Slide 1: Supplemental Report Third Quarter 2014
1 1 supplemental Strategy. Execution. Results. report Third Quarter 2014 South Port Square Port Charlotte, 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 14 Senior Housing 19 Post-Acute/Skilled 22 Life Science 25 Medical Office 28 Hospital 30 Investment Management Platform 31
Slide 3: This Quarter: Sustainability
THIS QUARTER Sustainability 1 st Global Real Estate Sustainability Benchmark Survey Named Global Healthcare Sector Leader, ranked #1 in Sector for third consecutive year Contributed to the University of California, Los Angeles Jules Stein Eye Institute to advance optic nerve transplant research Top
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% MedicalO ice13% LifeScience14% Three Months Ended September 30, 2014 2013 Revenues $ 596,638 $ 546,157 NOI 479,075 428,198 Cash NOI 413,
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% 8.7% 0.5% 0.5% 1.2% 0.4% 0.7%0.5% 1.4% 1.3% 0.4% 0.9% 0.7% 0.8% 0.7% 0.6% 0.2% 0.1% 0.6% 0.3% 0.1% 0.2% 0.4% 0.50x0.75x1.00x1.25x1.50x02468101214161820TERM(YEARS TO EXPIRATION) 0.7% 0.2% 0.1% 28.9% (4) 10.25x25EBITDAR CFC(TR
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% 40.6% 0% 20% 40% 60% 80% Pre-CNLAcquisition200620072008200920102011201220133Q 201411.5% 21.2% 11.8% 15.1% 15.8% 14.1% 10.0% 8.3% 6.8% 6.1% 0% 5% 10% 15% 20% 25% Pre-CNLAcquisition20
Slide 7: Credit Profile
CREDIT Profile Total Gross Assets (in billions) Same Property NOI Growth 83% 87% 80% 77% 86% 83% 71% 72% 70% 73% 50% 60% 70% 80% 90% Pre-CNLAcquisition200620072008200920102011201220133Q 2014$4.7 $10.6 $13.7 $13.2 $13.8 $14.2 $19.2 $22.0 $22.5 $23.7 $0$5$10$15$20$25Pre-CNLAcquisition20062007200820092
Slide 8: Capitalization
Capitalization Dollars and shares in thousands, except price data TOTAL DEBT September 30, 2014 December 31, 2013 September 30, 2013 Bank line of credit $ 70,000 $ — $ 285,000 Term loan(1) 222,118 226,858 221,748 Senior unsecured notes 7,625,041 6,963,375 6,565,934 Mortgage debt 1,199,633 1,396,485
Slide 9: Capitalization: Common Stock and Equivalents
Capitalization Common Stock and Equivalents In thousands Shares Outstanding September 30, 2014 Weighted Average Shares Three Months Ended September 30, 2014 Weighted Average Shares Nine Months Ended September 30, 2014 Diluted EPS Diluted FFO Diluted FAD Diluted EPS Diluted FFO Diluted FAD Common sto
Slide 10: Indebtedness and Ratios: Debt Maturities
Indebtedness and Ratios As of September 30, 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) Consol
Slide 11: Indebtedness and Ratios
Indebtedness and Ratios September 30, 2014 December 31, 2013 Consolidated Debt/Consolidated Gross Assets 40.8% 39.1% Financial Leverage (Total Debt/Total Gross Assets) 40.6% 39.2% Consolidated Secured Debt/Consolidated Gross Assets 5.3% 6.3% Secured Debt Ratio (Total Secured Debt/Total Gross Assets)
Slide 12: Investments
Investments Dollars and square feet in thousands INVESTMENTS September 30, 2014 Description Three Months Ended Nine Months Ended Investment in Entrance Fee CCRC joint venture(1) $ 588,270 $ 588,270 Investment in United Kingdom real estate — 127,396 Investment in other real estate assets 149,909 347,
Slide 13: Investments: Development
Investments Development As of September 30, 2014, dollars and square feet in thousands DEVELOPMENT PROJECTS IN PROCESS Name of Project Location Segment Estimated Completion Date Capacity Investment to Date Estimated Total Investment Development: Ridgeview Poway, CA Life science 4Q 2014 115 Sq. Ft. $
Slide 14: Portfolio Summary
Portfolio Summary As of and for the quarter ended September 30, 2014, dollars and square feet in thousands PORTFOLIO SUMMARY BY INVESTMENT PRODUCT Property Portfolio Property Count Investment Cash NOI Age (Years) Capacity Occupancy % EBITDARM CFC EBITDAR CFC Senior housing 395 $ 6,161,212 $ 135,424
Slide 15: Portfolio Summary: NOI, Cash NOI and Interest Income
Cypress Village Jacksonville, FL Portfolio Summary 15 For the quarter ended September 30, 2014, dollars in thousands PORTFOLIO 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) $ 246,0
