HCP Reports Third Quarter 2015 Results

November 5, 2015

FFO as adjusted and FAD per share increased year-over-year by 5% to $0.79 and 3% to $0.67, respectively; FFO per share and EPS were $0.57 and $0.25, respectively

Raised $438 million in proceeds from capital recycling and financing activities during the third quarter and through November 2, 2015

Created a $225 million medical office joint venture with an institutional capital partner in October, adding to our Investment Management platform

Executed 667,000 sq. ft. of leasing in our life science and medical office portfolios, including pre-leasing 38,000 sq. ft., in the first phase of The Cove life science development

Welcomed Justin Hutchens as EVP and Chief Investment Officer – Senior Housing and Care

Named to the Dow Jones Sustainability North America Index for the third consecutive year and the Dow Jones Sustainability World Index for the first time

Increased full year per share guidance for FFO as adjusted to $3.12 – $3.18 and FAD to $2.66 – $2.72

IRVINE, Calif., HCP (NYSE: HCP) announced results for the quarter ended September 30, 2015.

FFO, FFO as adjusted and FAD are supplemental non-GAAP financial measures that we believe are useful in evaluating the operating performance of real estate investment trusts. See the "Funds From Operations" and "Funds Available for Distribution" sections of this release for additional information regarding these non-GAAP financial measures.

INVESTMENT TRANSACTIONS
During the third quarter, we expanded our senior housing joint venture partnerships with Brookdale Senior Living and MBK Senior Living with $26 million of new investments, bringing our year-to-date total investments to $1.9 billion.

As previously disclosed, in July 2015, we converted a $42 million (£27 million) loan to Maria Mallaband Care Group ("MMCG") into fee ownership of two care homes in the United Kingdom at an equal value. The properties are triple-net leased to MMCG for an initial term of 15 years.

CAPITAL RECYCLING AND FINANCING ACTIVITIES
During the third quarter and through November 2, 2015, we raised $438 million from our capital recycling and financing activities. The majority of the proceeds were used to pay down our revolving line of credit, which was drawn to fund our 2015 investments. Our financial leverage improved 170 basis points, from 45.4% at the end of the second quarter, to 43.7% primarily as a result of the capital recycling and financing transactions completed through November 2, 2015, as follows:

Capital Recycling

We generated $365 million through 1) asset sales, 2) a new joint venture as part of our Investment Management platform and 3) loan repayments, as follows:

1) $180 million from asset sales:

$130 million in proceeds from 12 of the 50 non-strategic HCR ManorCare ("HCRMC") facilities (described below).
$50 million in proceeds from land and other asset sales.

2) $110 million from a medical office joint venture adding to our Investment Management platform:

In June 2015, we acquired a 1.2 million sq. ft. portfolio of 11 on-campus medical office buildings from Memorial Hermann in a sale lease-back transaction for $225 million. In October, we sold a 49% non-controlling interest for $110 million to Prime Property Fund, an investment fund advised by Morgan Stanley Real Estate Advisors. HCP retained a 51% controlling interest and will act as the managing member of the joint venture.

3) $75 million from loan repayments:

$52 million (£34 million) from HC-One upon the sale of previously identified non-strategic assets in their operating portfolio.
$23 million in October as repayment for a loan in our hospital segment.

Financing
During the third quarter and through November 2, 2015, we issued 1.8 million shares of common stock at a weighted average price of $40.14 per share for net proceeds of $73 million under our at-the-market equity offering program ("ATM Program").

HCR MANORCARE UPDATES
HCRMC's normalized fixed charge coverage ratio for the trailing 12 months ended September 30, 2015 was 1.11x, before any benefit from the non-strategic facility sales described below. On a pro forma basis reflecting the annualized effect from the April 2015 lease amendment and completion of the facility sales, HCRMC's trailing 12-month normalized fixed charge coverage ratio ended September 30, 2015 would increase to approximately 1.25x. For the nine-month period ended September 30, 2015, HCRMC's normalized EBITDAR decreased 1.7% or $7 million year-over-year, and normalized EBITDAR margins of 14% remained essentially in-line with the comparable prior year period. HCRMC had cash and cash equivalents of $151 million at September 30, 2015.

During the third quarter, we recorded an impairment charge of $27 million, or $0.06 per share, related to our 9% equity ownership interest in HCRMC, reducing the carrying amount of our equity investment from $48 million to $21 million. The impairment primarily resulted from our review of recent HCRMC operating results and market and industry data, which, among other factors, show a declining trend in admissions from hospitals and continuing trends in mix and length of stay driven by Medicare Advantage and other managed care plans.

