Healthpeak Properties (DOC) 8-K Results of Operations and Financial Condition

Exhibit 99.2

Supplemental Information

December 31, 2007

(Unaudited)

Edmonds, WA	South San Francisco, CA	Denver, CO

Company Information (1)

Board of Directors

Mary A. Cirillo-Goldberg

Former Chairman and Chief Executive

Officer, OPCENTER

Robert R. Fanning, Jr.

Managing Director (Retired),

The Huron Consulting Group

James F. Flaherty III

Chairman and Chief Executive Officer

HCP, Inc.

Christine Garvey

Former Global Head of Corporate

Real Estate Services, Deutsche Bank AG

David B. Henry

Vice Chairman and Chief Investment

Officer, Kimco Realty Corporation

Michael D. McKee

Chief Executive Officer and Vice

Chairman, The Irvine Company

Harold M. Messmer, Jr.

Chairman and Chief Executive Officer

Robert Half International, Inc.

Peter L. Rhein

Partner, Sarlot & Rhein

Kenneth B. Roath

Chairman Emeritus, HCP, Inc.

Richard M. Rosenberg

Chairman and Chief Executive Officer

(Retired), Bank of America

Joseph P. Sullivan

Chairman of the Board of Advisors

RAND Health

Senior Management

Jon M. Bergschneider

Senior Vice President

Life Science Estates

George P. Doyle

Senior Vice President

Chief Accounting Officer

Charles A. Elcan

Executive Vice President

Medical Office Properties

James F. Flaherty III

Chairman and

Chief Executive Officer

Paul F. Gallagher

Executive Vice President

Chief Investment Officer

Edward J. Henning

Executive Vice President

General Counsel, Chief Administrative 

Officer and Corporate Secretary

Thomas D. Kirby

Senior Vice President

Acquisitions and Valuations

Thomas M. Klaritch

Senior Vice President

Medical Office Properties

Marshall D. Lees

Executive Vice President

Life Science Estates

Brian J. Maas

Senior Vice President

Associate General Counsel

Donald S. McNutt

Executive Vice President

Operations

Stephen I. Robie

Senior Vice President

Financial Planning and Analysis

Randall W. Rohner

Senior Vice President

Life Science Estates

Timothy M. Schoen

Senior Vice President

Investment Management

Susan M. Tate

Senior Vice President

Asset Management

Mark A. Wallace

Executive Vice President

Chief Financial Officer and Treasurer

See Reporting Definitions and Supplemental Financial Measures Disclosures

2

Company Information (1)

Other Information

Corporate Headquarters	Nashville Office	Senior Debt Ratings
3760 Kilroy Airport Way, Suite 300	3100 West End Avenue, Suite 800	Moody’s	Baa3
Long Beach, CA 90806-2473	Nashville, TN 37203	Standard & Poor’s	BBB
(562) 733-5100		Fitch	BBB
Chicago Office	San Francisco Office	Stock Exchange Listing
444 North Michigan Avenue, Suite 3230	400 Oyster Point Boulevard, Suite 409	NYSE
Chicago, IL 60611	South San Francisco, CA 94080
		Trading Symbol
		HCP	Common Stock
		HCP_pe	Series E Preferred Stock
		HCP_pf	Series F Preferred Stock

(1)   As of February 11, 2008.

See Reporting Definitions and Supplemental Financial Measures Disclosures

3

Highlights

Dollars in thousands, except per share data

	Three Months Ended December 31,						Year Ended December 31,
	2007			2006			2007			2006
Revenues	$	273,121		$	212,758		$	982,509		$	534,891
NOI	218,639			179,249			782,378			442,475
Adjusted EBITDA	236,496			192,676			875,001			541,936
Net income applicable to common shares	45,013			235,992			567,885			396,417
FFO applicable to common shares	117,241			65,629			449,091			272,753
Per diluted common share:
EPS	$	0.21		$	1.28		$	2.71		$	2.66
FFO	0.54			0.35			2.14			1.82
Dividends declared per common share	0.445			0.425			1.78			1.70
FFO payout ratio per common share	82		%	121		%	83		%	93		%
Adjusted fixed charge coverage	2.0		x	1.6		x	2.1		x	2.3		x
Financial leverage(1)							57		%	59		%

See Reporting Definitions and Supplemental Financial Measures Disclosures

4

Financial Performance	Total Assets Under Management:  $13.6 Billion(2)
·      18% year-over-year FFO per share growth
·      $4.7 billion of investments in 2007
·      $1.0 billion of dispositions in 2007
·      Contributed $1.7 billion of assets to joint ventures in 2007
·      Raised $6.3 billion of capital in 2007

(1)	Financial leverage represents Total Debt divided by Total Gross Assets.
(2)	Represents the historical cost of real estate owned by HCP, the carrying amount of mortgage loans and 100% of the cost of real estate owned by unconsolidated joint ventures as of December 31, 2007.

See Reporting Definitions and Supplemental Financial Measures Disclosures

5

Consolidated Balance Sheets

In thousands

	December 31,
	2007			2006
ASSETS
Real estate:
Buildings and improvements	$	7,984,935		$	5,755,944
Development costs and construction in progress	372,947			42,346
Land	1,620,721			650,894
Less accumulated depreciation and amortization	728,804			519,965
Net real estate	9,249,799			5,929,219
Net investment in direct financing leases	640,052			678,013
Loans receivable, net	1,065,485			196,480
Investments in and advances to unconsolidated joint ventures	248,894			25,389
Accounts receivable, net	44,892			31,026
Cash and cash equivalents	96,269			58,405
Restricted cash	36,427			40,786
Intangible assets, net	623,650			380,568
Real estate held for sale, net	171			512,187
Real estate held for contribution	—			1,684,341
Other assets, net	516,133			476,335
Total assets	$	12,521,772		$	10,012,749
LIABILITIES AND STOCKHOLDERS’ EQUITY
Bank lines of credit	$	951,700		$	624,500
Bridge and term loans	1,350,000			504,593
Senior unsecured notes	3,819,950			2,748,522
Mortgage debt	1,280,761			1,288,681
Mortgage debt on assets held for sale	—			38,617
Mortgage debt on assets held for contribution	—			889,356
Other debt	108,496			107,746
Intangible liabilities, net	278,553			134,050
Accounts payable and accrued liabilities	233,342			200,088
Deferred revenue	55,990			20,795
Total liabilities	8,078,792			6,556,948
Minority interests:
Joint venture partners	33,436			34,211
Non-managing member unitholders	305,835			127,554
Total minority interests	339,271			161,765
Commitments and contingencies Stockholders’ equity:
Preferred stock	285,173			285,173
Common stock	216,819			198,599
Additional paid-in capital	3,724,739			3,108,908
Cumulative dividends in excess of earnings	(120,920		)	(316,369		)
Accumulated other comprehensive income (loss)	(2,102		)	17,725
Total stockholders’ equity	4,103,709			3,294,036
Total liabilities and stockholders’ equity	$	12,521,772		$	10,012,749

