in redevelopment.

(3) Represents average capacity as reported by the respective tenants or operators for the three-month period.

SPP NOI and Adjusted NOI decreased primarily as a result of the following:

• occupancy declines and higher labor costs; partially offset by

• increased rates for resident fees.

Total Portfolio NOI and Adjusted NOI decreased primarily as a result of the aforementioned impacts to SPP and the following Non-SPP impacts:

• decreased NOI from assets sold in 2018 and 2019; partially offset by

• increased NOI from the transfer of 22 and 18 senior housing triple-net assets to our SHOP segment during 2018 and 2019, respectively.

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Life Science

The following table summarizes results at and for the three months ended March 31, 2019 and 2018 (dollars and square feet in thousands, except per square foot data):

	SPP									Total Portfolio
	Three Months Ended March 31,									Three Months Ended March 31,
	2019			2018			Change			2019			2018			Change
Rental and related revenues	$	73,340		$	69,072		$	4,268		$	94,473		$	99,622		$	(5,149	)
Operating expenses	(16,465		)	(15,345		)	(1,120		)	(21,992		)	(21,809		)	(183		)
NOI	56,875			53,727			3,148			72,481			77,813			(5,332		)
Adjustments to NOI	(446		)	(765		)	319			(2,478		)	(3,751		)	1,273
Adjusted NOI	$	56,429		$	52,962		$	3,467		70,003			74,062			(4,059		)
Non-SPP adjusted NOI										(13,574		)	(21,100		)	7,526
SPP adjusted NOI										$	56,429		$	52,962		$	3,467
Adjusted NOI % change							6.5		%
Property count(1)	97			97						125			131
Average occupancy	96.1		%	93.9		%				96.6		%	93.7		%
Average occupied square feet	5,645			5,515						6,655			7,289
Average annual total revenues per occupied square foot	$	52		$	50					$	55		$	53
Average annual base rent per occupied square foot(2)	$	42		$	40					$	44		$	43

_______________________________________

(1) From our 2018 presentation of SPP, we removed 12 life science facilities that were sold and three life science facilities that were placed in redevelopment.

(2) 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).

SPP NOI and Adjusted NOI increased primarily as a result of the following:

• increased occupancy and new leasing activity; and

• specific to adjusted NOI, annual rent escalations.

Total Portfolio NOI and Adjusted NOI decreased primarily as a result of the aforementioned increases to SPP and the following Non-SPP impacts:

• decreased NOI from: (i) facilities sales in 2018 and (ii) the placement of facilities into redevelopment in 2018 and 2019; partially offset by

• increased NOI from: (i) increased occupancy in developments and redevelopments placed into service in 2018 and 2019, and (ii) acquisitions in 2018 and 2019.

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Medical Office

The following table summarizes results at and for the three months ended March 31, 2019 and 2018 (dollars and square feet in thousands, except per square foot data):

	SPP									Total Portfolio
	Three Months Ended March 31,									Three Months Ended March 31,
	2019			2018			Change			2019			2018			Change
Rental and related revenues	$	121,976		$	118,557		$	3,419		$	142,195		$	133,220		$	8,975
Operating expenses	(40,919		)	(40,288		)	(631		)	(48,987		)	(47,878		)	(1,109		)
NOI	81,057			78,269			2,788			93,208			85,342			7,866
Adjustments to NOI	(1,258		)	(1,703		)	445			(1,771		)	(1,932		)	161
Adjusted NOI	$	79,799		$	76,566		$	3,233		91,437			83,410			8,027
Non-SPP adjusted NOI										(11,638		)	(6,844		)	(4,794		)
SPP adjusted NOI										$	79,799		$	76,566		$	3,233
Adjusted NOI % change							4.2		%
Property count(1)	236			236						269			256
Average occupancy	92.5		%	93.1		%				92.1		%	92.5		%
Average occupied square feet	16,777			16,852						19,104			18,343
Average annual total revenues per occupied square foot	$	29		$	28					$	29		$	28
Average annual base rent per occupied square foot(2)	$	24		$	23					$	25		$	24

_______________________________________

(1) From our 2018 presentation of SPP, we removed four MOBs that were sold and two MOBs that were placed into redevelopment.

(2) 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).

SPP NOI and Adjusted NOI increased primarily as a result of mark-to-market lease renewals. Additionally, SPP adjusted NOI increased as a result of annual rent escalations.

Total Portfolio NOI and Adjusted NOI increased primarily as a result of the aforementioned increases to SPP and the following Non-SPP impacts:

• increased NOI from 2018 acquisitions; and

• increased occupancy in former redevelopment and development properties that have been placed into service; partially offset by

• decreased NOI from MOB sales during 2018.

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Other Income and Expense Items

The following table summarizes the results of our other income and expense items for the three months ended March 31, 2019 and 2018 (in thousands):

	Three months ended March 31,
	2019			2018			Change
Interest income	$	1,713		$	6,365		$	(4,652	)
Interest expense	49,327			75,102			(25,775		)
Depreciation and amortization	131,951			143,250			(11,299		)
General and administrative	21,355			29,175			(7,820		)
Transaction costs	4,518			2,195			2,323
Impairments (recoveries), net	8,858			—			8,858
Gain (loss) on sales of real estate, net	8,044			20,815			(12,771		)
Other income (expense), net	3,133			(40,407		)	43,540
Income tax benefit (expense)	3,458			5,336			(1,878		)
Equity income (loss) from unconsolidated joint ventures	(863		)	570			(1,433		)
Noncontrolling interests’ share in earnings	(3,520		)	(3,005		)	(515		)

Interest income

Interest income decreased for the three months ended March 31, 2019 primarily as a result of: (i) the conversion of the U.K. Bridge Loan into real estate during the first quarter of 2018 and (ii) the paydown of a participating development loan during the first quarter of 2018.

Interest expense

Interest expense decreased for the three months ended March 31, 2019 as a result of senior unsecured notes, term loan, and mortgage debt repayments during 2018 and a lower average balance under our revolving credit facility.

Depreciation and amortization expense

Depreciation and amortization expense decreased for the three months ended March 31, 2019 primarily as a result of dispositions of real estate throughout 2018 and 2019 (including selling interests into the U.K. JV in 2018), partially offset by: (i) assets acquired during 2018 and 2019 (primarily in our life science and medical office segments) and (ii) development and redevelopment projects placed into service during 2018 (primarily in our life science and medical office segments).

General and administrative expenses

General and administrative expenses decreased for the three months ended March 31, 2019 primarily as a result of a reduction in severance and related charges (the three months ended March 31, 2018 included charges related to the departure of our former Executive Chairman in March 2018).

Transaction costs

Transaction costs increased for the three months ended March 31, 2019 primarily as a result of costs associated with transitioning senior housing triple-net assets to our SHOP segment.

Impairments (recoveries), net

We recognized impairments on two MOBs identified as candidates for potential future sale during the three months ended March 31, 2019. There were no impairments recognized in the three months ended March 31, 2018.

Gain (loss) on sales of real estate, net

During the three months ended March 31, 2019, we sold: (i) nine SHOP assets for $68 million, (ii) two senior housing triple-net assets for $26 million, and (iii) one undeveloped life science land parcel for $35 million, resulting in total net gain on sales of $8 million. During the three months ended March 31, 2018, we sold two SHOP facilities, resulting in total net gain on sales of $21 million.

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Other income (expense), net

Other income (expense), net, increased for the three months ended March 31, 2019 primarily as a result of a loss on consolidation of seven U.K. care homes in March 2018 (see Note 14 to the Consolidated Financial Statements for additional information).

Liquidity and Capital Resources

We anticipate that our cash flow from operations, available cash balances and cash from our various financing activities will be adequate for at least the next 12 months for purposes of: (i) funding recurring operating expenses; (ii) meeting debt service requirements; and (iii) satisfying our distributions to our stockholders and non-controlling interest members. During the three months ended March 31, 2019, distributions to shareholders and noncontrolling interest holders exceeded cash flows from operations by approximately $24 million. Distributions were made using a combination of cash flows from operations, funds available under revolving line of credit, proceeds from the sale of properties, and other sources of cash available to us. 

Our principal investing needs for the next 12 months are to:

• fund capital expenditures, including tenant improvements and leasing costs; and

• fund future acquisition, transactional and development activities.

We anticipate satisfying these future investing needs using one or more of the following:

• cash flow from operations;

• sale or exchange of ownership interests in properties;

• draws on our credit facilities;

• issuance of additional debt, including unsecured notes and mortgage debt; and/or

• issuance of common or preferred stock.

Access to capital markets impacts our cost of capital and ability to refinance maturing indebtedness, as well as our ability to fund future acquisitions and development through the issuance of additional securities or secured debt. Credit ratings impact our ability to access capital and directly impact our cost of capital as well. For example, our revolving line of credit facility accrues interest at a rate per annum equal to LIBOR plus a margin that depends upon our credit ratings. We also pay a facility fee on the entire revolving commitment that depends upon our credit ratings. At April 30, 2019, we had senior unsecured credit ratings of Baa1 from Moody’s, BBB+ from S&P Global and BBB from Fitch.

Cash Flow Summary

The following summary discussion of our cash flows is based on the consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

The following table sets forth changes in cash flows (in thousands):

	Three Months Ended March 31,
	2019			2018			Change
Net cash provided by (used in) operating activities	$	158,582		$	196,164		$	(37,582	)
Net cash provided by (used in) investing activities	(160,277		)	10,728			(171,005		)
Net cash provided by (used in) financing activities	8,521			(171,238		)	179,759

Operating Cash Flows

The decrease in operating cash flow is primarily the result of a reduction in income related to (i) dispositions during 2018 and 2019 and (ii) occupancy declines and higher labor costs within our SHOP segment, as well as the timing of payments to satisfy accounts payable and accrued liabilities. The decrease in operating cash flow is partially offset by: (i) 2018 and 2019 acquisitions, (ii) annual rent increases, (iii) developments and redevelopments placed in service during 2018 and 2019, and (iv) decreased interest paid as a result of debt repayments during 2018. Our cash flow from operations is dependent upon the occupancy levels of our buildings, rental rates on leases, our tenants’ performance on their lease obligations, the level of operating expenses and other factors.

46

Investing Cash Flows

The following are significant investing activities for the three months ended March 31, 2019:

• made investments of $289 million primarily related to the acquisition, development, and redevelopment of real estate; and

• received net proceeds of $129 million primarily from sales of real estate assets.

The following are significant investing activities for the three months ended March 31, 2018:

• received net proceeds of $163 million primarily from the sale of our Tandem Mezzanine Loan and sales of real estate assets; and

• made investments of $159 million primarily for the development of real estate.

Financing Cash Flows

The following are significant financing activities for the three months ended March 31, 2019:

• made net borrowings of $193 million under our bank line of credit, senior unsecured notes and mortgage debt; and

• paid cash dividends on common stock of $177 million.

The following are significant financing activities for the three months ended March 31, 2018:

• made net borrowings of $70 million under our bank line of credit;

• paid $63 million to purchase Brookdale’s noncontrolling interest in RIDEA I; and

• paid cash dividends on common stock of $174 million.

Debt

See Note 8 to the Consolidated Financial Statements for additional information about our outstanding debt.

Approximately 95% and 83% of our consolidated debt, inclusive of $43 million and $43 million of variable rate debt swapped to fixed through interest rate swaps, was fixed rate debt as of March 31, 2019 and 2018, respectively. At March 31, 2019, our fixed rate debt and variable rate debt had weighted average interest rates of 4.04% and 3.19%, respectively. At March 31, 2018, our fixed rate debt and variable rate debt had weighted average interest rates of 4.20% and 2.78%, respectively. For a more detailed discussion of our interest rate risk, see “Quantitative and Qualitative Disclosures About Market Risk” in Item 3 below.

Equity

At March 31, 2019, we had 478 million shares of common stock outstanding, equity totaled $6.4 billion, and our equity securities had a market value of $15.2 billion.

At March 31, 2019, non-managing members held an aggregate of 4 million units in five limited liability companies (“DownREITs”) for which we are the managing member. The DownREIT units are exchangeable for an amount of cash approximating the then-current market value of shares of our common stock or, at our option, shares of our common stock (subject to certain adjustments, such as stock splits and reclassifications). At March 31, 2019, the DownREIT units were convertible into 6 million shares of our common stock.

At-The-Market Program

In February 2019, we terminated our 2018 ATM Program and concurrently established our 2019 ATM Program. In addition to the issuance and sale of shares of our common stock, we may also enter into one or more forward sales agreements with the sales agents for the sale of our shares of common stock under our 2019 ATM Program.

During the three months ended March 31, 2019, we utilized the forward provisions under the 2019 ATM Program to allow for the sale of up to an aggregate of 3.6 million shares of our common stock at an initial weighted average net price of $31.19 per share, after commissions. Each forward sale has a one year term, during which time we must settle the forward sale by delivery of physical shares of common stock to the forward seller or, at our election, in cash or net shares. The forward sale price that we expect to receive upon settlement will be the initial forward price established upon the effective date, subject to adjustments for: (i) accrued interest, (ii) the forward purchasers’ stock borrowing costs, and (iii) certain fixed price reductions during the term of the agreement. At March 31, 2019, no shares had been issued to settle any of the forward sales, all of which remain outstanding.

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At March 31, 2019, approximately $888 million of our common stock remained available for sale under the 2019 ATM Program. Actual future sales will depend upon a variety of factors, including but not limited to market conditions, the trading price of our common stock and our capital needs. We have no obligation to sell any of these remaining shares under our at-the-market program.

Subsequent to March 31, 2019, we utilized the forward provisions under the 2019 ATM Program to allow for the sale of up to an additional 1.5 million shares of our common stock at an initial weighted average net price of $30.63 per share, after commissions.

See Note 10 to the Consolidated Financial Statements for additional information about our 2019 ATM Program.

In December 2018, we entered into a forward sales agreement to sell up to an aggregate of 15.25 million shares of our common stock (including shares issued through the exercise of underwriters’ options) at an initial net price of $28.60 per share, after underwriting discounts and commissions. The agreement has a one year term and expires on December 13, 2019 during which time we may settle the forward sales agreement by delivery of physical shares of common stock to the forward seller or, at the our election, by settling in cash or net shares. The forward sale price that we expect to receive upon settlement of the agreement will be the initial net price of $28.60, subject to adjustments for: (i) accrued interest, (ii) the forward purchasers’ stock borrowing costs, and (iii) certain fixed price reductions during the term of the agreement. At March 31, 2019, no shares have been issued under the forward sales agreement, which remains outstanding.

Shelf Registration

We filed a prospectus with the SEC as part of a registration statement on Form S-3, using an automatic shelf registration process. Our current shelf registration statement expires in May 2021, at which time we expect to file a new shelf registration statement. Under the “shelf” process, we may sell any combination of the securities described in the prospectus through one or more offerings. The securities described in the prospectus include common stock, preferred stock, depositary shares, debt securities and warrants.

Off-Balance Sheet Arrangements

We own interests in certain unconsolidated joint ventures as described in Note 6 to the Consolidated Financial Statements. Except in limited circumstances, our risk of loss is limited to our investment in the joint ventures and any outstanding loans receivable. In addition, we have certain properties which serve as collateral for debt that is owed by a previous owner of certain of our facilities. Our risk of loss for these certain properties is limited to the outstanding debt balance plus penalties, if any. We have no other material off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources except for commitments and operating leases included in our Annual Report on Form 10-K for the year ended December 31, 2018 in “Contractual Obligations” under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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Non-GAAP Financial Measures Reconciliations

The following is a reconciliation from net income (loss) applicable to common shares, the most directly comparable financial measure calculated and presented in accordance with GAAP, to NAREIT FFO, FFO as adjusted and FAD (in thousands, except per share data):

	Three Months Ended March 31,
	2019			2018
Net income (loss) applicable to common shares	$	61,029		$	39,841
Real estate related depreciation and amortization	131,951			143,250
Real estate related depreciation and amortization on unconsolidated joint ventures	15,077			17,388
Real estate related depreciation and amortization on noncontrolling interests and other	(4,920		)	(2,543		)
Other real estate-related depreciation and amortization	2,085			1,296
Loss (gain) on sales of real estate, net	(8,044		)	(20,815		)
Loss (gain) upon consolidation of real estate, net(1)	—			41,017
Impairments (recoveries) of depreciable real estate, net	8,858			—
NAREIT FFO applicable to common shares	206,036			219,434
Distributions on dilutive convertible units and other	1,795			—
Diluted NAREIT FFO applicable to common shares	$	207,831		$	219,434
Weighted average shares outstanding - diluted NAREIT FFO	483,671			469,695
Impact of adjustments to NAREIT FFO:
Transaction-related items	$	5,889		$	1,942
Other impairments (recoveries) and losses (gains), net(2)	—			(3,298		)
Severance and related charges(3)	—			8,738
Litigation costs (recoveries)	128			406
Foreign currency remeasurement losses (gains)	(28		)	130
Total adjustments	$	5,989		$	7,918
FFO as adjusted applicable to common shares	$	212,025		$	227,352
Distributions on dilutive convertible units and other	1,780			1,711
Diluted FFO as adjusted applicable to common shares	$	213,805		$	229,063
Weighted average shares outstanding - diluted FFO as adjusted	483,671			474,363

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	Three Months Ended March 31,
	2019			2018
FFO as adjusted applicable to common shares	$	212,025		$	227,352
Amortization of deferred compensation(4)	3,590			3,420
Amortization of deferred financing costs	2,699			3,336
Straight-line rents	(6,246		)	(10,686		)
FAD capital expenditures	(19,220		)	(19,118		)
Lease restructure payments	288			299
CCRC entrance fees(5)	3,496			3,027
Deferred income taxes	(3,732		)	(2,140		)
Other FAD adjustments(6)	(1,429		)	(3,754		)
FAD applicable to common shares	191,471			201,736
Distributions on dilutive convertible units and other	1,794			—
Diluted FAD applicable to common shares	$	193,265		$	201,736
Weighted average shares outstanding - diluted FAD	483,671			469,695

	Three Months Ended March 31,
	2019			2018
Diluted earnings per common share	$	0.13		$	0.08
Depreciation and amortization	0.30			0.34
Loss (gain) on sales of real estate, net	(0.02		)	(0.04		)
Loss (gain) upon consolidation of real estate, net(1)	—			0.09
Impairments (recoveries) of depreciable real estate, net	0.02			—
Diluted NAREIT FFO per common share	$	0.43		$	0.47
Transaction-related items	0.01			—
Other impairments (recoveries) and losses (gains), net(2)	—			(0.01		)
Severance and related charges(3)	—			0.02
Diluted FFO as adjusted per common share	$	0.44		$	0.48

_______________________________________

(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, 2018, represents the impairment recovery of our Tandem Health Care mezzanine loan.

(3) For the three months ended March 31, 2018, primarily relates to the departure of our former Executive Chairman, which consisted of $6 million of cash severance and $3 million of equity award vestings.

(4) Excludes amounts related to the acceleration of deferred compensation for restricted stock units that vested upon the departure of certain former employees, which have already been excluded from FFO as adjusted in severance and related charges.

(5) 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.

(6) Primarily includes our share of FAD capital expenditures from unconsolidated joint ventures, partially offset by noncontrolling interests' share of FAD capital expenditures from consolidated joint ventures.

For a reconciliation of NOI and Adjusted NOI to net income (loss), refer to Note 11 to the Consolidated Financial Statements. For a reconciliation of SPP NOI and Adjusted NOI to total portfolio NOI and Adjusted NOI by segment, refer to the analysis of each segment in “Results of Operations” above.

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Critical Accounting Policies and Recent Accounting Pronouncements

The preparation of financial statements in conformity with U.S. GAAP requires our management to use judgment in the application of accounting policies, including making estimates and assumptions. We base estimates on the best information available to us at the time, our experience and on various other assumptions believed to be reasonable under the circumstances. These estimates affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of our consolidated financial statements. From time to time, we re-evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2018 in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2 to the Consolidated Financial Statements. There have been no significant changes to our critical accounting policies during 2019 other than those resulting from new accounting standards (see Note 2 to the Consolidated Financial Statements).

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market risks, including the potential loss arising from adverse changes in interest rates and foreign currency exchange rates, specifically the British pound sterling (“GBP”). We use derivative financial instruments in the normal course of business to mitigate interest rate and foreign currency risk. We do not use derivative financial instruments for speculative or trading purposes. Derivatives are recorded on the consolidated balance sheets at fair value (see Note 17 to the Consolidated Financial Statements).

To illustrate the effect of movements in the interest rate markets, we performed a market sensitivity analysis on our hedging instruments. We applied various basis point spreads to the underlying interest rate curves of the derivative portfolio in order to determine the change in fair value. Assuming a one percentage point change in the underlying interest rate curve, the estimated change in fair value of each of the underlying derivative instruments would not be material.

Interest Rate Risk.  At March 31, 2019, our exposure to interest rate risk is primarily on our variable rate debt. At March 31, 2019, $43 million of our variable-rate debt was hedged by interest rate swap transactions. The interest rate swaps are designated as cash flow hedges, with the objective of managing the exposure to interest rate risk by converting the interest rates on our variable-rate debt to fixed interest rates.

Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed rate debt and assets until their maturity or earlier prepayment and refinancing. If interest rates have risen at the time we seek to refinance our fixed rate debt, whether at maturity or otherwise, our future earnings and cash flows could be adversely affected by additional borrowing costs. Conversely, lower interest rates at the time of refinancing may reduce our overall borrowing costs. However, interest rate changes will affect the fair value of our fixed rate instruments. A one percentage point increase or decrease in interest rates would change the fair value of our fixed rate debt by approximately $252 million and $269 million, respectively, and would not materially impact earnings or cash flows. Conversely, changes in interest rates on variable rate debt and investments would change our future earnings and cash flows, but not materially impact the fair value of those instruments. Assuming a one percentage point increase in the interest rate related to the variable-rate debt and variable-rate investments, and assuming no other changes in the outstanding balance at March 31, 2019, our annual interest expense and interest income would increase by approximately $3 million and $1 million, respectively.

Foreign Currency Risk.  At March 31, 2019, our exposure to foreign currencies primarily relates to U.K. investments in leased real estate and related GBP denominated cash flows. Our foreign currency exposure is partially mitigated through the use of GBP-denominated borrowings. Based solely on our operating results for the three months ended March 31, 2019, including the impact of existing hedging arrangements, if the value of the GBP relative to the U.S. dollar were to increase or decrease by 10% compared to the average exchange rate during the three months ended March 31, 2019, the increase or decrease to our cash flows would not be material.

Market Risk.  We have investments in marketable debt securities classified as held-to-maturity because we have the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are recorded at amortized cost and adjusted for the amortization of premiums and discounts through maturity. We consider a variety of factors in evaluating an other-than-temporary decline in value, such as: the length of time and the extent to which the market value has been less than our current adjusted carrying value; the issuer’s financial condition, capital strength and near-term prospects; any recent events specific to that issuer and economic conditions of its industry; and our investment horizon in relationship to an anticipated near-term recovery in the market value, if any. At March 31, 2019, both the fair value and carrying value of marketable debt securities was $19 million.

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Item 4.  Controls and Procedures

Disclosure Controls and Procedures.  We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2019. Based upon that evaluation, our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2019.

Changes in Internal Control Over Financial Reporting.  There were no changes in our internal control over financial reporting (as such term as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See the “Legal Proceedings” section of Note 9 to the Consolidated Financial Statements for information regarding legal proceedings, which information is incorporated by reference in this Item 1.

Item 1A.  Risk Factors

There are no material changes to the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a)

None.

(b)

None.

(c)

The following table sets forth information with respect to purchases of our common stock made by us or on our behalf during the three months ended March 31, 2019.

Period Covered	Total Number Of Shares Purchased(1)	Average Price Paid Per Share		Total Number Of Shares (Or Units) Purchased As Part Of Publicly Announced Plans Or Programs	Maximum Number (Or Approximate Dollar Value) Of Shares (Or Units) That May Yet Be Purchased Under The Plans Or Programs
January 1-31, 2019	44	$	29.88	—	—
February 1-28, 2019	94,787	30.79		—	—
March 1-31, 2019	—	—		—	—
Total	94,831	$	30.79	—	—

_______________________________________

(1) Represents shares of our common stock withheld under our equity incentive plans to offset tax withholding obligations that occur upon vesting of restricted shares. The value of the shares withheld is based on the closing price of our common stock on the last trading day prior to the date the relevant transaction occurred.

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Item 6. Exhibits

3.1	Articles of Restatement of HCP, dated June 1, 2012, as supplemented by the Articles Supplementary, dated July 31, 2017 (incorporated herein by reference to Exhibit 3.1 to HCP’s Quarterly Report on Form 10-Q filed November 2, 2017).
3.2	Fifth Amended and Restated Bylaws of HCP, as amended through July 27, 2017 (incorporated herein by reference to Exhibit 3.2 to HCP’s Quarterly Report on Form 10-Q filed November 2, 2017).
10.1	Form of 2014 Performance Incentive Plan NEO 3-Year LTIP RSU Agreement (adopted 2019).*†
10.2	Form of 2014 Performance Incentive Plan NEO Retentive LTIP RSU Agreement (adopted 2019).*†
31.1	Certification by Thomas M. Herzog, HCP’s Principal Executive Officer, Pursuant to Securities Exchange Act Rule 13a-14(a).*
31.2	Certification by Peter A. Scott, HCP’s Principal Financial Officer, Pursuant to Securities Exchange Act Rule 13a-14(a).*
32.1	Certification by Thomas M. Herzog, HCP’s Principal Executive Officer, Pursuant to Securities Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350.**
32.2	Certification by Peter A. Scott, HCP’s Principal Financial Officer, Pursuant to Securities Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350.**
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.*
101.SCH	XBRL Taxonomy Extension Schema Document.*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.*
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document.*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.*

_______________________________________

*       Filed herewith.

**     Furnished herewith. 

† Management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 2, 2019	HCP, Inc.
	(Registrant)
	/s/ THOMAS M. HERZOG
	Thomas M. Herzog
	President and Chief Executive Officer
	(Principal Executive Officer)
	/s/ PETER A. SCOTT
	Peter A. Scott
	Executive Vice President and
	Chief Financial Officer
	(Principal Financial Officer)
	/s/ SHAWN G. JOHNSTON
	Shawn G. Johnston
	Executive Vice President and
	Chief Accounting Officer
	(Principal Accounting Officer)

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EX-10.1

EXHIBIT 10.1

HCP, INC.

3-YEAR LTIP RSU AGREEMENT

THIS 3-YEAR LTIP RSU AGREEMENT (this “Agreement”) is effective as of [_____], 20[__] (the “Award Date”) by and between HCP, Inc., a Maryland corporation (the “Corporation”), and [_____] (the “Participant”).

W I T N E S S E T H

WHEREAS, the Compensation Committee of the Board of Directors of the Corporation (the “Committee”) has determined that the Participant is eligible to receive an award of restricted stock units, as described below; and

WHEREAS, pursuant to the HCP, Inc. 2014 Performance Incentive Plan, as amended and/or restated from time to time (the “Plan”), the Corporation hereby grants to the Participant, effective as of the date hereof, an award of restricted stock units under the Plan (the “Award”), upon the terms and conditions set forth herein and in the Plan.

NOW THEREFORE, in consideration of services rendered and to be rendered by the Participant, and the mutual promises made herein and the mutual benefits to be derived therefrom, the parties agree as follows:

1.Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Plan.

2.Grant. Subject to the terms of this Agreement, the Corporation hereby grants to the Participant a target award (the “Award”) of [_____] stock units (the “Performance Units”) with respect to the performance period beginning on January 1, [_____] and ending on December 31, [_____] (the “Performance Period”). As used herein, the term “stock unit” means a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Corporation’s Common Stock solely for purposes of the Plan and this Agreement. The Performance Units shall be used solely as a device for the determination of the payment to eventually be made to the Participant if such Performance Units vest pursuant to Section 3. The Performance Units shall not be treated as property or as a trust fund of any kind. The Committee is the Administrator of the Plan for purposes of the Performance Units. The Award is subject to all of the terms and conditions set forth in this Agreement, and is further subject to all of the terms and conditions of the Plan, as it may be amended from time to time, and any rules adopted by the Committee, as such rules are in effect from time to time.

3.Vesting. Subject to this Section 3 and Section 8, the number of Performance Units ultimately earned and vested under the Award shall be determined in accordance with Exhibit A attached hereto based on whether the Corporation has attained certain pre-established performance goals with respect to the Performance Period. The determination as to whether

1

the Corporation has attained the performance goals set forth in Exhibit A with respect to the Performance Period shall be made by the Committee (the “Committee Determination”). The Committee Determination shall be made no later than March 15 following the end of the Performance Period (or such earlier time as provided in Section 9(b)). The Performance Units shall not be deemed vested pursuant to any other provision of this Agreement earlier than the date that the Committee makes such determination.

4.Continuance of Employment. Except as otherwise expressly provided in Section 8, the vesting schedule requires continued employment through the date of the Committee Determination (the “Vesting Period”), as provided in Section 3, as a condition to the vesting of the Award and the rights and benefits under this Agreement. Employment for only a portion of the Vesting Period, even if a substantial portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment as provided in Section 8 below or under the Plan.

Nothing contained in this Agreement or the Plan constitutes an employment or service commitment by the Corporation or any of its Subsidiaries, affects the Participant’s status as an employee at will who is subject to termination without Cause (as defined herein), confers upon the Participant any right to remain employed by or in service to the Corporation or any of its Subsidiaries, interferes in any way with the right of the Corporation or any of its Subsidiaries at any time to terminate such employment or services, or affects the right of the Corporation or any of its Subsidiaries to increase or decrease the Participant’s other compensation or benefits. Nothing in this paragraph, however, is intended to adversely affect any independent contractual right of the Participant without his or her consent thereto.

5.Dividend and Voting Rights.

(a)Limitations on Rights Associated with Units. The Participant shall have no rights as a stockholder of the Corporation, no dividend rights (except as expressly provided in Section 5(b) with respect to Dividend Equivalent Rights) and no voting rights with respect to the Performance Units and any shares of Common Stock underlying or issuable in respect of such Performance Units until such shares of Common Stock are actually issued to and held of record by the Participant.

(b)Dividend Equivalent Rights. Subject to vesting as provided below, the Participant will have the right to receive, with respect to each Performance Unit, an amount equal to the amount of any ordinary cash dividend paid by the Corporation on a share of Common Stock as to which the related dividend record date occurs on or after the first day of the Performance Period and before the date on which the Performance Unit is settled pursuant to Section 7 (a “Dividend Equivalent Right”). Any Dividend Equivalent Right credited with respect to an outstanding Performance Unit that does not vest pursuant to Section 3 shall immediately terminate upon the forfeiture of such Performance Unit, and the Participant shall not be entitled to any payment with respect thereto. In the case of Dividend Equivalent Rights credited with respect to an outstanding Performance Unit that vests pursuant to Section 3, the Dividend Equivalent Rights will be paid to the Participant in cash (without interest) as soon as practicable

2

after the Committee Determination and in all events not later than March 15 of the year that follows the end of the Performance Period. Dividend Equivalent Rights will not be paid to the Participant with respect to any Performance Units that are forfeited or terminated pursuant to Section 3 or 8.

