Slide 1: Fourth Quarter 2014 Supplemental Report
1 1 supplemental Strategy. Execution. Results. report 2014 Fourth Quarter Lake Port Square Leesburg, FL THE ONLY REIT IN THE S&P 500® THE FIRST HEALTHCARE REIT DIVIDEND ARISTOCRATS® S&P 500 IN THE INDEX
Slide 2: Table of Contents
2 Sustainability 3 Summary 4 Heat Map - Triple-Net Master Lease Profile 5 Credit Profile 6 Capitalization 8 Indebtedness and Ratios 10 Investments 12 Portfolio Portfolio Summary 15 Senior Housing 20 Post-Acute/Skilled 24 Life Science 27 Medical Office 30 Hospital 32 Investment Management Platform 33
Slide 3: This Quarter Sustainability
THIS QUARTER Sustainability HCP sponsored and its employees participated in fundraising supporting the Walk to End Alzheimer’s® in Huntington Beach, CA and Nashville, TN. We are proud to support one of the nation’s largest events to raise awareness and funds for Alzheimer’s care, support and researc
Slide 4: The Numbers: Summary
THE NUMBERS Summary PORTFOLIO INCOME FROM ASSETS UNDER MANAGEMENT (1) Dollars in thousands, except per share data Hospital5% Post-Acute/Skilled31% SeniorHousing37% MedicalOffice13% LifeScience14% Three Months Ended December 31, 2014 2013 Revenues $ 603,528 $ 530,297 NOI 449,288 436,016 Cash NOI 423,
Slide 5: Heat Map - Triple-Net Master Lease Profile
HEAT MAP Triple-Net Master Lease Profile(1) 0.4% 0.4% 0.8% 0.7%0.1%0.1%0.5% 8.8% 0.5% 0.5% 1.2% 0.4% 0.7%0.4% 1.4% 1.3% 0.4% 0.9%0.7% 0.8% 0.7% 0.6% 0.2% 0.4% 0.1% 0.6% 0.2% 0.1% 0.2% 0.4% 0.50x0.75x1.00x1.25x1.50x024681012141618TERM(YEARS TO EXPIRATION) 0.7% 0.2% 28.0% (3) 12.00x25EBITDAR CFC(TRAIL
Slide 6: Credit Profile
CREDIT Profile Financial Leverage Adjusted Fixed Charge Coverage 48.7% 58.7% 57.4% 47.6% 43.4% 38.2% 41.0% 40.2% 39.2% 41.5% 0% 20% 40% 60% 80% Pre-CNLAcquisition20062007200820092010201120122013201411.5% 21.2% 11.8% 15.1% 15.8% 14.1% 10.0% 8.3% 6.8% 5.0% 0% 5% 10% 15% 20% 25% Pre-CNLAcquisition20062
Slide 7: Credit Profile
CREDIT Profile Total Gross Assets (in billions) Same Property NOI Growth 83% 87% 80% 77% 86% 83% 71% 72% 70% 72% 50% 60% 70% 80% 90% Pre-CNLAcquisition200620072008200920102011201220132014$4.7 $10.6 $13.7 $13.2 $13.8 $14.2 $19.2 $22.0 $22.5 $24.5 $0$5$10$15$20$25$30Pre-CNLAcquisition20062007200820092
Slide 8: Capitalization
Capitalization Dollars and shares in thousands, except price data TOTAL DEBT December 31, 2014 December 31, 2013 Bank line of credit $ 838,516 $ — Term loan(1) 213,610 226,858 Senior unsecured notes 7,626,194 6,963,375 Mortgage debt 984,431 1,396,485 Other debt 97,022 74,909 Consolidated Debt $ 9,75
Slide 9: Capitalization: Common Stock and Equivalents
Capitalization Common Stock and Equivalents In thousands Shares Outstanding December 31, 2014 Weighted Average Shares Three Months Ended December 31, 2014 Weighted Average Shares Year Ended December 31, 2014 Diluted EPS Diluted FFO Diluted FAD Diluted EPS Diluted FFO Diluted FAD Common stock 459,746
Slide 10: Indebtedness and Ratios: Debt Maturities
Indebtedness and Ratios As of December 31, 2014, dollars in thousands DEBT MATURITIES AND SCHEDULED PRINCIPAL REPAYMENTS (AMORTIZATION) Senior Unsecured Notes Mortgage Debt HCP’s Share of Unconsolidated Debt Total Debt Bank Line of Credit Term Loan(1) Amounts Rates %(2) Amounts(3) Rates %(2) Consoli
Slide 11: Indebtedness and Ratios
Indebtedness and Ratios December 31, 2014 December 31, 2013 Consolidated Debt/Consolidated Gross Assets 41.8% 39.1% Financial Leverage (Total Debt/Total Gross Assets) 41.5% 39.2% Consolidated Secured Debt/Consolidated Gross Assets 4.2% 6.3% Secured Debt Ratio (Total Secured Debt/Total Gross Assets)
Slide 12: Investments