See Reporting Definitions and Supplemental Financial Measures Disclosures

6

Consolidated Statements of Income

In thousands, except per share data

	Three Months Ended December 31,						Year Ended December 31,
	2007			2006			2007			2006
Revenues:
Rental and related revenues	$	233,453		$	183,996		$	835,722		$	483,921
Tenant recoveries	23,334			12,534			69,354			32,067
Income from direct financing leases	14,815			15,008			63,852			15,008
Investment management fee income	1,519			1,220			13,581			3,895
	273,121			212,758			982,509			534,891
Costs and expenses:
Interest	101,105			109,882			357,024			211,869
Depreciation and amortization	79,232			53,184			274,348			132,916
Operating	52,963			32,289			186,550			88,521
General and administrative	17,463			22,163			70,930			47,195
Impairments	—			3,577			—			3,577
	250,763			221,095			888,852			484,078
Operating income (loss):	22,358			(8,337		)	93,657			50,813
Equity income from unconsolidated joint ventures	1,887			751			5,645			8,331
Gain on sale of real estate interest	—			—			10,141			—
Interest and other income, net	20,921			8,852			75,676			34,816
Minority interests’ share of earnings	(6,364		)	(3,347		)	(24,356		)	(14,805		)
Income (loss) from continuing operations	38,802			(2,081		)	160,763			79,155
Discontinued operations:
Operating income	178			15,966			24,668			69,113
Impairments	—			(1,293		)	—			(6,004		)
Gains on sales of real estate	11,315			228,682			403,584			275,283
	11,493			243,355			428,252			338,392
Net income	50,295			241,274			589,015			417,547
Preferred stock dividends	(5,282		)	(5,282		)	(21,130		)	(21,130		)
Net income applicable to common shares	$	45,013		$	235,992		$	567,885		$	396,417
Basic earnings (loss) per common share (EPS):
Continuing operations	$	0.16		$	(0.04	)	$	0.67		$	0.39
Discontinued operations	0.05			1.32			2.06			2.28
Net income applicable to common shares	$	0.21		$	1.28		$	2.73		$	2.67
Diluted earnings (loss) per common share:
Continuing operations	$	0.16		$	(0.04	)	$	0.67		$	0.39
Discontinued operations	0.05			1.32			2.04			2.27
Net income applicable to common shares	$	0.21		$	1.28		$	2.71		$	2.66
Weighted average shares used to calculate EPS:
Basic	215,645			183,736			207,924			148,236
Diluted	216,917			183,736			209,254			148,841
Dividends declared per common share	$	0.445		$	0.425		$	1.780		$	1.700

See Reporting Definitions and Supplemental Financial Measures Disclosures

7

Consolidated Statements of Cash Flows

In thousands

	Year Ended December 31,
	2007			2006
Cash flows from operating activities:
Net income	$	589,015		$	417,547
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of real estate, in-place lease and other intangibles:
Continuing operations	274,348			132,916
Discontinued operations	6,831			21,153
Amortization of above and (below) market lease intangibles, net	(6,056		)	(797		)
Stock-based compensation	11,408			8,232
Amortization of debt issuance costs	20,413			14,533
Recovery of loan losses	(386		)	—
Straight-line rents	(49,725		)	(18,210		)
Interest accretion	(8,739		)	(2,513		)
Deferred rental revenue	9,027			(518		)
Equity income from unconsolidated joint ventures	(5,645		)	(8,331		)
Distributions of earnings from unconsolidated joint ventures	5,264			8,331
Minority interests’ share of earnings	24,356			14,805
Impairments	—			9,581
Gains on sales of real estate and real estate interest	(413,725		)	(275,283		)
Securities gains, net	(2,233		)	(1,861		)
Changes in:
Accounts receivable	(13,115		)	1,295
Other assets	(14,621		)	(8,263		)
Accounts payable and accrued liabilities	26,634			28,579
Net cash provided by operating activities	453,051			341,196
Cash flows from investing activities:
Cash used in SEUSA acquisition, net of cash acquired	(2,982,689		)	—
Cash used in CNL Retirement Properties merger, net of cash acquired	—			(3,325,046		)
Cash used in purchase of HCP MOP interest, net of cash acquired	—			(138,163		)
Cash used in other acquisitions and development of real estate	(425,464		)	(480,140		)
Lease commissions and tenant and capital improvements	(49,669		)	(18,932		)
Proceeds from sales of real estate	887,218			512,317
Contributions to unconsolidated joint ventures	(3,641		)	—
Distributions in excess of earnings from unconsolidated joint ventures	478,293			32,115
Purchase of marketable securities	(26,647		)	(13,670		)
Proceeds from the sale of marketable securities	53,817			7,550
Principal repayments on loans receivable and direct financing leases	104,009			63,535
Investments in loans receivable	(923,534		)	(329,724		)
Decrease (increase) in restricted cash	192			(1,894		)
Net cash used in investing activities	(2,888,115		)	(3,692,052		)

See Reporting Definitions and Supplemental Financial Measures Disclosures

8

Consolidated Statements of Cash Flows

In thousands

	Year Ended December 31,
	2007			2006
Cash flows from financing activities:
Net borrowings under bank lines of credit	327,200			365,900
Repayments of term and bridge loans	(1,904,593		)	(1,901,136		)
Borrowings under term and bridge loans	2,750,000			2,405,729
Repayments of mortgage debt	(97,882		)	(66,689		)
Issuance of mortgage debt	143,421			619,911
Repayments of senior unsecured notes	(20,000		)	(255,000		)
Issuance of senior unsecured notes	1,100,000			1,550,000
Debt issuance costs	(27,044		)	(32,313		)
Net proceeds from the issuance of common stock and exercise of options	618,854			989,039
Dividends paid on common and preferred stock	(393,566		)	(266,814		)
Settlement of cash flow hedges	—			(4,354		)
Distributions to minority interests	(23,462		)	(16,354		)
Net cash provided by financing activities	2,472,928			3,387,919
Net increase in cash and cash equivalents	37,864			37,063
Cash and cash equivalents, beginning of year	58,405			21,342
Cash and cash equivalents, end of year	$	96,269		$	58,405

See Reporting Definitions and Supplemental Financial Measures Disclosures

9

Consolidated Funds From Operations

Dollars in thousands, except per share data

	Three Months Ended December 31,						Year Ended December 31,
	2007			2006			2007			2006
Net income applicable to common shares	$	45,013		$	235,992		$	567,885		$	396,417
Depreciation and amortization of real estate, in-place lease and other intangibles:
Continuing operations	79,232			53,184			274,348			132,916
Discontinued operations	67			5,060			6,831			21,153
Gains on sales of real estate and real estate interest	(11,315		)	(228,682		)	(413,725		)	(275,283		)
Equity income from unconsolidated joint ventures	(1,887		)	(751		)	(5,645		)	(8,331		)
FFO from unconsolidated joint ventures	6,981			1,631			22,800			7,321
Minority interests’ share of earnings	6,364			3,347			24,356			14,805
Minority interests’ share of FFO	(7,214		)	(4,152		)	(27,759		)	(16,245		)
FFO applicable to common shares	$	117,241		$	65,629		$	449,091		$	272,753
Distributions on convertible units	$	4,846		$	—		$	14,933		$	7,832
Diluted FFO applicable to common shares	$	122,087		$	65,629		$	464,024		$	280,585
Basic FFO per common share	$	0.54		$	0.36		$	2.16		$	1.84
Diluted FFO per common share	$	0.54		$	0.35		$	2.14		$	1.82
Weighted average shares used to calculate diluted FFO per common share	227,014			185,278			217,240			153,831
Dividends declared per common share	$	0.445		$	0.425		$	1.780		$	1.700
FFO payout ratio per common share	82.4		%	121.4		%	83.2		%	93.4		%
Impact of merger-related charges and impairments	$	3,789		$	18,373		$	21,846		$	23,591
Per common share impact of merger-related charges and impairments on diluted FFO	$	0.01		$	0.10		$	0.10		$	0.16
FFO payout ratio per common share prior to merger-related charges and impairments	80.9		%	94.4		%	79.5		%	85.9		%
Consolidated selected supplemental cash flow information:
Impairments	$	—		$	4,870		$	—		$	9,581
Amortization of above and (below) market lease intangibles, net	2,871			(586		)	6,056			797
Stock-based compensation	2,892			2,172			11,408			8,232
Amortization of debt issuance costs	5,139			11,787			20,413			14,533
Straight-line rents	10,258			10,774			49,725			18,210
Interest accretion	2,311			2,513			8,739			2,513
Increase (decrease) in deferred revenues – tenant improvement related	3,294			—			8,216			—
Increase (decrease) in SAB 104 deferred revenue	(3,204		)	(878		)	811			(518		)
Lease commissions and tenant and capital improvements	22,640			6,929			49,669			18,932
Capitalized interest	8,322			307			12,346			895
HCP’s share of selected supplemental cash flow information from unconsolidated joint ventures(1):
Amortization of above and (below) market lease intangibles, net	$	(273	)	$	180		$	(999	)	$	2,564
Amortization of debt issuance costs	99			110			342			682
Straight-line rents	1,471			251			5,924			1,437
Lease commissions and tenant and capital improvements	427			1,758			819			5,230

(1)Includes HCP Ventures II, HCP Ventures III, HCP Ventures IV and HCP MOP.  Prior to November 30, 2006, HCP MOP was an unconsolidated joint venture formed between the Company and an affiliate of General Electric Company (“GE”), for which the Company was the managing member and had a 33% interest therein.