6.Restrictions on Transfer. Neither the Award, nor any interest therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a) transfers to the Corporation, or (b) transfers by will or the laws of descent and distribution.

7.Timing and Manner of Payment; Minimum Holding Period Requirement.

(a)Timing and Manner of Payment. As soon as administratively practical following the Committee Determination (and in all events no later than March 15 of the year that follows the end of the Performance Period or such time as provided in Section 9(b)), the Corporation shall deliver to the Participant a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Corporation in its discretion) equal to the number of Performance Units subject to the Award that vest in accordance with Section 3; provided, however, that in the event that the vesting and payment of the Performance Units is triggered by the Participant’s “separation from service” (within the meaning of Treasury Regulation Section 1.409A-1(h)) and the Participant is a “specified employee” (within the meaning of Treasury Regulation Section 1.409A-1(i)) on the date of such separation from service, the Participant shall not be entitled to any payment of the Performance Units until the earlier of (a) the date which is six months after the Participant’s separation from service with the Corporation for any reason other than death, or (b) the date of the Participant’s death, if and to the extent such delay in payment is required to comply with Section 409A of the Code. The Corporation’s obligation to deliver shares of Common Stock or otherwise make payment with respect to vested Performance Units is subject to the condition precedent that the Participant or other person entitled under the Plan to receive any shares with respect to the vested Performance Units deliver to the Corporation any representations or other documents or assurances that the Administrator may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements. The Participant shall have no further rights with respect to any Performance Units that are paid or that terminate pursuant to this Agreement.

(b)Minimum Holding Period Requirement. As to any shares of Common Stock acquired by the Participant in payment of the Performance Units that vest pursuant to the Award, the Participant agrees that the Participant will not sell, pledge, assign, hypothecate, transfer or otherwise dispose of such shares prior to the date that is one (1) year after the last day of the Performance Period (as the Performance Period may be shortened pursuant to Section 9(b)); provided, however, that the restrictions set forth in this Section 7(b) shall (i) not apply to any shares withheld or reacquired by the Corporation to satisfy tax withholding obligations as contemplated by Section 10, (ii) not apply to any shares sold by the Participant to satisfy any tax

3

liability arising in connection with the payment of the Stock Units (to the extent such tax liability exceeds the tax withholding amounts applicable to such Stock Unit payment), (iii) not apply to any transfer of shares made without consideration (or for only nominal consideration) to a “family member” (as such term is defined in the SEC General Instructions to a Registration Statement on Form S-8) of the Participant solely for purposes of estate or tax planning, and provided the transfer restrictions on such shares continue in effect after any such transfer, and (iv) lapse upon the Participant’s death or Disability or as otherwise provided by the Corporation. The Corporation may provide for any shares of Common Stock acquired under the Award and issued in book-entry form to include notations regarding the restrictions on transfer imposed under this Section 7(b) (or, as to any such shares issued in certificate form, provide for such certificates to bear appropriate legends regarding such transfer restrictions).

8.Termination of Employment or Services. Notwithstanding any provisions to the contrary in any employment agreement, the HCP, Inc. Executive Severance Plan (as it may be amended from time to time, the “Severance Plan”), the HCP, Inc. Executive Change in Control Severance Plan or successor plan (as it may be amended from time to time, the “CIC Severance Plan”), or any other severance plan adopted by the Corporation, the provisions set forth in this Section 8 are applicable in the event of a termination of the Participant’s employment with the Corporation and its Subsidiaries.

(a)Qualifying Termination. If, at any time during the Vesting Period, the Participant ceases to be employed by the Corporation or one of its Subsidiaries (the date of such termination of employment is referred to as the Participant’s “Severance Date”) as a result of (i) the Participant’s death or Disability, or (ii) a termination of employment by the Corporation or one of its Subsidiaries without Cause (as defined herein), then, subject to the release requirement set forth in the following paragraph, the Performance Units will remain outstanding during the remainder of the Vesting Period and will remain subject to Section 3. The Participant will be entitled to the number of Performance Units the Participant would have received in accordance with Section 3, if any, had the Participant remained employed until the end of the Vesting Period.

Any benefit to the Participant pursuant to the preceding paragraph (other than in connection with the Participant’s death) is subject to the condition precedent that (x) the Participant has fully executed a valid and effective release (in the form attached to the Severance Plan or, if such release is executed on or after a Change in Control Event, in the form attached to the CIC Severance Plan, or in either case such other form as the Committee may reasonably require in the circumstances, which other form shall be substantially similar to the form attached to the Severance Plan or the CIC Severance Plan, as the case may be, that would otherwise apply in the circumstances but with such changes as the Committee may determine to be required or reasonably advisable in order to make the release enforceable and otherwise compliant with applicable laws), (y) such executed release is delivered by the Participant to the Corporation so that it is received by the Corporation in the time period specified below, and (z) such release is not revoked by the Participant (pursuant to any revocation rights afforded by applicable law). In order to satisfy the requirements of this paragraph, the Participant’s release referred to in the preceding sentence must be delivered by the Participant to the Corporation so that it is received

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by the Corporation no later than twenty-five (25) calendar days after the Participant’s Severance Date (or such later date as may be required for an enforceable release of the Participant’s claims under the United States Age Discrimination in Employment Act of 1967, as amended (“ADEA”), to the extent the ADEA is applicable in the circumstances, in which case the Participant will be provided with either twenty-one (21) or forty-five (45) days, depending on the circumstances of the termination, to consider the release). In addition, the Corporation may require that the Participant’s release be executed no earlier than the Participant’s Severance Date. If the period during which the Participant is permitted to consider the release in accordance with this paragraph begins in one calendar year and ends in a second calendar year, the payment of any Stock Units that remain eligible to vest pursuant to the preceding paragraph shall not be made earlier than the second calendar year.

(b)Forfeiture of Performance Units upon Certain Terminations of Employment. If, at any time during the Vesting Period, the Participant ceases to be employed by the Corporation or one of its Subsidiaries as a result of (i) a termination of employment by the Corporation or one of its Subsidiaries for Cause, or (ii) a termination of employment by the Participant, excluding any termination contemplated by Section 8(a) (other than a termination contemplated by Section 8(a) but as to which the Participant did not timely satisfy any applicable release requirement pursuant to Section 8(a)) and subject to the next paragraph, all of the Performance Units shall be automatically terminated and cancelled in full, effective as of the Severance Date, and this Agreement shall be null and void and of no further force and effect.

If, however, the Participant ceases to be employed by the Corporation or one of its Subsidiaries and such termination of employment is a result of a retirement or resignation by the Participant (other than (x) any termination contemplated by Section 8(a) and (y) a termination of employment by the Corporation or one of its Subsidiaries for Cause) and, immediately after such termination of employment, the Participant is a member of the Board or provides consulting services to the Corporation or one of its Subsidiaries under a written consulting agreement entered into by and between the Participant and the Corporation or one of its Subsidiaries, then the termination of employment rules of the preceding paragraph shall not apply when the Participant ceases to be employed by the Corporation or one of its Subsidiaries but shall apply if and when, and effective as of the time that, the Participant ceases to be a member of the Board or ceases to provide consulting services to the Corporation or one of its Subsidiaries under such a written consulting agreement. For clarity, the Participant’s obligations under a confidentiality, noncompetition, non-solicitation, cooperation or similar clause or agreement shall not constitute “consulting services” for purposes of the preceding sentence.

(c)Termination of Performance Units. Any Performance Units that are not vested on the date of the Committee Determination (after giving effect to such Committee Determination) shall terminate. If any unvested Performance Units are terminated pursuant to Section 8(b) or this Section 8(c), such Performance Units shall automatically terminate and be cancelled as of the Severance Date or as of the date of the Committee Determination, as the case may be, without payment of any consideration by the Corporation and without any other action

5

by the Participant, or the Participant’s beneficiary or personal representative, as the case may be.

(d)Definitions. As used in this Agreement:

(i)“Cause” shall have the meaning set forth in the Severance Plan.

(ii)“Disability” means a “permanent and total disability” (within the meaning of Section 22(e)(3) of the Code or as otherwise determined by the Administrator).

9.Adjustments upon Specified Events; Change in Control Event.

(a)Adjustments. Upon the occurrence of certain events relating to the Corporation’s stock contemplated by Section 7.1 of the Plan (including, without limitation, an extraordinary cash dividend on such stock), the Administrator shall make adjustments in accordance with such section in the number of Performance Units then outstanding and the number and kind of securities that may be issued in respect of the Award. No such adjustment shall be made with respect to any ordinary cash dividend for which dividend equivalents are paid pursuant to Section 5(b).

(b)Change in Control Event. Upon the occurrence, at any time during the Vesting Period, of a Change in Control Event with respect to the Corporation and notwithstanding any provision of Section 7.2 or 7.3 of the Plan, any employment agreement, the Severance Plan, the CIC Severance Plan (or successor plan) or any other severance plan adopted by the Corporation, the Performance Period for all outstanding Awards will be shortened, if such Performance Period has not already ended, so that the Performance Period will be deemed to have ended on the day of the Change in Control Event and the Committee Determination pursuant to Section 3 shall be made not later than 20 days following the Change in Control Event. The Vesting Period will be deemed to end on the date of the Change in Control Event even though the Committee Determination may not occur until after such date, such that a Participant employed by the Corporation or a Subsidiary on the date of the Change in Control Event shall be fully vested in any Performance Units that vest as a result of the Committee Determination even if the Participant does not remain employed by the Corporation or a Subsidiary through the date of the Committee Determination. A Participant shall become vested in a number of Performance Units, if any, determined in accordance with Section 3 based on such shortened Performance Period. On or as soon as administratively practical following the Change in Control Event (and in all events no later than thirty (30) days following such Change in Control Event), the Corporation shall deliver to the Participant a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Corporation in its discretion) equal to the number of Performance Units that vest in accordance with this Section 9(b).

10.Tax Withholding. Upon vesting of any Performance Units or any distribution of shares of Common Stock in respect of the Performance Units, the Corporation shall reduce the

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number of shares to be delivered by (or otherwise reacquire) the appropriate number of whole shares, valued at their then fair market value, to satisfy any withholding obligations of the Corporation or its Subsidiaries with respect to such distribution of shares at the minimum applicable withholding rates; provided, however, that in the event that the Corporation cannot legally satisfy such withholding obligations by such reduction of shares, or in the event of a cash payment or any other withholding event in respect of the Performance Units, the Corporation (or a Subsidiary) shall be entitled to require a cash payment by or on behalf of the Participant and/or to deduct from other compensation payable to the Participant any sums required by federal, state or local tax law to be withheld with respect to such distribution or payment.

11.Notices. Any notice to be given under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal office to the attention of the Secretary, and to the Participant at the Participant’s last address reflected on the Corporation’s payroll records. Any notice shall be delivered in person or shall be enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government. Any such notice shall be given only when received, but if the Participant is no longer an Eligible Person, shall be deemed to have been duly given five business days after the date mailed in accordance with the foregoing provisions of this Section 11.

12.Plan. The Award and all rights of the Participant under this Agreement are subject to the terms and conditions of the provisions of the Plan, incorporated herein by reference. The Participant agrees to be bound by the terms of the Plan and this Agreement. The Participant acknowledges having read and understanding the Plan, the Prospectus for the Plan and this Agreement. Unless otherwise expressly provided in other sections of this Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not (and shall not be deemed to) create any rights in the Participant unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan after the date hereof.

13.Entire Agreement. This Agreement and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. The Plan and this Agreement may be amended pursuant to Section 8.6 of the Plan. Any such amendment must be in writing and signed by the Corporation. Any such amendment that materially and adversely affects the Participant’s rights under this Agreement requires the consent of the Participant in order to be effective with respect to the Award. The Corporation may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Participant hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof. The Participant acknowledges receipt of a copy of this Agreement, the Plan and the Prospectus for the Plan.

14.Limitation on Participant’s Rights. Participation in the Planconfers norights or interests other than as herein provided. This Agreement creates only a contractual obligation on

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the part of the Corporation as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Participant shall have only the rights of a general unsecured creditor of the Corporation with respect to amounts credited and benefits payable, if any, with respect to the Performance Units, and rights no greater than the right to receive the Common Stock as a general unsecured creditor with respect to the Performance Units, as and when payable hereunder. The Award has been granted to the Participant in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Participant.

15.Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

16.Section Headings. The section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

17.Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Maryland without regard to conflict of law principles thereunder.

18.Construction. It is intended that the terms of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code. This Agreement shall be construed and interpreted consistent with that intent.

19.Clawback Policy. The Performance Units are subject to the terms of the Corporation’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Performance Units or any shares of Common Stock or other cash or property received with respect to the Performance Units (including any value received from a disposition of the shares acquired upon payment of the Performance Units).

* * *

[The remainder of this page is intentionally left blank.]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, effective as of the date first written above.

HCP, Inc.

By:

__________________________________________

Name:

Title:

Participant

__________________________________________

Name:

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EXHIBIT A

Award Subject to Relative TSR Performance. The Award shall be eligible to vest in accordance with this Exhibit A. The Award will be subject to forfeiture and cancellation by the Corporation if the Corporation’s performance during the Performance Period does not meet or exceed the Threshold goal for the Performance Period. Performance at or above the Threshold level will result in the Award becoming vested in the amount set forth below. The vesting for performance between the Threshold and Target levels and Target and High levels, respectively, shall be based on linear interpolation. In no event will the Award vest as to more than 200% of the target number of Performance Units subject to the Award.

Performance	Threshold	Target	High
Relative Three-Year Total Stockholder Return of the Corporation	25th   percentile ranking	50th   percentile ranking	80th   percentile ranking or above
Percentage of Award Vesting	50%	100%	200%

“Total Stockholder Return” or “TSR” means total stockholder return, meaning stock price appreciation from the beginning to the end of the Performance Period, plus dividends and distributions (other than stock dividends as to which an adjustment is made as provided below) made or declared (assuming such dividends or distributions are reinvested in the applicable company’s common stock on the date of distribution, with non-cash dividends or distributions valued at their fair market value at the time of distribution) during the Performance Period. For purposes of computing TSR, the stock price at the beginning of the Performance Period will be the closing price of a share of common stock on the first trading day of the Performance Period, and the stock price at the end of the Performance Period will be the average closing price of a share of common stock over the 10 trading days ending on the last trading day of the Performance Period, adjusted for stock splits, reverse stock splits, and stock dividends. As to a stock which goes ex-dividend during such 10-trading day period, the closing prices as to such stock for the portion of such period preceding the ex-dividend date shall be equitably and proportionately adjusted to exclude the amount of the related dividend as the dividend will be treated as reinvested as provided above.

“Relative Three-Year Total Stockholder Return” shall be based on the Corporation's three-year TSR for the Performance Period compared to the three-year TSRs of the companies that constitute the [_____] Index at the beginning of the Performance Period and that, throughout the Performance Period, remain traded on a national securities exchange, as such term is defined by the SEC, excluding the following:

• The following constituents:

o [_____]; and

A-1

• Any other constituent that is subject during the Performance Period to a merger, sale or spin-off of all or substantially all of its assets, or other business combination that would artificially distort its TSR, provided that if the constituent is the acquirer or survivor in any such merger or other business combination and its stock remains traded on a national securities exchange following such merger or other business combination, the constituent shall not be excluded for these purposes.

In determining Relative Three-Year Total Stockholder Return, in the event that the Corporation’s TSR for the Performance Period is equal to the TSR(s) for the Performance Period of one or more other companies in the comparison group (as provided above), the Corporation’s TSR will be deemed to be greater than the TSR of such other comparison group member(s) for that period.

A-2

EX-10.2

EXHIBIT 10.2

HCP, INC.

RETENTIVE LTIP RSU AGREEMENT

THIS RETENTIVE LTIP RSU AGREEMENT (this “Agreement”) is effective as of [_____], 20[__] (the “Award Date”) by and between HCP, Inc., a Maryland corporation (the “Corporation”), and [_____] (the “Participant”).

W I T N E S S E T H

WHEREAS, the Compensation Committee of the Board of Directors of the Corporation (the “Committee”) has determined that the Participant is eligible to receive an award of restricted stock units, as described below; and

WHEREAS, pursuant to the HCP, Inc. 2014 Performance Incentive Plan, as amended and/or restated from time to time (the “Plan”), the Corporation hereby grants to the Participant, effective as of the date hereof, an award of restricted stock units under the Plan (the “Award”), upon the terms and conditions set forth herein and in the Plan.

NOW THEREFORE, in consideration of services rendered and to be rendered by the Participant, and the mutual promises made herein and the mutual benefits to be derived therefrom, the parties agree as follows:

1.Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Plan.

2.Grant. Subject to the terms of this Agreement, the Corporation hereby grants to the Participant an award (the “Award”) of [_____] stock units (the “Stock Units”). As used herein, the term “stock unit” means a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Corporation’s Common Stock solely for purposes of the Plan and this Agreement. The Stock Units shall be used solely as a device for the determination of the payment to eventually be made to the Participant if such Stock Units vest pursuant to Section 3. The Stock Units shall not be treated as property or as a trust fund of any kind. The Committee is the Administrator of the Plan for purposes of the Stock Units. The Award is subject to all of the terms and conditions set forth in this Agreement, and is further subject to all of the terms and conditions of the Plan, as it may be amended from time to time, and any rules adopted by the Committee, as such rules are in effect from time to time.

3.Vesting. Subject to Section 8, the Award shall vest and become nonforfeitable with respect to one-third of the total number of the Stock Units on each of the first, second and third anniversaries of the Award Date. Notwithstanding the foregoing, no portion of the Award will vest unless the Corporation’s Normalized FFO Per Share, as defined in the Corporation’s [____] Cash Incentive Plan, with respect to the [____] calendar year equals or exceeds $[____].

4.Continuance of Employment. Except as otherwise expressly provided in Section 8, the vesting schedule requires continued employment through each applicable vesting date, as

1

provided in Section 3, as a condition to the vesting of the applicable installment of the Award and the rights and benefits under this Agreement. Employment for only a portion of the vesting period, even if a substantial portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment as provided in Section 8 below or under the Plan.

Nothing contained in this Agreement or the Plan constitutes an employment or service commitment by the Corporation or any of its Subsidiaries, affects the Participant’s status as an employee at will who is subject to termination without Cause (as defined herein), confers upon the Participant any right to remain employed by or in service to the Corporation or any of its Subsidiaries, interferes in any way with the right of the Corporation or any of its Subsidiaries at any time to terminate such employment or services, or affects the right of the Corporation or any of its Subsidiaries to increase or decrease the Participant’s other compensation or benefits. Nothing in this paragraph, however, is intended to adversely affect any independent contractual right of the Participant without his or her consent thereto.

5.Dividend and Voting Rights.

(a)Limitations on Rights Associated with Units. The Participant shall have no rights as a stockholder of the Corporation, no dividend rights (except as expressly provided in Section 5(b) with respect to Dividend Equivalent Rights) and no voting rights, with respect to the Stock Units and any shares of Common Stock underlying or issuable in respect of such Stock Units until such shares of Common Stock are actually issued to and held of record by the Participant.

(b)Dividend Equivalent Rights. As of any date that the Corporation pays an ordinary cash dividend on its Common Stock, the Corporation shall pay the Participant an amount equal to the per share cash dividend paid by the Corporation on its Common Stock on such date multiplied by the number of Stock Units remaining subject to the Award as of the related dividend payment record date. No such payment shall be made with respect to any Stock Units which, as of such record date, have either been paid pursuant to Section 7 or terminated pursuant to Section 8.

6.Restrictions on Transfer. Neither the Award, nor any interest therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a) transfers to the Corporation, or (b) transfers by will or the laws of descent and distribution.

7.Timing and Manner of Payment; Minimum Holding Period Requirement.

(a)Timing and Manner of Payment. As soon as administratively practical following each vesting of the applicable portion of the total Award pursuant to the terms hereof (and in all events within sixty (60) days after such vesting event), the Corporation shall deliver to the Participant a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Corporation in its discretion) equal to the number of Stock Units subject to the Award

2

that vest on such vesting event; provided, however, that in the event that the vesting and payment of the Stock Units is triggered by the Participant’s “separation from service” (within the meaning of Treasury Regulation Section 1.409A-1(h)) and the Participant is a “specified employee” (within the meaning of Treasury Regulation Section 1.409A-1(i)) on the date of such separation from service, the Participant shall not be entitled to any payment of the Stock Units until the earlier of (a) the date which is six months after the Participant’s separation from service with the Corporation for any reason other than death, or (b) the date of the Participant’s death, if and to the extent such delay in payment is required to comply with Section 409A of the Code. The Corporation’s obligation to deliver shares of Common Stock or otherwise make payment with respect to vested Stock Units is subject to the condition precedent that the Participant or other person entitled under the Plan to receive any shares with respect to the vested Stock Units deliver to the Corporation any representations or other documents or assurances that the Administrator may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements. The Participant shall have no further rights with respect to any Stock Units that are paid or that terminate pursuant to this Agreement.

(b)Minimum Holding Period Requirement. As to any shares of Common Stock acquired by the Participant in payment of the Stock Units that vest pursuant to the Award, the Participant agrees that the Participant will not sell, pledge, assign, hypothecate, transfer or otherwise dispose of such shares prior to the date that is one (1) year after the date the Stock Units to which such shares related became vested in accordance with the terms of the Award (for example, if 100 shares of Common Stock were acquired upon payment of 100 Stock Units that became vested on a particular date, such one-year period would commence as of such vesting date as to those 100 shares); provided, however, that the restrictions set forth in this Section 7(b) shall (i) not apply to any shares withheld or reacquired by the Corporation to satisfy tax withholding obligations as contemplated by Section 10, (ii) not apply to any shares sold by the Participant to satisfy any tax liability arising in connection with the payment of the Stock Units (to the extent such tax liability exceeds the tax withholding amounts applicable to such Stock Unit payment), (iii) not apply to any transfer of shares made without consideration (or for only nominal consideration) to a “family member” (as such term is defined in the SEC General Instructions to a Registration Statement on Form S-8) of the Participant solely for purposes of estate or tax planning, and provided the transfer restrictions on such shares continue in effect after any such transfer, and (iv) lapse upon the Participant’s death or Disability or as otherwise provided by the Corporation. The Corporation may provide for any shares of Common Stock acquired under the Award and issued in book-entry form to include notations regarding the restrictions on transfer imposed under this Section 7(b) (or, as to any such shares issued in certificate form, provide for such certificates to bear appropriate legends regarding such transfer restrictions).

8.Termination of Employment or Services. Notwithstanding any provisions to the contrary in any employment agreement, the HCP, Inc. Executive Severance Plan (as it may be amended from time to time, the “Severance Plan”), the HCP, Inc. Change in Control Severance Plan (or successor plan) (as it may be amended from time to time, the “CIC Severance Plan”), or any other severance plan adopted by the Corporation, the provisions set forth in this Section 8

3

are applicable in the event of a termination of the Participant’s employment with the Corporation and its Subsidiaries.

(a)Qualifying Termination. If the Participant ceases to be employed by the Corporation or one of its Subsidiaries (the date of such termination of employment is referred to as the Participant’s “Severance Date”) as a result of (i) the Participant’s death or Disability, (ii) a termination of employment by the Corporation or one of its Subsidiaries without Cause (as defined herein, and whether before or after a Change in Control Event), or (iii) a termination of employment by the Participant for Good Reason (as defined herein) upon or following a Change in Control Event with respect to the Corporation, then, subject to the release requirement set forth in the following paragraph, the Participant’s Stock Units, to the extent such units are not then vested and without regard to the last sentence of Section 3, shall become fully vested as of the Severance Date and shall be paid in accordance with Section 7.

Any acceleration of vesting pursuant to the preceding paragraph (other than in connection with the Participant’s death) is subject to the condition precedent that (x) the Participant has fully executed a valid and effective release (in the form attached to the Severance Plan or, if such release is executed on or after a Change in Control Event, in the form attached to the CIC Severance Plan, or in either case such other form as the Committee may reasonably require in the circumstances, which other form shall be substantially similar to the form attached to the Severance Plan or the CIC Severance Plan, as the case may be, that would otherwise apply in the circumstances but with such changes as the Committee may determine to be required or reasonably advisable in order to make the release enforceable and otherwise compliant with applicable laws), (y) such executed release is delivered by the Participant to the Corporation so that it is received by the Corporation in the time period specified below, and (z) such release is not revoked by the Participant (pursuant to any revocation rights afforded by applicable law). In order to satisfy the requirements of this paragraph, the Participant’s release referred to in the preceding sentence must be delivered by the Participant to the Corporation so that it is received by the Corporation no later than twenty-five (25) calendar days after the Participant’s Severance Date (or such later date as may be required for an enforceable release of the Participant’s claims under the United States Age Discrimination in Employment Act of 1967, as amended (“ADEA”), to the extent the ADEA is applicable in the circumstances, in which case the Participant will be provided with either twenty-one (21) or forty-five (45) days, depending on the circumstances of the termination, to consider the release). In addition, the Corporation may require that the Participant’s release be executed no earlier than the Participant’s Severance Date. If the period during which the Participant is permitted to consider the release in accordance with this paragraph begins in one calendar year and ends in a second calendar year, the payment of any Stock Units that accelerate pursuant to the preceding paragraph shall be made in accordance with Section 7 but in all events in the second calendar year.

(b)Forfeiture of Stock Units upon Certain Terminations of Employment. If the Participant ceases to be employed by the Corporation or one of its Subsidiaries as a result of (i) a termination of employment by the Corporation or one of its Subsidiaries for Cause, or (ii) a termination of employment by the Participant, excluding any termination contemplated by Section 8(a) (other than a termination contemplated by Section 8(a) but as to which the

4

Participant did not timely satisfy any applicable release requirement pursuant to Section 8(a)) and subject to the next paragraph, the Participant’s Stock Units shall be automatically terminated to the extent such units have not become vested pursuant to Section 3 hereof upon the Severance Date.

If, however, the Participant ceases to be employed by the Corporation or one of its Subsidiaries and such termination of employment is a result of a retirement or resignation by the Participant (other than (x) any termination contemplated by Section 8(a) and (y) a termination of employment by the Corporation or one of its Subsidiaries for Cause) and, immediately after such termination of employment, the Participant is a member of the Board or provides consulting services to the Corporation or one of its Subsidiaries under a written consulting agreement entered into by and between the Participant and the Corporation or one of its Subsidiaries, then the termination of employment rules of the preceding paragraph shall not apply when the Participant ceases to be employed by the Corporation or one of its Subsidiaries but shall apply if and when, and effective as of the time that, the Participant ceases to be a member of the Board or ceases to provide consulting services to the Corporation or one of its Subsidiaries under such a written consulting agreement. For clarity, the Participant’s obligations under a confidentiality, noncompetition, non-solicitation, cooperation or similar clause or agreement shall not constitute “consulting services” for purposes of the preceding sentence.

(c)Termination of Stock Units. If any unvested Stock Units are terminated pursuant to Section 8(b), such Stock Units shall automatically terminate and be cancelled as of the Severance Date without payment of any consideration by the Corporation and without any other action by the Participant, or the Participant’s beneficiary or personal representative, as the case may be.

(d)Definitions. As used in this Agreement:

(i)“Cause” shall have the meaning set forth in the Severance Plan; provided, however, that upon and after a Change in Control Event “Cause” shall have the meaning set forth in the CIC Severance Plan.

(ii)“Disability” means a “permanent and total disability” (within the meaning of Section 22(e)(3) of the Code or as otherwise determined by the Administrator).

(iii)“Good Reason” shall have the meaning set forth in the CIC Severance Plan.

9.Adjustments Upon Specified Events; Change in Control Event.

(a)Adjustments. Upon the occurrence of certain events relating to the Corporation’s stock contemplated by Section 7.1 of the Plan (including, without limitation, an extraordinary cash dividend on such stock), the Administrator shall make adjustments in accordance with such section in the number of Stock Units then outstanding and the number and kind of securities that may be issued in respect of the Award. No such adjustment shall be made

5

with respect to any ordinary cash dividend for which dividend equivalents are paid pursuant to Section 5(b).

(b)Change in Control Event. Upon the occurrence of an event contemplated by Section 7.2 or 7.3 of the Plan and notwithstanding any provision of Section 7.2 or 7.3 of the Plan, any employment agreement, the CIC Severance Plan (or successor plan)or any other severance plan adopted by the Corporation, the Award (to the extent outstanding at the time of such event) shall continue in effect in accordance with its terms following such event (subject to adjustment in connection with such event pursuant to Section 7.1 of the Plan); provided, however, that the Administrator shall determine, in its sole discretion, whether the vesting of the Stock Units will accelerate in connection with such event and the extent of any such accelerated vesting; provided, further, that any Stock Units that are so accelerated will be paid on or as soon as administratively practical following (and in all events no later than thirty (30) days following) such event.

10.Tax Withholding. Upon vesting of any Stock Units or any distribution of shares of Common Stock in respect of the Stock Units, the Corporation shall reduce the number of shares to be delivered by (or otherwise reacquire) the appropriate number of whole shares, valued at their then fair market value, to satisfy any withholding obligations of the Corporation or its Subsidiaries with respect to such distribution of shares at the minimum applicable withholding rates; provided, however, that in the event that the Corporation cannot legally satisfy such withholding obligations by such reduction of shares, or in the event of a cash payment or any other withholding event in respect of the Stock Units, the Corporation (or a Subsidiary) shall be entitled to require a cash payment by or on behalf of the Participant and/or to deduct from other compensation payable to the Participant any sums required by federal, state or local tax law to be withheld with respect to such distribution or payment.

11.Notices. Any notice to be given under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal office to the attention of the Secretary, and to the Participant at the Participant’s last address reflected on the Corporation’s payroll records. Any notice shall be delivered in person or shall be enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government. Any such notice shall be given only when received, but if the Participant is no longer an Eligible Person, shall be deemed to have been duly given five business days after the date mailed in accordance with the foregoing provisions of this Section 11.

12.Plan. The Award and all rights of the Participant under this Agreement are subject to the terms and conditions of the provisions of the Plan, incorporated herein by reference. The Participant agrees to be bound by the terms of the Plan and this Agreement. The Participant acknowledges having read and understanding the Plan, the Prospectus for the Plan and this Agreement. Unless otherwise expressly provided in other sections of this Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not (and shall not be deemed to) create any rights in the Participant unless such rights are expressly set

6

forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan after the date hereof.