Investments Dollars in thousands INVESTMENTS December 31, 2014 Description Three Months Ended Year Ended Investment in Entrance Fee CCRC JV(1) $ — $ 588,270 United Kingdom debt investment(2) 561,886 561,886 Investment in United Kingdom real estate(3) 19,649 147,045 Investment in other real estate as
Slide 13: Investments: Real Estate
Investments Real Estate For the year ended December 31, 2014, dollars and square feet in thousands INVESTMENTS, DISPOSITIONS AND CONTRIBUTIONS Location Date Capacity Property Count Segment Investment/ Net Sales Price Investments: Deer Park, IL(1) February 18 8 Acres — Senior housing $ 6,655 Dallas,
Slide 14: Investments: Development
Investments Development As of December 31, 2014, dollars and square feet in thousands(1) DEVELOPMENT PROJECTS IN PROCESS Name of Project Location Segment Estimated Completion Date Capacity Investment to Date Estimated Total Investment Development: The Cove - Phase I(1) South San Francisco, CA Life s
Slide 15: Property Portfolio Summary
15 Property Portfolio Property Count Investment Cash NOI Age (Years) Capacity Occupancy % EBITDARM CFC EBITDAR CFC Senior housing 397 $ 6,166,657 $ 128,755 19 35,489 Units 87.3 1.32x 1.12x Senior housing - operating 68 1,616,220 29,357 19 9,869 Units 86.7 N/A N/A Post-acute/skilled 301 5,875,525 121
Slide 16: Portfolio Summary: NOI and Cash NOI
Freedom Village at Brandywine West Brandywine, PA Portfolio Summary 16 For the quarter ended December 31, 2014, dollars in thousands NOI, CASH NOI AND INTEREST INCOME Segment Rental and RIDEA Revenues Operating Expenses NOI(2) Cash NOI Interest Income Cash NOI and Interest Income Senior housing(1) $
Slide 17: Portfolio Diversification
Portfolio Diversification As of and for the quarter ended December 31, 2014, dollars in thousands CASH NOI BY STATE State Properties Senior Housing Post-Acute/ Skilled Life Science Medical Office Hospital Total % of Total CA 160 $ 20,110 $ 4,837 $ 56,371 $ 2,970 $ 4,498 $ 88,786 21 TX 109 18,545 1,9
Slide 18: Same Property Portfolio
Same Property Portfolio As of December 31, 2014, dollars in thousands THREE-MONTH SPP Year-Over-Year Sequential Property Count Investment Percent of Property Portfolio Occupancy NOI Growth Occupancy NOI Growth 4Q14 4Q13 GAAP Cash 4Q14 3Q14 GAAP Cash Senior housing 392 $ 6,730,234 86 87.9% 87.7% 0.3%
Slide 19: Expirations and Maturities
Expirations and Maturities Annualized Revenues at December 31, 2014, dollars in thousands LEASE EXPIRATIONS(1) Year Total % of Total Senior Housing(3) Post-Acute/ Skilled Life Science Medical Office Hospital 2015(2) $ 61,842 4 $ 220 $ — $ 9,076 $ 52,546 $ — 2016 64,917 4 17,139 340 10,165 37,273 — 2
Slide 20: Senior Housing
Senior Housing As of and for the quarter ended December 31, 2014, dollars in thousands INVESTMENTS Property Portfolio Property Count Investment Cash NOI Units Occupancy % EBITDARM CFC EBITDAR CFC Operating Leases: Assisted living 249 $ 3,300,277 $ 70,518 18,746 88.4 1.31x 1.11x Independent living 44
Slide 21: Senior Housing Operator Concentration
Senior Housing Operator Concentration As of and for the quarter ended December 31, 2014, dollars in thousands Property Portfolio(1) Operator Investment NOI and Interest Income Cash NOI and Interest Income Properties Occupancy % EBITDARM CFC EBITDAR CFC Count % Pooled Units Brookdale $ 4,429,329 $ 93
Slide 22: Senior Housing Operating Portfolio
Senior Housing Operating Portfolio As of and for the quarter ended December 31, 2014, dollars in thousands, except REVPOR NOI DIVERSIFICATION Market Investment(1) Cash NOI(2) % of total NOI IL Units AL Units 3-Month Occupancy % REVPOR Houston, TX $ 261,021 $ 4,077 13.9 1,720 — 89.6 $ 2,252 Chicago,
Slide 23: Senior Housing Same Property Portfolio