See Reporting Definitions and Supplemental Financial Measures Disclosures

10

Capitalization

In thousands

Debt Maturities and Scheduled Principal Repayments December 31, 2007

							Senior											HCP’s Share of Unconsolidated
	Bank Lines						Unsecured			Mortgage			Other		Consolidated			Mortgage
	of Credit			Bridge Loan			Notes			Debt			Debt(1)		Debt			Debt(2)			Total Debt
2008	$	—		$	—		$	300,000		$	91,896		$	108,496	$	500,392		$	3,290		$	503,682
2009	—			1,350,000			—			271,844			—		1,621,844			3,536			1,625,380
2010	—			—			206,421			292,562			—		498,983			3,755			502,738
2011	951,700			—			300,000			130,069			—		1,381,769			4,304			1,386,073
2012	—			—			250,000			102,054			—		352,054			11,499			363,553
2013	—			—			550,000			46,661			—		596,661			43,033			639,694
2014	—			—			87,000			167,900			—		254,900			4,147			259,047
2015	—			—			400,000			32,391			—		432,391			15,073			447,464
2016	—			—			400,000			53,240			—		453,240			50,721			503,961
2017	—			—			750,000			22,602			—		772,602			201,901			974,503
Thereafter				—			600,000			62,468			—		662,468			—			662,468
Subtotal	951,700			1,350,000			3,843,421			1,273,687			108,496		7,527,304			341,259			7,868,563
(Discounts) and premiums, net	––			—			(23,471		)	7,074			—		(16,397		)	(753		)	(17,150		)
Total	$	951,700		$	1,350,000		$	3,819,950		$	1,280,761		$	108,496	$	7,510,907		$	340,506		$	7,851,413
Weighted average interest rate	5.66		%	6.13		%	6.18		%	6.02		%	—		6.08		%	5.67		%	6.06		%
Weighted average maturity in years	3.58			1.61			6.78			4.47			—		5.03			8.88			5.20

See Reporting Definitions and Supplemental Financial Measures Disclosures

11

Capitalization Ratios

	December 31,
	2007		2006
Total debt/Total book capitalization	63.9	%	64.3	%
Total debt/Total undepreciated book capitalization	59.8	%	60.7	%
Consolidated debt/Consolidated gross assets	57.3	%	58.7	%
Total debt/Total gross assets	57.4	%	58.7	%
Consolidated secured debt/Consolidated gross assets	9.8	%	21.0	%
Total secured debt/Total gross assets	11.9	%	21.2	%
Consolidated debt/Consolidated market capitalization	48.0	%	44.2	%
Total debt/Total market capitalization	49.2	%	44.3	%

Variable Rate Debt

	December 31,
	2007		2006
Fixed and variable rate ratios
Fixed rate	64.1	%	73.2	%
Variable rate	35.9	%	26.8	%
	100.0	%	100.0	%

(1)In connection with the CRP merger on October 5, 2006, the Company assumed non-interest bearing Life Care Bonds at two of its CCRCs and non-interest bearing occupancy fee deposits at another of its senior housing facilities.

(2)Includes pro-rata share of our unconsolidated institutional joint ventures, HCP Ventures II, HCP Ventures III and HCP Ventures IV.

See Reporting Definitions and Supplemental Financial Measures Disclosures

12

Investments

Dollars and square feet in thousands

Description	Capacity		Segment	Investment
Property acquisitions:
First quarter
Milwaukee, WI	62 Beds		Hospital	$	6,354
Dallas, TX	140 Beds		Hospital	13,874
Atlanta, GA	72 Beds		Hospital	14,977
Dallas, TX	699 Sq. Ft.		Medical office	183,900
Dallas, TX	598 Beds		Hospital	165,968
Haverhill, MA	56 Sq. Ft.		Medical office	10,093
Dayton, OH	72 Sq. Ft.		Medical office	9,803
Keller, TX	39 Sq. Ft.		Medical office	9,803
Wylie, TX	20 Sq. Ft.		Medical office	5,098
Salt Lake City, UT	70 Sq. Ft.		Life science	3,907
				423,777
Second quarter
Cedar Hill, TX	80 Units		Senior housing	8,071
Baton Rouge, LA	43 Beds		Hospital	9,507
Plano, TX	73 Beds		Hospital	29,807
				47,385
Third quarter
Seattle, WA	101 Sq. Ft.		Medical office	42,171
Marietta, OH	93 Units		Senior housing	13,033
Various (SEUSA)	5,200 Sq. Ft.		Life science	2,989,055
				3,044,259
Fourth quarter
San Diego, CA	91 Sq. Ft.		Life science	31,042
San Francisco, CA	36 Sq. Ft.		Life science	15,135
Indianapolis, IN	N/A	(1)	Senior housing	340
				46,517
Total property acquisitions				$	3,561,938
Mezzanine loan and other debt investments:
HCR ManorCare			Skilled nursing	$	903,152
Other debt investments			Various	47,841
				$	950,993
Total fundings for development, tenant and capital improvements				$	149,645
Total investments				$	4,662,576
Weighted average yield				7.7		%

(1)Land purchase.

See Reporting Definitions and Supplemental Financial Measures Disclosures

13

Dispositions

Dollars and square feet in thousands

Description	Capacity		Segment	Sales Price, Net of Costs
Property dispositions:
First quarter
Austin, TX	N/A	(1)	Senior housing	$	3,000
Hoover, AL	110 Units		Senior housing	6,187
Spartanburg, SC	259 Units		Senior housing	15,992
Easley, SC	194 Units		Senior housing	12,723
Various	1,111 Units		Skilled nursing	50,237
Various	1,754 Units		Skilled nursing	69,373
Richmond Heights, OH	94 Units		Senior housing	9,056
Delaware, OH	117 Units		Skilled nursing	7,457
Sunnyvale, CA	105 Sq. Ft.		Medical office	27,500
Anderson, IN	166 Units		Skilled nursing	1,568
				203,093
Second quarter
Salem, OR	75 Units		Skilled nursing	682
Various	1,444 Units		Senior housing	184,984
Clayton, OH	90 Units		Senior housing	1,000
Orem, UT	66 Sq. Ft.		Medical office	2,287
				188,953
Third quarter
Glendora, CA	98 Units		Senior housing	3,324
Various	3,736 Units		Skilled nursing	500,439
				503,763
Fourth quarter
San Diego, CA	38 Sq. Ft.		Medical office	8,381
Terre Haute, IN	249 Units		Skilled nursing	136
Various	315 Units		Skilled nursing	5,410
Various	123 Units		Skilled nursing	5,416
Mesa, AZ	167 Units		Senior housing	7,271
				26,614
Total property dispositions				$	922,423
Total marketable securities sold			Various	$	52,847
Total dispositions				$	975,270
Weighted average yield				6.9		%

(1)Land sale.

See Reporting Definitions and Supplemental Financial Measures Disclosures

14

Development

Dollars and square feet in thousands

Development Projects in Process(1)

					Estimated
			Estimated	Estimated	Rentable
			Completion	Stabilization	Square
Name of Project	Location	Segment	Date	Date	Feet
East Grand (Building 7)	So. San Francisco, CA	Life science	1Q 2008	1Q 2008	93
East Grand (Building 8)	So. San Francisco, CA	Life science	2Q 2008	2Q 2008	82
East Grand (Building 9)	So. San Francisco, CA	Life science	2Q 2008	2Q 2008	54
Oyster Point II (Building A)	So. San Francisco, CA	Life science	4Q 2008	4Q 2008	115
Oyster Point II (Building B)	So. San Francisco, CA	Life science	4Q 2008	4Q 2008	122
Oyster Point II (Building C)	So. San Francisco, CA	Life science	1Q 2010	1Q 2010	78
					544
	Estimated total investment				$	426,543
	Investment-to-date(2)				$	331,383
	Percentage pre-leased				86		%

Land Held for Future Development

				Estimated
				Rentable
			Gross Site	Square
Name of Project	Location	Segment	Acreage	Feet
Forbes Research Center	So. San Francisco, CA	Life science	7	326
Sierra Point	So. San Francisco, CA	Life science	23	540
Bressi I	Carlsbad, CA	Life science	23	397
Bressi II	Carlsbad, CA	Life science	18	300
Poway I	Poway, CA	Life science	41	676
Poway II	Poway, CA	Life science	31	585
Torrey Pines Science Center	Torrey Pines, CA	Life science	6	93
			149	2,917

(1)Excludes potential redevelopment assets.