13.Entire Agreement. This Agreement and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. The Plan and this Agreement may be amended pursuant to Section 8.6 of the Plan. Any such amendment must be in writing and signed by the Corporation. Any such amendment that materially and adversely affects the Participant’s rights under this Agreement requires the consent of the Participant in order to be effective with respect to the Award. The Corporation may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Participant hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof. The Participant acknowledges receipt of a copy of this Agreement, the Plan and the Prospectus for the Plan.

14.Limitation on Participant’s Rights. Participation in the Planconfers norights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Corporation as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Participant shall have only the rights of a general unsecured creditor of the Corporation with respect to amounts credited and benefits payable, if any, with respect to the Stock Units, and rights no greater than the right to receive the Common Stock as a general unsecured creditor with respect to the Stock Units, as and when payable hereunder. The Award has been granted to the Participant in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Participant.

15.Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

16.Section Headings. The section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

17.Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Maryland without regard to conflict of law principles thereunder.

18.Construction. It is intended that the terms of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code. This Agreement shall be construed and interpreted consistent with that intent.

19.Clawback Policy. The Stock Units are subject to the terms of the Corporation’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Stock Units or any shares of Common Stock or other cash or

7

property received with respect to the Stock Units (including any value received from a disposition of the shares acquired upon payment of the Stock Units).

* * *

[The remainder of this page is intentionally left blank.]

8

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, effective as of the date first written above.

HCP, Inc.

By

__________________________________________

Name:

Title:

Participant

__________________________________________

Name:

9

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Thomas M. Herzog, certify that:

1. I have reviewed this quarterly report on Form 10-Q of HCP, Inc. for the period ended March 31, 2019;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

4
Date: May 2, 2019	/s/ THOMAS M. HERZOG
	Thomas M. Herzog
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Peter A. Scott, certify that:

1. I have reviewed this quarterly report on Form 10-Q of HCP, Inc. for the period ended March 31, 2019;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

4
Date: May 2, 2019	/s/ PETER A. SCOTT
	Peter A. Scott
	Executive Vice President and
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of HCP, Inc., a Maryland corporation (the “Company”), hereby certifies, to his knowledge, that:

(i) the accompanying quarterly report on Form 10-Q of the Company for the period ended March 31, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 2, 2019	/s/ THOMAS M. HERZOG
	Thomas M. Herzog
	President and Chief Executive Officer
	(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates it by reference.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of HCP, Inc., a Maryland corporation (the “Company”), hereby certifies, to his knowledge, that:

(i) the accompanying quarterly report on Form 10-Q of the Company for the period ended March 31, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 2, 2019	/s/ PETER A. SCOTT
	Peter A. Scott
	Executive Vice President and
	Chief Financial Officer
	(Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates it by reference.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	Apr. 30, 2019
Document and Entity Information
Entity Registrant Name	HCP, Inc.
Entity Central Index Key	0000765880
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding		477,983,011
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Real estate:
Buildings and improvements	$ 11,220,557	$ 10,877,248
Development costs and construction in progress	605,165	537,643
Land	1,717,259	1,637,506
Accumulated depreciation and amortization	(2,915,798)	(2,842,947)
Net real estate	10,627,183	10,209,450
Net investment in direct financing leases	363,395	713,818
Loans receivable, net	86,139	62,998
Investments in and advances to unconsolidated joint ventures	531,966	540,088
Accounts receivable, net of allowance of $5,175 and $5,127, respectively	48,555	48,171
Cash and cash equivalents	120,117	110,790
Restricted cash	26,535	29,056
Intangible assets, net	275,565	305,079
Assets held for sale, net	10,842	108,086
Right-of-use asset, net	165,748	0
Other assets, net	643,456	591,017
Total assets	12,899,501	12,718,553
LIABILITIES AND EQUITY
Bank line of credit	276,500	80,103
Senior unsecured notes	5,260,622	5,258,550
Mortgage debt	137,525	138,470
Other debt	89,223	90,785
Intangible liabilities, net	49,488	54,663
Liabilities of assets held for sale, net	132	1,125
Lease liability	152,837	0
Accounts payable and accrued liabilities	352,642	391,583
Deferred revenue	181,467	190,683
Total liabilities	6,500,436	6,205,962
Commitments and contingencies
Common stock, $1.00 par value: 750,000,000 shares authorized; 477,928,816 and 477,496,499 shares issued and outstanding, respectively	477,929	477,496
Additional paid-in capital	8,405,258	8,398,847
Cumulative dividends in excess of earnings	(3,042,422)	(2,927,196)
Accumulated other comprehensive income (loss)	(3,883)	(4,708)
Total stockholders' equity	5,836,882	5,944,439
Joint venture partners	389,369	391,401
Non-managing member unitholders	172,814	176,751
Total noncontrolling interests	562,183	568,152
Total equity	6,399,065	6,512,591
Total liabilities and equity	$ 12,899,501	$ 12,718,553

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Balance Sheet Parenthetical Disclosures
Accounts receivable, allowance (in dollars)	$ 5,175	$ 5,127
Common stock, par value (in dollars per share)	$ 1.00	$ 1.00
Common stock, shares authorized	750,000,000	750,000,000
Common stock, shares issued	477,928,816	477,496,499
Common stock, shares outstanding	477,928,816	477,496,499

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues:
Rental and related revenues	$ 294,222	$ 316,752
Resident fees and services	126,695	142,814
Income from direct financing leases	13,524	13,266
Interest income	1,713	6,365
Total revenues	436,154	479,197
Costs and expenses:
Interest expense	49,327	75,102
Depreciation and amortization	131,951	143,250
Operating	168,927	172,552
General and administrative	21,355	29,175
Transaction costs	4,518	2,195
Impairments (recoveries), net	8,858	0
Total costs and expenses	384,936	422,274
Other income (expense):
Gain (loss) on sales of real estate, net	8,044	20,815
Other income (expense), net	3,133	(40,407)
Total other income (expense), net	11,177	(19,592)
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	62,395	37,331
Income tax benefit (expense)	3,458	5,336
Equity income (loss) from unconsolidated joint ventures	(863)	570
Net income (loss)	64,990	43,237
Noncontrolling interests' share in earnings	(3,520)	(3,005)
Net income (loss) attributable to HCP, Inc.	61,470	40,232
Participating securities' share in earnings	(441)	(391)
Net income (loss) applicable to common shares	$ 61,029	$ 39,841
Earnings per common share:
Earnings per common share, basic (in dollars per share)	$ 0.13	$ 0.08
Earnings per common share, diluted (in dollars per share)	$ 0.13	$ 0.08
Weighted average shares outstanding:
Basic (in shares)	477,766	469,557
Diluted (in shares)	479,131	469,695

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 64,990	$ 43,237
Other comprehensive income (loss):
Net unrealized gains (losses) on derivatives	94	(5,164)
Change in Supplemental Executive Retirement Plan obligation and other	69	104
Foreign currency translation adjustment	662	7,652
Reclassification adjustment realized in net income (loss)	0	125
Total other comprehensive income (loss)	825	2,717
Total comprehensive income (loss)	65,815	45,954
Total comprehensive income (loss) attributable to noncontrolling interests	(3,520)	(3,005)
Total comprehensive income (loss) attributable to HCP, Inc.	$ 62,295	$ 42,949

XML

CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands		Total	Common Stock	Additional Paid-In Capital	Cumulative Dividends In Excess Of Earnings	Accumulated Other Comprehensive Income (Loss)	Total Stockholders’ Equity	Total Noncontrolling Interests
Increase (Decrease) in Stockholders' Equity
Cumulative effect of new accounting principle	[1]	$ 79,144			$ 79,144		$ 79,144
Adjusted balance, January 1		5,674,082	$ 469,436	$ 8,226,113	(3,291,376)	$ (24,024)	5,380,149	$ 293,933
Balance at Dec. 31, 2017		5,594,938	$ 469,436	8,226,113	(3,370,520)	(24,024)	5,301,005	293,933
Balance (in shares) at Dec. 31, 2017			469,436
Increase (Decrease) in Stockholders' Equity
Net income (loss)		43,237			40,232		40,232	3,005
Other comprehensive income (loss)		2,717				2,717	2,717
Issuance of common stock, net		2,774	$ 382	2,392			2,774
Issuance of common stock, net (in shares)			382
Repurchase of common stock		(2,144)	$ (93)	(2,051)			(2,144)
Repurchase of common stock (in shares)			(93)
Amortization of deferred compensation		5,919		5,919			5,919
Common dividends ($0.37 per share)		(174,149)			(174,149)		(174,149)
Distributions to noncontrolling interests		(5,077)		0				(5,077)
Issuances of noncontrolling interests		995						995
Purchase of noncontrolling interests		(67,431)		(49,207)			(49,207)	(18,224)
Balance at Mar. 31, 2018		5,480,923	$ 469,725	8,183,166	(3,425,293)	(21,307)	5,206,291	274,632
Balance (in shares) at Mar. 31, 2018			469,725
Balance at Dec. 31, 2017		5,594,938	$ 469,436	8,226,113	(3,370,520)	(24,024)	5,301,005	293,933
Balance (in shares) at Dec. 31, 2017			469,436
Balance at Dec. 31, 2018		6,512,591	$ 477,496	8,398,847	(2,927,196)	(4,708)	5,944,439	568,152
Balance (in shares) at Dec. 31, 2018			477,496
Increase (Decrease) in Stockholders' Equity
Cumulative effect of new accounting principle	[2]	590					590
Adjusted balance, January 1		6,513,181	$ 477,496	8,398,847	(2,926,606)	(4,708)	5,945,029	568,152
Net income (loss)		64,990			61,470		61,470	3,520
Other comprehensive income (loss)		825				825	825
Issuance of common stock, net		1,532	$ 342	1,190			1,532
Issuance of common stock, net (in shares)			342
Conversion of DownREIT units to common stock		0	$ 184	3,890			4,074	(4,074)
Conversion of DownREIT units to common stock (in shares)			184
Repurchase of common stock		(2,919)	$ (95)	(2,824)			(2,919)
Repurchase of common stock (in shares)			(95)
Exercise of stock options (in shares)			2
Exercise of stock options		46	$ 2	44			46
Amortization of deferred compensation		4,111		4,111			4,111
Common dividends ($0.37 per share)		(177,286)			(177,286)		(177,286)
Distributions to noncontrolling interests		(5,415)						(5,415)
Balance at Mar. 31, 2019		$ 6,399,065	$ 477,929	$ 8,405,258	$ (3,042,422)	$ (3,883)	$ 5,836,882	$ 562,183
Balance (in shares) at Mar. 31, 2019			477,929

[1] On January 1, 2018, the Company adopted ASU No. 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”), and recognized the cumulative-effect of adoption to beginning retained earnings. Refer to Note 2 for a detailed impact of adoption.

[2] On January 1, 2019, the Company adopted a series of Accounting Standards Updates (“ASUs”) related to accounting for leases, and recognized the cumulative-effect of adoption to beginning retained earnings. Refer to Note 2 for a detailed impact of adoption.

XML

CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement of Stockholders' Equity [Abstract]
Common dividends, per share (in dollars per share)	$ 0.37	$ 0.37

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net income (loss)	$ 64,990	$ 43,237
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of real estate, in-place lease and other intangibles	131,951	143,250
Amortization of deferred compensation	4,111	5,919
Amortization of deferred financing costs	2,699	3,336
Straight-line rents	(5,091)	(10,686)
Equity loss (income) from unconsolidated joint ventures	863	(570)
Distributions of earnings from unconsolidated joint ventures	5,232	5,336
Deferred income tax expense (benefit)	(3,800)	(2,394)
Impairments (recoveries), net	8,858	(3,298)
Loss (gain) on sales of real estate, net	(8,044)	(20,815)
Loss (gain) on consolidation, net	0	41,017
Other non-cash items	560	(2,401)
Decrease (increase) in accounts receivable and other assets, net	(11,114)	(18,082)
Increase (decrease) in accounts payable, accrued liabilities and deferred revenue	(32,633)	12,315
Net cash provided by (used in) operating activities	158,582	196,164
Cash flows from investing activities:
Acquisitions of real estate	(106,298)	(22,121)
Development and redevelopment of real estate	(136,654)	(113,648)
Leasing costs, tenant improvements, and recurring capital expenditures	(19,220)	(19,246)
Proceeds from sales of real estate, net	122,678	30,392
Contributions to unconsolidated joint ventures	(3,870)	(3,688)
Distributions in excess of earnings from unconsolidated joint ventures	5,497	7,257
Proceeds from sales/principal repayments on debt investments and direct financing leases	481	132,429
Investments in loans receivable, direct financing leases and other	(22,891)	(647)
Net cash provided by (used in) investing activities	(160,277)	10,728
Cash flows from financing activities:
Borrowings under bank line of credit	320,000	240,000
Repayments under bank line of credit	(125,000)	(170,000)
Repayments and repurchase of debt, excluding bank line of credit	(2,437)	(1,172)
Issuance of common stock and exercise of options	1,578	2,774
Repurchase of common stock	(2,919)	(2,144)
Dividends paid on common stock	(177,286)	(174,149)
Issuance of noncontrolling interests	0	995
Distributions to and purchase of noncontrolling interests	(5,415)	(67,542)
Net cash provided by (used in) financing activities	8,521	(171,238)
Effect of foreign exchanges on cash, cash equivalents and restricted cash	(20)	111
Net increase (decrease) in cash, cash equivalents and restricted cash	6,806	35,765
Cash, cash equivalents and restricted cash, beginning of period	139,846	82,203
Cash, cash equivalents and restricted cash, end of period	$ 146,652	$ 117,968

XML

Business

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business

Business

Overview

HCP, Inc., a Standard & Poor’s 500 company, is a Maryland corporation that is organized to qualify as a real estate investment trust (“REIT”) which, together with its consolidated entities (collectively, “HCP” or the “Company”), invests primarily in real estate serving the healthcare industry in the United States (“U.S.”). The Company acquires, develops, leases, owns and manages healthcare real estate. The Company’s diverse portfolio is comprised of investments in the following reportable healthcare segments: (i) senior housing triple-net; (ii) senior housing operating portfolio (“SHOP”); (iii) life science and (iv) medical office.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Management is required to make estimates and assumptions in the preparation of financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from management’s estimates.

The consolidated financial statements include the accounts of HCP, Inc., its wholly-owned subsidiaries, joint ventures (“JVs”) and variable interest entities (“VIEs”) that it controls through voting rights or other means. Intercompany transactions and balances have been eliminated upon consolidation. All adjustments (consisting of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows have been included. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. The accompanying unaudited interim financial information should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”).

Recent Accounting Pronouncements

Adopted

Revenue Recognition. Between May 2014 and February 2017, the Financial Accounting Standards Board (“FASB”) issued four Accounting Standards Updates (“ASUs”) changing the requirements for recognizing and reporting revenue (together, herein referred to as the “Revenue ASUs”): (i) ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), (ii) ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”), (iii) ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), and (iv) ASU No. 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”). ASU 2014-09 provides guidance for revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2016-08 is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. ASU 2016-12 provides practical expedients and improvements on the previously narrow scope of ASU 2014-09. ASU 2017-05 clarifies the scope of the FASB’s guidance on nonfinancial asset derecognition and aligns the accounting for partial sales of nonfinancial assets and in-substance nonfinancial assets with the guidance in ASU 2014-09. The Company adopted the Revenue ASUs effective January 1, 2018 and utilized a modified retrospective adoption approach, resulting in a cumulative-effect adjustment to equity of $79 million as of January 1, 2018. Under the Revenue ASUs, the Company also elected to utilize a practical expedient which allows the Company to only reassess contracts that were not completed as of the adoption date, rather than all historical contracts.

As the timing and recognition of the majority of the Company’s revenue is the same whether accounted for under the Revenue ASUs or lease accounting guidance (see discussion below), the impact of the Revenue ASUs, upon and subsequent to adoption, is generally limited to the following:

• Prior to the adoption of the Revenue ASUs, the Company recognized a gain on sale of real estate using the full accrual method when collectibility of the sales price was reasonably assured, the Company was not obligated to perform additional activities that may be considered significant, the initial investment from the buyer was sufficient and other profit recognition criteria had been satisfied. The Company deferred all or a portion of a gain on sale of real estate if the requirements for gain recognition were not met at the time of sale. Subsequent to adopting the Revenue ASUs on January 1, 2018, the Company began recognizing a gain on sale of real estate upon transferring control of the asset to the purchaser, which is generally satisfied at the time of sale. In conjunction with its adoption of the Revenue ASUs, the Company reassessed its historical partial sale of real estate transactions to determine which transactions, if any, were not completed contracts (i.e., the transaction did not qualify for sale treatment under previous guidance). The Company concluded that it had one such material transaction, its partial sale of RIDEA II in the first quarter of 2017 (which was not a completed sale under historical guidance as of the Company's adoption date due to a minor obligation related to the interest sold). In accordance with the Revenue ASUs, the Company recorded its retained 40% equity investment at fair value as of the sale date. As a result, the Company recorded an adjustment to equity as of January 1, 2018 (under the modified retrospective transition approach) representing a step-up in the fair value of its equity investment in RIDEA II of $107 million (to a carrying value of $121 million as of January 1, 2018) and a $30 million impairment charge to decrease the carrying value to the sales price of the investment (see Note 3). The Company completed the sale of its equity investment in June 2018 and no longer holds an economic interest in RIDEA II.

• The Company generally expects that the new guidance will result in certain transactions qualifying as sales of real estate at an earlier date than under historical accounting guidance.

• The Company, along with its joint venture partners and independent SHOP operators, provide certain ancillary services to SHOP residents that are not contemplated in the lease with each resident (i.e., guest meals, concierge services, pharmacy services, etc.). These services are provided and paid for in addition to the standard services included in each resident lease (i.e., room and board, standard meals, etc.). The Company bills residents for ancillary services one month in arrears and recognizes revenue as the services are provided, as the Company has no continuing performance obligation related to those services. Included within resident fees and services for both the three months ended March 31, 2019 and 2018 is $10 million of ancillary service revenue.

Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 (codified under Accounting Standards Codification (“ASC”) 842, Leases) amends the previous accounting for leases to: (i) require lessees to put most leases on their balance sheets (not required for short-term leases with lease terms of 12 months or less), but continue recognizing expenses on their income statements in a manner similar to requirements under prior accounting guidance, (ii) eliminate real estate specific lease provisions, and (iii) modify the classification criteria and accounting for sales-type leases for lessors. Additionally, ASU 2016-02 provides a practical expedient, which the Company elected, that allows an entity to not reassess the following upon adoption (must be elected as a group): (i) whether an expired or existing contract contains a lease arrangement, (ii) lease classification related to expired or existing lease arrangements, or (iii) whether costs incurred on expired or existing leases qualify as initial direct costs.

As a result of adopting ASU 2016-02 on January 1, 2019 using the modified retrospective transition approach, the Company recognized a cumulative-effect adjustment to equity of $1 million as of January 1, 2019. Under ASU 2016-02, the Company began capitalizing fewer costs related to the drafting and negotiation of its lease agreements. Additionally, the Company began recognizing all of its significant operating leases for which it is the lessee, including corporate office leases, equipment leases, and ground leases, on its consolidated balance sheets as a lease liability and corresponding right-of-use asset. As such, the Company recognized a lease liability of $153 million and right-of-use asset of $166 million on January 1, 2019. The aggregate lease liability is calculated as the present value of minimum lease payments, discounted using a rate that approximates the Company’s secured incremental borrowing rate, adjusted for the noncancelable term of each lease. The right-of-use asset is calculated as the aggregate lease liability, adjusted for the existing accrued straight-line rent liability balance of $20 million and net unamortized above/below market ground lease intangible assets of $33 million.

Under ASU 2016-02, a practical expedient was offered to lessees to make a policy election, which the Company elected, to not separate lease and nonlease components, but rather account for the combined components as a single lease component under ASC 842. In July 2018, the FASB issued ASU No. 2018-11, Leases - Targeted Improvements (“ASU 2018-11”), which provides lessors with a similar option to elect a practical expedient allowing them to not separate lease and nonlease components in a contract for the purpose of revenue recognition and disclosure. This practical expedient is limited to circumstances in which: (i) the timing and pattern of transfer are the same for the nonlease component and the related lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease. This practical expedient causes an entity to assess whether a contract is predominantly lease or service based and recognize the entire contract under the relevant accounting guidance (i.e.,

predominantly lease-based would be accounted for under ASU 2016-02 and predominantly service-based would be accounted for under the Revenue ASUs). The Company elected this practical expedient as well and, as a result, beginning January 1, 2019, the Company recognizes revenue from its senior housing triple-net, medical office, and life science segments under ASC 842 and revenue from its SHOP segment under the Revenue ASUs (codified under ASC 606, Revenue from Contracts with Customers).

In conjunction with reaching the conclusions above, the Company concluded it was appropriate (under ASC 205, Presentation of Financial Statements) to reclassify amounts previously classified as revenue from tenant recoveries (within the senior housing triple-net, life science, and medical office segments) and present them combined with rental and related revenues within the consolidated statements of operations. The Company implemented this change during the fourth quarter of 2018. Included within rental and related revenues for the three months ended March 31, 2018 is $37 million of tenant recoveries.

In December 2018, the FASB issued ASU No. 2018-20, Narrow Scope Improvements for Lessors (“ASU 2018-20”), which requires that a lessor: (i) exclude certain lessor costs paid directly by a lessee to third parties on behalf of the lessor from a lessor's measurement of variable lease revenue and associated expense (i.e., no gross up of revenue and expense for these costs), and (ii) include lessor costs that are paid by the lessor and reimbursed by the lessee in the measurement of variable lease revenue and the associated expense (i.e., gross up revenue and expense for these costs). This is consistent with the Company’s historical presentation and did not require a material change on January 1, 2019.

Other. Effective January 1, 2019, the Company adopted the following ASU, which did not have a material impact to its consolidated financial position, results of operations, cash flows or disclosures upon adoption:

• ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). The amendments in ASU 2017-12 expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. For cash flow and net investment hedges existing at the date of adoption, the Company adopted the amendments in ASU 2017-12 using the modified retrospective approach. For amendments impacting presentation and disclosure, the Company adopted ASU 2017-12 using a prospective approach.

Not Yet Adopted

Credit Losses. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 is intended to improve financial reporting by requiring timelier recognition of credit losses on loans and other financial instruments held by financial institutions and other organizations. The amendments in ASU 2016-13 eliminate the “probable” initial threshold for recognition of credit losses in current accounting guidance and, instead, reflect an entity’s current estimate of all expected credit losses over the life of the financial instrument. Previously, when credit losses were measured under current accounting guidance, an entity generally only considered past events and current conditions in measuring the incurred loss. The amendments in ASU 2016-13 broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss. ASU 2016-13 is effective for fiscal years, and interim periods within, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within, beginning after December 15, 2018. A reporting entity is required to apply the amendments in ASU 2016-13 using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. A prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. Upon adoption of ASU 2016-13, the Company is required to reassess its financing receivables, including direct financing leases (“DFLs”) and loans receivable, and expects that application of ASU 2016-13 may result in the Company recognizing credit losses at an earlier date than would otherwise be recognized under current accounting guidance. The Company is evaluating the impact of the adoption of ASU 2016-13 on January 1, 2020 to its consolidated financial position and results of operations.

Segment Reporting

The Company’s reportable segments, based on how it evaluates its business and allocates resources, are as follows: (i) senior housing triple-net, (ii) SHOP, (iii) life science and (iv) medical office. During the first quarter of 2019, as a result of a change in how operating results are reported to the Company's chief operating decision makers for the purpose of evaluating performance and allocating resources, two facilities were reclassified from other non-reportable segments to the medical office segment. Accordingly, all prior period segment information has been recast to conform to the current period presentation.

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Real Estate Transactions

3 Months Ended

Mar. 31, 2019

Real Estate [Abstract]

Real Estate Transactions

 Real Estate Transactions

2019 Real Estate Investments

Cambridge Acquisition

During the three months ended March 31, 2019, the Company acquired a life science facility for $71 million and development rights at an adjacent undeveloped land parcel for consideration of up to $27 million. The existing facility and land parcel are located in Cambridge, Massachusetts.

Discovery Portfolio Acquisition

In April 2019, the Company acquired a portfolio of nine senior housing properties for $445 million. The properties are located across Florida, Georgia and Texas and will be operated by Discovery Senior Living, LLC (“Discovery”).

Oakmont Portfolio Acquisition and Transitions

On May 1, 2019, the Company acquired three newly-built, senior housing communities for $113 million. The portfolio will be operated by Oakmont Senior Living LLC (“Oakmont”). Additionally, the Company transitioned four senior housing triple-net properties to RIDEA structures with Oakmont continuing as the operator.

2018 Real Estate Investments

MSREI MOB JV

In August 2018, the Company and Morgan Stanley Real Estate Investment (“MSREI”) formed a joint venture (the “MSREI JV”) to own a portfolio of medical office buildings (“MOBs”), which the Company owns 51% of and consolidates. To form the joint venture, MSREI contributed cash of $298 million and HCP contributed nine wholly-owned MOBs (the “Contributed Assets”). The Contributed Assets are primarily located in Texas and Florida and were valued at approximately $320 million at the time of contribution. The MSREI JV used substantially all of the cash contributed by MSREI to acquire an additional portfolio of 16 MOBs in Greenville, South Carolina (the “Greenville Portfolio”) for $285 million. Concurrent with acquiring the additional MOBs, the MSREI JV entered into 10-year leases with the anchor tenants in the Greenville Portfolio.

The Contributed Assets are accounted for at historical depreciated cost by the Company, as the assets continue to be consolidated. The Greenville Portfolio was accounted for as an asset acquisition, which required the Company to record the individual components of the acquisition at their relative fair values. As a result, the Company recorded net real estate of $276 million and net intangible assets of $20 million during the three months ended September 30, 2018 related to the Greenville Portfolio. Additionally, during the three months ended September 30, 2018, the Company recognized a noncontrolling interest of $298 million related to the interest owned by MSREI. Refer to Note 14 for a discussion of the Company’s consolidation of the MSREI JV.

Life Science JV Interest Purchase

In November 2018, the Company acquired the outstanding equity interests in three life science joint ventures (which owned four buildings) for $92 million, bringing the Company’s equity ownership to 100% for all three joint ventures. As the Company began consolidating the assets upon acquisition, it derecognized the existing investment in the joint ventures, marked the real estate to fair value (using a relative fair value allocation), and recognized a gain on consolidation of $50 million within other income (expense), net.

Sierra Point Towers Acquisition

In November 2018, the Company entered into definitive agreements to acquire two life science buildings in South San Francisco, California adjacent to the Company’s The Shore at Sierra Point development, for $245 million. The Company made a $15 million nonrefundable deposit upon completing due diligence and expects to close the transaction in the second quarter of 2019.

Other

During the three months ended March 31, 2018, the Company acquired development rights on a land parcel in the Boston suburb of Lexington, Massachusetts for $21 million. The Company commenced a life science development on the land in 2018.

Development Activities

As part of the development program with HCA Healthcare, during the first quarter of 2019, the Company signed definitive agreements to develop three additional MOBs, two of which will be on-campus, with an aggregate estimated cost of $70 million. Construction on these projects is expected to commence in the second quarter of 2019.

Held for Sale

At March 31, 2019, two MOBs and one SHOP facility were classified as held for sale, with an aggregate carrying value of $11 million, primarily comprised of real estate assets of $10 million, net of accumulated depreciation of $5 million. At December 31, 2018, nine SHOP facilities and one undeveloped life science land parcel were classified as held for sale, with an aggregate carrying value of $108 million, primarily comprised of real estate assets of $101 million, net of accumulated depreciation of $30 million. Liabilities of assets held for sale was primarily comprised of intangible and other liabilities at both March 31, 2019 and December 31, 2018.

2019 Dispositions of Real Estate

During the quarter ended March 31, 2019, the Company sold nine SHOP assets for $68 million, two senior housing triple-net assets for $26 million, and one undeveloped life science land parcel for $35 million, resulting in total gain on sales of $8 million.

2018 Dispositions of Real Estate

Shoreline Technology Center

In November 2018, the Company sold its Shoreline Technology Center life science campus located in Mountain View, California for $1.0 billion and recognized a gain on sale of $726 million.

RIDEA II Sale Transaction

In January 2017, the Company completed the contribution of its ownership interest in RIDEA II to an unconsolidated joint venture owned by HCP and an investor group led by Columbia Pacific Advisors, LLC (“CPA”) (the “HCP/CPA JV”). Also in January 2017, RIDEA II was recapitalized with $602 million of debt, of which $360 million was provided by a third-party and $242 million was provided by HCP. In return for both transaction elements, the Company received combined proceeds of $480 million from the HCP/CPA JV and $242 million in loans receivable and retained an approximately 40% ownership interest in RIDEA II. This transaction resulted in the Company deconsolidating the net assets of RIDEA II and recognizing a net gain on sale of $99 million. Refer to Note 2 for the impact of adopting the Revenue ASUs on January 1, 2018 to the Company’s partial sale of RIDEA II in the first quarter of 2017.

In June 2018, the Company sold its remaining 40% ownership interest in RIDEA II to an investor group led by CPA for $91 million. Additionally, CPA refinanced the Company’s $242 million of loans receivable from RIDEA II, resulting in total proceeds of $332 million. The Company no longer holds an economic interest in RIDEA II.

U.K. Portfolio

In June 2018, the Company entered into a joint venture with an institutional investor (the “U.K. JV”) through which the Company sold a 51% interest in substantially all United Kingdom (“U.K.”) assets previously owned by the Company (the “U.K. Portfolio”) based on a total value of £382 million ($507 million). The Company retained a 49% noncontrolling interest in the joint venture and received gross proceeds of $402 million, including proceeds from the refinancing of the Company’s previously held intercompany loans. Upon closing the U.K. JV, the Company deconsolidated the U.K. Portfolio, recognized its retained noncontrolling interest investment at fair value ($105 million) and recognized a gain on sale of $11 million, net of $17 million of cumulative foreign currency translation reclassified from other comprehensive income. The U.K. JV provides numerous mechanisms by which the joint venture partner can acquire the Company’s remaining interest in the U.K. JV. The fair value of the Company’s retained noncontrolling interest investment is based on Level 2 measurements within the fair value hierarchy.

Additionally, in August 2018, the Company sold its remaining £11 million U.K. development loan at par.

Other

During the quarter ended March 31, 2018, the Company sold two SHOP assets for $35 million, resulting in total gain on sales of $21 million.

During the quarter ended June 30, 2018, the Company sold eight SHOP assets for $268 million and two senior housing triple-net assets for $35 million, resulting in total gain on sales of $25 million.

During the quarter ended September 30, 2018, the Company sold four life science assets for $269 million, 11 SHOP assets for $76 million and two MOBs for $21 million, resulting in total gain on sales of $95 million.

During the quarter ended December 31, 2018, the Company sold two SHOP facilities for $15 million, two MOBs for $4 million, and one undeveloped land parcel for $3 million, resulting in no material gain or loss on sales.