Slide 16: Portfolio Diversification
Portfolio Diversification As of and for the quarter ended September 30, 2014, dollars in thousands CASH NOI BY STATE State Properties Senior Housing Post-Acute/ Skilled Life Science Medical Office Hospital Total % of Total CA 161 $ 18,282 $ 4,904 $ 55,749 $ 2,806 $ 4,499 $ 86,240 21 TX 109 18,781 1,
Slide 17: Same Property Portfolio
Same Property Portfolio As of September 30, 2014, dollars in thousands THREE-MONTH SPP Year-Over-Year Sequential Property Count Investment Percent of Property Portfolio Occupancy NOI Growth Occupancy NOI Growth 3Q14 3Q13 GAAP Cash 3Q14 2Q14 GAAP Cash Senior housing 393 $ 6,728,895 87 87.2% 87.1% 1.6
Slide 18: Portfolio Lease Expirations and Debt Investment Maturities
Portfolio Lease Expirations and Debt Investment Maturities(1) Annualized Revenues at September 30, 2014, dollars in thousands LEASE EXPIRATIONS Year Total % of Total Senior Housing(3) Post-Acute/ Skilled Life Science Medical Office Hospital 2014(2) $ 31,415 2 $ — $ — $ 3,691 $ 27,724 $ — 2015 56,556
Slide 19: Senior Housing
Senior Housing As of and for the quarter ended September 30, 2014, dollars in thousands INVESTMENTS Property Portfolio Property Count Investment Cash NOI Units Occupancy % EBITDARM CFC EBITDAR CFC Operating Leases: Assisted living 247 $ 3,301,219 $ 76,439 18,728 88.5 1.31x 1.11x Independent living 4
Slide 20: Senior Housing Operator Concentration
Senior Housing Operator Concentration As of and for the quarter ended September 30, 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(2) $ 4,465,625
Slide 21: Senior Housing Same Property Portfolio
Senior Housing Same Property Portfolio Dollars in thousands 3Q13 4Q13 1Q14 2Q14 3Q14 Property count 393 393 393 393 393 Investment $ 6,683,330 $ 6,697,016 $ 6,708,438 $ 6,717,834 $ 6,728,895 Units 39,098 39,131 39,130 39,095 39,090 3-month Occupancy % 87.1 87.6 87.6 87.3 87.2 EBITDARM CFC 1.37x 1.35
Slide 22: Post-Acute/Skilled
Post-Acute/Skilled As of and for the quarter ended September 30, 2014, dollars in thousands INVESTMENTS Leased Properties Property Count Investment Cash NOI Beds Occupancy % EBITDARM CFC EBITDAR CFC Operating leases 34 $ 212,240 $ 7,080 3,637 85.6 2.03x 1.56x HCR DFLs 267 5,632,347 114,898 34,691 84
Slide 23: Post-Acute/Skilled Same Property Portfolio
Post-Acute/Skilled Dollars in thousands SAME PROPERTY PORTFOLIO 3Q13 4Q13 1Q14 2Q14 3Q14 Property count 301 301 301 301 301 Investment $ 5,710,020 $ 5,741,630 $ 5,775,186 $ 5,804,540 $ 5,835,980 Beds 38,318 38,353 38,334 38,324 38,328 3-month Occupancy % 84.6 83.9 83.9 85.7 84.3 NOI: Total revenues
Slide 24: HCR ManorCare Portfolio Summary
HCR ManorCare Portfolio Summary Post-Acute/Skilled As of and for the quarter ended September 30, 2014, dollars in thousands HCP INVESTMENT IN HCR MANORCARE Property Count Investment(1) NOI(2) Cash NOI Occupancy % Assisted living 66 $ 876,325 $ 18,561 $ 15,921 82.3 Post-acute/skilled 267 5,632,347 13
Slide 25: Life Science
Life Science As of and for the quarter ended September 30, 2014, dollars and square feet in thousands INVESTMENTS Leased Properties Property Count Investment Cash NOI Square Feet Occupancy % San Francisco 76 $ 2,724,507 $ 44,362 4,689 93.4 San Diego 23 650,820 11,387 1,672 91.5 Other 13 210,028 4,97
Slide 26: Life Science: Lease Expiration 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 27: Life Science Tenant Concentration
University Center San Diego, CA Life Science 27 As of September 30, 2014, dollars and square feet in thousands TENANT CONCENTRATION Square Feet Annualized Revenues Amount % of Total Amount % of Total Amgen 684 10 $ 44,123 17 Genentech 856 13 42,399 16 Rigel Pharmaceuticals 147 2 14,397 6 LinkedIn Co
Slide 28: Medical Office
Medical Office As of and for the quarter ended September 30, 2014, dollars and square feet in thousands INVESTMENTS Leased Properties Property Count Investment Cash NOI Square Feet Occupancy % Healthcare System Affiliated % On-campus 163 $ 2,243,117 $ 43,873 12,070 90.9 100.0 Off-campus 48 679,137 1