(2)Investment-to-date includes $64.8 million of land and $11.2 million of intangible assets, net, which are not included in development costs and construction in progress on our consolidated balance sheet.

See Reporting Definitions and Supplemental Financial Measures Disclosures

15

Investment Management Business

As of and for the year ended December 31, 2007

In thousands

			HCP’s		Joint		HCP’s Net		Investment		Initial
	Primary	Date	Ownership		Venture’s		Equity		Management		Term (in
Joint Venture	Segment	Established	Percentage		Investment		Investment(1)		Fee Income(2)		years)
HCP Ventures II(2)	Senior housing	January-07	35	%	$	1,097,267	$	144,228	$	8,579	Indefinite
HCP Ventures III	Medical office	October-06	30	%(3)	140,570		13,088		431		10
HCP Ventures IV(2)	Medical office	April-07	20	%	648,383		48,864		4,571		10
					$	1,886,220	$	206,180	$	13,581

Funds From Operations

	Three Months Ended December 31, 2007									Year Ended December 31, 2007
	HCP Ventures II			HCP Ventures III			HCP Ventures IV			HCP Ventures II			HCP Ventures III		HCP Ventures IV
Net income (loss)	$	2,518		$	(314	)	$	(983	)	$	10,097		$	268	$	(4,415	)
Depreciation and amortization of real estate and in-place lease intangibles	7,141			1,439			6,733			28,544			4,891		17,066
Funds from operations (FFO)	$	9,659		$	1,125		$	5,750		$	38,641		$	5,159	$	12,651
HCP’s share of FFO from unconsolidated joint ventures	$	3,381		$	338		$	1,150		$	13,524		$	1,548	$	2,530
Selected supplemental cash flow information:
Amortization of (above) and below market lease intangibles, net	$	(697	)	$	141		$	(349	)	$	(2,788	)	$	567	$	(967	)
Amortization of debt issuance costs	169			38			150			619			152		394
Straight-line rents	3,825			155			432			15,298			719		1,768
Lease commissions and tenant and capital improvements	—			27			2,102			—			178		3,832

(1)   Excludes unconsolidated joint ventures outside of the investment management business.

(2)   Includes acquisition fees from HCP Ventures II of $5 million and HCP Ventures IV of $3 million.

(3)   The Company owns an 85% interest in HCP Birmingham Portfolio LLC, which owns a 30% interest in HCP Ventures III.

See Reporting Definitions and Supplemental Financial Measures Disclosures

16

Investment Management Business

In thousands

Balance Sheets

	December 31, 2007						December 31, 2006
	HCP Ventures II		HCP Ventures III		HCP Ventures IV		HCP Ventures II(1)		HCP Ventures III		HCP Ventures IV(2)
ASSETS
Real estate:
Buildings and improvements	$	936,095	$	129,144	$	515,520	$	—	$	129,239	$	—
Development costs and construction in progress	—		551		4,709		—		50		—
Land	108,907		1,780		65,698		—		1,780		—
Less accumulated depreciation and amortization	33,965		6,092		19,384		—		2,829		—
Net real estate	1,011,037		125,383		566,543		—		128,240		—
Cash and cash equivalents and restricted cash	6,998		850		13,937		—		5,312		—
Other assets, net	25,434		4,306		8,442		—		3,237		—
Intangible assets, net	48,321		12,397		62,755		—		13,904		—
Total assets	$	1,091,790	$	142,936	$	651,677	$	—	$	150,693	$	—
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage debt	$	677,764	$	91,730	$	378,842	$	—	$	91,730	$	—
Intangible liabilities, net	1,282		5,581		12,925		—		6,236		—
Accounts payable, accrued and deferred liabilities	7,082		2,063		15,316		—		5,398		—
Total liabilities	686,128		99,374		407,083		—		103,364		—
HCP’s capital	139,197		11,546		38,778		—		12,676		—
Partners’ capital	266,465		32,016		205,816		—		34,653		—
Total liabilities and members’ capital	$	1,091,790	$	142,936	$	651,677	$	—	$	150,693	$	—

See Reporting Definitions and Supplemental Financial Measures Disclosures

17

Investment Management Business

Statements of Operations

	Three Months Ended December 31, 2007								Year Ended December 31, 2007
	HCP Ventures II		HCP Ventures III			HCP Ventures IV			HCP Ventures II		HCP Ventures III		HCP Ventures IV
Rental and related revenues:
Rental and related revenues	$	20,901	$	2,890		$	14,975		$	83,312	$	12,967	$	37,751
Tenant recoveries	—		1,020			3,220			—		4,462		7,542
	20,901		3,910			18,195			83,312		17,429		45,293
Costs and expenses:
Interest	9,994		1,417			5,543			39,756		5,769		14,100
Depreciation and amortization	7,141		1,439			6,733			28,544		4,891		17,066
Operating	—		1,305			6,006			7		5,890		16,555
General and administrative	1,280		300			920			4,942		848		2,011
	18,415		4,461			19,202			73,249		17,398		49,732
Operating income	2,486		(551		)	(1,007		)	10,063		31		(4,439		)
Interest and other income, net	32		237			24			34		237		24
Net income (loss)	$	2,518	$	(314	)	$	(983	)	$	10,097	$	268	$	(4,415	)

(1)   At December 31, 2006, HCP Ventures II was a wholly owned consolidated subsidiary of the Company.

(2)At December 31, 2006, 55 of the 58 assets included in HCP Ventures IV were included in the consolidated balance sheet.

See Reporting Definitions and Supplemental Financial Measures Disclosures

18

Investment Management Business

In thousands

Net Operating Income

	Three Months Ended December 31, 2007									Year Ended December 31, 2007
	HCP Ventures II			HCP Ventures III			HCP Ventures IV			HCP Ventures II			HCP Ventures III			HCP Ventures IV
Net income (loss)	$	2,518		$	(314	)	$	(983	)	$	10,097		$	268		$	(4,415	)
Interest expense	9,994			1,417			5,543			39,756			5,769			14,100
Depreciation and amortization	7,141			1,439			6,733			28,544			4,891			17,066
General and administrative	1,280			300			920			4,942			848			2,011
Interest and other income, net	(32		)	(237		)	(24		)	(34		)	(237		)	(24		)
NOI	$	20,901		$	2,605		$	12,189		$	83,305		$	11,539		$	28,738
HCP’s share of NOI from unconsolidated joint ventures	$	7,315		$	782		$	2,438		$	29,157		$	3,462		$	5,748

EBITDA

	Three Months Ended December 31, 2007								Year Ended December 31, 2007
	HCP Ventures II		HCP Ventures III			HCP Ventures IV			HCP Ventures II		HCP Ventures III		HCP Ventures IV
Net income (loss)	$	2,518	$	(314	)	$	(983	)	$	10,097	$	268	$	(4,415	)
Interest expense	9,994		1,417			5,543			39,756		5,769		14,100
Depreciation and amortization	7,141		1,439			6,733			28,544		4,891		17,066
EBITDA	$	19,653	$	2,542		$	11,293		$	78,397	$	10,928	$	26,751
HCP’s share of EBITDA from unconsolidated joint ventures	$	6,879	$	763		$	2,259		$	27,439	$	3,278	$	5,350

See Reporting Definitions and Supplemental Financial Measures Disclosures

19

Investment Management Business

In thousands

Mortgage Debt Maturities and Scheduled Principal Repayments
December 31, 2007

													HCP’s Share of
	HCP			HCP			HCP						Unconsolidated
	Ventures II			Ventures III			Ventures IV			Total			Mortgage Debt
2008	$	8,930		$	—		$	828		$	9,758		$	3,290
2009	9,567			—			937			10,504			3,536
2010	10,130			—			1,049			11,179			3,755
2011	10,726			—			2,742			13,468			4,304
2012	11,253			—			37,802			49,055			11,499
2013	118,124			—			8,450			126,574			43,033
2014	10,359			—			2,606			12,965			4,147
2015	10,969			—			56,169			67,138			15,073
2016	10,821			91,730			97,075			199,626			50,721
2017	477,486			—			173,898			651,384			201,901
Subtotal	678,365			91,730			381,556			1,151,651			341,259
(Discounts) and premiums, net	(601		)	—			(2,714		)	(3,315		)	(753		)
Total debt	$	677,764		$	91,730		$	378,842		$	1,148,336		$	340,506
HCP’s share of total debt	$	237,216		$	27,519		$	75,769		$	340,506
Weighted average interest rate(1)	5.67		%	6.02		%	5.60		%	5.67		%
Weighted average maturity in years	9.12			8.42			8.31			8.88

(1)   Mortgage debt is 100% fix rate date.