Additionally, during 2018, the Company sold 19 senior housing assets to a third-party buyer for $377 million, resulting in a gain on sale of $40 million.

Impairments of Real Estate

2019

During the three months ended March 31, 2019, the Company determined that the carrying value of two MOBs that are candidates for potential future sale was no longer recoverable due to the Company’s shortened intended hold period under the held-for-use impairment model. Accordingly, the Company wrote-down the carrying amount of these two assets to their respective fair value, which resulted in an aggregate impairment charge of $9 million. The fair value of the assets was based on forecasted sales prices which are considered to be Level 2 measurements within the fair value hierarchy.

Brookdale MTCA Transactions

In November 2017, the Company and Brookdale Senior Living, Inc. (“Brookdale”) entered into a Master Transactions and Cooperation Agreement (the “MTCA”) to provide the Company with the ability to significantly reduce its concentration of assets leased to and/or managed by Brookdale (the “Brookdale Transactions”). In connection with the overall transaction pursuant to the MTCA, the Company and Brookdale, and certain of their respective subsidiaries, agreed to the following:

• The Company, which owned 90% of the interests in its RIDEA I and RIDEA III joint ventures with Brookdale at the time the MTCA was executed, agreed to purchase Brookdale’s 10% noncontrolling interest in each joint venture for an aggregate purchase price of $95 million. At the time the MTCA was executed, these joint ventures collectively owned and operated 58 independent living, assisted living, memory care and/or skilled nursing facilities (the “RIDEA Facilities”). The Company completed its acquisitions of the RIDEA III noncontrolling interest for $32 million in December 2017 and the RIDEA I noncontrolling interest for $63 million in March 2018;

• The Company received the right to sell, or transition to other operators, 32 of the 78 total assets under an Amended and Restated Master Lease and Security Agreement (the “Amended Master Lease”) with Brookdale and 36 of the RIDEA Facilities (and terminate related management agreements with an affiliate of Brookdale without penalty), certain of which were sold during 2018 and 2019 and are included in the disposition transactions discussed above;

• The Company provided an aggregate $5 million annual reduction in rent on three assets, effective January 1, 2018; and

• Brookdale agreed to purchase two of the assets under the Amended Master Lease for $35 million and four of the RIDEA Facilities for $240 million, all of which were sold in 2018 and are included in the 2018 disposition transactions discussed above.

Additionally, during 2018, the Company terminated the previous management agreements or leases with Brookdale on 37 assets contemplated under the MTCA and completed the transition of 20 SHOP assets and 17 senior housing triple-net assets to other managers.

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Leases

3 Months Ended

Mar. 31, 2019

Leases, Capital [Abstract]

Leases

Leases

Lease Income

The following table summarizes the Company’s lease income:

	Three Months Ended March 31,
	2019		2018
Operating lease income	$	294,222	$	316,752
Interest income on direct financing leases	13,524		13,266

Direct Financing Leases

Net investment in DFLs consists of the following (dollars in thousands):

	March 31, 2019
Present value of minimum lease payments receivable	$	273,629
Present value of estimated residual value	114,364
Less deferred selling profits	(24,598		)
Net investment in direct financing leases	$	363,395
Properties subject to direct financing leases	15

	December 31, 2018
Minimum lease payments receivable	$	1,013,976
Estimated residual value	507,484
Less unearned income	(807,642		)
Net investment in direct financing leases	$	713,818
Properties subject to direct financing leases	29

Direct Financing Lease Internal Ratings

The following table summarizes the Company’s internal ratings for DFLs at March 31, 2019 (dollars in thousands):

	Carrying Amount		Percentage of DFL Portfolio	Internal Ratings
Segment				Performing DFLs		Watch List DFLs		Workout DFLs
Senior housing triple-net	$	278,791	77	$	278,791	$	—	$	—
Other non-reportable segments	84,604		23	84,604		—		—
	$	363,395	100	$	363,395	$	—	$	—

Beginning September 30, 2013, the Company placed a 14-property senior housing triple-net DFL (the “DFL Watchlist Portfolio”) on nonaccrual status and “Watch List” status. The Company determined that the collection of all rental payments was and continues to be no longer reasonably assured; therefore, rental revenue for the DFL Watchlist Portfolio is being recognized on a cash basis. During the three months ended March 31, 2019 and 2018, the Company recognized income from DFLs of $4 million and $3 million, respectively. During the three months ended March 31, 2019 and 2018, the Company received cash payments of $5 million from the DFL Watchlist Portfolio. The carrying value of the DFL Watchlist Portfolio was zero and $351 million at March 31, 2019 and December 31, 2018, respectively.

Direct Financing Lease Transition

During the first quarter of 2019, the Company transitioned the DFL Watchlist Portfolio to a RIDEA structure, requiring the Company to recognize net assets equal to the lower of the net assets’ fair value or the carrying value of the net investment in the DFL. As a result, the Company derecognized the $351 million carrying value of the net investment in DFL related to the 14 properties and recognized a combination of net real estate ($331 million) and net intangibles assets ($20 million) for the same aggregate amount,

with no gain or loss recognized. As a result of the transaction, the 14 properties were transitioned from the senior housing triple-net segment to the SHOP segment during the first quarter of 2019.

Direct Financing Lease Receivable Maturities

The following table summarizes future minimum lease payments contractually due under DFLs at March 31, 2019 (in thousands):

Year	Amount
2019 (nine months)	$	29,365
2020	32,558
2021	31,989
2022	25,346
2023	24,774
Thereafter	416,286
Undiscounted minimum lease payments receivable	560,318
Less: imputed interest	(286,689		)
Present value of minimum lease payments receivable	$	273,629

The following table summarizes future minimum lease payments contractually due under DFLs at December 31, 2018 (in thousands):

Year	Amount
2019	$	114,970
2020	63,308
2021	63,687
2022	58,135
2023	58,570
Thereafter	655,306
	$	1,013,976

Residual Value Risk

Quarterly, the Company reviews the estimated unguaranteed residual value of assets under DFLs to determine if there have been any material changes compared to the prior quarter. As needed, the Company and/or the related tenants will invest necessary funds to maintain the residual value of each asset.

Operating Leases

Future Minimum Rents

The following table summarizes future minimum lease payments to be received, excluding operating expense reimbursements, from tenants under non-cancelable operating leases as of March 31, 2019 (in thousands):

Year	Amount
2019 (nine months)	$	733,816
2020	952,756
2021	884,923
2022	782,066
2023	703,054
Thereafter	2,505,848
	$	6,562,463

The following table summarizes future minimum lease payments to be received, excluding operating expense reimbursements, from tenants under non-cancelable operating leases as of December 31, 2018 (in thousands):

Year	Amount
2019	$	971,417
2020	928,102
2021	853,451
2022	751,972
2023	675,537
Thereafter	2,320,847
	$	6,501,326

Lease Costs

The following tables provide information regarding the Company’s leases to which it is the lessee, such as corporate offices and ground leases (dollars in thousands):

	Three Months Ended March 31,
Lease Expense Information:	2019		2018
Total lease expense(1)	$	4,803	$	5,024

_______________________________________

(1) Lease expense related to corporate assets is included in general and administrative expenses and lease expense related to ground leases is included within operating expenses in the Company’s consolidated statements of operations.

	Three Months Ended March 31,
Supplemental Cash Flow Information:	2019		2018
Cash paid for amounts included in the measurement of lease liability:
Operating cash flows for operating leases	$	3,963	$	4,253
ROU asset obtained in exchange for new lease liability:
Operating leases	$	880	$	—

Weighted Average Lease Term and Discount Rate:	March 31, 2019
Weighted average remaining lease term (years):
Operating leases	52
Weighted average discount rate:
Operating leases	4.36	%

The following table summarizes future minimum lease obligations under non-cancelable ground and other operating leases as of March 31, 2019 (in thousands):

Year	Amount
2019 (nine months)	$	5,937
2020	7,816
2021	7,888
2022	8,028
2023	8,198
Thereafter	471,083
Undiscounted minimum lease payments payable	508,950
Less: imputed interest	(356,113		)
Present value of lease liability	$	152,837

The following table summarizes future minimum lease obligations under non-cancelable ground and other operating leases as of December 31, 2018 (in thousands):

Year	Amount
2019	$	5,597
2020	5,687
2021	5,776
2022	5,862
2023	5,983
Thereafter	466,130
	$	495,035

Depreciation Expense

While the Company leases the majority of its property, plant, and equipment to various tenants under operating leases and DFLs, in certain situations, the Company owns and operates property, plant, and equipment for general corporate purposes. Corporate assets are recorded within other assets, net within the Company’s consolidated balance sheets and depreciation expense for those assets is recorded in general and administrative expenses in the Company’s consolidated statements of operations. Included within other assets, net as of both March 31, 2019 and December 31, 2018 is $3 million and $2 million, respectively, of accumulated depreciation related to corporate assets. Included within general and administrative expenses for the three months ended March 31, 2019 and 2018 is $0.4 million and $0.2 million, respectively, of depreciation expense related to corporate assets.

Leases

Leases

Lease Income

The following table summarizes the Company’s lease income:

	Three Months Ended March 31,
	2019		2018
Operating lease income	$	294,222	$	316,752
Interest income on direct financing leases	13,524		13,266

Direct Financing Leases

Net investment in DFLs consists of the following (dollars in thousands):

	March 31, 2019
Present value of minimum lease payments receivable	$	273,629
Present value of estimated residual value	114,364
Less deferred selling profits	(24,598		)
Net investment in direct financing leases	$	363,395
Properties subject to direct financing leases	15

	December 31, 2018
Minimum lease payments receivable	$	1,013,976
Estimated residual value	507,484
Less unearned income	(807,642		)
Net investment in direct financing leases	$	713,818
Properties subject to direct financing leases	29

Direct Financing Lease Internal Ratings

The following table summarizes the Company’s internal ratings for DFLs at March 31, 2019 (dollars in thousands):

	Carrying Amount		Percentage of DFL Portfolio	Internal Ratings
Segment				Performing DFLs		Watch List DFLs		Workout DFLs
Senior housing triple-net	$	278,791	77	$	278,791	$	—	$	—
Other non-reportable segments	84,604		23	84,604		—		—
	$	363,395	100	$	363,395	$	—	$	—

Beginning September 30, 2013, the Company placed a 14-property senior housing triple-net DFL (the “DFL Watchlist Portfolio”) on nonaccrual status and “Watch List” status. The Company determined that the collection of all rental payments was and continues to be no longer reasonably assured; therefore, rental revenue for the DFL Watchlist Portfolio is being recognized on a cash basis. During the three months ended March 31, 2019 and 2018, the Company recognized income from DFLs of $4 million and $3 million, respectively. During the three months ended March 31, 2019 and 2018, the Company received cash payments of $5 million from the DFL Watchlist Portfolio. The carrying value of the DFL Watchlist Portfolio was zero and $351 million at March 31, 2019 and December 31, 2018, respectively.

Direct Financing Lease Transition

During the first quarter of 2019, the Company transitioned the DFL Watchlist Portfolio to a RIDEA structure, requiring the Company to recognize net assets equal to the lower of the net assets’ fair value or the carrying value of the net investment in the DFL. As a result, the Company derecognized the $351 million carrying value of the net investment in DFL related to the 14 properties and recognized a combination of net real estate ($331 million) and net intangibles assets ($20 million) for the same aggregate amount,

with no gain or loss recognized. As a result of the transaction, the 14 properties were transitioned from the senior housing triple-net segment to the SHOP segment during the first quarter of 2019.

Direct Financing Lease Receivable Maturities

The following table summarizes future minimum lease payments contractually due under DFLs at March 31, 2019 (in thousands):

Year	Amount
2019 (nine months)	$	29,365
2020	32,558
2021	31,989
2022	25,346
2023	24,774
Thereafter	416,286
Undiscounted minimum lease payments receivable	560,318
Less: imputed interest	(286,689		)
Present value of minimum lease payments receivable	$	273,629

The following table summarizes future minimum lease payments contractually due under DFLs at December 31, 2018 (in thousands):

Year	Amount
2019	$	114,970
2020	63,308
2021	63,687
2022	58,135
2023	58,570
Thereafter	655,306
	$	1,013,976

Residual Value Risk

Quarterly, the Company reviews the estimated unguaranteed residual value of assets under DFLs to determine if there have been any material changes compared to the prior quarter. As needed, the Company and/or the related tenants will invest necessary funds to maintain the residual value of each asset.

Operating Leases

Future Minimum Rents

The following table summarizes future minimum lease payments to be received, excluding operating expense reimbursements, from tenants under non-cancelable operating leases as of March 31, 2019 (in thousands):

Year	Amount
2019 (nine months)	$	733,816
2020	952,756
2021	884,923
2022	782,066
2023	703,054
Thereafter	2,505,848
	$	6,562,463

The following table summarizes future minimum lease payments to be received, excluding operating expense reimbursements, from tenants under non-cancelable operating leases as of December 31, 2018 (in thousands):

Year	Amount
2019	$	971,417
2020	928,102
2021	853,451
2022	751,972
2023	675,537
Thereafter	2,320,847
	$	6,501,326

Lease Costs

The following tables provide information regarding the Company’s leases to which it is the lessee, such as corporate offices and ground leases (dollars in thousands):

	Three Months Ended March 31,
Lease Expense Information:	2019		2018
Total lease expense(1)	$	4,803	$	5,024

_______________________________________

(1) Lease expense related to corporate assets is included in general and administrative expenses and lease expense related to ground leases is included within operating expenses in the Company’s consolidated statements of operations.

	Three Months Ended March 31,
Supplemental Cash Flow Information:	2019		2018
Cash paid for amounts included in the measurement of lease liability:
Operating cash flows for operating leases	$	3,963	$	4,253
ROU asset obtained in exchange for new lease liability:
Operating leases	$	880	$	—

Weighted Average Lease Term and Discount Rate:	March 31, 2019
Weighted average remaining lease term (years):
Operating leases	52
Weighted average discount rate:
Operating leases	4.36	%

The following table summarizes future minimum lease obligations under non-cancelable ground and other operating leases as of March 31, 2019 (in thousands):

Year	Amount
2019 (nine months)	$	5,937
2020	7,816
2021	7,888
2022	8,028
2023	8,198
Thereafter	471,083
Undiscounted minimum lease payments payable	508,950
Less: imputed interest	(356,113		)
Present value of lease liability	$	152,837

The following table summarizes future minimum lease obligations under non-cancelable ground and other operating leases as of December 31, 2018 (in thousands):

Year	Amount
2019	$	5,597
2020	5,687
2021	5,776
2022	5,862
2023	5,983
Thereafter	466,130
	$	495,035

Depreciation Expense

While the Company leases the majority of its property, plant, and equipment to various tenants under operating leases and DFLs, in certain situations, the Company owns and operates property, plant, and equipment for general corporate purposes. Corporate assets are recorded within other assets, net within the Company’s consolidated balance sheets and depreciation expense for those assets is recorded in general and administrative expenses in the Company’s consolidated statements of operations. Included within other assets, net as of both March 31, 2019 and December 31, 2018 is $3 million and $2 million, respectively, of accumulated depreciation related to corporate assets. Included within general and administrative expenses for the three months ended March 31, 2019 and 2018 is $0.4 million and $0.2 million, respectively, of depreciation expense related to corporate assets.

Leases

Leases

Lease Income

The following table summarizes the Company’s lease income:

	Three Months Ended March 31,
	2019		2018
Operating lease income	$	294,222	$	316,752
Interest income on direct financing leases	13,524		13,266

Direct Financing Leases

Net investment in DFLs consists of the following (dollars in thousands):

	March 31, 2019
Present value of minimum lease payments receivable	$	273,629
Present value of estimated residual value	114,364
Less deferred selling profits	(24,598		)
Net investment in direct financing leases	$	363,395
Properties subject to direct financing leases	15

	December 31, 2018
Minimum lease payments receivable	$	1,013,976
Estimated residual value	507,484
Less unearned income	(807,642		)
Net investment in direct financing leases	$	713,818
Properties subject to direct financing leases	29

Direct Financing Lease Internal Ratings

The following table summarizes the Company’s internal ratings for DFLs at March 31, 2019 (dollars in thousands):

	Carrying Amount		Percentage of DFL Portfolio	Internal Ratings
Segment				Performing DFLs		Watch List DFLs		Workout DFLs
Senior housing triple-net	$	278,791	77	$	278,791	$	—	$	—
Other non-reportable segments	84,604		23	84,604		—		—
	$	363,395	100	$	363,395	$	—	$	—

Beginning September 30, 2013, the Company placed a 14-property senior housing triple-net DFL (the “DFL Watchlist Portfolio”) on nonaccrual status and “Watch List” status. The Company determined that the collection of all rental payments was and continues to be no longer reasonably assured; therefore, rental revenue for the DFL Watchlist Portfolio is being recognized on a cash basis. During the three months ended March 31, 2019 and 2018, the Company recognized income from DFLs of $4 million and $3 million, respectively. During the three months ended March 31, 2019 and 2018, the Company received cash payments of $5 million from the DFL Watchlist Portfolio. The carrying value of the DFL Watchlist Portfolio was zero and $351 million at March 31, 2019 and December 31, 2018, respectively.

Direct Financing Lease Transition

During the first quarter of 2019, the Company transitioned the DFL Watchlist Portfolio to a RIDEA structure, requiring the Company to recognize net assets equal to the lower of the net assets’ fair value or the carrying value of the net investment in the DFL. As a result, the Company derecognized the $351 million carrying value of the net investment in DFL related to the 14 properties and recognized a combination of net real estate ($331 million) and net intangibles assets ($20 million) for the same aggregate amount,

with no gain or loss recognized. As a result of the transaction, the 14 properties were transitioned from the senior housing triple-net segment to the SHOP segment during the first quarter of 2019.

Direct Financing Lease Receivable Maturities

The following table summarizes future minimum lease payments contractually due under DFLs at March 31, 2019 (in thousands):

Year	Amount
2019 (nine months)	$	29,365
2020	32,558
2021	31,989
2022	25,346
2023	24,774
Thereafter	416,286
Undiscounted minimum lease payments receivable	560,318
Less: imputed interest	(286,689		)
Present value of minimum lease payments receivable	$	273,629

The following table summarizes future minimum lease payments contractually due under DFLs at December 31, 2018 (in thousands):

Year	Amount
2019	$	114,970
2020	63,308
2021	63,687
2022	58,135
2023	58,570
Thereafter	655,306
	$	1,013,976

Residual Value Risk

Quarterly, the Company reviews the estimated unguaranteed residual value of assets under DFLs to determine if there have been any material changes compared to the prior quarter. As needed, the Company and/or the related tenants will invest necessary funds to maintain the residual value of each asset.

Operating Leases

Future Minimum Rents

The following table summarizes future minimum lease payments to be received, excluding operating expense reimbursements, from tenants under non-cancelable operating leases as of March 31, 2019 (in thousands):

Year	Amount
2019 (nine months)	$	733,816
2020	952,756
2021	884,923
2022	782,066
2023	703,054
Thereafter	2,505,848
	$	6,562,463

The following table summarizes future minimum lease payments to be received, excluding operating expense reimbursements, from tenants under non-cancelable operating leases as of December 31, 2018 (in thousands):

Year	Amount
2019	$	971,417
2020	928,102
2021	853,451
2022	751,972
2023	675,537
Thereafter	2,320,847
	$	6,501,326

Lease Costs

The following tables provide information regarding the Company’s leases to which it is the lessee, such as corporate offices and ground leases (dollars in thousands):

	Three Months Ended March 31,
Lease Expense Information:	2019		2018
Total lease expense(1)	$	4,803	$	5,024

_______________________________________

(1) Lease expense related to corporate assets is included in general and administrative expenses and lease expense related to ground leases is included within operating expenses in the Company’s consolidated statements of operations.

	Three Months Ended March 31,
Supplemental Cash Flow Information:	2019		2018
Cash paid for amounts included in the measurement of lease liability:
Operating cash flows for operating leases	$	3,963	$	4,253
ROU asset obtained in exchange for new lease liability:
Operating leases	$	880	$	—

Weighted Average Lease Term and Discount Rate:	March 31, 2019
Weighted average remaining lease term (years):
Operating leases	52
Weighted average discount rate:
Operating leases	4.36	%

The following table summarizes future minimum lease obligations under non-cancelable ground and other operating leases as of March 31, 2019 (in thousands):

Year	Amount
2019 (nine months)	$	5,937
2020	7,816
2021	7,888
2022	8,028
2023	8,198
Thereafter	471,083
Undiscounted minimum lease payments payable	508,950
Less: imputed interest	(356,113		)
Present value of lease liability	$	152,837

The following table summarizes future minimum lease obligations under non-cancelable ground and other operating leases as of December 31, 2018 (in thousands):

Year	Amount
2019	$	5,597
2020	5,687
2021	5,776
2022	5,862
2023	5,983
Thereafter	466,130
	$	495,035

Depreciation Expense

While the Company leases the majority of its property, plant, and equipment to various tenants under operating leases and DFLs, in certain situations, the Company owns and operates property, plant, and equipment for general corporate purposes. Corporate assets are recorded within other assets, net within the Company’s consolidated balance sheets and depreciation expense for those assets is recorded in general and administrative expenses in the Company’s consolidated statements of operations. Included within other assets, net as of both March 31, 2019 and December 31, 2018 is $3 million and $2 million, respectively, of accumulated depreciation related to corporate assets. Included within general and administrative expenses for the three months ended March 31, 2019 and 2018 is $0.4 million and $0.2 million, respectively, of depreciation expense related to corporate assets.

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Loans Receivable

3 Months Ended

Mar. 31, 2019

Receivables [Abstract]

Loans Receivable

Loans Receivable

The following table summarizes the Company’s loans receivable (in thousands):

	March 31, 2019								December 31, 2018
	Real Estate Secured		Other Secured			Total			Real Estate Secured		Other Secured			Total
Mezzanine	$	—	$	20,545		$	20,545		$	—	$	21,013		$	21,013
Participating development loans and other(1)	65,635		—			65,635			42,037		—			42,037
Unamortized discounts, fees and costs	—		(41		)	(41		)	—		(52		)	(52		)
	$	65,635	$	20,504		$	86,139		$	42,037	$	20,961		$	62,998

_______________________________________

(1) At March 31, 2019, the Company had $53 million remaining of commitments to fund a $115 million senior living development project.

Loans Receivable Internal Ratings

The following table summarizes the Company’s internal ratings for loans receivable at March 31, 2019 (dollars in thousands):

	Carrying Amount		Percentage of Loan Portfolio	Internal Ratings
Investment Type				Performing Loans		Watch List Loans		Workout Loans
Real estate secured	$	65,635	76	$	65,635	$	—	$	—
Other secured	20,504		24	20,504		—		—
	$	86,139	100	$	86,139	$	—	$	—

U.K. Bridge Loan

In 2016, the Company provided a £105 million ($131 million at closing) bridge loan to MMCG (the “U.K. Bridge Loan”) to fund the acquisition of a portfolio of seven care homes in the U.K. Under the U.K. Bridge Loan, the Company retained a three year call option to acquire those seven care homes at a future date for £105 million, subject to certain conditions precedent being met. In March 2018, upon resolution of all conditions precedent, the Company began the process of exercising its call option to acquire the seven care homes and concluded that it should consolidate the real estate. As a result, the Company derecognized the outstanding loan receivable of £105 million and recognized a £29 million ($41 million) loss on consolidation. Refer to Note 14 for the complete impact of consolidating the seven care homes during the first quarter of 2018.

In June 2018, the Company completed the process of exercising the above-mentioned call option. The seven care homes acquired through the call option were included in the U.K. JV transaction (see Note 3).

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Investments in and Advances to Unconsolidated Joint Ventures

3 Months Ended

Mar. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

Investments in and Advances to Unconsolidated Joint Ventures

Investments in and Advances to Unconsolidated Joint Ventures

The Company owns interests in the following entities that are accounted for under the equity method (dollars in thousands): 

			Carrying Amount
			March 31,		December 31,
Entity(1)	Property Count	Ownership %	2019		2018
CCRC JV	15	49	$	358,172	$	365,764
U.K. JV(2)	68	49	102,692		101,735
MBK JV	5	50	34,935		35,435
Other SHOP JVs(3)	5	50 - 90	24,684		25,493
Medical Office JVs(4)	3	20 - 67	10,039		10,160
K&Y JVs(5)	3	80	1,431		1,430
Advances to unconsolidated joint ventures, net			13		71
			$	531,966	$	540,088

_______________________________________

(1) These entities are not consolidated because the Company does not control, through voting rights or other means, the joint ventures.

(2) See Note 3 for discussion of the formation of the U.K. JV and the Company’s equity method investment.

(3) Includes four unconsolidated SHOP joint ventures (and the Company’s ownership percentage): (i) Vintage Park Development JV (85%); (ii) Waldwick JV (85%); (iii) Otay Ranch JV (90%); and (iv) MBK Development JV (50%).

(4) Includes three unconsolidated medical office joint ventures (and the Company’s ownership percentage): HCP Ventures IV, LLC (20%); HCP Ventures III, LLC (30%); and Suburban Properties, LLC (67%).

(5)

At March 31, 2019, includes two unconsolidated joint ventures. At December 31, 2018, includes three unconsolidated joint ventures.

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Intangibles

3 Months Ended

Mar. 31, 2019

Intangibles

Intangibles

Intangibles

Intangible assets primarily consist of lease-up intangibles and above market tenant lease intangibles. Intangible liabilities primarily consist of below market lease intangibles. The following tables summarize the Company’s intangible lease assets and liabilities (in thousands):

Intangible lease assets	March 31, 2019			December 31, 2018
Gross intangible lease assets	$	491,998		$	556,114
Accumulated depreciation and amortization	(216,433		)	(251,035		)
Intangible assets, net	$	275,565		$	305,079

Intangible lease liabilities	March 31, 2019			December 31, 2018
Gross intangible lease liabilities	$	82,777		$	94,444
Accumulated depreciation and amortization	(33,289		)	(39,781		)
Intangible liabilities, net	$	49,488		$	54,663

On January 1, 2019, in conjunction with the adoption of ASU 2016-12 (see Note 2), the Company reclassified $39 million of intangible assets, net and $6 million of intangible liabilities, net related to above and below market ground leases to right-of-use asset, net.

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Debt

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Debt

Debt

Bank Line of Credit and Term Loan

The Company’s $2.0 billion unsecured revolving line of credit facility (the “Facility”) matures on October 19, 2021 and contains two, six months extension options. Borrowings under the Facility accrue interest at LIBOR plus a margin that depends on the Company’s credit ratings. The Company pays a facility fee on the entire revolving commitment that depends on its credit ratings. Based on the Company’s credit ratings at March 31, 2019, the margin on the Facility was 0.875% and the facility fee was 0.15%. The Facility also includes a feature that allows the Company to increase the borrowing capacity by an aggregate amount of up to $750 million, subject to securing additional commitments. At March 31, 2019, the Company had $277 million, including £55 million ($72 million), outstanding under the Facility, with a weighted average effective interest rate of 3.20%.

The Facility contains certain financial restrictions and other customary requirements, including cross-default provisions to other indebtedness. Among other things, these covenants, using terms defined in the agreements: (i) limit the ratio of Consolidated Total Indebtedness to Consolidated Total Asset Value to 60%; (ii) limit the ratio of Secured Debt to Consolidated Total Asset Value to 30%; (iii) limit the ratio of Unsecured Debt to Consolidated Unencumbered Asset Value to 60%; (iv) require a minimum Fixed Charge Coverage ratio of 1.5 times; and (v) require a Minimum Consolidated Tangible Net Worth of $6.5 billion. At March 31, 2019, the Company believes it was in compliance with each of these restrictions and requirements of the Facility.

On July 3, 2018, the Company exercised its one-time right under its term loan to repay the outstanding British pound sterling (“GBP”) balance and re-borrow in U.S. Dollars (“USD”) with all other key terms unchanged, which resulted in repayment of the £169 million balance and re-borrowing of $224 million. In November 2018, the Company repaid the $224 million unsecured term loan, bringing the total term loan balance to zero.

Senior Unsecured Notes

At March 31, 2019, the Company had senior unsecured notes outstanding with an aggregate principal balance of $5.3 billion. The senior unsecured notes contain certain covenants including limitations on debt, maintenance of unencumbered assets, cross-acceleration provisions and other customary terms. The Company believes it was in compliance with these covenants at March 31, 2019.

There were no senior unsecured notes payoffs during the three months ended March 31, 2019. The following table summarizes the Company’s senior unsecured notes payoffs during the year ended December 31, 2018 (dollars in thousands):

Date	Amount		Coupon Rate
July 16, 2018(1)	$	700,000	5.375	%
November 8, 2018	$	450,000	3.750	%

_______________________________________

(1) The Company recorded a $44 million loss on debt extinguishment related to the repurchase of senior notes.

There were no senior unsecured notes issuances during the three months ended March 31, 2019 or year ended December 31, 2018.

Mortgage Debt

At March 31, 2019, the Company had $132 million in aggregate principal of mortgage debt outstanding, which is secured by 15 healthcare facilities with an aggregate carrying value of $276 million.

Mortgage debt generally requires monthly principal and interest payments, is collateralized by real estate assets and is generally non-recourse. Mortgage debt typically restricts transfer of the encumbered assets, prohibits additional liens, restricts prepayment, requires payment of real estate taxes, requires maintenance of the assets in good condition, requires insurance on the assets and includes conditions to obtain lender consent to enter into or terminate material leases. Some of the mortgage debt may require tenants or operators to maintain compliance with the applicable leases or operating agreements of such real estate assets.

Debt Maturities

The following table summarizes the Company’s stated debt maturities and scheduled principal repayments at March 31, 2019 (in thousands):

Year	Bank Line of Credit(1)		Senior Unsecured Notes(2)			Mortgage Debt(3)		Total(4)
2019 (nine months)	$	—	$	—		$	2,686	$	2,686
2020	—		800,000			3,609		803,609
2021	276,500		—			10,957		287,457
2022	—		900,000			2,691		902,691
2023	—		800,000			2,811		802,811
Thereafter	—		2,800,000			109,705		2,909,705
	276,500		5,300,000			132,459		5,708,959
(Discounts), premium and debt costs, net	—		(39,378		)	5,066		(34,312		)
	$	276,500	$	5,260,622		$	137,525	$	5,674,647

_______________________________________

(1) Includes £55 million translated into USD.

(2) Effective interest rates on the notes ranged from 2.79% to 6.87% with a weighted average effective interest rate of 4.03% and a weighted average maturity of five years.

(3) Effective interest rates on the mortgage debt ranged from 2.47% to 5.91% with a weighted average effective interest rate of 4.19% and a weighted average maturity of 19 years.

(4)

Excludes $89 million of other debt that have no scheduled maturities.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Proceedings

From time to time, the Company is a party to, or has a significant relationship to, legal proceedings, lawsuits and other claims. Except as described below, the Company is not aware of any legal proceedings or claims that it believes may have, individually or taken together, a material adverse effect on the Company’s financial condition, results of operations or cash flows. The Company’s policy is to expense legal costs as they are incurred.