Through November 2, 2015, we completed sales of 12 of the 50 non-strategic HCRMC facilities, generating proceeds of $130 million. The remaining 38 facilities are under contract and expected to close over the next six months. Total proceeds from all 50 facilities are expected to exceed $350 million, above the high end of our initial guidance of between $250 and $350 million. As previously announced, HCRMC will receive an annual rent reduction equal to 7.75% of the proceeds received by HCP.

In addition, as part of our lease amendment transaction with HCRMC, through November 2, 2015, we obtained fee ownership in four of the nine recently built post-acute facilities valued at $99 million, with an average occupancy of 85%. Transfer of the remaining five facilities is expected to be completed over the next six months.

LIFE SCIENCE AND MEDICAL OFFICE LEASING
During the third quarter, we completed 667,000 sq. ft. of leasing in our life science and medical office portfolios, consisting of 211,000 sq. ft. of new leases and 456,000 sq. ft. of renewals.

We pre-leased 38,000 sq. ft. in the first phase of The Cove, the newest generation of life science development. The first phase consists of two buildings totaling 253,000 sq. ft. and is expected to be completed in the third quarter of 2016. Visit our website for more information, including a link to see the development progress at www.hcpi.com/portfolio/life-science.

At September 30, 2015, our life science occupancy reached 98.1%, representing the 5th consecutive quarterly all-time high for this segment, and our medical office occupancy was 91.5%, representing the 8th consecutive quarter with occupancy above 90%.

EXECUTIVE MANAGEMENT ADDITION
On September 8, 2015, we welcomed Justin Hutchens as Executive Vice President and Chief Investment Officer – Senior Housing and Care. Mr. Hutchens joined HCP from National Health Investors, Inc. (NYSE: NHI) where he was employed since 2009 and most recently served as President and Chief Executive Officer since 2011. He brings over 20 years of experience in REIT investments and senior care operations.

SUSTAINABILITY LEADERSHIP
In September 2015, HCP was named to the Dow Jones Sustainability North America Index for the third consecutive year, and achieved constituency for the first time in the Dow Jones Sustainability World Index. More information about HCP's sustainability efforts can be found on our website at www.hcpi.com/sustainability.

DIVIDEND ARISTOCRAT
On October 29, 2015, our Board of Directors declared a quarterly cash dividend of $0.565 per common share, representing a 3.7% increase over the prior year. The dividend will be paid on November 24, 2015 to stockholders of record as of the close of business on November 9, 2015. HCP has increased its dividend for 30 consecutive years and is the only REIT included in the S&P 500 Dividend Aristocrats index.

UPDATED FULL YEAR 2015 OUTLOOK
For full year 2015, we expect: FFO per share to range between $1.74 and $1.80; FFO as adjusted per share to range between $3.12 and $3.18; FAD per share to range between $2.66 and $2.72; and EPS to range between $0.52 and $0.58. In addition, we continue to expect 2015 Same Property Portfolio Cash Net Operating Income ("SPP Cash NOI") to increase between 0.0% and 1.0%. Excluding HCRMC, we expect 2015 SPP Cash NOI to increase between 3.25% and 4.25%. These estimates do not reflect the potential impact from unannounced future acquisitions and dispositions. Refer to the "Projected Future Operations" and "Projected SPP Cash NOI" sections of this release for additional information regarding these estimates.

COMPANY INFORMATION
HCP has scheduled a conference call and webcast for Tuesday, November 3, 2015 at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) in order to present the Company's performance and operating results for the quarter ended September 30, 2015. The conference call is accessible by dialing (888) 317-6003 (U.S.) or (412) 317-6061 (International). The participant passcode is 2790781. The webcast is accessible via the Company's website at www.hcpi.com. This link can be found on the "Event Calendar" page, which is under the "Investor Relations" tab. Through November 18, 2015, an archive of the webcast will be available on our website, and a telephonic replay can be accessed by calling (877) 344-7529 (U.S.) or (412) 317-0088 (International) and entering passcode 10073754. The Company's supplemental information package for the current period is available with this earnings release on the Company's website in the "Presentations" section of the "Investor Relations" tab.

ABOUT HCP
HCP, Inc. is a fully integrated real estate investment trust (REIT) that invests primarily in real estate serving the healthcare industry in the United States. The Company's portfolio of assets is diversified among five distinct sectors: senior housing, post-acute/skilled nursing, life science, medical office and hospital. A publicly traded company since 1985, HCP: (i) was the first healthcare REIT selected to the S&P 500 index; (ii) has increased its dividend per share for 30 consecutive years; (iii) is the only REIT included in the S&P 500 Dividend Aristocrats index; and (iv) is a global leader in sustainability as a member of the CDP, Dow Jones and FTSE4Good sustainability leadership indices, as well as the GRESB Global Healthcare Sector Leader for three of the past four years. For more information regarding HCP, visit the Company's website at www.hcpi.com