See Reporting Definitions and Supplemental Financial Measures Disclosures

20

Operating Portfolio

As of and for the year ended December 31, 2007, dollars and square feet in thousands

Consolidated Portfolio

	Property			Average
Segment	Count	Investment		Age (Years)	Capacity	Occupancy %	CFC/DSC
Senior housing	246	$	4,158,129	11	25,804 Units	90.8	1.06	x
Life science	97	2,658,255		10	6,021 Sq. Ft.	82.4	N/A
Medical office	205	2,222,757		16	13,912 Sq. Ft.	90.3	N/A
Hospital	37	1,456,951		22	4,402 Beds	55.4	2.38	x
Skilled nursing	63	1,221,972		22	7,437 Beds	86.1	1.52	x
	648	$	11,718,064	15

Portfolio Diversification

Relationship Concentration				Geographic Concentration(1)
	Annualized Revenues				Investment			Rental Revenues &		Interest		Operating
Company	Amount		%	State	Amount		%	DFL Income		Income		Expenses
Sunrise Senior Living	$	147,804	19	CA	$	3,640,399	35	$	193,706	$	1,686	$	40,172
HCR ManorCare	93,206		12	TX	1,326,493		13	163,343		9,187		46,814
HCA	69,890		9	FL	692,814		7	79,052		—		15,881
Brookdale	57,948		7	VA	392,874		4	35,764		—		1,759
Tenet Healthcare Corporation	41,260		5	CO	383,519		4	40,675		1,563		10,241
Amgen	24,541		3	UT	314,873		3	38,537		—		6,324
Emeritus Corporation	22,611		3	WA	307,466		3	33,384		—		11,803
Genentech	21,388		3	NJ	280,589		3	21,643		—		2
Aegis Senior Living	19,255		2	IL	200,658		2	18,364		—		1,085
HealthSouth Corporation	16,051		2	IN	219,623		2	30,872		—		8,420
Kindred	14,995		2	MD	210,440		2	20,252		—		1,376
Other	263,899		33	Other	2,471,449		22	293,336		851		42,673
	$	792,848	100		$	10,441,197	100	$	968,928	$	13,287	$	186,550

(1)   Geographic concentration excludes Mezzanine Loans and Other Debt Investments as the investment and revenues associated with those assets cannot be allocated to a particular geographic region.

See Reporting Definitions and Supplemental Financial Measures Disclosures

21

Operating Portfolio

In thousands

Consolidated Portfolio

	Three Months Ended December 31, 2007								Year Ended December 31, 2007
	Rental Revenues & DFL		Operating				Interest		Rental Revenues & DFL		Operating				Interest
Segment	Income		Expenses		NOI		Income		Income		Expenses		NOI		Income
Senior housing	$	94,508	$	3,270	$	91,238	$	344	$	362,065	$	14,125	$	347,940	$	2,338
Life science	53,064		13,410		39,654		—		98,990		25,697		73,293		—
Medical office	79,873		35,349		44,524		—		335,492		144,767		190,725		—
Hospital	33,171		934		32,237		10,575		129,248		1,884		127,364		46,967
Skilled nursing	10,986		—		10,986		3,581		43,133		77		43,056		5,751
	$	271,602	$	52,963	$	218,639	$	14,500	$	968,928	$	186,550	$	782,378	$	55,056

See Reporting Definitions and Supplemental Financial Measures Disclosures

22

Operating Portfolio

As of and for the year ended December 31, 2007, dollars and square feet in thousands

Owned Property Portfolio

	Property			Rental		Operating		Average			Cash Flow Coverage
Segment	Count	Investment		Revenues		Expenses		Age (Years)	Capacity	Occupancy %	EBITDAR		CFC
Senior housing	213	$	3,511,096	$	298,213	$	14,125	11	22,495 Units	90.8	$	271,520	1.08	x
Life science	97	2,658,255		98,990		25,697		10	6,021 Sq. Ft.	82.4	N/A		N/A
Medical office	205	2,222,757		335,492		144,767		16	13,912 Sq. Ft.	90.3	N/A		N/A
Hospital	36	1,047,930		129,248		1,884		22	4,344 Beds	55.4	242,614		2.38	x
Skilled nursing	60	303,233		43,133		77		22	6,995 Beds	86.2	57,482		1.48	x
	611	$	9,743,271	$	905,076	$	186,550	14

Direct Financing Lease Portfolio

	Property					Average			Cash Flow Coverage
Segment	Count	Investment		DFL Income		Age (Years)	Capacity	Occupancy %	EBITDAR		CFC
Senior housing	30	$	628,800	$	63,852	11	3,141 Units	91.0	$	33,563	0.93	x

Secured Loan Portfolio

	Property			Interest		Average			Debt Service Coverage
Segment	Count	Investment		Income		Age (Years)	Capacity	Occupancy %	EBITDAR		DSC
Senior housing	3	$	18,233	$	2,338	15	168 Units	82.5	$	844	1.93	x
Hospital	1	35,308		8,345		9	58 Beds	51.8	7,414		2.47	x
Skilled nursing	3	15,585		2,604		29	442 Beds	84.5	5,229		2.13	x
	7	$	69,126	$	13,287	20

Mezzanine Loans and Other Debt Investments

			Interest
Segment	Investment		Income
Hospital	$	373,713	$	38,622
Skilled nursing	903,154		3,147
	$	1,276,867	$	41,769

See Reporting Definitions and Supplemental Financial Measures Disclosures

23

Operating Portfolio

As of and for the year ended December 31, 2007, dollars and square feet in thousands

Lease Expirations

	Expiration Year
Sector	2008		2009		2010		2011		2012		2013		2014		2015		2016		2017		Thereafter
Senior housing:
Properties	1		—		4		3		4		6		8		2		25		26		167
Annualized base rent	$	72	$	—	$	656	$	785	$	1,075	$	22,798	$	15,601	$	3,156	$	26,177	$	29,126	$	208,362
Life science:
Square feet	376		357		575		374		163		126		306		424		197		543		1,520
Annualized base rent	$	6,691	$	6,956	$	11,513	$	12,448	$	3,632	$	3,234	$	6,461	$	14,314	$	5,627	$	17,926	$	65,246
Medical office:
Square feet	2,552		1,765		1,914		1,170		1,389		595		649		568		359		449		1,150
Annualized base rent	$	60,711	$	46,221	$	48,157	$	30,094	$	32,026	$	14,213	$	19,591	$	18,281	$	10,698	$	13,433	$	34,266
Hospital:																			��
Properties	2		7		1		3		3		—		—		3		—		3		15
Annualized base rent	$	2,644	$	41,019	$	2,973	$	5,606	$	2,765	$	—	$	—	$	3,873	$	—	$	5,426	$	37,641
Skilled nursing:
Properties	1		4		—		—		—		10		9		5		14		11		9
Annualized base rent	$	637	$	2,240	$	—	$	—	$	—	$	6,622	$	6,547	$	2,744	$	10,701	$	8,411	$	3,186
Total:
Annualized base rent	$	70,755	$	96,436	$	63,299	$	48,933	$	39,498	$	46,867	$	48,200	$	42,368	$	53,203	$	74,322	$	348,701