Class Action. On May 9, 2016, a purported stockholder of the Company filed a putative class action complaint, Boynton Beach Firefighters’ Pension Fund v. HCP, Inc., et al., Case No. 3:16-cv-01106-JJH, in the U.S. District Court for the Northern District of Ohio against the Company, certain of its officers, HCR ManorCare, Inc. (“HCRMC”), and certain of its officers, asserting violations of the federal securities laws. The suit asserts claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and alleges that the Company made certain false or misleading statements relating to the value of and risks concerning its investment in HCRMC by allegedly failing to disclose that HCRMC had engaged in billing fraud, as alleged by the U.S. Department of Justice (“DoJ”) in a suit against HCRMC arising from the False Claims Act that the DoJ voluntarily dismissed with prejudice. The plaintiff in the class action suit demands compensatory damages (in an unspecified amount), costs and expenses (including attorneys’ fees and expert fees), and equitable, injunctive, or other relief as the Court deems just and proper. On November 28, 2017, the Court appointed Societe Generale Securities GmbH (SGSS Germany) and the City of Birmingham Retirement and Relief Systems (Birmingham) as Co-Lead Plaintiffs in the class action. The motion to dismiss was fully briefed on May 21, 2018 and oral arguments were held on October 23, 2018. Subsequently, on December 6, 2018, HCRMC and its officers were voluntarily dismissed from the class action lawsuit without prejudice to such claims being refiled. The Company believes the suit to be without merit and intends to vigorously defend against it.

Derivative Actions. On June 16, 2016 and July 5, 2016, purported stockholders of the Company filed two derivative actions, respectively, Subodh v. HCR ManorCare Inc., et al., Case No. 30-2016-00858497-CU-PT-CXC and Stearns v. HCR ManorCare, Inc., et al., Case No. 30-2016-00861646-CU-MC-CJC, in the Superior Court of California, County of Orange, against certain of the Company’s current and former directors and officers and HCRMC. The Company is named as a nominal defendant. As both derivative actions contained substantially the same allegations, they have been consolidated into a single action (the “California derivative action”). The consolidated action alleges that the defendants engaged in various acts of wrongdoing, including, among other things, breaching fiduciary duties by publicly making false or misleading statements of fact regarding HCRMC’s finances and prospects, and failing to maintain adequate internal controls. On April 18, 2017, the Court approved the parties’ stipulation to stay the case pending disposition of the motion to dismiss the class action litigation.

On April 10, 2017, a purported stockholder of the Company filed a derivative action, Weldon v. Martin et al., Case No. 3:17-cv-755, in federal court in the Northern District of Ohio, Western Division, against certain of the Company’s current and former directors and officers and HCRMC. The Company is named as a nominal defendant. The Weldon complaint asserts similar claims to those asserted in the California derivative action. In addition, the complaint asserts a claim under Section 14(a) of the Exchange Act, alleging that the Company made false statements in its 2016 proxy statement by not disclosing that the Company’s performance issues in 2015 were the direct result of alleged billing fraud at HCRMC. On April 18, 2017, the Court re-assigned and transferred this action to the judge presiding over the related federal securities class action. On July 11, 2017, the Court approved a stipulation by the parties to stay the case pending disposition of the motion to dismiss the class action.

On July 21, 2017, a purported stockholder of the Company filed another derivative action, Kelley v. HCR ManorCare, Inc., et al., Case No. 8:17-cv-01259, in federal court in the Central District of California, against certain of the Company’s current and former directors and officers and HCRMC. The Company is named as a nominal defendant. The Kelley complaint asserts similar claims to those asserted in Weldon and in the California derivative action. Like Weldon, the Kelley complaint also additionally alleges that the Company made false statements in its 2016 proxy statement, and asserts a claim for a violation of Section 14(a) of the Exchange Act. On November 28, 2017, the federal court in the Central District of California granted Defendants’ motion to transfer the action to the Northern District of Ohio (i.e., the court where the class action and other federal derivative action are pending). The Court in the Northern District of Ohio is currently considering whether to consolidate the Weldon and Kelley actions, appointment of lead plaintiffs and counsel, and whether the stay in Weldon should continue as to either or both actions.

The Company’s Board of Directors received letters dated August 17, 2016, April 19, 2017, and April 20, 2017 from private law firms acting on behalf of clients who are purported stockholders of the Company, each asserting allegations similar to those made in the California derivative action matters discussed above. Each letter demands that the Board of Directors take action to assert the Company’s rights. The Board of Directors completed its evaluation and rejected the demand letters in December of 2017.

The Company believes that the plaintiffs lack standing or the lawsuits and demands are without merit, but cannot predict the outcome of these proceedings or reasonably estimate any potential loss at this time. Accordingly, no loss contingency has been recorded for these matters as of March 31, 2019, as the likelihood of loss is not considered probable or estimable.

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Equity

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Equity

Equity

At-The-Market Equity Offering Program

In June 2015, the Company established an at-the-market equity offering program (“ATM Program”) to sell shares of its common stock from time to time through a consortium of banks acting as sales agents or directly to the banks acting as principals. In May 2018, the Company renewed its ATM Program (the “2018 ATM Program”). During the year ended December 31, 2018, the Company issued 5.4 million shares of common stock at a weighted average net price of $28.27 for net proceeds of $154 million.

In February 2019, the Company terminated the 2018 ATM Program and established a new ATM Program (the “2019 ATM Program) pursuant to which shares of common stock having an aggregate gross sales price of up to $1.0 billion may be sold (i) by the Company through a consortium of banks acting as sales agents or directly to the banks acting as principals, or (ii) by a consortium of banks acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement. The use of a forward sale agreement would allow the Company to lock in a share price on the sale of shares at the time the agreement is effective, but defer receiving the proceeds from the sale of shares until a later date.

During the three months ended March 31, 2019, the Company utilized the forward provisions under the 2019 ATM Program to allow for the sale of up to an aggregate of 3.6 million shares of its common stock at an initial weighted average net price of $31.19 per share, after commissions. Each forward sale has a one year term, during which time the Company must settle the forward sale by delivery of physical shares of common stock to the forward seller or, at the Company’s election, in cash or net shares. The forward sale price that the Company expects to receive upon settlement will be the initial forward price established upon the effective date, subject to adjustments for: (i) accrued interest, (ii) the forward purchasers’ stock borrowing costs, and (iii) certain fixed price reductions during the term of the agreement. At March 31, 2019, no shares had been issued to settle any of the forward sales, all of which remain outstanding.

At March 31, 2019, approximately $888 million of our common stock remained available for sale under the 2019 ATM Program.

Subsequent to March 31, 2019, the Company utilized the forward provisions under the 2019 ATM Program to allow for the sale of up to an additional 1.5 million shares of its common stock at an initial weighted average net price of $30.63 per share, after commissions. Each forward sale has a one year term, during which time the Company must settle the forward sale by delivery of physical shares of common stock to the forward seller or, at the Company’s election, in cash or net shares.

2018 Forward Equity Offering

In December 2018, the Company entered into a forward sales agreement to sell up to an aggregate of 15.25 million shares of its common stock (including shares issued through the exercise of underwriters’ options) at an initial net price of $28.60 per share, after underwriting discounts and commissions. The agreement has a one year term that expires on December 13, 2019 during which time the Company may settle the forward sales agreement by delivery of physical shares of common stock to the forward seller or, at the Company’s election, by settling in cash or net shares. The forward sale price that the Company expects to receive upon settlement of the agreement will be the initial net price of $28.60, subject to adjustments for: (i) accrued interest, (ii) the forward purchasers’ stock borrowing costs, and (iii) certain fixed price reductions during the term of the agreement. At March 31, 2019, no shares have been issued under the forward sales agreement, which remains outstanding.

In December 2018, contemporaneous with the forward equity offering discussed above, the Company completed an offering of 2 million shares of common stock at a net price of $28.60 per share, resulting in net proceeds of $57 million.

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the Company’s accumulated other comprehensive income (loss) (in thousands):

	March 31, 2019			December 31, 2018
Cumulative foreign currency translation adjustment(1)	$	(1,021	)	$	(1,683	)
Unrealized gains (losses) on derivatives, net	(373		)	(467		)
Supplemental Executive Retirement plan minimum liability and other	(2,489		)	(2,558		)
Total accumulated other comprehensive income (loss)	$	(3,883	)	$	(4,708	)

_______________________________________

(1)

See Note 3 for a discussion of the U.K. JV transaction.

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Segment Disclosures

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Segment Disclosures

Segment Disclosures

The Company evaluates its business and allocates resources based on its reportable business segments: (i) senior housing triple-net, (ii) SHOP, (iii) life science and (iv) medical office. The Company has non-reportable segments that are comprised primarily of the Company’s debt investments, hospital properties, unconsolidated joint ventures, and U.K. investments. The accounting policies of the segments are the same as those in Note 2 to the Consolidated Financial Statements in the Company’s 2018 Annual Report on Form 10-K filed with the SEC, as updated by Note 2 herein.

During the first quarter of 2019, as a result of a change in how operating results are reported to the chief operating decision makers for the purpose of evaluating performance and allocating resources, the Company reclassified operating results related to two facilities from its other non-reportable segment to its medical office segment. Accordingly, all prior period segment information has been recast to conform to current period presentation.

During the three months ended March 31, 2019, 18 senior housing triple-net facilities were transferred to the Company’s SHOP segment as a result of terminating the triple-net leases and transitioning the assets to a RIDEA structure. During the three months ended March 31, 2018, there were no transfers of assets between segments. When an asset is transferred from one segment to another, the results associated with that asset are included in the original segment until the date of transfer. Results generated after the transfer date are included in the new segment.

The Company evaluates performance based upon: (i) property NOI and (ii) Adjusted NOI. NOI is defined as real estate revenues (inclusive of rental and related revenues, resident fees and services, and income from direct financing leases), less property level operating expenses (which exclude transition costs); NOI excludes all other financial statement amounts included in net income (loss). Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL non-cash interest, amortization of market lease intangibles, termination fees, actuarial reserves for insurance claims that have been incurred but not reported, and the impact of deferred community fee income and expense.

NOI and Adjusted NOI exclude the Company’s share of income (loss) from unconsolidated joint ventures, which is recognized as equity income (loss) from unconsolidated joint ventures in the consolidated statements of operations.

Non-segment assets consist of assets in the Company's other non-reportable segments and corporate non-segment assets. Corporate non-segment assets consist primarily of corporate assets, including cash and cash equivalents, restricted cash, accounts receivable, net, marketable equity securities and, if any, real estate assets and liabilities held for sale. See Note 15 for other information regarding concentrations of credit risk.

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

For the three months ended March 31, 2019:

	Senior Housing Triple-Net			SHOP			Life Science			Medical Office			Other Non-reportable			Corporate Non-segment			Total
Real estate revenues(1)	$	58,892		$	126,181		$	94,473		$	142,195		$	12,700		$	—		$	434,441
Operating expenses	(993		)	(96,948		)	(21,992		)	(48,987		)	(7		)	—			(168,927		)
NOI	57,899			29,233			72,481			93,208			12,693			—			265,514
Adjustments to NOI(2)	564			1,152			(2,478		)	(1,771		)	195			—			(2,338		)
Adjusted NOI	58,463			30,385			70,003			91,437			12,888			—			263,176
Addback adjustments	(564		)	(1,152		)	2,478			1,771			(195		)	—			2,338
Interest income	—			—			—			—			1,713			—			1,713
Interest expense	(589		)	(663		)	(73		)	(111		)	—			(47,891		)	(49,327		)
Depreciation and amortization	(16,683		)	(24,086		)	(36,246		)	(53,101		)	(1,835		)	—			(131,951		)
General and administrative	—			—			—			—			—			(21,355		)	(21,355		)
Transaction costs	—			—			—			—			—			(4,518		)	(4,518		)
Recoveries (impairments), net	—			—			—			(8,858		)	—			—			(8,858		)
Gain (loss) on sales of real estate, net	3,557			4,487			—			—			—			—			8,044
Other income (expense), net	—			—			—			—			—			3,133			3,133
Income tax benefit (expense)	—			—			—			—			—			3,458			3,458
Equity income (loss) from unconsolidated joint ventures	—			—			—			—			(863		)	—			(863		)
Net income (loss)	$	44,184		$	8,971		$	36,162		$	31,138		$	11,708		$	(67,173	)	$	64,990

_______________________________________

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

(2) Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, net and termination fees.

For the three months ended March 31, 2018:

	Senior Housing Triple-Net			SHOP			Life Science			Medical Office			Other Non-reportable			Corporate Non-segment			Total
Real estate revenues(1)	$	74,289		$	144,670		$	99,622		$	133,220		$	21,031		$	—		$	472,832
Operating expenses	(1,045		)	(101,746		)	(21,809		)	(47,878		)	(74		)	—			(172,552		)
NOI	73,244			42,924			77,813			85,342			20,957			—			300,280
Adjustments to NOI(2)	(1,865		)	(1,607		)	(3,751		)	(1,932		)	(531		)	—			(9,686		)
Adjusted NOI	71,379			41,317			74,062			83,410			20,426			—			290,594
Addback adjustments	1,865			1,607			3,751			1,932			531			—			9,686
Interest income	—			—			—			—			6,365			—			6,365
Interest expense	(600		)	(988		)	(83		)	(120		)	(728		)	(72,583		)	(75,102		)
Depreciation and amortization	(21,906		)	(27,628		)	(36,080		)	(47,198		)	(10,438		)	—			(143,250		)
General and administrative	—			—			—			—			—			(29,175		)	(29,175		)
Transaction costs	—			—			—			—			—			(2,195		)	(2,195		)
Gain (loss) on sales of real estate, net	—			20,815			—			—			—			—			20,815
Other income (expense), net	—			—			—			—			(40,567		)	160			(40,407		)
Income tax benefit (expense)	—			—			—			—			—			5,336			5,336
Equity income (loss) from unconsolidated joint ventures	—			—			—			—			570			—			570
Net income (loss)	$	50,738		$	35,123		$	41,650		$	38,024		$	(23,841	)	$	(98,457	)	$	43,237

_______________________________________

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

(2) Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, net and termination fees.

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

	Three Months Ended March 31,
Segment	2019		2018
Senior housing triple-net	$	58,892	$	74,289
SHOP	126,181		144,670
Life science	94,473		99,622
Medical office	142,195		133,220
Other non-reportable segments	14,413		27,396
Total revenues	$	436,154	$	479,197

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

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Earnings Per Common Share

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Earnings Per Common Share

Earnings Per Common Share

Basic income (loss) per common share (“EPS”) is computed based upon the weighted average number of common shares outstanding. Diluted income (loss) per common share is computed based upon the weighted average number of common shares outstanding plus the impact of forward equity sales agreements using the treasury stock method and common shares issuable from the assumed conversion of DownREIT units, stock options, certain performance restricted stock units and unvested restricted stock units. Only those instruments having a dilutive impact on our basic income (loss) per share are included in diluted income (loss) per share during the periods presented.

Restricted stock and certain performance restricted stock units are considered participating securities, because dividend payments are not forfeited even if the underlying award does not vest, and require use of the two-class method when computing basic and diluted earnings per share.

During the first quarter of 2019, the Company utilized the forward sale provisions under the 2019 ATM Program to sell up to an aggregate of 3.6 million shares with a one year term. Additionally, in December 2018, the Company entered into a forward equity sales agreement to sell up to an aggregate of 15.25 million shares of its common stock by no later than December 13, 2019. The Company expects to settle the forward sales with shares of common stock prior to their respective expiration dates. See Note 10 for further details.

The Company considered the potential dilution resulting from the forward agreements to the calculation of earnings per share. At inception, the agreements do not have an effect on the computation of basic EPS as no shares are delivered until settlement. However, the Company uses the treasury stock method to determine the dilution, if any, resulting from the forward sales agreements during the period of time prior to settlement. The aggregate effect on the Company’s diluted weighted-average common shares for the three months ended March 31, 2019, was 1.1 million weighted-average incremental shares from the forward equity sales agreements. 

The following table illustrates the computation of basic and diluted earnings per share (in thousands, except per share amounts):

	Three Months Ended March 31,
	2019			2018
Numerator
Net income (loss)	$	64,990		$	43,237
Noncontrolling interests' share in earnings	(3,520		)	(3,005		)
Net income (loss) attributable to HCP, Inc.	61,470			40,232
Less: Participating securities' share in earnings	(441		)	(391		)
Net income (loss) applicable to common shares	$	61,029		$	39,841
Denominator
Basic weighted average shares outstanding	477,766			469,557
Dilutive potential common shares - equity awards	272			138
Dilutive potential common shares - forward equity agreements	1,093			—
Diluted weighted average common shares	479,131			469,695
Basic earnings per common share
Basic	$	0.13		$	0.08
Diluted	$	0.13		$	0.08

For the three months ended March 31, 2019 and 2018, 6 million and 7 million shares, respectively, issuable upon conversion of DownREIT units were not included because they are anti-dilutive. Additionally, for the three months ended March 31, 2019, 18 million shares of common stock issuable pursuant to the settlement of forward equity sales agreements were not included because they are anti-dilutive (see discussion above). For all periods presented in the above table, approximately 1 million shares of common stock subject to outstanding equity awards (restricted stock units and stock options) were not included because they are anti-dilutive.

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Supplemental Cash Flow Information

3 Months Ended

Mar. 31, 2019

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

Supplemental Cash Flow Information

The following table provides supplemental cash flow information (in thousands):

	Three Months Ended March 31,
	2019			2018
Supplemental cash flow information:
Interest paid, net of capitalized interest	$	53,475		$	92,701
Income taxes paid (refunded)	(769		)	340
Capitalized interest	8,369			3,578
Supplemental schedule of non-cash investing and financing activities:
Accrued construction costs	94,904			62,160
Derecognition of U.K. Bridge Loan receivable	—			147,474
Consolidation of net assets related to U.K. Bridge Loan	—			106,457
Vesting of restricted stock units and conversion of non-managing member units into common stock	4,341			258
Conversion of DFLs to real estate	350,540			—

See discussion related to the U.K. Bridge Loan in Notes 5 and 14.

The following table summarizes cash, cash equivalents and restricted cash (in thousands):

	March 31,
	2019		2018
Cash and cash equivalents	$	120,117	$	86,021
Restricted cash	26,535		31,947
Cash, cash equivalents and restricted cash	$	146,652	$	117,968

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Variable Interest Entities

3 Months Ended

Mar. 31, 2019

Variable Interest Entities [Abstract]

Variable Interest Entities

Variable Interest Entities

Unconsolidated Variable Interest Entities

At March 31, 2019, the Company had investments in: (i) 30 properties leased to VIE tenants, (ii) four unconsolidated VIE joint ventures, (iii) marketable debt securities of one VIE, and (iv) one loan to a VIE borrower. The Company has determined that it is not the primary beneficiary of and therefore does not consolidate these VIEs because it does not have the ability to control the activities that most significantly impact their economic performance. Except for the Company’s equity interest in the unconsolidated joint ventures (CCRC OpCo, Vintage Park Development JV, Waldwick JV and the LLC investment discussed below), it has no formal involvement in these VIEs beyond its investments.

The Company leases 30 properties to a total of four tenants that have also been identified as VIEs (“VIE tenants”). These VIE tenants are “thinly capitalized” entities that rely on the operating cash flows generated from the senior housing facilities to pay operating expenses, including the rent obligations under their leases.

The Company holds a 49% ownership interest in CCRC OpCo, a joint venture entity formed in August 2014 that operates senior housing properties in a RIDEA structure and has been identified as a VIE. The equity members of CCRC OpCo “lack power” because they share certain operating rights with Brookdale, as manager of the CCRCs. The assets of CCRC OpCo primarily consist of the CCRCs that it owns and leases, resident fees receivable, notes receivable, and cash and cash equivalents; its obligations primarily consist of operating lease obligations to CCRC PropCo, debt service payments and capital expenditures for the properties, and accounts payable and expense accruals associated with the cost of its CCRCs’ operations. Assets generated by the CCRC operations (primarily rents from CCRC residents) of CCRC OpCo may only be used to settle its contractual obligations (primarily from debt service payments, capital expenditures, and rental costs and operating expenses incurred to manage such facilities).

The Company holds an 85% ownership interest in a joint venture (Vintage Park Development JV), which has been identified as a VIE as power is shared with a member that does not have a substantive equity investment at risk. The assets of the joint venture primarily consist of a leased property (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of debt-service payments. Any assets generated by the joint venture may only be used to settle its respective contractual obligations (primarily debt service payments).

The Company holds an 85% ownership interest in a development joint venture (Waldwick JV), which has been identified as a VIE as power is shared with a member that does not have a substantive equity investment at risk. The assets of the joint venture primarily consist of an in-progress senior housing facility development project that it owns and cash and cash equivalents; its obligations primarily consist of accounts payable and expense accruals associated with the cost of its development obligations. Any assets generated by the joint venture may only be used to settle its respective contractual obligations (primarily development expenses and debt service payments).

The Company holds a limited partner ownership interest in an unconsolidated LLC that has been identified as a VIE. The Company’s involvement in the entity is limited to its equity investment as a limited partner, and it does not have any substantive participating rights or kick-out rights over the general partner. The assets and liabilities of the entity primarily consist of those associated with its senior housing real estate and development activities. Any assets generated by the entity may only be used to settle its contractual obligations (primarily development expenses and debt service payments).

The Company holds commercial mortgage-backed securities (“CMBS”) issued by Federal Home Loan Mortgage Corporation (commonly referred to as Freddie MAC) through a special purpose entity that has been identified as a VIE because it is “thinly capitalized.” The CMBS issued by the VIE are backed by mortgage debt obligations on real estate assets.

The Company provided seller financing of $10 million related to its sale of seven senior housing triple-net facilities. The financing was provided in the form of a secured five year mezzanine loan to a “thinly capitalized” borrower created to acquire the facilities.

The classification of the related assets and liabilities and the maximum loss exposure as a result of the Company’s involvement with these VIEs at March 31, 2019 was as follows (in thousands):

VIE Type	Asset/Liability Type	Maximum Loss Exposure and Carrying Amount(1)
VIE tenants - DFLs(2)	Net investment in DFLs	$	249,803
VIE tenants - operating leases(2)	Lease intangibles, net and straight-line rent receivables	6,909
CCRC OpCo	Investments in unconsolidated joint ventures	175,011
Unconsolidated development joint ventures	Investments in unconsolidated joint ventures	15,206
Loan - seller financing	Loans receivable, net	10,000
CMBS and LLC investment	Marketable debt and LLC investment	34,397

_______________________________________

(1) The Company’s maximum loss exposure represents the aggregate carrying amount of such investments (including accrued interest).

(2) The Company’s maximum loss exposure may be mitigated by re-leasing the underlying properties to new tenants upon an event of default.

At March 31, 2019, the Company had not provided, and is not required to provide, financial support through a liquidity arrangement or otherwise, to its unconsolidated VIEs, including circumstances in which it could be exposed to further losses (e.g., cash shortfalls).

See Notes 4, 5 and 6 for additional descriptions of the nature, purpose and operating activities of the Company’s unconsolidated VIEs and interests therein.

Consolidated Variable Interest Entities

HCP, Inc.’s consolidated total assets and total liabilities at March 31, 2019 and December 31, 2018 include certain assets of VIEs that can only be used to settle the liabilities of the related VIE. The VIE creditors do not have recourse to HCP, Inc. Total assets and total liabilities include VIE assets and liabilities as follows (in thousands):

	March 31, 2019			December 31, 2018
Assets
Buildings and improvements	$	2,001,875		$	1,949,582
Development costs and construction in progress	43,481			39,584
Land	196,484			151,746
Accumulated depreciation and amortization	(424,325		)	(398,143		)
Net real estate	1,817,515			1,742,769
Investments in and advances to unconsolidated joint ventures	1,534			1,550
Accounts receivable, net	6,811			7,904
Cash and cash equivalents	32,831			23,772
Restricted cash	3,386			3,399
Intangible assets, net	96,197			111,333
Right-of-use asset, net	93,796			—
Other assets, net	44,312			43,149
Total assets	$	2,096,382		$	1,933,876
Liabilities
Mortgage debt	44,500			44,598
Intangible liabilities, net	17,014			19,128
Lease liability	90,043			—
Accounts payable and accrued liabilities	56,542			66,736
Deferred revenue	23,536			24,215
Total liabilities	$	231,635		$	154,677

HCP Ventures V, LLC.  The Company holds a 51% ownership interest in and is the managing member of a joint venture entity formed in October 2015 that owns and leases MOBs (“HCP Ventures V”). The Company classifies HCP Ventures V as a VIE due to the non-managing member lacking substantive participation rights in the management of HCP Ventures V or kick-out rights over the managing member. The Company consolidates HCP Ventures V as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of HCP Ventures V primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of capital expenditures for the properties. Assets generated by HCP Ventures V may only be used to settle its contractual obligations (primarily from capital expenditures).

Vintage Park JV.  The Company holds a 90% ownership interest in and is the managing member of a joint venture entity formed in January 2015 (“Vintage Park JV”) that owns an 85% interest in an unconsolidated development VIE. The Company classifies Vintage Park JV as a VIE due to the non-managing member lacking substantive participation rights in the management of the Vintage Park JV or kick-out rights over the managing member. The Company consolidates Vintage Park JV as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of Vintage Park JV primarily consist of an investment in the Vintage Park Development JV and cash and cash equivalents; its obligations primarily consist of funding the ongoing development of the Vintage Park Development JV. Assets generated by the Vintage Park JV may only be used to settle its contractual obligations (primarily from the funding of the Vintage Park Development JV).

Watertown JV.  The Company holds a 95% ownership interest in and is the managing member of joint venture entities formed in November 2017 that own and operate a senior housing property in a RIDEA structure (“Watertown JV”). Watertown PropCo is a VIE as the Company and the non-managing member share in control of the entity, but substantially all of the entity's activities are performed on behalf of the Company. Watertown OpCo is a VIE as the non-managing member, through its equity interest, lacks substantive participation rights in the management of Watertown OpCo or kick-out rights over the managing member. The Company consolidates Watertown PropCo and Watertown OpCo as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of Watertown PropCo primarily consist of a leased

property (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of notes payable to a non-VIE consolidated subsidiary of the Company. The assets of Watertown OpCo primarily consist of leasehold interests in a senior housing facility (operating lease), resident fees receivable, and cash and cash equivalents; its obligations primarily consist of lease payments to Watertown PropCo and operating expenses of its senior housing facilities (accounts payable and accrued expenses). Assets generated by the senior housing operations (primarily from senior housing resident rents) of the Watertown structure may only be used to settle its contractual obligations (primarily from the rental costs, operating expenses incurred to manage such facilities and debt costs).

Life Science JVs.  The Company holds a 99% ownership interest in multiple joint venture entities that own and lease life science assets (the “Life Science JVs”). The Life Science JVs are VIEs as the members share in control of the entities, but substantially all of the activities are performed on behalf of the Company. The Company consolidates the Life Science JVs as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the Life Science JVs primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the Life Science JVs may only be used to settle their contractual obligations (primarily from capital expenditures).

MSREI MOB JV. The Company holds a 51% ownership interest in, and is the managing member of, a joint venture entity formed in August 2018 that owns and leases MOBs (the “MSREI JV” - see Note 3). The MSREI JV is a VIE due to the non-managing member lacking substantive participation rights in the management of the joint venture or kick-out rights over the managing member. The Company consolidates the MSREI JV as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of the MSREI JV primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of capital expenditures for the properties. Assets generated by the MSREI JV may only be used to settle its contractual obligations (primarily from capital expenditures).

Consolidated Lessee. The Company leases one senior housing property to a lessee entity under a cash flow lease through which the Company receives monthly rent equal to the residual cash flows of the property. The lessee entity is classified as a VIE as it is a "thinly capitalized" entity. The Company consolidates the lessee entity as it has the ability to control the activities that most significantly impact the economic performance of the lessee entity. The lessee entity’s assets primarily consist of leasehold interests in a senior housing facility (operating leases), resident fees receivable, and cash and cash equivalents; its obligations primarily consist of lease payments to the Company and operating expenses of the senior housing facility (accounts payable and accrued expenses). Assets generated by the senior housing operations (primarily from senior housing resident rents) may only be used to settle its contractual obligations (primarily from the rental costs, operating expenses incurred to manage such facilities and debt costs).

DownREITs.  The Company holds a controlling ownership interest in and is the managing member of five limited liability companies (“DownREITs”). The Company classifies the DownREITs as VIEs due to the non-managing members lacking substantive participation rights in the management of the DownREITs or kick-out rights over the managing member. The Company consolidates the DownREITs as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the DownREITs primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the DownREITs (primarily from resident rents) may only be used to settle their contractual obligations (primarily from debt service and capital expenditures).

Other Consolidated Real Estate Partnerships.  The Company holds a controlling ownership interest in and is the general partner (or managing member) of multiple partnerships that own and lease real estate assets (the “Partnerships”). The Company classifies the Partnerships as VIEs due to the limited partners (non-managing members) lacking substantive participation rights in the management of the Partnerships or kick-out rights over the general partner (managing member). The Company consolidates the Partnerships as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the Partnerships primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the Partnerships (primarily from resident rents) may only be used to settle their contractual obligations (primarily from debt service and capital expenditures).

Other consolidated VIEs.  The Company made a loan to an entity that entered into a tax credit structure (“Tax Credit Subsidiary”) and a loan to an entity that made an investment in a development joint venture (“Development JV”) both of which are considered VIEs. The Company consolidates the Tax Credit Subsidiary and Development JV as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIEs’ economic performance. The assets and liabilities of the Tax Credit Subsidiary and Development JV substantially consist of a development in progress, notes receivable, prepaid expenses, notes payable, and accounts payable and accrued liabilities generated from their operating activities. Any assets generated by the operating activities of the Tax Credit Subsidiary and Development JV may only be used to settle their contractual obligations.

U.K. Bridge Loan. In 2016, the Company provided a £105 million ($131 million at closing) bridge loan to MMCG to fund the acquisition of a portfolio of seven care homes in the U.K. MMCG created a special purpose entity to acquire the portfolio and funded it entirely using the Company’s bridge loan. As such, the special purpose entity had historically been identified as a VIE because it was “thinly capitalized.” The Company retained a three year call option to acquire all the shares of the special purpose entity, which it could only exercise upon the occurrence of certain events. During the quarter ended March 31, 2018, the Company concluded that the conditions required to exercise the call option had been met and initiated the call option process to acquire the special purpose entity. In conjunction with initiating the process to legally exercise its call option and the satisfaction of required contingencies, the Company concluded that it was the primary beneficiary of the special purpose entity and therefore, should consolidate the entity. As such, during the quarter ended March 31, 2018, the Company derecognized the previously outstanding loan receivable, recognized the special purpose entity’s assets and liabilities at their respective fair values, and recognized a £29 million ($41 million) loss on consolidation, net of a tax benefit of £2 million ($3 million), to account for the difference between the carrying value of the loan receivable and the fair value of net assets and liabilities assumed. The loss on consolidation was recognized within other income (expense), net and the tax benefit was recognized within income tax benefit (expense). The fair value of net assets and liabilities consolidated during the first quarter of 2018 consisted of £81 million ($114 million) of net real estate, £4 million ($5 million) of intangible assets, and £9 million ($13 million) of net deferred tax liabilities.