Slide 29: Medical Office: Lease Expiration 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 2014(1) 1,113 8 $ 27,724 9 985 $ 24,48
Slide 30: Hospital
Hospital As of and for the quarter ended September 30, 2014, dollars in thousands INVESTMENTS Leased Properties Property Count Investment Cash NOI Beds Occupancy % (1) EBITDARM CFC EBITDAR CFC Acute care 5 $ 379,860 $ 14,857 1,508 48.2 6.55x 6.10x Other 11 213,857 5,881 713 59.5 3.46x 3.17x 16 $ 593
Slide 31: Investment Management Platform
Investment Management Platform Unconsolidated Joint Venture As of and for the quarter ended September 30, 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 $ 975,023 $ 827,211 $ 147,8
Slide 32: Entrance Fee CCRC Portfolio
Entrance Fee CCRC Portfolio Unconsolidated Joint Venture As of September 30, 2014 and for the period August 29, 2014 (inception) to September 30, 2014, dollars in thousands except per unit PORTFOLIO METRICS CCRC Campuses 14 Units 6,842 Occupancy 83.1% Average monthly revenue per occupied unit $ 4,84
Slide 33: Brookdale Lease Amendment Transaction
Brookdale Lease Amendment Transaction 202 Properties Formerly Operated by Emeritus Dollars in millions, except per share OVERVIEW OF VALUATION AND ACCOUNTING TREATMENT Cancellation of Purchase Options Value of Future Rent Reductions GAAP/NAREIT FFO Accounting Impact to FAD # Properties Value of Opti
Slide 34: RIDEA Property Addresses
RIDEA Property Addresses RIDEA I Property Name Address The Park at Olympia Fields 3633 Breakers Drive, Olympia Fields, IL The Park at Vernon Hills 145 North Milwaukee Avenue, Vernon Hills, IL East Bay Manor 1440 Wampanoag Trail, East Providence, RI Greenwich Bay Manor 945 Main Street, East Greenwich
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. The Company’s various debt agre
Slide 36: Definitions: Entrance Fees and Facility EBITDA
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 and 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: Secured Debt Ratio and Total Debt
Secured Debt Ratio* Total Secured Debt divided by Total Gross Assets. Secured Debt Ratio is a supplemental measure of the Company’s financial position, which enables both management and investors to analyze its leverage and to compare its leverage to that of other companies. The ratio of Consolidate
Slide 39: Reconciliations of Non-GAAP Measures: EBITDA
Reconciliations of Non-GAAP Measures Dollars in thousands EBITDA AND ADJUSTED EBITDA FROM NET INCOME Three Months Ended September 30, 2014 2013 Net income $ 251,059 $ 236,858 Interest expense: Continuing operations 111,275 108,088 Discontinued operations — — Income taxes: Continuing operations 55 1,
Slide 40: Reconciliations of Non-GAAP Measures: Fixed Charge Coverage
Reconciliations of Non-GAAP Measures Dollars in thousands ADJUSTED FIXED CHARGE COVERAGE Three Months Ended September 30, 2014 2013 Adjusted EBITDA $ 463,467 $ 475,733 Interest expense: Continuing operations 111,275 108,088 Discontinued operations — — HCP’s share of unconsolidated JV interest expens
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 at Patomak Global Partners LLC and Scholar In Residence at the Marshall School of Business USC Christine N. Garvey Forme
Slide 42: Forward Looking Statements & Risk Factors
The Solana Vintage Park 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 S
Slide 43: Forward Looking Statements & Risk Factors (continued)
including with respect to new leases and mortgages and the renewal or rollover of existing leases; the Company’s ability to negotiate the same or better terms with new tenants or operators if existing leases are not renewed or the Company exercises its right to replace an existing operator or tenant
Slide 44: Our Commitment: Strategy, Execution, Results
our commitment STRATEGY EXECUTION RESULTS Corporate Headquarters 1920 Main Street, Suite 1200 Irvine, CA 92614 (949) 407-0700 San Francisco Office 400 Oyster Point Boulevard, Suite 409 South San Francisco, CA 94080-1920 Los Angeles Office 11150 Santa Monica Boulevard, Suite 1600 Los Angeles, CA 9002