See Reporting Definitions and Supplemental Financial Measures Disclosures

24

Same Property Portfolio

As of December 31, 2007, except NOI data, dollars and square feet in thousands

				Senior			Life			Medical					Skilled
	Total			Housing			Science			Office		Hospital			Nursing
Property count	279			80			9			105		26			59
Investment	$	3,124,288		$	980,632		$	125,526		$	1,005,573	$	714,391		$	298,166
Percent of owned property portfolio (by investment) %	32.1			27.9			4.7			45.2		68.2			98.3
Capacity				8,137 Units			739 Sq. Ft.			6,449 Sq. Ft.		3,217 Beds			6,907 Beds
NOI for the quarter ended:
December 31, 2007	$	85,334		$	24,924		$	1,906		$	24,157	$	23,471		$	10,876
September 30, 2007	$	93,643		$	32,565		$	2,111		$	24,061	$	24,286		$	10,620
Same property change in NOI %	(8.9		)	(23.5		)	(9.7		)	0.4		(3.4		)	2.4
Adjusted NOI for the quarter ended:
December 31, 2007	$	83,320		$	23,426		$	1,927		$	24,015	$	23,211		$	10,741
September 30, 2007	$	83,398		$	23,365		$	2,197		$	23,336	$	24,026		$	10,474
Same property change in Adjusted NOI %	(0.1		)	0.3			(12.3		)	2.9		(3.4		)	2.5
NOI for the year ended:
December 31, 2007	$	349,327		$	105,598		$	8,702		$	99,703	$	92,833		$	42,491
December 31, 2006	$	334,856		$	94,375		$	11,528		$	97,161	$	91,506		$	40,286
Same property change in NOI %	4.3			11.9			(24.5		)	2.6		1.5			5.5
Adjusted NOI for the year ended:
December 31, 2007	$	330,839		$	92,312		$	8,409		$	96,490	$	91,749		$	41,879
December 31, 2006	$	324,280		$	88,714		$	11,685		$	93,502	$	90,193		$	40,186
Same property change in Adjusted NOI %	2.0			4.1			(28.0		)	3.2		1.7			4.2

See Reporting Definitions and Supplemental Financial Measures Disclosures

25

Senior Housing Portfolio

As of and for the year ended December 31, 2007, dollars in thousands

	Property			Rental		Operating		Average Age			Cash Flow Coverage
Owned Property Portfolio	Count	Investment		Revenues		Expenses		(Years)	Units	Occupancy %	EBITDAR		CFC
Assisted living	175	$	2,305,811	$	189,237	$	12,871	11	14,315	89.3	$	160,460	1.01	x
Independent living	29	666,249		54,369		1,245		12	4,641	91.6	51,295		1.01	x
CCRCs	9	539,036		54,607		9		18	3,539	96.3	59,765		1.41	x
	213	$	3,511,096	$	298,213	$	14,125	11	22,495	90.8	$	271,520	1.08	x

	Property					Average Age			Cash Flow Coverage
Direct Financing Lease Portfolio	Count	Investment		DFL Income		(Years)	Units	Occupancy %	EBITDAR		CFC
Assisted living	27	$	569,300	$	46,381	11	3,141	91.0	$	33,563	0.93	x
CCRCs(1)	3	59,500		8,774
	30	$	628,800	55,155
Properties purchased by operator				8,697
				$	63,852

	Property			Interest		Average Age			Debt Service Coverage
Secured Loan Portfolio	Count	Investment		Income		(Years)	Units	Occupancy %	EBITDAR		DSC
Assisted living	2	$	5,020	$	291	11	68	—	$	—	N/A
Independent living	1	3,148		328		24	100	82.5	844		1.93	x
CCRCs(2)	—	10,065		842
	3	$	18,233	1,461
Repaid loans				877
				$	2,338

(1)   Represents ground leases on CCRCs.

(2)   Represents a secured construction loan on one CCRC included in the direct financing lease portfolio.

See Reporting Definitions and Supplemental Financial Measures Disclosures

26

Senior Housing Portfolio

As of and for the year ended December 31, 2007, dollars in thousands

Portfolio Diversification

Operator Concentration

	Properties		Investment		Rental Revenues &  Interest Income(1)
Operator	Count	% Pooled	Amount	%	Amount	%	Units	Occupancy %	CFC/DSC
Sunrise Senior Living	101	100	$2,224,497	54	$158,333	45	11,730	90.7	0.93	x
Brookdale	24	92	675,054	16	66,746	19	4,793	95.4	1.37	x
Aegis Senior Living	12	67	258,008	6	22,425	6	957	91.7	0.96	x
Emeritus Corporation	25	92	234,289	6	32,705	9	2,268	91.5	1.25	x
Capital Senior Living	15	73	176,517	4	13,986	4	1,530	87.0	1.14	x
Harbor Retirement Associates	10	90	159,029	4	8,107	2	1,069	82.2	0.81	x
Atria Senior Living Group	6	100	88,076	2	9,123	3	900	95.6	1.01	x
Other	53	34	342,659	8	43,404	12	2,557	85.5	1.05	x
	246	85	$4,158,129	100	$354,829	100	25,804	90.8	1.06	x

Geographic Concentration

	Property	Investment			Rental Revenues & Interest Income(1)
State	Count	Amount		%	Amount		%	Units	Occupancy %	CFC/DSC
CA	27	$	567,238	14	$	41,809	12	3,124	89.1	0.95	x
FL	30	477,854		11	43,497		12	3,859	90.2	1.19	x
TX	31	387,077		9	38,274		11	3,320	91.0	1.17	x
NJ	13	280,589		7	21,643		6	1,230	91.0	0.93	x
VA	10	278,121		7	22,294		6	1,347	90.0	0.99	x
IL	11	187,218		5	15,324		4	911	93.3	1.12	x
MD	9	182,087		4	16,295		5	828	90.7	0.86	x
CO	5	168,931		4	13,431		4	871	95.1	1.21	x
MI	8	154,261		4	14,115		4	900	91.5	0.95	x
AL	4	143,123		3	13,127		4	683	93.3	0.98	x
PA	2	137,400		3	14,558		4	542	97.1	1.34	x
WA	8	132,609		3	8,658		2	571	82.1	0.74	x
Other	88	1,061,621		26	91,804		26	7,618	90.9	1.09	x
	246	$	4,158,129	100	$	354,829	100	25,804	90.8	1.06	x

(1)Excludes rental revenues from properties purchased by operators and interest income from secured loans that were repaid.

See Reporting Definitions and Supplemental Financial Measures Disclosures

27

Senior Housing Portfolio

Dollars in thousands

Portfolio Trends

	Total Portfolio									Same Property Portfolio
	Year-to-Date									Three Months Ended								Year Ended
	12/31/07			9/30/07(1)			12/31/06(1)			12/31/07			9/30/07			Change %		12/31/07			12/31/06			Change %
Total Senior housing:
Property count	246			249			311			80			80					80			80
Investment	$	4,158,129		$	4,166,176		$	4,689,882		$	980,632		$	980,632		—		$	980,632		$	980,135		0.1
Units	25,804			26,171			31,713			8,137			8,137			—		8,137			8,137			—
Occupancy %	90.8			91.0			90.4			91.8			92.2			(0.4	)	91.8			92.4			(0.6	)
EBITDAR	$	305,927		$	297,217		$	305,787		$	113,563		$	110,727		2.6		$	113,563		$	108,454		4.7
CFC/DSC	1.06		x	1.05		x	1.03		x	1.28		x	1.25		x	2.4		1.28		x	1.20		x	6.7
NOI:
Rental revenues										$	28,138		$	35,916		(21.7	)	$	118,080		$	106,234		11.2
Operating expenses										(3,214		)	(3,351		)	(4.1	)	(12,482		)	(11,859		)	5.3
										$	24,924		$	32,565		(23.5	)	$	105,598		$	94,375		11.9
Adjusted NOI:
Straight-line rents										(1,498		)	(9,200		)	(83.7	)	(13,286		)	(5,661		)	134.7
										$	23,426		$	23,365		0.3		$	92,312		$	88,714		4.1

(1)Amounts are reflected as originally reported.