In June 2018, the Company completed the exercise of the above-mentioned call option and formally acquired full ownership of the special purpose entity. As such, the Company reconsidered whether the special purpose entity was a VIE and concluded that it was no longer “thinly capitalized” as the previously outstanding bridge loan converted to equity at risk and, therefore, was no longer a VIE. The real estate assets held by the special purpose entity were contributed to the U.K. JV formed by the Company in June 2018 (see Note 3).

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Concentration of Credit Risk

3 Months Ended

Mar. 31, 2019

Risks and Uncertainties [Abstract]

Concentration of Credit Risk

Concentration of Credit Risk

Concentrations of credit risk arise when one or more tenants, operators or obligors related to the Company’s investments are engaged in similar business activities or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions. The Company regularly monitors various segments of its portfolio to assess potential concentrations of credit risks.

The following tables provide information regarding the Company’s concentrations of credit risk with respect to certain tenants:

	Percentage of Total Assets
	Total Company		Senior Housing Triple-Net
	March 31,	December 31,	March 31,	December 31,
Tenant	2019	2018	2019	2018
Brookdale(1)	6	6	31	27

	Percentage of Revenues
	Total Company		Senior Housing Triple-Net
	Three Months Ended March 31,		Three Months Ended March 31,
Tenant	2019	2018	2019	2018
Brookdale(1)	4	7	32	43

_______________________________________

(1) Excludes senior housing facilities operated by Brookdale in the Company’s SHOP segment as discussed below. Percentages of segment and total company revenues include partial-year revenue earned from senior housing triple-net facilities that were sold during 2018.

At both March 31, 2019 and December 31, 2018, Brookdale managed or operated, in the Company’s SHOP segment, approximately 7% of the Company’s real estate investments (based on total assets). Because an operator manages the Company’s facilities in exchange for the receipt of a management fee, the Company is not directly exposed to the credit risk of its operators in the same manner or to the same extent as its triple-net tenants. At March 31, 2019, Brookdale provided comprehensive facility management and accounting services with respect to 27 of the Company’s consolidated SHOP facilities and 16 SHOP facilities owned by its unconsolidated joint ventures, for which the Company or joint venture pay annual management fees pursuant to long-term management agreements. Most of the management agreements have terms ranging from 10 to 15 years, with three to four 5-year renewal periods. The base management fees are 4.5% to 5.0% of gross revenues (as defined) generated by the RIDEA properties. In addition, there are incentive management fees payable to Brookdale if operating results of the RIDEA properties exceed pre-established EBITDAR (as defined) thresholds.

To mitigate the credit risk of leasing properties to certain senior housing and post-acute/skilled nursing operators, leases with operators are often combined into portfolios that contain cross-default terms, so that if a tenant of any of the properties in a portfolio defaults on its obligations under its lease, the Company may pursue its remedies under the lease with respect to any of the properties in the portfolio. Certain portfolios also contain terms whereby the net operating profits of the properties are combined for the purpose of securing the funding of rental payments due under each lease.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2019

Financial Instruments, Owned, at Fair Value [Abstract]

Fair Value Measurements

Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets are immaterial at March 31, 2019.

The table below summarizes the carrying amounts and fair values of the Company’s financial instruments (in thousands):

	March 31, 2019(3)				December 31, 2018(3)
	Carrying Value		Fair Value		Carrying Value		Fair Value
Loans receivable, net(2)	$	86,139	$	86,139	$	62,998	$	62,998
Marketable debt securities(2)	19,337		19,337		19,202		19,202
Bank line of credit(2)	276,500		276,500		80,103		80,103
Senior unsecured notes(1)	5,260,622		5,484,915		5,258,550		5,302,485
Mortgage debt(2)	137,525		133,652		138,470		136,161
Other debt(2)	89,223		89,223		90,785		90,785
Interest-rate swap liabilities(2)	1,217		1,217		1,310		1,310

_______________________________________

(1) Level 1: Fair value calculated based on quoted prices in active markets.

(2) Level 2: Fair value based on (i) for marketable debt securities, quoted prices for similar or identical instruments in active or inactive markets, respectively, or (ii) for loans receivable, net, mortgage debt and swaps, calculated utilizing standardized pricing models in which significant inputs or value drivers are observable in active markets. For bank line of credit, term loan and other debt, the carrying values are a reasonable estimate of fair value because the borrowings are primarily based on market interest rates and the Company’s credit rating.

(3)

During the three months ended March 31, 2019 and year ended December 31, 2018, there were no material transfers of financial assets or liabilities within the fair value hierarchy.

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Derivative Financial Instruments

3 Months Ended

Mar. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The following table summarizes the Company’s outstanding swap contracts at March 31, 2019 (dollars in thousands):

Date Entered	Maturity Date	Hedge Designation	Notional		Pay Rate	Receive Rate	Fair Value(1)
Interest rate:
July 2005(2)	July 2020	Cash Flow	$	43,000	3.82%	BMA Swap Index	$	(1,217	)

______________________________________

(1) Derivative liabilities are recorded in accounts payable and accrued liabilities on the consolidated balance sheets.

(2) Represents three interest-rate swap contracts, which hedge fluctuations in interest payments on variable-rate secured debt due to overall changes in hedged cash flows.

The Company uses derivative instruments to mitigate the effects of interest rate fluctuations on specific forecasted transactions as well as recognized financial obligations or assets. Utilizing derivative instruments allows the Company to manage the risk of fluctuations in interest rates related to the potential impact these changes could have on future earnings and forecasted cash flows. The Company does not use derivative instruments for speculative or trading purposes. Assuming a one percentage point shift in the underlying interest rate curve, the estimated change in fair value of each of the underlying derivative instruments would not exceed $1 million.

At March 31, 2019, £55 million of the Company’s GBP-denominated borrowings under the Facility are designated as a hedge of a portion of the Company’s net investments in GBP-functional currency unconsolidated subsidiaries to mitigate its exposure to fluctuations in the GBP to USD exchange rate. For instruments that are designated and qualify as net investment hedges, the variability in the foreign currency to USD exchange rate of the instrument is recorded as part of the cumulative translation adjustment component of accumulated other comprehensive income (loss). Accordingly, the remeasurement value of the designated £55 million GBP-denominated borrowings due primarily to fluctuations in the GBP to USD exchange rate are reported in accumulated

other comprehensive income (loss) as the hedging relationship is considered to be effective. The balance in accumulated other comprehensive income (loss) will be reclassified to earnings when the Company sells its remaining investment in the U.K.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Management is required to make estimates and assumptions in the preparation of financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from management’s estimates.

The consolidated financial statements include the accounts of HCP, Inc., its wholly-owned subsidiaries, joint ventures (“JVs”) and variable interest entities (“VIEs”) that it controls through voting rights or other means. Intercompany transactions and balances have been eliminated upon consolidation. All adjustments (consisting of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows have been included. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. The accompanying unaudited interim financial information should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”).

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Adopted

Revenue Recognition. Between May 2014 and February 2017, the Financial Accounting Standards Board (“FASB”) issued four Accounting Standards Updates (“ASUs”) changing the requirements for recognizing and reporting revenue (together, herein referred to as the “Revenue ASUs”): (i) ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), (ii) ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”), (iii) ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), and (iv) ASU No. 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”). ASU 2014-09 provides guidance for revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2016-08 is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. ASU 2016-12 provides practical expedients and improvements on the previously narrow scope of ASU 2014-09. ASU 2017-05 clarifies the scope of the FASB’s guidance on nonfinancial asset derecognition and aligns the accounting for partial sales of nonfinancial assets and in-substance nonfinancial assets with the guidance in ASU 2014-09. The Company adopted the Revenue ASUs effective January 1, 2018 and utilized a modified retrospective adoption approach, resulting in a cumulative-effect adjustment to equity of $79 million as of January 1, 2018. Under the Revenue ASUs, the Company also elected to utilize a practical expedient which allows the Company to only reassess contracts that were not completed as of the adoption date, rather than all historical contracts.

As the timing and recognition of the majority of the Company’s revenue is the same whether accounted for under the Revenue ASUs or lease accounting guidance (see discussion below), the impact of the Revenue ASUs, upon and subsequent to adoption, is generally limited to the following:

• Prior to the adoption of the Revenue ASUs, the Company recognized a gain on sale of real estate using the full accrual method when collectibility of the sales price was reasonably assured, the Company was not obligated to perform additional activities that may be considered significant, the initial investment from the buyer was sufficient and other profit recognition criteria had been satisfied. The Company deferred all or a portion of a gain on sale of real estate if the requirements for gain recognition were not met at the time of sale. Subsequent to adopting the Revenue ASUs on January 1, 2018, the Company began recognizing a gain on sale of real estate upon transferring control of the asset to the purchaser, which is generally satisfied at the time of sale. In conjunction with its adoption of the Revenue ASUs, the Company reassessed its historical partial sale of real estate transactions to determine which transactions, if any, were not completed contracts (i.e., the transaction did not qualify for sale treatment under previous guidance). The Company concluded that it had one such material transaction, its partial sale of RIDEA II in the first quarter of 2017 (which was not a completed sale under historical guidance as of the Company's adoption date due to a minor obligation related to the interest sold). In accordance with the Revenue ASUs, the Company recorded its retained 40% equity investment at fair value as of the sale date. As a result, the Company recorded an adjustment to equity as of January 1, 2018 (under the modified retrospective transition approach) representing a step-up in the fair value of its equity investment in RIDEA II of $107 million (to a carrying value of $121 million as of January 1, 2018) and a $30 million impairment charge to decrease the carrying value to the sales price of the investment (see Note 3). The Company completed the sale of its equity investment in June 2018 and no longer holds an economic interest in RIDEA II.

• The Company generally expects that the new guidance will result in certain transactions qualifying as sales of real estate at an earlier date than under historical accounting guidance.

• The Company, along with its joint venture partners and independent SHOP operators, provide certain ancillary services to SHOP residents that are not contemplated in the lease with each resident (i.e., guest meals, concierge services, pharmacy services, etc.). These services are provided and paid for in addition to the standard services included in each resident lease (i.e., room and board, standard meals, etc.). The Company bills residents for ancillary services one month in arrears and recognizes revenue as the services are provided, as the Company has no continuing performance obligation related to those services. Included within resident fees and services for both the three months ended March 31, 2019 and 2018 is $10 million of ancillary service revenue.

Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 (codified under Accounting Standards Codification (“ASC”) 842, Leases) amends the previous accounting for leases to: (i) require lessees to put most leases on their balance sheets (not required for short-term leases with lease terms of 12 months or less), but continue recognizing expenses on their income statements in a manner similar to requirements under prior accounting guidance, (ii) eliminate real estate specific lease provisions, and (iii) modify the classification criteria and accounting for sales-type leases for lessors. Additionally, ASU 2016-02 provides a practical expedient, which the Company elected, that allows an entity to not reassess the following upon adoption (must be elected as a group): (i) whether an expired or existing contract contains a lease arrangement, (ii) lease classification related to expired or existing lease arrangements, or (iii) whether costs incurred on expired or existing leases qualify as initial direct costs.

As a result of adopting ASU 2016-02 on January 1, 2019 using the modified retrospective transition approach, the Company recognized a cumulative-effect adjustment to equity of $1 million as of January 1, 2019. Under ASU 2016-02, the Company began capitalizing fewer costs related to the drafting and negotiation of its lease agreements. Additionally, the Company began recognizing all of its significant operating leases for which it is the lessee, including corporate office leases, equipment leases, and ground leases, on its consolidated balance sheets as a lease liability and corresponding right-of-use asset. As such, the Company recognized a lease liability of $153 million and right-of-use asset of $166 million on January 1, 2019. The aggregate lease liability is calculated as the present value of minimum lease payments, discounted using a rate that approximates the Company’s secured incremental borrowing rate, adjusted for the noncancelable term of each lease. The right-of-use asset is calculated as the aggregate lease liability, adjusted for the existing accrued straight-line rent liability balance of $20 million and net unamortized above/below market ground lease intangible assets of $33 million.

Under ASU 2016-02, a practical expedient was offered to lessees to make a policy election, which the Company elected, to not separate lease and nonlease components, but rather account for the combined components as a single lease component under ASC 842. In July 2018, the FASB issued ASU No. 2018-11, Leases - Targeted Improvements (“ASU 2018-11”), which provides lessors with a similar option to elect a practical expedient allowing them to not separate lease and nonlease components in a contract for the purpose of revenue recognition and disclosure. This practical expedient is limited to circumstances in which: (i) the timing and pattern of transfer are the same for the nonlease component and the related lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease. This practical expedient causes an entity to assess whether a contract is predominantly lease or service based and recognize the entire contract under the relevant accounting guidance (i.e.,

predominantly lease-based would be accounted for under ASU 2016-02 and predominantly service-based would be accounted for under the Revenue ASUs). The Company elected this practical expedient as well and, as a result, beginning January 1, 2019, the Company recognizes revenue from its senior housing triple-net, medical office, and life science segments under ASC 842 and revenue from its SHOP segment under the Revenue ASUs (codified under ASC 606, Revenue from Contracts with Customers).

In conjunction with reaching the conclusions above, the Company concluded it was appropriate (under ASC 205, Presentation of Financial Statements) to reclassify amounts previously classified as revenue from tenant recoveries (within the senior housing triple-net, life science, and medical office segments) and present them combined with rental and related revenues within the consolidated statements of operations. The Company implemented this change during the fourth quarter of 2018. Included within rental and related revenues for the three months ended March 31, 2018 is $37 million of tenant recoveries.

In December 2018, the FASB issued ASU No. 2018-20, Narrow Scope Improvements for Lessors (“ASU 2018-20”), which requires that a lessor: (i) exclude certain lessor costs paid directly by a lessee to third parties on behalf of the lessor from a lessor's measurement of variable lease revenue and associated expense (i.e., no gross up of revenue and expense for these costs), and (ii) include lessor costs that are paid by the lessor and reimbursed by the lessee in the measurement of variable lease revenue and the associated expense (i.e., gross up revenue and expense for these costs). This is consistent with the Company’s historical presentation and did not require a material change on January 1, 2019.

Other. Effective January 1, 2019, the Company adopted the following ASU, which did not have a material impact to its consolidated financial position, results of operations, cash flows or disclosures upon adoption:

• ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). The amendments in ASU 2017-12 expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. For cash flow and net investment hedges existing at the date of adoption, the Company adopted the amendments in ASU 2017-12 using the modified retrospective approach. For amendments impacting presentation and disclosure, the Company adopted ASU 2017-12 using a prospective approach.

Not Yet Adopted

Credit Losses. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 is intended to improve financial reporting by requiring timelier recognition of credit losses on loans and other financial instruments held by financial institutions and other organizations. The amendments in ASU 2016-13 eliminate the “probable” initial threshold for recognition of credit losses in current accounting guidance and, instead, reflect an entity’s current estimate of all expected credit losses over the life of the financial instrument. Previously, when credit losses were measured under current accounting guidance, an entity generally only considered past events and current conditions in measuring the incurred loss. The amendments in ASU 2016-13 broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss. ASU 2016-13 is effective for fiscal years, and interim periods within, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within, beginning after December 15, 2018. A reporting entity is required to apply the amendments in ASU 2016-13 using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. A prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. Upon adoption of ASU 2016-13, the Company is required to reassess its financing receivables, including direct financing leases (“DFLs”) and loans receivable, and expects that application of ASU 2016-13 may result in the Company recognizing credit losses at an earlier date than would otherwise be recognized under current accounting guidance. The Company is evaluating the impact of the adoption of ASU 2016-13 on January 1, 2020 to its consolidated financial position and results of operations.

Segment Reporting

The Company’s reportable segments, based on how it evaluates its business and allocates resources, are as follows: (i) senior housing triple-net, (ii) SHOP, (iii) life science and (iv) medical office. During the first quarter of 2019, as a result of a change in how operating results are reported to the Company's chief operating decision makers for the purpose of evaluating performance and allocating resources, two facilities were reclassified from other non-reportable segments to the medical office segment. Accordingly, all prior period segment information has been recast to conform to the current period presentation.

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Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases, Capital [Abstract]

Schedule of Company's Lease Income

The following table summarizes the Company’s lease income:

	Three Months Ended March 31,
	2019		2018
Operating lease income	$	294,222	$	316,752
Interest income on direct financing leases	13,524		13,266

Schedule of Components of Net Investment in DFLs

Net investment in DFLs consists of the following (dollars in thousands):

	March 31, 2019
Present value of minimum lease payments receivable	$	273,629
Present value of estimated residual value	114,364
Less deferred selling profits	(24,598		)
Net investment in direct financing leases	$	363,395
Properties subject to direct financing leases	15

	December 31, 2018
Minimum lease payments receivable	$	1,013,976
Estimated residual value	507,484
Less unearned income	(807,642		)
Net investment in direct financing leases	$	713,818
Properties subject to direct financing leases	29

Schedule of Future Minimum Lease Payments Contractually Due Under DFLs

The following table summarizes future minimum lease payments contractually due under DFLs at March 31, 2019 (in thousands):

Year	Amount
2019 (nine months)	$	29,365
2020	32,558
2021	31,989
2022	25,346
2023	24,774
Thereafter	416,286
Undiscounted minimum lease payments receivable	560,318
Less: imputed interest	(286,689		)
Present value of minimum lease payments receivable	$	273,629

The following table summarizes future minimum lease payments contractually due under DFLs at December 31, 2018 (in thousands):

Year	Amount
2019	$	114,970
2020	63,308
2021	63,687
2022	58,135
2023	58,570
Thereafter	655,306
	$	1,013,976

Summary of the Company's Internal Ratings for DFLs

The following table summarizes the Company’s internal ratings for DFLs at March 31, 2019 (dollars in thousands):

	Carrying Amount		Percentage of DFL Portfolio	Internal Ratings
Segment				Performing DFLs		Watch List DFLs		Workout DFLs
Senior housing triple-net	$	278,791	77	$	278,791	$	—	$	—
Other non-reportable segments	84,604		23	84,604		—		—
	$	363,395	100	$	363,395	$	—	$	—

The following table summarizes the Company’s internal ratings for loans receivable at March 31, 2019 (dollars in thousands):

	Carrying Amount		Percentage of Loan Portfolio	Internal Ratings
Investment Type				Performing Loans		Watch List Loans		Workout Loans
Real estate secured	$	65,635	76	$	65,635	$	—	$	—
Other secured	20,504		24	20,504		—		—
	$	86,139	100	$	86,139	$	—	$	—

Schedule of Future Minimum Lease Payments Due Under Operating Leases

The following table summarizes future minimum lease payments to be received, excluding operating expense reimbursements, from tenants under non-cancelable operating leases as of March 31, 2019 (in thousands):

Year	Amount
2019 (nine months)	$	733,816
2020	952,756
2021	884,923
2022	782,066
2023	703,054
Thereafter	2,505,848
	$	6,562,463

The following table summarizes future minimum lease payments to be received, excluding operating expense reimbursements, from tenants under non-cancelable operating leases as of December 31, 2018 (in thousands):

Year	Amount
2019	$	971,417
2020	928,102
2021	853,451
2022	751,972
2023	675,537
Thereafter	2,320,847
	$	6,501,326

Schedule of Other Lease Information

The following tables provide information regarding the Company’s leases to which it is the lessee, such as corporate offices and ground leases (dollars in thousands):

	Three Months Ended March 31,
Lease Expense Information:	2019		2018
Total lease expense(1)	$	4,803	$	5,024

_______________________________________

(1) Lease expense related to corporate assets is included in general and administrative expenses and lease expense related to ground leases is included within operating expenses in the Company’s consolidated statements of operations.

	Three Months Ended March 31,
Supplemental Cash Flow Information:	2019		2018
Cash paid for amounts included in the measurement of lease liability:
Operating cash flows for operating leases	$	3,963	$	4,253
ROU asset obtained in exchange for new lease liability:
Operating leases	$	880	$	—

Weighted Average Lease Term and Discount Rate:	March 31, 2019
Weighted average remaining lease term (years):
Operating leases	52
Weighted average discount rate:
Operating leases	4.36	%

Schedule of Future Minimum Lease Obligations

The following table summarizes future minimum lease obligations under non-cancelable ground and other operating leases as of March 31, 2019 (in thousands):

Year	Amount
2019 (nine months)	$	5,937
2020	7,816
2021	7,888
2022	8,028
2023	8,198
Thereafter	471,083
Undiscounted minimum lease payments payable	508,950
Less: imputed interest	(356,113		)
Present value of lease liability	$	152,837

The following table summarizes future minimum lease obligations under non-cancelable ground and other operating leases as of December 31, 2018 (in thousands):

Year	Amount
2019	$	5,597
2020	5,687
2021	5,776
2022	5,862
2023	5,983
Thereafter	466,130
	$	495,035

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Loans Receivable (Tables)

3 Months Ended

Mar. 31, 2019

Receivables [Abstract]

Schedule of Loans Receivable

The following table summarizes the Company’s loans receivable (in thousands):

	March 31, 2019								December 31, 2018
	Real Estate Secured		Other Secured			Total			Real Estate Secured		Other Secured			Total
Mezzanine	$	—	$	20,545		$	20,545		$	—	$	21,013		$	21,013
Participating development loans and other(1)	65,635		—			65,635			42,037		—			42,037
Unamortized discounts, fees and costs	—		(41		)	(41		)	—		(52		)	(52		)
	$	65,635	$	20,504		$	86,139		$	42,037	$	20,961		$	62,998

_______________________________________

(1) At March 31, 2019, the Company had $53 million remaining of commitments to fund a $115 million senior living development project.

Summary of the Company's Internal Ratings for Loans Receivable

The following table summarizes the Company’s internal ratings for DFLs at March 31, 2019 (dollars in thousands):

	Carrying Amount		Percentage of DFL Portfolio	Internal Ratings
Segment				Performing DFLs		Watch List DFLs		Workout DFLs
Senior housing triple-net	$	278,791	77	$	278,791	$	—	$	—
Other non-reportable segments	84,604		23	84,604		—		—
	$	363,395	100	$	363,395	$	—	$	—

The following table summarizes the Company’s internal ratings for loans receivable at March 31, 2019 (dollars in thousands):

	Carrying Amount		Percentage of Loan Portfolio	Internal Ratings
Investment Type				Performing Loans		Watch List Loans		Workout Loans
Real estate secured	$	65,635	76	$	65,635	$	—	$	—
Other secured	20,504		24	20,504		—		—
	$	86,139	100	$	86,139	$	—	$	—

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Investments in and Advances to Unconsolidated Joint Ventures (Tables)

3 Months Ended

Mar. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Equity Method Investments

The Company owns interests in the following entities that are accounted for under the equity method (dollars in thousands): 

			Carrying Amount
			March 31,		December 31,
Entity(1)	Property Count	Ownership %	2019		2018
CCRC JV	15	49	$	358,172	$	365,764
U.K. JV(2)	68	49	102,692		101,735
MBK JV	5	50	34,935		35,435
Other SHOP JVs(3)	5	50 - 90	24,684		25,493
Medical Office JVs(4)	3	20 - 67	10,039		10,160
K&Y JVs(5)	3	80	1,431		1,430
Advances to unconsolidated joint ventures, net			13		71
			$	531,966	$	540,088

_______________________________________

(1) These entities are not consolidated because the Company does not control, through voting rights or other means, the joint ventures.

(2) See Note 3 for discussion of the formation of the U.K. JV and the Company’s equity method investment.

(3) Includes four unconsolidated SHOP joint ventures (and the Company’s ownership percentage): (i) Vintage Park Development JV (85%); (ii) Waldwick JV (85%); (iii) Otay Ranch JV (90%); and (iv) MBK Development JV (50%).

(4) Includes three unconsolidated medical office joint ventures (and the Company’s ownership percentage): HCP Ventures IV, LLC (20%); HCP Ventures III, LLC (30%); and Suburban Properties, LLC (67%).

(5)

At March 31, 2019, includes two unconsolidated joint ventures. At December 31, 2018, includes three unconsolidated joint ventures.

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Intangibles (Tables)

3 Months Ended

Mar. 31, 2019

Intangibles

Schedule of Intangible Lease Assets

The following tables summarize the Company’s intangible lease assets and liabilities (in thousands):

Intangible lease assets	March 31, 2019			December 31, 2018
Gross intangible lease assets	$	491,998		$	556,114
Accumulated depreciation and amortization	(216,433		)	(251,035		)
Intangible assets, net	$	275,565		$	305,079

Schedule of Intangible Lease Liabilities

Intangible lease liabilities	March 31, 2019			December 31, 2018
Gross intangible lease liabilities	$	82,777		$	94,444
Accumulated depreciation and amortization	(33,289		)	(39,781		)
Intangible liabilities, net	$	49,488		$	54,663

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Debt (Tables)

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Summary of Senior Notes Issuances

The following table summarizes the Company’s senior unsecured notes payoffs during the year ended December 31, 2018 (dollars in thousands):

Date	Amount		Coupon Rate
July 16, 2018(1)	$	700,000	5.375	%
November 8, 2018	$	450,000	3.750	%

_______________________________________

(1)

The Company recorded a $44 million loss on debt extinguishment related to the repurchase of senior notes.

Summary of Debt Maturities and Schedule Principal Repayments

The following table summarizes the Company’s stated debt maturities and scheduled principal repayments at March 31, 2019 (in thousands):

Year	Bank Line of Credit(1)		Senior Unsecured Notes(2)			Mortgage Debt(3)		Total(4)
2019 (nine months)	$	—	$	—		$	2,686	$	2,686
2020	—		800,000			3,609		803,609
2021	276,500		—			10,957		287,457
2022	—		900,000			2,691		902,691
2023	—		800,000			2,811		802,811
Thereafter	—		2,800,000			109,705		2,909,705
	276,500		5,300,000			132,459		5,708,959
(Discounts), premium and debt costs, net	—		(39,378		)	5,066		(34,312		)
	$	276,500	$	5,260,622		$	137,525	$	5,674,647

_______________________________________

(1) Includes £55 million translated into USD.

(2) Effective interest rates on the notes ranged from 2.79% to 6.87% with a weighted average effective interest rate of 4.03% and a weighted average maturity of five years.

(3) Effective interest rates on the mortgage debt ranged from 2.47% to 5.91% with a weighted average effective interest rate of 4.19% and a weighted average maturity of 19 years.

(4)

Excludes $89 million of other debt that have no scheduled maturities.

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Equity (Tables)

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Schedule of Accumulated Other comprehensive Loss

The following table summarizes the Company’s accumulated other comprehensive income (loss) (in thousands):

	March 31, 2019			December 31, 2018
Cumulative foreign currency translation adjustment(1)	$	(1,021	)	$	(1,683	)
Unrealized gains (losses) on derivatives, net	(373		)	(467		)
Supplemental Executive Retirement plan minimum liability and other	(2,489		)	(2,558		)
Total accumulated other comprehensive income (loss)	$	(3,883	)	$	(4,708	)

_______________________________________

(1)

See Note 3 for a discussion of the U.K. JV transaction.

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Segment Disclosures (Tables)

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Summary of Financial Information of Reportable Segments

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

For the three months ended March 31, 2019:

	Senior Housing Triple-Net			SHOP			Life Science			Medical Office			Other Non-reportable			Corporate Non-segment			Total
Real estate revenues(1)	$	58,892		$	126,181		$	94,473		$	142,195		$	12,700		$	—		$	434,441
Operating expenses	(993		)	(96,948		)	(21,992		)	(48,987		)	(7		)	—			(168,927		)
NOI	57,899			29,233			72,481			93,208			12,693			—			265,514
Adjustments to NOI(2)	564			1,152			(2,478		)	(1,771		)	195			—			(2,338		)
Adjusted NOI	58,463			30,385			70,003			91,437			12,888			—			263,176
Addback adjustments	(564		)	(1,152		)	2,478			1,771			(195		)	—			2,338
Interest income	—			—			—			—			1,713			—			1,713
Interest expense	(589		)	(663		)	(73		)	(111		)	—			(47,891		)	(49,327		)
Depreciation and amortization	(16,683		)	(24,086		)	(36,246		)	(53,101		)	(1,835		)	—			(131,951		)
General and administrative	—			—			—			—			—			(21,355		)	(21,355		)
Transaction costs	—			—			—			—			—			(4,518		)	(4,518		)
Recoveries (impairments), net	—			—			—			(8,858		)	—			—			(8,858		)
Gain (loss) on sales of real estate, net	3,557			4,487			—			—			—			—			8,044
Other income (expense), net	—			—			—			—			—			3,133			3,133
Income tax benefit (expense)	—			—			—			—			—			3,458			3,458
Equity income (loss) from unconsolidated joint ventures	—			—			—			—			(863		)	—			(863		)
Net income (loss)	$	44,184		$	8,971		$	36,162		$	31,138		$	11,708		$	(67,173	)	$	64,990

_______________________________________

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

(2) Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, net and termination fees.

For the three months ended March 31, 2018:

	Senior Housing Triple-Net			SHOP			Life Science			Medical Office			Other Non-reportable			Corporate Non-segment			Total
Real estate revenues(1)	$	74,289		$	144,670		$	99,622		$	133,220		$	21,031		$	—		$	472,832
Operating expenses	(1,045		)	(101,746		)	(21,809		)	(47,878		)	(74		)	—			(172,552		)
NOI	73,244			42,924			77,813			85,342			20,957			—			300,280
Adjustments to NOI(2)	(1,865		)	(1,607		)	(3,751		)	(1,932		)	(531		)	—			(9,686		)
Adjusted NOI	71,379			41,317			74,062			83,410			20,426			—			290,594
Addback adjustments	1,865			1,607			3,751			1,932			531			—			9,686
Interest income	—			—			—			—			6,365			—			6,365
Interest expense	(600		)	(988		)	(83		)	(120		)	(728		)	(72,583		)	(75,102		)
Depreciation and amortization	(21,906		)	(27,628		)	(36,080		)	(47,198		)	(10,438		)	—			(143,250		)
General and administrative	—			—			—			—			—			(29,175		)	(29,175		)
Transaction costs	—			—			—			—			—			(2,195		)	(2,195		)
Gain (loss) on sales of real estate, net	—			20,815			—			—			—			—			20,815
Other income (expense), net	—			—			—			—			(40,567		)	160			(40,407		)
Income tax benefit (expense)	—			—			—			—			—			5,336			5,336
Equity income (loss) from unconsolidated joint ventures	—			—			—			—			570			—			570
Net income (loss)	$	50,738		$	35,123		$	41,650		$	38,024		$	(23,841	)	$	(98,457	)	$	43,237

_______________________________________

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

(2) Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, net and termination fees.