Senior Housing Same Property Portfolio Dollars in thousands 4Q13 1Q14 2Q14 3Q14 4Q14 Property count 392 392 392 392 392 Investment $ 6,679,806 $ 6,691,228 $ 6,700,623 $ 6,711,684 $ 6,730,234 Units 39,007 39,006 38,971 38,966 38,930 3-month Occupancy % 87.7 87.7 87.4 87.2 87.9 EBITDARM CFC 1.35x 1.35
Slide 24: Post-Acute/Skilled
Post-Acute/Skilled As of and for the quarter ended December 31, 2014, dollars in thousands INVESTMENTS Leased Properties Property Count Investment Cash NOI Beds Occupancy % EBITDARM CFC EBITDAR CFC Operating leases 34 $ 212,240 $ 7,042 3,632 85.4 2.02x 1.55x HCR DFLs 267 5,663,285 114,870 34,677 84.
Slide 25: Post-Acute/Skilled Same Property Portfolio
Post-Acute/Skilled Dollars in thousands SAME PROPERTY PORTFOLIO 4Q13 1Q14 2Q14 3Q14 4Q14 Property count 301 301 301 301 301 Investment $ 5,741,630 $ 5,775,186 $5,804,540 $ 5,835,980 $ 5,866,919 Beds 38,353 38,334 38,324 38,328 38,309 3-month Occupancy % 83.9 83.9 85.7 84.3 83.2 NOI: Total revenues $
Slide 26: Post-Acute/Skilled footnotes
26 Post-Acute/Skilled (1) Includes accumulated DFL accretion of $539 million. (2) Assisted living and post-acute/skilled NOI includes reductions of $1.9 million and $13.7 million, respectively, related to HCP’s equity interest in HCR. (3) Private-pay is 33.3% and Medicare is 33.5% of total revenues
Slide 27: Life Science
Life Science As of and for the quarter ended December 31, 2014, dollars and square feet in thousands INVESTMENTS Leased Properties Property Count Investment Cash NOI Square Feet Occupancy % San Francisco 75 $ 2,749,840 $ 45,094 4,677 94.7 San Diego 23 660,677 11,277 1,731 95.0 Other 13 237,988 5,698
Slide 28: Life Science Lease Expirations and Leasing Activity
Life Science Dollars and square feet in thousands, except dollars per square foot SELECTED LEASE EXPIRATION DATA (NEXT 3 YEARS) Total San Francisco San Diego Other Year Square Feet % Annualized Revenues % Square Feet Annualized Revenues Square Feet Annualized Revenues Square Feet Annualized Revenues
Slide 29: Life Science Tenant Concentration
Oyster Point San Francisco, CA Life Science 29 As of December 31, 2014, dollars and square feet in thousands TENANT CONCENTRATION Square Feet Annualized Revenues Amount % of Total Amount % of Total Amgen 684 10 $ 44,547 17 Genentech 856 12 43,596 17 Rigel Pharmaceuticals 147 2 14,397 6 LinkedIn Corp
Slide 30: Medical Office
Medical Office As of and for the quarter ended December 31, 2014, dollars and square feet in thousands INVESTMENTS Leased Properties Property Count Investment Cash NOI Square Feet Occupancy % Healthcare System Affiliated % On-campus 164 $ 2,289,928 $ 46,977 12,084 91.1 100.0 Off-campus 51 734,025 13
Slide 31: Medical Office Lease Expirations and Leasing Activity
Medical Office Dollars and square feet in thousands, except dollars per square foot SELECTED LEASE EXPIRATION DATA (NEXT 3 YEARS) Total On-Campus Off-Campus Year Square Feet % Annualized Revenues % Square Feet Annualized Revenues Square Feet Annualized Revenues 2015(1) 2,242 16 $ 52,546 17 1,849 $ 4
Slide 32: Hospital
Hospital As of and for the quarter ended December 31, 2014, dollars in thousands INVESTMENTS Leased Properties Property Count Investment Cash NOI Beds Occupancy % (1) EBITDARM CFC EBITDAR CFC Acute care 5 $ 380,191 $ 15,259 1,508 48.5 6.68x 6.23x Other 11 213,857 5,988 713 60.2 3.27x 2.99x 16 $ 594,
Slide 33: Investment Management Platform
Investment Management Platform Unconsolidated Joint Venture As of and for the quarter ended December 31, 2014, dollars and square feet in thousands INVESTMENTS Total Medical Office (1) Life Science HCP’s ownership percentage 20% - 30% 50% - 63% Joint venture’s Investment $ 983,848 $ 833,610 $ 150,23
Slide 34: Entrance Fee CCRC Portfolio
