Slide 1: Second Quarter 2014 Supplemental Report
1 1 supplemental Strategy. Execution. Results. report 2014 Second Quarter The Fairfax Fort Belvoir, Virginia THE FIRST HEALTHCARE REIT THE ONLY REIT IN THE S&P 500® S&P 500 DIVIDEND ARISTOCRATS® 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: Sustainability
JUNE 30, 2014 Sustainability Reduced greenhouse gas emissions through 2013 by 7.5% since 2011. Achieved 50% of our longer term goal of a 15% reduction by 2020. Charitable Giving -7.5% Contributed to educational and charitable organizations in partnership with our employees, tenants and peers. 2 nd R
Slide 4: Summary
THE NUMBERS Summary PORTFOLIO INCOME FROM ASSETS UNDER MANAGEMENT (1) Dollars in thousands, except per share data Hospital 5% Post-Acute/Skilled 31% SeniorHousing 37% Medical Office 13% LifeScience 14% Three Months Ended June 30, 2014 2013 Revenues $ 536,121 $ 512,239 NOI 439,873 423,706 Cash NOI 40
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% 0.4% 1.8% 1.1% 1.5% 0.7% 0.5% 0.8% 1.6% 0.4% 0.7% 0.4% 1.4% 1.3% 0.4% 0.9% 0.7% 0.8% 0.7% 0.6% 0.2% 0.1% 0.6% 0.3% 0.1% 0.2% 0.4% 6.2% 0.50x 0.75x 1.00x 1.25x 1.50x TERM (YEARS TO EXPIRATION) 0.1% 0.8% 0.2% 28.6% (3) 10.25x 25
Slide 6: Credit Profile
CREDIT Profile Financial Leverage Adjusted Fixed Charge Coverage 2.9x 2.3x 2.1x 2.3x 2.6x 2.9x 3.1x 3.6x 4.0x 4.0x 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x Pre-CNL Acquisition 2006 2007 2008 2009 2010 2011 2012 2013 2Q 2014 48.7% 58.7% 57.4% 47.6% 43.4% 38.2% 41.0% 40.2% 39.2% 38.9% 0% 20% 40% 60% 80% Pre-CNL
Slide 7: Credit Profile
CREDIT Profile Same Property NOI Growth Total Gross Assets (in billions) 2.1% 2.6% 2.0% 1.6% 3.2% 4.8% 4.0% 4.2% 3.1% 2.4% 2.4% 4.6% 4.6% 2.1% (2.8%) (0.6%) 2.7% 3.7% 3.9% (4%) (2%) 0% 2% 4% 6% HCPMajor Property Sectors(1) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2Q 2014(2) $4.7 $10.6 $13.7 $13.
Slide 8: Capitalization
Capitalization Dollars and shares in thousands, except price data TOTAL DEBT June 30, 2014 December 31, 2013 June 30, 2013 Bank line of credit $ 310,000 $ — $ 261,582 Term loan(1) 234,352 226,858 208,418 Senior unsecured notes 6,826,884 6,963,375 6,564,842 Mortgage debt 1,229,773 1,396,485 1,653,426
Slide 9: Capitalization
Capitalization Common Stock and Equivalents In thousands Shares Outstanding June 30, 2014 Weighted Average Shares Three Months Ended June 30, 2014 Weighted Average Shares Six Months Ended June 30, 2014 Diluted EPS Diluted FFO Diluted FAD Diluted EPS Diluted FFO Diluted FAD Common stock 458,742 458,2
Slide 10: Indebtedness and Ratios
Indebtedness and Ratios As of June 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) Consolidate
Slide 11: Investments
Investments Dollars and square feet in thousands INVESTMENTS Description Three Months Ended June 30, 2014 Six Months Ended June 30, 2014 Investment in United Kingdom real estate $ 127,396 $ 127,396 Investment in other real estate assets 158,570 197,225 Total fundings for development, tenant and capi
Slide 12: Investments - Development
Investments Development As of June 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. $ 18,1
Slide 13: Portfolio Summary
Portfolio Summary As of and for the quarter ended June 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 446 $ 7,118,834 $ 139,423 18 41
Slide 14: Portfolio Summary
Timpanogos Medical Office Building Orem, Utah Portfolio Summary 15 For the quarter ended June 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)
Slide 15: Portfolio Diversification
Portfolio Diversification As of and for the quarter ended June 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 $ 16,899 $ 4,868 $ 54,640 $ 2,880 $ 4,492 $ 83,779 20 TX 108 18,563 1,993 —
Slide 16: Same Property Portfolio
Same Property Portfolio As of June 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 2Q14 2Q13 GAAP Cash 2Q14 1Q14 GAAP Cash Senior housing 442 $ 7,637,663 97% 86.8% 86.3% 0.1% 2.