See Reporting Definitions and Supplemental Financial Measures Disclosures

28

Senior Housing Portfolio

Dollars in thousands

Lease Expirations

	Total				Assisted Living			Independent Living			CCRCs
		Annualized Base Rent				Annualized			Annualized			Annualized
Year	Properties	Amount		%	Properties	Base Rent		Properties	Base Rent		Properties	Base Rent
2008	1	$	72	—	1	$	72	—	$	—	—	$	—
2009	—	—		—	—	—		—	—		—	—
2010	4	656		—	4	656		—	—		—	—
2011	3	785		—	3	785		—	—		—	—
2012	4	1,075		—	4	1,075		—	—		—	—
2013	6	22,798		7	—	—		1	4,130		5	18,668
2014	8	15,601		5	5	1,949		—	—		3	13,652
2015	2	3,156		1	1	599		1	2,557		—	—
2016	25	26,177		9	14	12,605		11	13,572		—	—
2017	26	29,126		9	21	18,644		3	3,825		2	6,657
Thereafter	167	208,362		69	151	167,832		14	27,206		2	13,324
	246	$	307,808	100	204	$	204,217	30	$	51,290	12	$	52,301

See Reporting Definitions and Supplemental Financial Measures Disclosures

29

Life Science Portfolio

As of and for the year ended December 31, 2007, dollars and square feet in thousands, except per leased square foot data

	Property			Rental		Operating		Average	Square
Owned Property Portfolio	Count	Investment		Revenues(1)		Expenses(1)		Age (Years)	Feet	Occupancy %
San Francisco	71	$	2,112,484	$	71,090	$	16,900	10	4,054	88.6
San Diego	17	455,505		15,321		6,584		10	1,387	57.0
Utah	9	90,266		11,876		2,156		8	580	100.0
	97	$	2,658,255	98,287		25,640		10	6,021	82.4
Properties contributed to joint ventures				703		57
				$	98,990	$	25,697

Portfolio Diversification

Tenant Concentration

	Square Feet		Annualized Rent
Tenant	Amount	%	Amount		%
Amgen	433	9	$	24,541	16
Genentech	565	11	21,388		14
Exelixis	265	5	11,127		7
Rigel Pharmaceuticals	147	3	9,548		6
Millennium Pharmaceuticals	136	3	6,225		4
ARUP	319	6	4,885		3
Sequenom	83	2	4,457		3
Fibrogen	106	2	4,369		3
Myriad Genetics	225	5	4,307		3
Other	2,682	54	63,201		41
	4,961	100	$	154,048	100

(1)Rental revenues and operating expenses for the Life Science portfolio reflect five months of operations from assets added through our acquisition of SEUSA.

See Reporting Definitions and Supplemental Financial Measures Disclosures

30

Life Science Portfolio

Dollars and square feet in thousands

Portfolio Trends

	Total Portfolio						Same Property Portfolio
	Year-to-Date						Three Months Ended								Year Ended
	12/31/07		9/30/07(1)		12/31/06(1)		12/31/07			9/30/07			Change %		12/31/07			12/31/06			Change %
Total Life science:
Property count	97		93		18		9			9					9			9
Investment	$	2,658,255	$	2,595,204	$	182,352	$	125,526		$	118,243		6.2		$	125,526		$	117,257		7.1
Square feet	6,021		5,885		1,011		739			739			—		739			739			—
Occupancy %	82.4		83.5		100.0		79.7			88.6			(8.9	)	79.7			100.0			(20.3	)
NOI:
Rental revenues							$	3,063		$	3,090		(0.9	)	$	12,525		$	15,542		(19.4	)
Operating expenses							(1,957		)	(979		)	99.9		(4,623		)	(4,014		)	15.2
Lease terminations							800			—			—		800			—			—
							$	1,906		$	2,111		(9.7	)	$	8,702		$	11,528		(24.5	)
Adjusted NOI
Straight-line rents							21			86			(75.6	)	(293		)	157			(286.6	)
							$	1,927		$	2,197		(12.3	)	$	8,409		$	11,685		(28.0	)

(1)Amounts are reflected as originally reported.

See Reporting Definitions and Supplemental Financial Measures Disclosures

31

Life Science Portfolio

Dollars and square feet in thousands

Lease Expirations(1)(2)

	Total					San Francisco			San Diego				Utah
	Square Feet		Annualized Base Rent			Square	Annualized		Square		Annualized		Square	Annualized
Year	Amount	%	Amount		%	Feet	Base Rent		Feet		Base Rent		Feet	Base Rent
2008	376	8	$	6,691	4	326	$	5,669		50	$	1,022	—	$	—
2009	357	7	6,956		5	130	2,431		152		3,511		75	1,014
2010	575	12	11,513		7	301	6,427		142		3,099		132	1,987
2011	374	8	12,448		8	344	11,521		30		927		—	—
2012	163	3	3,632		2	95	2,085		32		1,045		36	502
2013	126	3	3,234		2	126	3,234		—		—		—	—
2014	306	6	6,461		4	306	6,461		—		—		—	—
2015	424	9	14,314		9	214	7,555		139		5,563		71	1,196
2016	197	4	5,627		4	197	5,627		—		—		—	—
2017	543	11	17,926		12	226	9,156		163		6,044		154	2,726
Thereafter	1,520	29	65,246		43	1,325	59,917		83		3,059		112	2,270
	4,961	100	$	154,048	100	3,590	$	120,083		791	$	24,270	580	$	9,695

(1)Excludes leased space that is not occupied.

(2)Includes month-to-month and hold-over leases.

See Reporting Definitions and Supplemental Financial Measures Disclosures

32

Life Science Portfolio

Square feet in thousands

Leasing Activity

			Annualized					Leasing		Average
	Leased		Base Rent Per		Change	TI Per		Costs Per		Lease Term	Retention
	Square Feet(1)		Square Foot		in Rents %	Square Foot		Square Foot		(Months)	Rates %
Leased Square Feet as of September 30, 2007	5,308
Acquisitions	127		$	26.27						30
Expirations	(140	)	25.26
Renewals, amendments and extensions	137		28.68		12.4	$	3.41	$	4.30	42	98.2
New leases	285		34.22		70.7	31.38			7.60	128
Terminations	(94	)	16.77
Leased Square Feet as of December 31, 2007	5,623

(1)  Includes leased space for tenants that have not yet taken physical occupancy.

See Reporting Definitions and Supplemental Financial Measures Disclosures

33

Medical Office Portfolio

As of and for the year ended December 31, 2007, dollars and square feet in thousands, except per leased square foot data

	Property			Rental		Operating		Average	Capacity
Owned Property Portfolio	Count	Investment		Revenues		Expenses		Age (Years)	(Square Feet)	Occupancy %
On-Campus	149	$	1,766,733	$	254,045	$	114,130	17	11,185	89.6
Off-Campus	56	456,024		63,226		23,198		14	2,727	93.3
	205	$	2,222,757	317,271		137,328		16	13,912	90.3
Properties contributed to joint ventures				18,221		7,439
				$	335,492	$	144,767

Portfolio Diversification

Geographic Concentration

	Property	Investment			Square Feet			Rental Revenues(1)			Operating Expenses(1)
State	Count	Amount		%	Amount	%	Occupancy %	Amount		%	Amount		%
TX	46	$	629,577	28	4,110	30	88.9	$	84,626	27	$	41,644	30
CA	16	247,104		11	944	7	93.1	32,929		10	16,367		12
WA	7	174,858		8	687	5	96.5	24,725		8	11,802		9
CO	16	183,337		8	1,039	7	80.4	24,448		8	10,239		7
FL	18	144,071		7	1,551	11	90.8	25,987		8	10,433		8
TN	19	139,241		6	1,026	7	92.6	23,074		7	10,838		8
UT	22	129,276		6	943	7	94.7	18,220		6	4,288		3
KY	6	101,570		5	640	5	93.7	12,759		4	4,232		3
IN	14	93,350		4	764	5	88.4	15,614		5	8,374		6
Other	41	380,373		17	2,208	16	90.6	54,889		17	19,111		14
	205	$	2,222,757	100	13,912	100	90.3	$	317,271	100	$	137,328	100

(1)     Geographic concentration excludes rental revenues and operating expenses from properties contributed to joint ventures.