Entrance Fee CCRC Portfolio Unconsolidated Joint Venture As of and for the quarter ended December 31, 2014, dollars in thousands except per unit CAPITALIZATION Joint venture’s Investment $ 1,208,373 Joint venture’s mortgage debt (excludes Entrance Fees) $ 202,126 HCP’s equity ownership 49% HCP’s net
Slide 35: Definitions
Adjusted Fixed Charge Coverage* Adjusted EBITDA divided by Fixed Charges. Adjusted Fixed Charge Coverage is a supplemental measure of liquidity and the Company’s ability to meet its interest payments on outstanding debt and pay dividends to its preferred stockholders, if applicable. The Company’s va
Slide 36: Definitions: Entrance Fees
Entrance Fees Certain of the Company’s communities have residency agreements which require the resident to pay an upfront entrance fee prior to occupying the community. For GAAP NOI, net income and FFO, the non-refundable portion of the entrance fee is recorded as deferred entrance fee revenue and a
Slide 37: Definitions: Investment Management Platform, Net Debt
Investment Management Platform (“IMP”) Includes the following unconsolidated joint ventures: (i) four life science properties in three joint ventures in which the Company’s interests range from 50%-63%, (ii) HCP Ventures III, a medical office joint venture in which the Company owns an effective inte
Slide 38: Definitions: Same Property Portfolio
Same Property Portfolio (“SPP”) Stabilized properties that remained in operations and were consistently reported as leased properties or operating properties (RIDEA) for the duration of the year-over-year comparison periods presented. SPP statistics allow management to evaluate the performance of th
Slide 39: Reconciliations of Non-GAAP Measures
Reconciliations of Non-GAAP Measures Dollars in thousands EBITDA AND ADJUSTED EBITDA FROM NET INCOME Three Months Ended December 31, Year Ended December 31, 2014 2013 2014 2013 Net income $ 199,630 $ 297,639 $ 936,591 $ 985,006 Interest expense: Continuing operations 114,987 109,603 439,742 435,252
Slide 40: Reconciliations of Non-GAAP Measures
Reconciliations of Non-GAAP Measures Dollars in thousands ADJUSTED FIXED CHARGE COVERAGE Three Months Ended December 31, Year Ended December 31, 2014 2013 2014 2013 Adjusted EBITDA $ 480,150 $ 457,677 $ 1,856,386 $ 1,833,889 Interest expense: Continuing operations 114,987 109,603 439,742 435,252 Dis
Slide 41: Company Information
COMPANY Information Board of Directors Michael D. McKee Chairman of the Board, HCP, Inc. and Chief Executive Officer, Bentall Kennedy U.S., L.P. Brian G. Cartwright Senior Advisor Patomak Global Partners LLC Christine N. Garvey Former Global Head of Corporate Real Estate Services, Deutsche Bank AG D
Slide 42: Forward Looking Statements & Risk Factors
Brookdale First Colony Houston, TX Forward Looking Statements & Risk Factors “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this supplemental report which are not historical facts are forward-looking statements within the meaning of Se
Slide 43: Forward Looking Statements & Risk Factors (continued)
its obligations or consummate transactions, or reduce the earnings from potential transactions; changes in global, national and local economic conditions, and currency exchange rates; changes in the credit ratings on U.S. government debt securities or default or delay in payment by the U.S. of its o
Slide 44: Our Commitment: Corporate Headquarters and Offices
our commitment STRATEGY EXECUTION RESULTS Corporate Headquarters 1920 Main Street, Suite 1200 Irvine, CA 92614 (949) 407-0700 Nashville Office 3000 Meridian Boulevard, Suite 200 Franklin, TN 37067 San Francisco Office 400 Oyster Point Boulevard, Suite 409 South San Francisco, CA 94080 Los Angeles Of