Reconciliation of Company's Revenues by Segment

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

	Three Months Ended March 31,
Segment	2019		2018
Senior housing triple-net	$	58,892	$	74,289
SHOP	126,181		144,670
Life science	94,473		99,622
Medical office	142,195		133,220
Other non-reportable segments	14,413		27,396
Total revenues	$	436,154	$	479,197

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Earnings Per Common Share (Tables)

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings per Share

The following table illustrates the computation of basic and diluted earnings per share (in thousands, except per share amounts):

	Three Months Ended March 31,
	2019			2018
Numerator
Net income (loss)	$	64,990		$	43,237
Noncontrolling interests' share in earnings	(3,520		)	(3,005		)
Net income (loss) attributable to HCP, Inc.	61,470			40,232
Less: Participating securities' share in earnings	(441		)	(391		)
Net income (loss) applicable to common shares	$	61,029		$	39,841
Denominator
Basic weighted average shares outstanding	477,766			469,557
Dilutive potential common shares - equity awards	272			138
Dilutive potential common shares - forward equity agreements	1,093			—
Diluted weighted average common shares	479,131			469,695
Basic earnings per common share
Basic	$	0.13		$	0.08
Diluted	$	0.13		$	0.08

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Supplemental Cash Flow Information (Tables)

3 Months Ended

Mar. 31, 2019

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

The following table provides supplemental cash flow information (in thousands):

	Three Months Ended March 31,
	2019			2018
Supplemental cash flow information:
Interest paid, net of capitalized interest	$	53,475		$	92,701
Income taxes paid (refunded)	(769		)	340
Capitalized interest	8,369			3,578
Supplemental schedule of non-cash investing and financing activities:
Accrued construction costs	94,904			62,160
Derecognition of U.K. Bridge Loan receivable	—			147,474
Consolidation of net assets related to U.K. Bridge Loan	—			106,457
Vesting of restricted stock units and conversion of non-managing member units into common stock	4,341			258
Conversion of DFLs to real estate	350,540			—

Schedule of Cash, Cash Equivalents and Restricted Cash

The following table summarizes cash, cash equivalents and restricted cash (in thousands):

	March 31,
	2019		2018
Cash and cash equivalents	$	120,117	$	86,021
Restricted cash	26,535		31,947
Cash, cash equivalents and restricted cash	$	146,652	$	117,968

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Variable Interest Entities (Tables)

3 Months Ended

Mar. 31, 2019

Variable Interest Entities [Abstract]

Schedule of Variable Interest Entities

The classification of the related assets and liabilities and the maximum loss exposure as a result of the Company’s involvement with these VIEs at March 31, 2019 was as follows (in thousands):

VIE Type	Asset/Liability Type	Maximum Loss Exposure and Carrying Amount(1)
VIE tenants - DFLs(2)	Net investment in DFLs	$	249,803
VIE tenants - operating leases(2)	Lease intangibles, net and straight-line rent receivables	6,909
CCRC OpCo	Investments in unconsolidated joint ventures	175,011
Unconsolidated development joint ventures	Investments in unconsolidated joint ventures	15,206
Loan - seller financing	Loans receivable, net	10,000
CMBS and LLC investment	Marketable debt and LLC investment	34,397

_______________________________________

(1) The Company’s maximum loss exposure represents the aggregate carrying amount of such investments (including accrued interest).

(2)

The Company’s maximum loss exposure may be mitigated by re-leasing the underlying properties to new tenants upon an event of default.

Consolidated Assets and Liabilities of Variable Interest Entities

Total assets and total liabilities include VIE assets and liabilities as follows (in thousands):

	March 31, 2019			December 31, 2018
Assets
Buildings and improvements	$	2,001,875		$	1,949,582
Development costs and construction in progress	43,481			39,584
Land	196,484			151,746
Accumulated depreciation and amortization	(424,325		)	(398,143		)
Net real estate	1,817,515			1,742,769
Investments in and advances to unconsolidated joint ventures	1,534			1,550
Accounts receivable, net	6,811			7,904
Cash and cash equivalents	32,831			23,772
Restricted cash	3,386			3,399
Intangible assets, net	96,197			111,333
Right-of-use asset, net	93,796			—
Other assets, net	44,312			43,149
Total assets	$	2,096,382		$	1,933,876
Liabilities
Mortgage debt	44,500			44,598
Intangible liabilities, net	17,014			19,128
Lease liability	90,043			—
Accounts payable and accrued liabilities	56,542			66,736
Deferred revenue	23,536			24,215
Total liabilities	$	231,635		$	154,677

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Concentration of Credit Risk (Tables)

3 Months Ended

Mar. 31, 2019

Risks and Uncertainties [Abstract]

Schedule of Concentration of Credit Risk

The following tables provide information regarding the Company’s concentrations of credit risk with respect to certain tenants:

	Percentage of Total Assets
	Total Company		Senior Housing Triple-Net
	March 31,	December 31,	March 31,	December 31,
Tenant	2019	2018	2019	2018
Brookdale(1)	6	6	31	27

	Percentage of Revenues
	Total Company		Senior Housing Triple-Net
	Three Months Ended March 31,		Three Months Ended March 31,
Tenant	2019	2018	2019	2018
Brookdale(1)	4	7	32	43

_______________________________________

(1)

Excludes senior housing facilities operated by Brookdale in the Company’s SHOP segment as discussed below. Percentages of segment and total company revenues include partial-year revenue earned from senior housing triple-net facilities that were sold during 2018.

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2019

Financial Instruments, Owned, at Fair Value [Abstract]

Summary of Carry Amounts and Fair Value of Financial Instruments

The table below summarizes the carrying amounts and fair values of the Company’s financial instruments (in thousands):

	March 31, 2019(3)				December 31, 2018(3)
	Carrying Value		Fair Value		Carrying Value		Fair Value
Loans receivable, net(2)	$	86,139	$	86,139	$	62,998	$	62,998
Marketable debt securities(2)	19,337		19,337		19,202		19,202
Bank line of credit(2)	276,500		276,500		80,103		80,103
Senior unsecured notes(1)	5,260,622		5,484,915		5,258,550		5,302,485
Mortgage debt(2)	137,525		133,652		138,470		136,161
Other debt(2)	89,223		89,223		90,785		90,785
Interest-rate swap liabilities(2)	1,217		1,217		1,310		1,310

_______________________________________

(1) Level 1: Fair value calculated based on quoted prices in active markets.

(2) Level 2: Fair value based on (i) for marketable debt securities, quoted prices for similar or identical instruments in active or inactive markets, respectively, or (ii) for loans receivable, net, mortgage debt and swaps, calculated utilizing standardized pricing models in which significant inputs or value drivers are observable in active markets. For bank line of credit, term loan and other debt, the carrying values are a reasonable estimate of fair value because the borrowings are primarily based on market interest rates and the Company’s credit rating.

(3)

During the three months ended March 31, 2019 and year ended December 31, 2018, there were no material transfers of financial assets or liabilities within the fair value hierarchy.

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Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

The following table summarizes the Company’s outstanding swap contracts at March 31, 2019 (dollars in thousands):

Date Entered	Maturity Date	Hedge Designation	Notional		Pay Rate	Receive Rate	Fair Value(1)
Interest rate:
July 2005(2)	July 2020	Cash Flow	$	43,000	3.82%	BMA Swap Index	$	(1,217	)

______________________________________

(1) Derivative liabilities are recorded in accounts payable and accrued liabilities on the consolidated balance sheets.

(2) Represents three interest-rate swap contracts, which hedge fluctuations in interest payments on variable-rate secured debt due to overall changes in hedged cash flows.

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Summary of Significant Accounting Policies (Details) $ in Thousands		3 Months Ended
	Jan. 01, 2018 USD ($)	Mar. 31, 2019 USD ($) facility	Mar. 31, 2018 USD ($)	Jan. 01, 2019 USD ($)		Dec. 31, 2018 USD ($)		Dec. 31, 2017 USD ($)	[2]	Mar. 31, 2017
Schedule of Equity Method Investments [Line Items]
Cumulative effect adjustment to equity		$ 5,836,882				$ 5,944,439
Cumulative effect of new accounting principle						590	[1]	$ 79,144
Present value of lease liabilities		152,837				0
Right-of-use asset		165,748				$ 0
RIDEA II
Schedule of Equity Method Investments [Line Items]
Investment ownership percentage										40.00%
Equity method investments	$ 121,000
ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606
Schedule of Equity Method Investments [Line Items]
Cumulative effect adjustment to equity	79,000
Impairment charge	30,000
ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | RIDEA II
Schedule of Equity Method Investments [Line Items]
Fair value of equity method investments	$ 107,000
ASU 2016-02
Schedule of Equity Method Investments [Line Items]
Present value of lease liabilities				$ 153,000
Right-of-use asset				166,000
Accrued straight-line rent liability				20,000
Unamortized lease intangibles				33,000
Ancillary service revenue | ASU 2014-09
Schedule of Equity Method Investments [Line Items]
Tenant recoveries and Resident fees and services		$ 10,000	$ 10,000
Tenant recoveries
Schedule of Equity Method Investments [Line Items]
Rental and related revenues			$ 37,000
Medical office
Schedule of Equity Method Investments [Line Items]
Number of facilities transitioned | facility		2
Cumulative Dividends In Excess Of Earnings
Schedule of Equity Method Investments [Line Items]
Cumulative effect of new accounting principle				$ 590	[1]			$ 79,144

[1] On January 1, 2019, the Company adopted a series of Accounting Standards Updates (“ASUs”) related to accounting for leases, and recognized the cumulative-effect of adoption to beginning retained earnings. Refer to Note 2 for a detailed impact of adoption.

[2] On January 1, 2018, the Company adopted ASU No. 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”), and recognized the cumulative-effect of adoption to beginning retained earnings. Refer to Note 2 for a detailed impact of adoption.

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Real Estate Transactions - 2019 Real Estate Investments (Details) $ in Millions		1 Months Ended	3 Months Ended					12 Months Ended
	May 01, 2019 USD ($) property	Apr. 30, 2019 USD ($) property	Mar. 31, 2019 USD ($) facility	Dec. 31, 2018 USD ($) facility	Sep. 30, 2018 USD ($) facility	Jun. 30, 2018 USD ($) facility	Mar. 31, 2018 USD ($)	Dec. 31, 2018 property
Real Estate [Line Items]
Payments to acquire real estate							$ 21
Life science
Real Estate [Line Items]
Number of properties disposed (in facilities) | facility					4
Proceeds from Sale of Real Estate					$ 269
Life science | Life science facility
Real Estate [Line Items]
Payments to acquire real estate			$ 71
Life science | Land
Real Estate [Line Items]
Number of properties disposed (in facilities) | facility			1	1
Proceeds from Sale of Real Estate			$ 35	$ 3
Payments to acquire real estate			$ 27
Senior housing triple-net
Real Estate [Line Items]
Number of properties disposed (in facilities) | facility			2			2
Proceeds from Sale of Real Estate			$ 26			$ 35
Subsequent Event | Senior Housing | Senior Housing
Real Estate [Line Items]
Payments to acquire real estate	$ 113	$ 445
Number of properties acquired (in properties) | property	3	9
Assets Leased to Others
Real Estate [Line Items]
Number of assets transitioned | property								37
Assets Leased to Others | Senior housing triple-net
Real Estate [Line Items]
Number of assets transitioned | property	4							17

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Real Estate Transactions - MSREI MOB JV (Details) $ in Thousands	1 Months Ended	3 Months Ended
	Aug. 31, 2018 USD ($) property	Mar. 31, 2019 USD ($)	Sep. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)
Real Estate [Line Items]
Payments to acquire real estate				$ 21,000
Net real estate		$ 10,627,183			$ 10,209,450
MSREI JV
Real Estate [Line Items]
Ownership percentage (as a percent)	51.00%	51.00%
Proceeds from contribution to a joint venture	$ 298,000
Number of properties contributed to joint venture | property	9
Value of contributed properties	$ 320,000
Number of properties acquired (in properties) | property	16
Noncontrolling interest in VIE			$ 298,000
Greenville Portfolio | MSREI JV
Real Estate [Line Items]
Payments to acquire real estate	$ 285,000
Lease term	10 years
Net real estate			276,000
Intangible assets acquired			$ 20,000

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Real Estate Transactions - Life Science JV Interest Purchase (Details) $ in Thousands	1 Months Ended	3 Months Ended
	Nov. 30, 2018 USD ($) property joint_venture	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($) property	Mar. 31, 2018 USD ($)
Real Estate [Line Items]
Payments to acquire real estate				$ 21,000
Gain (loss) on consolidation	$ 50,000	$ 0		$ (41,017)
Life science joint ventures
Real Estate [Line Items]
Number of joint ventures (in joint ventures) | joint_venture	3
Number of properties acquired (in properties) | property	4		2
Payments to acquire real estate	$ 92,000		$ 245,000
Investment ownership percentage	100.00%

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Real Estate Transactions - Sierra Point Towers Acquisition (Details) $ in Millions	1 Months Ended	3 Months Ended
	Nov. 30, 2018 USD ($) property	Dec. 31, 2018 USD ($) property	Mar. 31, 2018 USD ($)
Real Estate [Line Items]
Payments to acquire real estate			$ 21
Nonrefundable deposit	$ 15
Life science joint ventures
Real Estate [Line Items]
Number of properties acquired (in properties) | property	4	2
Payments to acquire real estate	$ 92	$ 245

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Real Estate Transactions - 2018 Other Real Estate Investments (Details) $ in Millions	3 Months Ended
	Mar. 31, 2018 USD ($)
Real Estate [Abstract]
Payments to acquire real estate	$ 21

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Real Estate Transactions - Development Activities (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 property	Jun. 30, 2019 USD ($)
Medical office
Real Estate [Line Items]
Number of properties to be developed (in properties)	3
On-campus
Real Estate [Line Items]
Number of properties to be developed (in properties)	2
Forecast | Medical office
Real Estate [Line Items]
Estimated aggregate cost | $		$ 70

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Real Estate Transactions - Held for Sale (Details) $ in Thousands	Mar. 31, 2019 USD ($) property	Dec. 31, 2018 USD ($) property
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets held for sale, net	$ 10,842	$ 108,086
Accumulated depreciation	2,915,798	2,842,947
Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets held for sale, net	$ 11,000	$ 108,000
Held-for-sale | SHOP
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties classified as held for sale (in properties) | property	1	9
Held-for-sale | Medical office
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties classified as held for sale (in properties) | property	2
Held-for-sale | Life science
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties classified as held for sale (in properties) | property		1
Held-for-sale | Real Estate
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets held for sale, net	$ 10,000	$ 101,000
Accumulated depreciation	$ 5,000	$ 30,000

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Real Estate Transactions - 2019 Dispositions (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) facility	Dec. 31, 2018 USD ($) facility	Sep. 30, 2018 USD ($) facility	Jun. 30, 2018 USD ($) facility	Mar. 31, 2018 USD ($) facility
Real Estate [Line Items]
Gain (loss) on sales of real estate, net	$ 8,044		$ 95,000	$ 25,000	$ 20,815
SHOP
Real Estate [Line Items]
Number of properties disposed (in facilities) | facility	9	2	11	8	2
Total consideration for disposal of real estate	$ 68,000	$ 15,000	$ 76,000	$ 268,000	$ 35,000
Gain (loss) on sales of real estate, net					$ 21,000
Medical office
Real Estate [Line Items]
Number of properties disposed (in facilities) | facility		2	2
Total consideration for disposal of real estate		$ 4,000	$ 21,000
Senior housing triple-net
Real Estate [Line Items]
Number of properties disposed (in facilities) | facility	2			2
Total consideration for disposal of real estate	$ 26,000			$ 35,000
Life science
Real Estate [Line Items]
Number of properties disposed (in facilities) | facility			4
Total consideration for disposal of real estate			$ 269,000
Land | Life science
Real Estate [Line Items]
Number of properties disposed (in facilities) | facility	1	1
Total consideration for disposal of real estate	$ 35,000	$ 3,000

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Real Estate Transactions - Shoreline Technology Center (Details) - Shoreline Technology Center $ in Millions	1 Months Ended
	Nov. 30, 2018 USD ($)
Real Estate [Line Items]
Proceeds from sale of buildings	$ 1,000
Recognized gain on sale	$ 726

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Real Estate Transactions - RIDEA II Sale Transaction (Details) - USD ($) $ in Thousands	1 Months Ended		3 Months Ended
	Jun. 30, 2018	Jan. 31, 2017	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Mar. 31, 2017
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain (loss) on sales of real estate			$ 8,044	$ 95,000	$ 25,000	$ 20,815
HCP/CPA/Brookdale JV
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Debt instrument provided		$ 602,000
Debt provided by third-party		360,000
Debt provided by entity		242,000
Net proceeds from the RIDEA II transaction		$ 480,000
RIDEA II
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Investment ownership percentage							40.00%
RIDEA II | HCP/CPA/Brookdale JV
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Investment ownership percentage		40.00%
Disposed of by Sale | RIDEA II
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain (loss) on sales of real estate		$ 99,000
RIDEA II | HCP/CPA/Brookdale JV
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Debt provided by entity	$ 242,000				242,000
Equity method investment ownership interest disposed	40.00%
Consideration of disposal of equity method investment	$ 91,000				$ 91,000
Proceeds from sale of ownership interest	$ 332,000

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Real Estate Transactions - U.K. Portfolio (Details) $ in Thousands, £ in Millions	1 Months Ended
	Aug. 31, 2018 GBP (£)	Jun. 30, 2018 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Jun. 30, 2018 GBP (£)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Value of U.K. Portfolio			$ 12,899,501	$ 12,718,553
Disposed of by Sale | U.K. Portfolio
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Ownership interest percentage selling		51.00%
Value of U.K. Portfolio		$ 507,000			£ 382
Proceeds from divestiture of interest in joint venture		402,000
Gain on disposal of interest in joint venture		11,000
Cumulative foreign currency translation reclassification from OCI		$ 17,000
U.K. Portfolio
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Percentage of noncontrolling interest in the joint venture		49.00%			49.00%
Fair value of investment		$ 105,000
Development loan to MMCG
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from sale of development loan receivables | £	£ 11

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Real Estate Transactions - 2018 Other Dispositions (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) facility	Dec. 31, 2018 USD ($) property facility	Sep. 30, 2018 USD ($) facility	Jun. 30, 2018 USD ($) facility	Mar. 31, 2018 USD ($) facility
Real Estate [Line Items]
Gain (loss) on sales of real estate	$ 8,044		$ 95,000	$ 25,000	$ 20,815
SHOP
Real Estate [Line Items]
Number of properties disposed (in facilities) | facility	9	2	11	8	2
Total consideration for disposal of real estate	$ 68,000	$ 15,000	$ 76,000	$ 268,000	$ 35,000
Gain (loss) on sales of real estate					21,000
Medical office
Real Estate [Line Items]
Number of properties disposed (in facilities) | facility		2	2
Total consideration for disposal of real estate		$ 4,000	$ 21,000
Senior housing triple-net
Real Estate [Line Items]
Number of properties disposed (in facilities) | facility	2			2
Total consideration for disposal of real estate	$ 26,000			$ 35,000
Life science
Real Estate [Line Items]
Number of properties disposed (in facilities) | facility			4
Total consideration for disposal of real estate			$ 269,000
Land | Life science
Real Estate [Line Items]
Number of properties disposed (in facilities) | facility	1	1
Total consideration for disposal of real estate	$ 35,000	$ 3,000
Brookedale MTCA
Real Estate [Line Items]
Number of assets to be sold (in properties) | property		19
Assets Leased to Others | Brookedale MTCA
Real Estate [Line Items]
Gain (loss) on sales of real estate					$ 40,000
Proceeds from sale of buildings		$ 377,000
Assets Leased to Others | Brookedale MTCA | SHOP
Real Estate [Line Items]
Number of assets to be sold (in properties) | property		4

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Real Estate Transactions - Impairments of Real Estate (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) property	Mar. 31, 2018 USD ($)
Real Estate [Line Items]
Impairments (recoveries), net	$ 8,858	$ (3,298)
Medical office
Real Estate [Line Items]
Number Of real estate properties impaired (in properties) | property	2
Impairments (recoveries), net	$ 9,000

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Real Estate Transactions - Brookedale MTCA Transactions (Details) $ in Millions			1 Months Ended		3 Months Ended					12 Months Ended
	May 01, 2019 property	Nov. 01, 2017 USD ($) property	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Mar. 31, 2019 property facility	Dec. 31, 2018 USD ($) property facility	Sep. 30, 2018 facility	Jun. 30, 2018 facility	Mar. 31, 2018 facility	Dec. 31, 2018 property facility	Jan. 01, 2018 USD ($) property
Real Estate [Line Items]
Percentage of interest acquired		10.00%
Consideration transferred | $		$ 95
Payment to acquired noncontrolling interest | $			$ 63	$ 32
Brookedale MTCA
Real Estate [Line Items]
Number of assets to be sold (in properties)						19				19
RIDEA Facilities
Real Estate [Line Items]
Ownership percentage (as a percent)		90.00%
Assets Leased to Others
Real Estate [Line Items]
Number of assets transitioned										37
Assets Leased to Others | Brookedale MTCA
Real Estate [Line Items]
Proceeds from sale of buildings | $						$ 377
Assets Leased to Others | RIDEA Facilities
Real Estate [Line Items]
Property count (in properties)		58
Senior housing triple-net
Real Estate [Line Items]
Number of properties disposed (in facilities) | facility					2			2
Senior housing triple-net | Assets Leased to Others
Real Estate [Line Items]
Property count (in properties)		78
Disposition of properties, available for sale (in properties)					32
Reduction in rent | $											$ 5
Number of properties with rent concessions											3
Total consideration for disposition of real estate | $		$ 35
Number of assets transitioned	4									17
Senior housing triple-net | Assets Leased to Others | Brookedale MTCA
Real Estate [Line Items]
Number of properties acquired (in properties) | facility										2
SHOP
Real Estate [Line Items]
Number of properties disposed (in facilities) | facility					9	2	11	8	2
SHOP | Assets Leased to Others
Real Estate [Line Items]
Number of assets transitioned										20
SHOP | Assets Leased to Others | Brookedale MTCA
Real Estate [Line Items]
Number of assets to be sold (in properties)						4				4
SHOP | Assets Leased to Others | RIDEA Facilities
Real Estate [Line Items]
Property count (in properties)		36
Total consideration for disposition of real estate | $		$ 240

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Leases - Lease Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Interest and Other Income [Abstract]
Operating lease income	$ 294,222	$ 316,752
Interest income on direct financing leases	$ 13,524	$ 13,266

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Leases - Direct Financing Leases (Details) $ in Thousands	Mar. 31, 2019 USD ($) property	Dec. 31, 2018 USD ($) property
Leases, Capital [Abstract]
Present value of minimum lease payments receivable	$ 273,629
Present value of estimated residual value	114,364
Less deferred selling profits	(24,598)
Net investment in direct financing leases	363,395
Minimum lease payments receivable		$ 1,013,976
Estimated residual value		507,484
Less deferred selling profits		(807,642)
Net investment in direct financing leases	$ 363,395	$ 713,818
Properties subject to direct financing leases (in properties) | property	15	29

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Leases - Future Minimum Rents, DFLs (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Leases [Abstract]
2019 (nine months)	$ 29,365
2019		$ 114,970
2020	32,558	63,308
2021	31,989	63,687
2022	25,346	58,135
2023	24,774	58,570
Thereafter	416,286	655,306
Lease payments receivable	560,318	$ 1,013,976
Less: imputed interest	(286,689)
Present value of minimum lease payments receivable	$ 273,629

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Leases - Direct Financing Lease Internal Ratings (Details)	3 Months Ended
	Mar. 31, 2019 USD ($) property	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($) property	Sep. 30, 2013 property
Net Investment in Direct Financing Leases
Net investment in direct financing leases	$ 363,395,000		$ 713,818,000
Conversion of DFLs to real estate	$ 350,540,000	$ 0
Percentage of DFL Portfolio	100.00%
Properties subject to direct financing leases (in properties) | property	15		29
Performing Loans
Net Investment in Direct Financing Leases
Net investment in direct financing leases	$ 363,395,000
Watch List DFLs
Net Investment in Direct Financing Leases
Net investment in direct financing leases	0
Watch List DFLs | DFL Portfolio
Net Investment in Direct Financing Leases
Income from direct financing leases	4,000,000	$ 3,000,000
Cash payments received	5,000,000
Workout DFLs
Net Investment in Direct Financing Leases
Net investment in direct financing leases	0
Senior housing triple-net
Net Investment in Direct Financing Leases
Net investment in direct financing leases	$ 278,791,000
Percentage of DFL Portfolio	77.00%
Senior housing triple-net | Performing Loans
Net Investment in Direct Financing Leases
Net investment in direct financing leases	$ 278,791,000
Senior housing triple-net | Watch List DFLs
Net Investment in Direct Financing Leases
Net investment in direct financing leases	0
Senior housing triple-net | Watch List DFLs | DFL Portfolio
Net Investment in Direct Financing Leases
Net investment in direct financing leases	0		$ 351,000,000
Conversion of DFLs to real estate	$ 351,000,000
Properties subject to direct financing leases (in properties) | property				14
Properties with derecognized carrying value during the period (in properties) | property	14
Senior housing triple-net | Workout DFLs
Net Investment in Direct Financing Leases
Net investment in direct financing leases	$ 0
Other non-reportable segments
Net Investment in Direct Financing Leases
Net investment in direct financing leases	$ 84,604,000
Percentage of DFL Portfolio	23.00%
Other non-reportable segments | Performing Loans
Net Investment in Direct Financing Leases
Net investment in direct financing leases	$ 84,604,000
Other non-reportable segments | Watch List DFLs
Net Investment in Direct Financing Leases
Net investment in direct financing leases	0
Other non-reportable segments | Workout DFLs
Net Investment in Direct Financing Leases
Net investment in direct financing leases	$ 0
SHOP | Watch List DFLs | DFL Portfolio
Net Investment in Direct Financing Leases
Properties subject to direct financing leases (in properties) | property	14
Gain (loss) recognized from transition	$ 0
Real estate assets | Senior housing triple-net | Watch List DFLs | DFL Portfolio
Net Investment in Direct Financing Leases
Real estate assets held for development or sale	331,000,000
Intangible assets | Senior housing triple-net | Watch List DFLs | DFL Portfolio
Net Investment in Direct Financing Leases
Real estate assets held for development or sale	$ 20,000,000

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Leases - Future Minimum Rents (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Leases [Abstract]
2019 (nine months)	$ 733,816
2019		$ 971,417
2020	952,756	928,102
2021	884,923	853,451
2022	782,066	751,972
2023	703,054	675,537
Thereafter	2,505,848	2,320,847
Total	$ 6,562,463	$ 6,501,326

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Leases - Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Real Estate [Abstract]
Total lease expense	$ 4,803	$ 5,024
Operating cash flows for operating leases	$ 3,963	4,253
Weighted average remaining lease term, operating leases	52 years
Weighted average discount rate, operating leases	4.36%
ROU asset obtained in exchange for new lease liability, operating leases	$ 880	$ 0

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Leases - Future Lease Obligations (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Leases [Abstract]
2019 (nine months)	$ 5,937
2019		$ 5,597
2020	7,816	5,687
2021	7,888	5,776
2022	8,028	5,862
2023	8,198	5,983
Thereafter	471,083	466,130
Less: imputed interest	508,950	495,035
Less: imputed interest	(356,113)
Present value of lease liabilities	$ 152,837	$ 0

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Leases - Depreciation Expense (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
General and Administrative Expense
Real Estate [Line Items]
Depreciation expense related to corporate assets	$ 0.4	$ 0.2
Other Assets
Real Estate [Line Items]
Accumulated depreciation related to corporate assets	$ 3.0		$ 2.0

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Loans Receivable - Schedule of Loans Receivable (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Loans Receivable:
Mezzanine	$ 20,545	$ 21,013
Participating development loans and other	65,635	42,037
Unamortized discounts, fees and costs	(41)	(52)
Loans receivable, net	86,139	62,998
Remaining loans receivable commitments	53,000
Loans receivable commitments	115,000
Real Estate Secured
Loans Receivable:
Mezzanine	0	0
Participating development loans and other	65,635	42,037
Unamortized discounts, fees and costs	0	0
Loans receivable, net	65,635	42,037
Other Secured
Loans Receivable:
Mezzanine	20,545	21,013
Participating development loans and other	0	0
Unamortized discounts, fees and costs	(41)	(52)
Loans receivable, net	$ 20,504	$ 20,961

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Loans Receivable - Schedule of Loans Receivable Internal Ratings (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Financing Receivable, Recorded Investment [Line Items]
Percentage of Loan Portfolio	100.00%
Loans receivable, net	$ 86,139	$ 62,998
Performing Loans
Financing Receivable, Recorded Investment [Line Items]
Loans receivable, net	86,139
Watch List Loans
Financing Receivable, Recorded Investment [Line Items]
Loans receivable, net	0
Workout Loans
Financing Receivable, Recorded Investment [Line Items]
Loans receivable, net	$ 0
Real Estate Secured
Financing Receivable, Recorded Investment [Line Items]
Percentage of Loan Portfolio	76.00%
Loans receivable, net	$ 65,635	42,037
Real Estate Secured | Performing Loans
Financing Receivable, Recorded Investment [Line Items]
Loans receivable, net	65,635
Real Estate Secured | Watch List Loans
Financing Receivable, Recorded Investment [Line Items]
Loans receivable, net	0
Real Estate Secured | Workout Loans
Financing Receivable, Recorded Investment [Line Items]
Loans receivable, net	$ 0
Other Secured
Financing Receivable, Recorded Investment [Line Items]
Percentage of Loan Portfolio	24.00%
Loans receivable, net	$ 20,504	$ 20,961
Other Secured | Performing Loans
Financing Receivable, Recorded Investment [Line Items]
Loans receivable, net	20,504
Other Secured | Watch List Loans
Financing Receivable, Recorded Investment [Line Items]
Loans receivable, net	0
Other Secured | Workout Loans
Financing Receivable, Recorded Investment [Line Items]
Loans receivable, net	$ 0