Slide 17: Portfolio Lease Expirations and Debt Investment Maturities
Portfolio Lease Expirations and Debt Investment Maturities(1) Annualized Revenues at June 30, 2014, dollars in thousands LEASE EXPIRATIONS Year Total % of Total Senior Housing(3) Post-Acute/Skilled Life Science Medical Office Hospital 2014(2) $ 45,674 3 $ — $ — $ 5,664 $ 40,010 $ — 2015 64,115 4 214
Slide 18: Senior Housing
Senior Housing As of and for the quarter ended June 30, 2014, dollars in thousands INVESTMENTS Property Portfolio Property Count Investment Cash NOI Units Occupancy % EBITDARM CFC EBITDAR CFC Operating Leases: Assisted living 292 $ 4,073,044 $ 79,669 23,514 86.8 1.25x 1.05x Independent living 47 860
Slide 19: Senior Housing - Operator Concentration
Senior Housing As of and for the quarter ended June 30, 2014, dollars in thousands OPERATOR CONCENTRATION Property Portfolio(1) Operator Investment NOI and Interest Income Cash NOI and Interest Income Properties Occupancy % EBITDARM CFC EBITDAR CFC Count % Pooled Units Emeritus(2) $ 2,946,148 $ 65,6
Slide 20: Senior Housing - Same Property Portfolio
Senior Housing Dollars in thousands SAME PROPERTY PORTFOLIO 2Q13 3Q13 4Q13 1Q14 2Q14 Property count 442 442 442 442 442 Investment $ 7,591,185 $ 7,603,160 $ 7,616,846 $ 7,628,268 $ 7,637,663 Units 45,108 45,111 45,145 45,141 45,094 3-month Occupancy % 86.3 86.1 86.7 86.8 86.8 EBITDARM CFC 1.34x 1.34
Slide 21: Post-Acute/Skilled
Post-Acute/Skilled As of and for the quarter ended June 30, 2014, dollars in thousands INVESTMENTS Leased Properties Property Count Investment Cash NOI Beds Occupancy % EBITDARM CFC EBITDAR CFC Operating leases 34 $ 212,240 $ 7,039 3,637 86.0 2.08x 1.61x HCR DFLs 268 5,615,261 115,066 34,872 84.3 N/
Slide 22: Post-Acute/Skilled - Same Property Portfolio
Post-Acute/Skilled Dollars in thousands SAME PROPERTY PORTFOLIO 2Q13 3Q13 4Q13 1Q14 2Q14 Property count 302 302 302 302 302 Investment $ 5,693,256 $ 5,724,132 $ 5,755,824 $5,789,464 $ 5,818,894 Beds 38,354 38,503 38,538 38,519 38,509 3-month Occupancy % 86.8 84.6 83.9 83.9 85.6 NOI: Total revenues $
Slide 23: HCR ManorCare Portfolio Summary
HCR ManorCare Portfolio Summary Post-Acute/Skilled As of and for the quarter ended June 30, 2014, dollars in thousands HCP INVESTMENT IN HCR MANORCARE Property Count Investment(1) NOI(2) Cash NOI Occupancy % Assisted living 66 $ 871,723 $ 18,442 $ 15,921 82.2 Post-acute/skilled 268 5,615,261 130,759
Slide 24: Life Science
Life Science As of and for the quarter ended June 30, 2014, dollars and square feet in thousands INVESTMENTS Leased Properties Property Count Investment Cash NOI Square Feet Occupancy % San Francisco 76 $ 2,699,849 $ 44,469 4,689 91.3 San Diego 23 650,923 10,171 1,672 91.5 Other 13 187,958 4,699 808
Slide 25: 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 26: Life Science - Tenant Concentration
Life Science As of June 30, 2014, dollars and square feet in thousands TENANT CONCENTRATION 27 Square Feet Annualized Revenues Amount % of Total Amount % of Total Amgen 684 10 $ 44,123 18 Genentech 856 13 42,115 17 Rigel Pharmaceuticals 147 2 14,397 6 LinkedIn Corporation 373 6 13,460 5 Exelixis, In
Slide 27: Medical Office
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) 1,618 12 $ 40,010 14 1,465 $ 3
Slide 28: Hospital
Hospital As of and for the quarter ended June 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 $ 14,638 1,508 47.8 6.56x 6.11x Other 11 213,688 5,837 713 59.6 3.86x 3.56x 16 $ 593,548
Slide 29: Investment Management Platform
Investment Management Platform As of and for the quarter ended June 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 $ 971,058 $ 824,062 $ 146,996 Joint venture’s mortgage debt 4
Slide 30: 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 31: Definitions and Reconciliations
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 32: Definitions (continued)
analyze the Company’s ability to meet its interest payments on outstanding debt and to make preferred dividend payments. EBITDA and Adjusted EBITDA do not reflect the Company’s historical cash expenditures or future cash requirements for capital expenditures or contractual commitments. Facility EBIT
Slide 33: Definitions (continued)
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 34: Definitions (continued)
developments, including redevelopments, are considered stabilized at the earlier of lease-up or 24 months from the date the property is placed in service. SPP NOI excludes certain non-property specific operating expenses that are allocated to each operating segment on a consolidated basis. Secured D
Slide 35: Reconciliations of Non-GAAP Measures
Reconciliations of Non-GAAP Measures Dollars in thousands EBITDA AND ADJUSTED EBITDA FROM NET INCOME Three Months Ended June 30, 2014 2013 Net income $ 222,279 $ 216,725 Interest expense: Continuing operations 106,842 108,452 Discontinued operations — 334 Income taxes: Continuing operations 1,339 1,
Slide 36: Reconciliations of Non-GAAP Measures
Reconciliations of Non-GAAP Measures Dollars in thousands ADJUSTED FIXED CHARGE COVERAGE Three Months Ended June 30, 2014 2013 Adjusted EBITDA $ 448,263 $ 440,878 Interest expense: Continuing operations 106,842 108,452 Discontinued operations — 334 HCP’s share of IMP interest expense 1,582 1,593 Cap
Slide 37: 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 38: Forward Looking Statements & Risk Factors
Senior Housing Facility Beverly Hills, California 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 th
Slide 39: Forward Looking Statements & Risk Factors (continued)
acquisition of Emeritus Corporation, and the possibility of larger than expected litigation costs, adverse results and related developments; competition for tenants and borrowers, including with respect to new leases and mortgages and the renewal or rollover of existing leases; the Company’s ability
Slide 40: 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 Nashville Office 3000 Meridian Boulevard, Suite 200 Franklin, TN 37067-6388