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Loans Receivable - Narrative (Details) $ in Thousands, £ in Millions	1 Months Ended	3 Months Ended			12 Months Ended
	Jun. 30, 2018 property	Mar. 31, 2019 USD ($)	Mar. 31, 2018 USD ($) property	Mar. 31, 2018 GBP (£) property	Dec. 31, 2017 USD ($) property	Dec. 31, 2016 USD ($) property	Dec. 31, 2018 USD ($)	Dec. 31, 2017 GBP (£) property	Dec. 31, 2016 GBP (£) property
Loans Receivable:
Loans receivable, net | $		$ 86,139					$ 62,998
Notes reduction due to call option exercised | $		$ 0	$ 147,474
MMCG
Loans Receivable:
Loss from initial consolidation of VIE			$ 41,000	£ 29
Bridge Loan | MMCG
Loans Receivable:
Loans receivable, net					$ 131,000	$ 131,000		£ 105	£ 105
Period of call-option retained					3 years	3 years
Number of properties in a purchase option | property					7	7		7	7
Number of properties acquired in a purchase option | property	7		7	7
Notes reduction due to call option exercised | £				£ 105
Loss from initial consolidation of VIE			$ 41,000	£ 29

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Investments in and Advances to Unconsolidated Joint Ventures (Details) $ in Thousands	Mar. 31, 2019 USD ($) property joint_venture	Dec. 31, 2018 USD ($) joint_venture
Schedule of Equity Method Investments [Line Items]
Investments in and advances to unconsolidated joint ventures	$ 531,966	$ 540,088
CCRC JV
Schedule of Equity Method Investments [Line Items]
Property count (in properties) | property	15
Investment ownership percentage	49.00%
Investments in and advances to unconsolidated joint ventures	$ 358,172	365,764
UK JV
Schedule of Equity Method Investments [Line Items]
Property count (in properties) | property	68
Investment ownership percentage	49.00%
Investments in and advances to unconsolidated joint ventures	$ 102,692	101,735
MBK JV
Schedule of Equity Method Investments [Line Items]
Property count (in properties) | property	5
Investment ownership percentage	50.00%
Investments in and advances to unconsolidated joint ventures	$ 34,935	35,435
Other SHOP JVs
Schedule of Equity Method Investments [Line Items]
Property count (in properties) | property	5
Investments in and advances to unconsolidated joint ventures	$ 24,684	25,493
Other SHOP JVs | Minimum
Schedule of Equity Method Investments [Line Items]
Investment ownership percentage	50.00%
Other SHOP JVs | Maximum
Schedule of Equity Method Investments [Line Items]
Investment ownership percentage	90.00%
Unconsolidated Development JVs
Schedule of Equity Method Investments [Line Items]
Number of unconsolidated joint ventures | joint_venture	4
Vintage Park Development JV
Schedule of Equity Method Investments [Line Items]
Investment ownership percentage	85.00%
Waldwick
Schedule of Equity Method Investments [Line Items]
Investment ownership percentage	85.00%
Otay Ranch
Schedule of Equity Method Investments [Line Items]
Investment ownership percentage	90.00%
MBK Development JV
Schedule of Equity Method Investments [Line Items]
Investment ownership percentage	50.00%
Medical Office JVs
Schedule of Equity Method Investments [Line Items]
Property count (in properties) | property	3
Investments in and advances to unconsolidated joint ventures	$ 10,039	10,160
Number of unconsolidated joint ventures | joint_venture	3
Medical Office JVs | Minimum
Schedule of Equity Method Investments [Line Items]
Investment ownership percentage	20.00%
Medical Office JVs | Maximum
Schedule of Equity Method Investments [Line Items]
Investment ownership percentage	67.00%
HCP Ventures IV, LLC
Schedule of Equity Method Investments [Line Items]
Investment ownership percentage	20.00%
HCP Ventures III, LLC
Schedule of Equity Method Investments [Line Items]
Investment ownership percentage	30.00%
Suburban Properties, LLC
Schedule of Equity Method Investments [Line Items]
Investment ownership percentage	67.00%
K&Y JVs
Schedule of Equity Method Investments [Line Items]
Property count (in properties) | property	3
Investment ownership percentage	80.00%
Investments in and advances to unconsolidated joint ventures	$ 1,431	$ 1,430
Number of unconsolidated joint ventures | joint_venture	2	3
Advances to unconsolidated joint ventures, net
Schedule of Equity Method Investments [Line Items]
Investments in and advances to unconsolidated joint ventures	$ 13	$ 71

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Intangibles - Intangibles Lease Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Intangibles
Gross intangible lease assets	$ 491,998	$ 556,114
Accumulated depreciation and amortization	(216,433)	(251,035)
Intangible assets, net	$ 275,565	$ 305,079

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Intangibles - Intangibles Lease Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Intangibles
Gross intangible lease liabilities	$ 82,777	$ 94,444
Accumulated depreciation and amortization	(33,289)	(39,781)
Intangible liabilities, net	$ 49,488	$ 54,663

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Intangibles - Additional Information (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Intangible assets, net	$ (275,565)		$ (305,079)
Intangible liabilities, net	$ (49,488)		$ (54,663)
Accounting Standards Update 2016-12
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Intangible assets, net		$ 39,000
Intangible liabilities, net		$ 6,000

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Debt - Bank Line of Credit and Term Loan (Details) £ in Millions			1 Months Ended	3 Months Ended
	Jul. 03, 2018 USD ($)	Jul. 03, 2018 GBP (£)	Nov. 30, 2018 USD ($)	Mar. 31, 2019 USD ($) renewal_option	Mar. 31, 2018 USD ($)	Mar. 31, 2019 GBP (£) renewal_option	Dec. 31, 2018 USD ($)
Debt Instrument
Bank line of credit				$ 276,500,000			$ 80,103,000
Repayment under bank line of credit				$ 125,000,000	$ 170,000,000
Term loan							$ 0
2015 Term Loan
Debt Instrument
Repayment under bank line of credit | £		£ 169
Repayments of debt			$ 224,000,000
2018 term loan
Debt Instrument
Issuance and borrowings of debt, excluding bank line of credit	$ 224,000,000
Line of Credit and Term Loan
Debt Instrument
Debt instrument, covenant debt to assets (as a percent)				60.00%		60.00%
Debt instrument, covenant secured debt to assets (as a percent)				30.00%		30.00%
Debt instrument, covenant unsecured debt to unencumbered assets (as a percent)				60.00%		60.00%
Debt instrument, covenant minimum fixed charge coverage ratio				1.5		1.5
Debt instrument, covenant net worth				$ 6,500,000,000
Bank Line of Credit | Revolving Credit Facility
Debt Instrument
Line of credit facility, maximum borrowing capacity				$ 2,000,000,000.0
Number of extensions | renewal_option				2		2
Length of debt instrument extension period				6 months
Debt instrument, facility fee (as a percent)				0.15%
Line of credit facility additional aggregate amount, maximum				$ 750,000,000
Bank line of credit				277,000,000
Debt denominated in foreign currency outstanding				$ 72,000,000		£ 55
Weighted-average interest rate (as a percent)				3.20%		3.20%
Bank Line of Credit | Revolving Credit Facility | LIBOR
Debt Instrument
Debt instrument, basis spread on variable rate (as a percent)				0.875%

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Debt - Senior Unsecured Notes (Details) - USD ($)			3 Months Ended
	Nov. 08, 2018	Jul. 16, 2018	Mar. 31, 2019	Dec. 31, 2018
Debt Instrument
Principal balance on debt			$ 5,708,959,000
Senior unsecured notes			5,260,622,000	$ 5,258,550,000
Other debt			89,223,000	90,785,000
Senior Unsecured Note
Debt Instrument
Principal balance on debt			5,300,000,000
Repayments of debt			0
Senior unsecured notes			$ 0	$ 0
Senior Unsecured Note | Unsecured Note 5.375%
Debt Instrument
Repayment of senior unsecured notes		$ 700,000,000
Percentage of stated interest rate		5.375%
Loss on extinguishment of debt		$ 44,000,000
Senior Unsecured Note | Unsecured Debt 3.750%
Debt Instrument
Repayment of senior unsecured notes	$ 450,000,000
Percentage of stated interest rate	3.75%

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Debt - Mortgage Debt (Details) £ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($) facility	Mar. 31, 2019 GBP (£) facility	Dec. 31, 2018 USD ($)
Debt Instrument
2019 (nine months)	$ 2,686,000
2020	803,609,000
2021	287,457,000
2022	902,691,000
2023	802,811,000
Thereafter	2,909,705,000
Total debt before discount, net	5,708,959,000
(Discounts), premiums and debt costs, net	(34,312,000)
Debt instruments, carrying amount	5,674,647,000
Other debt	89,223,000		$ 90,785,000
Bank Line of Credit
Debt Instrument
2019 (nine months)	0
2020	0
2021	276,500,000
2022	0
2023	0
Thereafter	0
Total debt before discount, net	276,500,000
(Discounts), premiums and debt costs, net	0
Debt instruments, carrying amount	$ 276,500,000
Term loans
Debt Instrument
Weighted-average interest rate (as a percent)	4.03%	4.03%
Weighted-average maturity	5 years
Term loans | Minimum
Debt Instrument
Percentage of stated interest rate	2.79%	2.79%
Term loans | Maximum
Debt Instrument
Percentage of stated interest rate	6.87%	6.87%
Senior Unsecured Note
Debt Instrument
Repayments of debt	$ 0
2019 (nine months)	0
2020	800,000,000
2021	0
2022	900,000,000
2023	800,000,000
Thereafter	2,800,000,000
Total debt before discount, net	5,300,000,000
(Discounts), premiums and debt costs, net	(39,378,000)
Debt instruments, carrying amount	$ 5,260,622,000
Mortgage Debt
Debt Instrument
Number of healthcare facilities used to secure debt | facility	15	15
Debt instrument, collateral, healthcare facilities carrying value	$ 276,000,000
2019 (nine months)	2,686,000
2020	3,609,000
2021	10,957,000
2022	2,691,000
2023	2,811,000
Thereafter	109,705,000
Total debt before discount, net	132,459,000
(Discounts), premiums and debt costs, net	5,066,000
Debt instruments, carrying amount	$ 137,525,000
Weighted-average interest rate (as a percent)	4.19%	4.19%
Weighted-average maturity	19 years
Mortgage Debt | Minimum
Debt Instrument
Percentage of stated interest rate	2.47%	2.47%
Mortgage Debt | Maximum
Debt Instrument
Percentage of stated interest rate	5.91%	5.91%
Revolving Credit Facility | Bank Line of Credit
Debt Instrument
Debt denominated in foreign currency outstanding	$ 72,000,000	£ 55
Weighted-average interest rate (as a percent)	3.20%	3.20%

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Commitments and Contingencies (Details)	Mar. 31, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Loss contingency accrual	$ 0

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Equity - Additional Information (Details) - USD ($)			1 Months Ended		3 Months Ended	12 Months Ended
	Apr. 01, 2019	Mar. 31, 2019	Feb. 28, 2019	Dec. 31, 2018	Mar. 31, 2019	Dec. 31, 2018
Class of Stock [Line Items]
Maximum shares issuable under forward equity sales agreement (in shares)				15,250,000
Forward equity sales agreement, initial net price (in usd per share)				$ 28.60
Common Stock
Class of Stock [Line Items]
Issuance of common stock, net (in shares)				2,000,000
Weighted average net price (in usd per share)		$ 28.60			$ 28.60
Proceeds from issuance of common stock				$ 57,000,000
At-The-Market Program 2018
Class of Stock [Line Items]
ATM aggregate amount authorized			$ 1,000,000,000.0
Issuance of common stock, net (in shares)						5,400,000
Weighted average net price (in usd per share)				$ 28.27		$ 28.27
Proceeds from issuance of common stock						$ 154,000,000
At-The-Market Program 2019
Class of Stock [Line Items]
ATM aggregate amount remaining		$ 888,000,000
Maximum shares issuable under forward equity sales agreement (in shares)					3,600,000
Forward equity sales agreement, initial net price (in usd per share)					$ 31.19
Option indexed to issuers equity, term					1 year
Forward Equity Offering
Class of Stock [Line Items]
Issuance of common stock, net (in shares)					0
Option indexed to issuers equity, term				1 year
Subsequent Event | At-The-Market Program 2019
Class of Stock [Line Items]
Maximum shares issuable under forward equity sales agreement (in shares)	1,500,000
Forward equity sales agreement, initial net price (in usd per share)	$ 30.63
Option indexed to issuers equity, term	1 year

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Equity - AOCI (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Accumulated Other Comprehensive Loss
Cumulative foreign currency translation adjustment	$ (1,021)	$ (1,683)
Unrealized gains (losses) on derivatives, net	(373)	(467)
Supplemental Executive Retirement plan minimum liability and other	(2,489)	(2,558)
Total accumulated other comprehensive income (loss)	$ (3,883)	$ (4,708)

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Segment Disclosures - Summary Information for the Reportable Segments (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) facility	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($) facility
Segment reporting information, revenues
Rental revenues	$ 434,441			$ 472,832
Operating expenses	(168,927)			(172,552)
Segment NOI	265,514			300,280
Adjustments to NOI	(2,338)			(9,686)
Adjusted NOI	263,176			290,594
Addback adjustments	2,338			9,686
Interest income	1,713			6,365
Interest expense	(49,327)			(75,102)
Depreciation and amortization	(131,951)			(143,250)
General and administrative	(21,355)			(29,175)
Transaction costs	(4,518)			(2,195)
Recoveries (impairments), net	(8,858)			0
Gain (loss) on sales of real estate, net	8,044	$ 95,000	$ 25,000	20,815
Other income (expense), net	3,133			(40,407)
Income tax benefit (expense)	3,458			5,336
Equity income (loss) from unconsolidated joint ventures	(863)			570
Net income (loss)	64,990			43,237
Corporate and other assets
Segment reporting information, revenues
Rental revenues	0			0
Operating expenses	0			0
Segment NOI	0			0
Adjustments to NOI	0			0
Adjusted NOI	0			0
Addback adjustments	0			0
Interest income	0			0
Interest expense	(47,891)			(72,583)
Depreciation and amortization	0			0
General and administrative	(21,355)			(29,175)
Transaction costs	(4,518)			(2,195)
Recoveries (impairments), net	0
Gain (loss) on sales of real estate, net	0			0
Other income (expense), net	3,133			160
Income tax benefit (expense)	3,458			5,336
Equity income (loss) from unconsolidated joint ventures	0			0
Net income (loss)	$ (67,173)			$ (98,457)
Senior housing triple-net
Segment Disclosure
Number of facilities transitioned | facility	18			0
Senior housing triple-net | Operating segment
Segment reporting information, revenues
Rental revenues	$ 58,892			$ 74,289
Operating expenses	(993)			(1,045)
Segment NOI	57,899			73,244
Adjustments to NOI	564			(1,865)
Adjusted NOI	58,463			71,379
Addback adjustments	(564)			1,865
Interest income	0			0
Interest expense	(589)			(600)
Depreciation and amortization	(16,683)			(21,906)
General and administrative	0			0
Transaction costs	0			0
Recoveries (impairments), net	0
Gain (loss) on sales of real estate, net	3,557			0
Other income (expense), net	0			0
Income tax benefit (expense)	0			0
Equity income (loss) from unconsolidated joint ventures	0			0
Net income (loss)	44,184			50,738
SHOP
Segment reporting information, revenues
Gain (loss) on sales of real estate, net				21,000
SHOP | Operating segment
Segment reporting information, revenues
Rental revenues	126,181			144,670
Operating expenses	(96,948)			(101,746)
Segment NOI	29,233			42,924
Adjustments to NOI	1,152			(1,607)
Adjusted NOI	30,385			41,317
Addback adjustments	(1,152)			1,607
Interest income	0			0
Interest expense	(663)			(988)
Depreciation and amortization	(24,086)			(27,628)
General and administrative	0			0
Transaction costs	0			0
Recoveries (impairments), net	0
Gain (loss) on sales of real estate, net	4,487			20,815
Other income (expense), net	0			0
Income tax benefit (expense)	0			0
Equity income (loss) from unconsolidated joint ventures	0			0
Net income (loss)	8,971			35,123
Life science | Operating segment
Segment reporting information, revenues
Rental revenues	94,473			99,622
Operating expenses	(21,992)			(21,809)
Segment NOI	72,481			77,813
Adjustments to NOI	(2,478)			(3,751)
Adjusted NOI	70,003			74,062
Addback adjustments	2,478			3,751
Interest income	0			0
Interest expense	(73)			(83)
Depreciation and amortization	(36,246)			(36,080)
General and administrative	0			0
Transaction costs	0			0
Recoveries (impairments), net	0
Gain (loss) on sales of real estate, net	0			0
Other income (expense), net	0			0
Income tax benefit (expense)	0			0
Equity income (loss) from unconsolidated joint ventures	0			0
Net income (loss)	$ 36,162			41,650
Medical office
Segment Disclosure
Number of facilities transitioned | facility	2
Medical office | Operating segment
Segment reporting information, revenues
Rental revenues	$ 142,195			133,220
Operating expenses	(48,987)			(47,878)
Segment NOI	93,208			85,342
Adjustments to NOI	(1,771)			(1,932)
Adjusted NOI	91,437			83,410
Addback adjustments	1,771			1,932
Interest income	0			0
Interest expense	(111)			(120)
Depreciation and amortization	(53,101)			(47,198)
General and administrative	0			0
Transaction costs	0			0
Recoveries (impairments), net	(8,858)
Gain (loss) on sales of real estate, net	0			0
Other income (expense), net	0			0
Income tax benefit (expense)	0			0
Equity income (loss) from unconsolidated joint ventures	0			0
Net income (loss)	31,138			38,024
Other non-reportable segments | Operating segment
Segment reporting information, revenues
Rental revenues	12,700			21,031
Operating expenses	(7)			(74)
Segment NOI	12,693			20,957
Adjustments to NOI	195			(531)
Adjusted NOI	12,888			20,426
Addback adjustments	(195)			531
Interest income	1,713			6,365
Interest expense	0			(728)
Depreciation and amortization	(1,835)			(10,438)
General and administrative	0			0
Transaction costs	0			0
Recoveries (impairments), net	0
Gain (loss) on sales of real estate, net	0			0
Other income (expense), net	0			(40,567)
Income tax benefit (expense)	0			0
Equity income (loss) from unconsolidated joint ventures	(863)			570
Net income (loss)	$ 11,708			$ (23,841)

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Segment Disclosures - Revenues and Assets by Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Segment Disclosure
Total revenues	$ 436,154	$ 479,197
Operating segment
Segment Disclosure
Total revenues	436,154	479,197
Operating segment | Senior housing triple-net
Segment Disclosure
Total revenues	58,892	74,289
Operating segment | SHOP
Segment Disclosure
Total revenues	126,181	144,670
Operating segment | Life science
Segment Disclosure
Total revenues	94,473	99,622
Operating segment | Medical office
Segment Disclosure
Total revenues	142,195	133,220
Operating segment | Other non-reportable segments
Segment Disclosure
Total revenues	$ 14,413	$ 27,396

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Earnings Per Common Share - Narrative (Details) - shares	1 Months Ended	3 Months Ended
	Dec. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Maximum shares issuable under forward equity sales agreement (in shares)	15,250,000
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Incremental Common Shares Attributable to Dilutive Effect of Equity Forward Agreements		1,093,000	0
Down REIT
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares of anti-dilutive securities excluded from earnings per share calculation (in shares)		6,000,000	7,000,000
Employee stock option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares of anti-dilutive securities excluded from earnings per share calculation (in shares)		1,000,000	1,000,000
Convertible Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares of anti-dilutive securities excluded from earnings per share calculation (in shares)		18,000,000
At-The-Market Program 2019
Earnings Per Share [Abstract]
Maximum shares issuable under forward equity sales agreement (in shares)		3,600,000
Option indexed to issuers equity, term		1 year

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Earnings Per Common Share - Schedule of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Numerator
Net income (loss)	$ 64,990	$ 43,237
Noncontrolling interests' share in earnings	(3,520)	(3,005)
Net income (loss) attributable to HCP, Inc.	61,470	40,232
Less: Participating securities' share in earnings	(441)	(391)
Net income (loss) applicable to common shares	$ 61,029	$ 39,841
Denominator
Basic weighted average shares outstanding (in shares)	477,766	469,557
Dilutive potential common shares - equity awards (in shares)	272	138
Dilutive potential common shares - forward equity agreements (in shares)	1,093	0
Diluted weighted average common shares (in shares)	479,131	469,695
Basic earnings per common share
Earnings per common share, basic (in dollars per share)	$ 0.13	$ 0.08
Earnings per common share, diluted (in dollars per share)	$ 0.13	$ 0.08

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Supplemental Cash Flow Information - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Supplemental cash flow information:
Interest paid, net of capitalized interest	$ 53,475	$ 92,701
Income taxes paid (refunded)	(769)	340
Capitalized interest	8,369	3,578
Supplemental schedule of non-cash investing and financing activities:
Accrued construction costs	94,904	62,160
Derecognition of U.K. Bridge Loan receivable	0	147,474
Consolidation of net assets related to U.K. Bridge Loan	0	106,457
Vesting of restricted stock units and conversion of non-managing member units into common stock	4,341	258
Conversion of DFLs to real estate	$ 350,540	$ 0

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Supplemental Cash Flow Information - Schedule of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Supplemental Cash Flow Elements [Abstract]
Cash and cash equivalents	$ 120,117	$ 110,790	$ 86,021
Restricted cash	26,535	29,056	31,947
Cash, cash equivalents and restricted cash	$ 146,652	$ 139,846	$ 117,968	$ 82,203

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Variable Interest Entities - Narrative (Details) $ in Thousands, £ in Millions	1 Months Ended	3 Months Ended				12 Months Ended
	Aug. 31, 2018	Mar. 31, 2019 USD ($) property facility joint_venture tenant loan	Jun. 30, 2018 facility	Mar. 31, 2018 USD ($)	Mar. 31, 2018 GBP (£)	Dec. 31, 2017 USD ($) property	Dec. 31, 2016 USD ($) property	Dec. 31, 2018 USD ($)	Mar. 31, 2018 GBP (£)	Dec. 31, 2017 GBP (£) property	Dec. 31, 2016 GBP (£) property
Variable Interest Entity [Line Items]
Mezzanine | $		$ 20,545						$ 21,013
Loans receivable, net | $		$ 86,139						$ 62,998
Senior housing triple-net
Variable Interest Entity [Line Items]
Number of properties sold | facility		2	2
Unconsolidated Variable Interest Entities
Variable Interest Entity [Line Items]
Number of unconsolidated joint ventures | joint_venture		4
Number of VIE borrowers with marketable debt securities | joint_venture		1
Number of loans to VIE borrowers | loan		1
VIE tenants-operating leases
Variable Interest Entity [Line Items]
Number of properties leased | property		30
Number of VIE tenants | tenant		4
CCRC OpCo
Variable Interest Entity [Line Items]
Ownership percentage (as a percent)		49.00%
Vintage Park Development JV
Variable Interest Entity [Line Items]
Ownership percentage (as a percent)		85.00%
Waldwick
Variable Interest Entity [Line Items]
Ownership percentage (as a percent)		85.00%
Loan - seller financing | Senior housing triple-net
Variable Interest Entity [Line Items]
Mezzanine | $		$ 10,000
Number of properties sold | facility		7
Term of facility		5 years
HCP Ventures V
Variable Interest Entity [Line Items]
Ownership percentage (as a percent)		51.00%
Vintage Park JV
Variable Interest Entity [Line Items]
Ownership percentage (as a percent)		90.00%
Watertown JV
Variable Interest Entity [Line Items]
Ownership percentage (as a percent)		95.00%
Life science joint ventures
Variable Interest Entity [Line Items]
Ownership percentage (as a percent)		99.00%
MSREI JV
Variable Interest Entity [Line Items]
Ownership percentage (as a percent)	51.00%	51.00%
Consolidated lessees VIE
Variable Interest Entity [Line Items]
Number of properties leased | property		1
DownREIT Partnerships
Variable Interest Entity [Line Items]
Number of controlling ownership interest entities as a managing member | joint_venture		5
MMCG
Variable Interest Entity [Line Items]
Loss from initial consolidation of VIE				$ 41,000	£ 29
Tax benefit of initial consolidation of variable interest entity				3,000	2
Carrying amount of liabilities in VIE				13,000					£ 9
MMCG | Property, plant and equipment
Variable Interest Entity [Line Items]
Carrying amount of assets in VIE				114,000					81
MMCG | Intangible assets
Variable Interest Entity [Line Items]
Carrying amount of assets in VIE				5,000					£ 4
MMCG | Bridge Loan
Variable Interest Entity [Line Items]
Loans receivable, net						$ 131,000	$ 131,000			£ 105	£ 105
Number of properties in a purchase option | property						7	7			7	7
Period of call-option retained						3 years	3 years
Loss from initial consolidation of VIE				$ 41,000	£ 29

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Variable Interest Entities - Schedule of Variable Interest Entities (Details) $ in Thousands	Mar. 31, 2019 USD ($)
VIE tenants-DFLs
Variable Interest Entity [Line Items]
Maximum Loss Exposure and Carrying Amount	$ 249,803
VIE tenants-operating leases
Variable Interest Entity [Line Items]
Maximum Loss Exposure and Carrying Amount	6,909
CCRC OpCo
Variable Interest Entity [Line Items]
Maximum Loss Exposure and Carrying Amount	175,011
Unconsolidated Development JVs
Variable Interest Entity [Line Items]
Maximum Loss Exposure and Carrying Amount	15,206
Loan - seller financing
Variable Interest Entity [Line Items]
Maximum Loss Exposure and Carrying Amount	10,000
CMBS and LLC investment
Variable Interest Entity [Line Items]
Maximum Loss Exposure and Carrying Amount	$ 34,397

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Variable Interest Entities - Consolidated Assets and Liabilities of VIEs (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
ASSETS
Buildings and improvements	$ 11,220,557	$ 10,877,248
Development costs and construction in progress	605,165	537,643
Land	1,717,259	1,637,506
Accumulated depreciation and amortization	(2,915,798)	(2,842,947)
Net real estate	10,627,183	10,209,450
Investments in and advances to unconsolidated joint ventures	531,966	540,088
Accounts receivable, net	48,555	48,171
Cash and cash equivalents	120,117	110,790	$ 86,021
Restricted cash	26,535	29,056	$ 31,947
Intangible assets, net	275,565	305,079
Right-of-use asset, net	165,748	0
Other assets, net	643,456	591,017
Total assets	12,899,501	12,718,553
LIABILITIES AND EQUITY
Mortgage debt	137,525	138,470
Intangible liabilities, net	49,488	54,663
Lease liability	152,837	0
Accounts payable and accrued liabilities	132	1,125
Deferred revenue	181,467	190,683
Total liabilities	6,500,436	6,205,962
VIEs
ASSETS
Buildings and improvements	2,001,875	1,949,582
Development costs and construction in progress	43,481	39,584
Land	196,484	151,746
Accumulated depreciation and amortization	(424,325)	(398,143)
Net real estate	1,817,515	1,742,769
Investments in and advances to unconsolidated joint ventures	1,534	1,550
Accounts receivable, net	6,811	7,904
Cash and cash equivalents	32,831	23,772
Restricted cash	3,386	3,399
Intangible assets, net	96,197	111,333
Right-of-use asset, net	93,796	0
Other assets, net	44,312	43,149
Total assets	2,096,382	1,933,876
LIABILITIES AND EQUITY
Mortgage debt	44,500	44,598
Intangible liabilities, net	17,014	19,128
Lease liability	90,043	0
Accounts payable and accrued liabilities	56,542	66,736
Deferred revenue	23,536	24,215
Total liabilities	$ 231,635	$ 154,677

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Concentration of Credit Risk - Schedule of Concentration Risk (Details) - Brookdale	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Total Assets
Concentration Risk [Line Items]
Concentration risk (as a percent)	6.00%		6.00%
Revenue
Concentration Risk [Line Items]
Concentration risk (as a percent)	4.00%	7.00%
Senior housing triple-net | Total Assets
Concentration Risk [Line Items]
Concentration risk (as a percent)	31.00%		27.00%
Senior housing triple-net | Revenue
Concentration Risk [Line Items]
Concentration risk (as a percent)	32.00%	43.00%

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Concentration of Credit Risk - Narrative (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2019 facility renewal	Dec. 31, 2018
Brookdale | Minimum
Concentration Risk [Line Items]
Percentage of EDITDAR payable as base management fee	4.50%
Brookdale | Maximum
Concentration Risk [Line Items]
Percentage of EDITDAR payable as base management fee	5.00%
SHOP | Management and Accounting Services | Brookdale
Concentration Risk [Line Items]
Number of facilities | facility	27
Number of facilities owned by unconsolidated joint venture | facility	16
Management and Accounting Services | SHOP | Brookdale
Concentration Risk [Line Items]
Management agreement renewal term (in years)	5 years
Management and Accounting Services | SHOP | Brookdale | Minimum
Concentration Risk [Line Items]
Management agreement term (in years)	10 years
Number of renewals on management agreement | renewal	3
Management and Accounting Services | SHOP | Brookdale | Maximum
Concentration Risk [Line Items]
Management agreement term (in years)	15 years
Number of renewals on management agreement | renewal	4
Total Assets | SHOP | Brookdale
Concentration Risk [Line Items]
Concentration risk (as a percent)	7.00%
Brookdale | Total Assets
Concentration Risk [Line Items]
Concentration risk (as a percent)	6.00%	6.00%

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Fair Value Measurements (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Summary of financial instruments
Bank line of credit	$ 276,500	$ 80,103
Senior unsecured notes	5,260,622	5,258,550
Mortgage debt	137,525	138,470
Other debt	89,223	90,785
Carrying Value
Summary of financial instruments
Loans receivable, net	86,139	62,998
Marketable debt securities	19,337	19,202
Bank line of credit	276,500	80,103
Senior unsecured notes	5,260,622	5,258,550
Mortgage debt	137,525	138,470
Other debt	89,223	90,785
Derivative liabilities	1,217	1,310
Fair Value | Level 1
Summary of financial instruments
Senior unsecured notes	5,484,915	5,302,485
Fair Value | Level 2
Summary of financial instruments
Loans receivable, net	86,139	62,998
Marketable debt securities	19,337	19,202
Bank line of credit	276,500	80,103
Mortgage debt	133,652	136,161
Other debt	89,223	90,785
Derivative liabilities	$ 1,217	$ 1,310

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Derivative Financial Instruments - Schedule of Derivative Instruments (Details) - Cash Flow - Interest-rate swap contracts	Mar. 31, 2019 USD ($) derivative
Derivative [Line Items]
Notional	$ 43,000,000
Fixed Rate/Buy Amount (as a percent)	3.82%
Fair value of interest rate hedge, liabilities	$ (1,217,000)
Number of interest-rate contracts held | derivative	3

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Derivative Financial Instruments - Narrative (Details) - 3 months ended Mar. 31, 2019 £ in Millions, $ in Millions	USD ($)	GBP (£)
Net Investment | Facility and 2015 Term Loan
Derivative [Line Items]
Borrowings designated as hedge of net investment | £		£ 55
Interest-rate swap contracts | Maximum
Derivative [Line Items]
Estimate change in fair value of derivative for assumption of one percentage point change in the interest rate | $	$ 1