See Reporting Definitions and Supplemental Financial Measures Disclosures

34

Medical Office Portfolio

Dollars and square feet in thousands

Portfolio Trends

	Total Portfolio						Same Property Portfolio
	Year-to-Date						Three Months Ended								Year Ended
	12/31/07		9/30/07(1)		12/31/06(1)		12/31/07			9/30/07			Change %		12/31/07			12/31/06			Change %
Total Medical office:
Property count	205		204		248		105			105					105			105
Investment	$	2,222,757	$	2,199,637	$	2,428,104	$	1,005,573		$	999,566		0.6		$	1,005,573		$	995,340		1.0
Square feet	13,912		13,787		15,182		6,449			6,449			—		6,449			6,449			—
Occupancy %	90.3		90.9		90.1		93.2			93.3			(0.1	)	93.2			93.9			(0.7	)
NOI:
Rental revenues							$	38,303		$	40,008		(4.3	)	$	155,404		$	147,006		5.7
Operating expenses							(14,146		)	(15,947		)	(11.3	)	(55,701		)	(49,845		)	11.7
							$	24,157		$	24,061		0.4		$	99,703		$	97,161		2.6
Adjusted NOI:
Straight-line rents							129			(174		)	(174.1	)	(1,845		)	(2,741		)	(32.7	)
Above/below market rents							(271		)	(551		)	(50.8	)	(1,368		)	(918		)	49.0
							$	24,015		$	23,336		2.9		$	96,490		$	93,502		3.2

(1)  Amounts are reflected as originally reported.

See Reporting Definitions and Supplemental Financial Measures Disclosures

35

Medical Office Portfolio

Dollars and square feet in thousands

Lease Expirations

	Total					On-Campus			Off-Campus
	Square Feet		Annualized Base Rent				Annualized			Annualized
	Amount	%	Amount		%	Square Feet	Base Rent		Square Feet	Base Rent
2008(1)	2,552	20	$	60,711	19	1,846	$	43,283	706	$	17,428
2009	1,765	14	46,221		14	1,464	39,549		301	6,672
2010	1,914	15	48,157		15	1,721	41,994		193	6,163
2011	1,170	9	30,094		9	973	25,893		197	4,201
2012	1,389	11	32,026		10	1,212	28,373		177	3,653
2013	595	5	14,213		4	361	10,661		234	3,552
2014	649	5	19,591		6	574	17,472		75	2,119
2015	568	5	18,281		6	401	12,845		167	5,436
2016	359	3	10,698		3	301	8,970		58	1,728
2017	449	4	13,432		4	382	11,822		67	1,610
Thereafter	1,150	9	34,266		10	805	22,068		345	12,198
	12,560	100	$	327,690	100	10,040	$	262,930	2,520	$	64,760

(1)  Includes month-to-month and hold-over leases.

See Reporting Definitions and Supplemental Financial Measures Disclosures

36

Medical Office Portfolio

Square feet in thousands

Leasing Activity

			Annualized					Leasing		Average
	Leased		Base Rent Per		Change	TI Per		Costs Per		Lease Term	Retention
	Square Feet		Square Foot		In Rents %	Square Foot		Square Foot		(Months)	Rates %
Leased Square Feet as of December 31, 2006	11,725
Acquisitions	669		$	24.90						36
Expirations	(502	)	20.47
Renewals, amendments and extensions	389		19.94		6.7	$	6.69	$	1.13	37	77.6
New leases	197		19.10			15.42		2.83		58
Terminations	(22	)	20.96
Leased Square Feet as of March 31, 2007	12,456
Dispositions	(5	)	16.94
Expirations	(400	)	20.87
Renewals, amendments and extensions	300		18.95		5.5	6.92		1.29		36	76.5
New leases	112		18.98			18.51		2.70		58
Terminations	(3	)	21.04
Leased Square Feet as of June 30, 2007	12,460
Acquisitions	97		29.40
Expirations	(543	)	16.81
Renewals, amendments and extensions	453		17.11		4.8	5.13		0.69		37	79.1
New leases	131		18.94			22.75		2.08		57
Terminations	(28	)	19.35
Leased Square Feet as of September 30, 2007	12,570
Dispositions	(32	)	27.65
Expirations	(335	)	23.90
Renewals, amendments and extensions	236		22.82		2.9	7.48		3.21		40	77.5
New leases	138		20.66			20.05		2.40		56
Terminations	(17	)	17.66
Leased Square Feet as of December 31, 2007	12,560

See Reporting Definitions and Supplemental Financial Measures Disclosures

37

Hospital Portfolio

As of and for the year ended December 31, 2007, dollars in thousands

	Property			Rental		Operating		Average Age
Owned Property	Count	Investment		Revenues		Expenses		(Years)	Beds	Occupancy %	EBITDAR		CFC
Acute care	14	$	731,104	$	89,348	$	1,733	31	2,960	52.5	$	158,468	2.26	x
LTACH	7	66,462		11,355		—		18	524	60.4	26,804		3.12	x
Rehab	12	159,004		18,425		19		14	801	61.3	39,907		2.51	x
Specialty	3	91,360		7,877		—		21	59	81.8	17,435		2.39	x
	36	$	1,047,930	127,005		1,752		22	4,344	55.4	$	242,614	2.38
Properties contributed to joint ventures				2,243		132
				$	129,248	$	1,884

	Property			Interest		Average Age
Secured Loan Portfolio	Count	Investment		Income		(Years)	Beds	Occupancy %	EBITDAR		DSC
Acute care	1	$	35,308	$	3,001	9	58	51.8	$	7,414	2.47	x
Repaid loans				5,344
				$	8,345

			Interest
Other Debt Investments	Investment		Income
Acute care	$	269,663	$	26,213
Specialty	104,050		12,409
	$	373,713	$	38,622

See Reporting Definitions and Supplemental Financial Measures Disclosures

38

Hospital Portfolio

As of and for the year ended December 31, 2007, dollars in thousands

Portfolio Diversification

Operator Concentration

	Properties		Investment			Rental Revenues & (2) Interest Income
Operator(1)	Count	% Pooled	Amount		%	Amount		%	Beds	Occupancy %	CFC/DSC
HCA	1	—	$	435,735	30	$	44,111	26	598	N/A	N/A
Tenet Healthcare Corp.	7	—	418,080		29	54,238		32	1,645	58.1	2.11	x
Cirrus Health	2	—	148,672		10	15,371		9	37	N/A	2.11	x
HealthSouth	10	40	119,560		8	16,215		10	685	61.3	2.51	x
Pioneer Valley Hospital	1	—	62,596		4	6,339		4	139	25.3	3.16	x
Other	16	50	272,308		19	32,354		19	1,298	79.2	2.74	x
	37	32	$	1,456,951	100	$	168,628	100	4,402	55.4	2.38

Geographic Concentration

	Property	Investment			Rental Revenues & Interest Income(2)
State	Count	Amount		%	Amount		%	Beds	Occupancy %	CFC/DSC
TX	8	$	285,355	26	$	30,786	24	1,195	53.8	2.21	x
CA	4	239,582		22	29,645		23	745	53.7	0.70	x
LA	5	83,239		8	9,436		7	455	39.9	1.65	x
GA	2	76,735		7	10,936		8	239	74.1	4.57	x
FL	2	75,719		7	9,768		8	312	68.7	2.10	x
Other	16	322,608		30	39,435		30	1,456	56.6	3.42	x
	37	$	1,083,238	100	$	130,006	100	4,402	55.4	2.38	x

(1)Certain operators in HCP’s hospital portfolio are not required under their respective leases to provide operational data.

(2)Geographic concentration excludes “Other Debt Investments” as the investment and revenues associated with those assets cannot be allocated to a particular geographic region.  In addition, geographic and operator concentrations also exclude rental revenues from properties contributed to joint ventures and interest income from secured loans that were repaid.

See Reporting Definitions and Supplemental Financial Measures Disclosures

39

Hospital Portfolio

Dollars in thousands

Portfolio Trends

	Total Portfolio									Same Property Portfolio
	Year-to-Date									Three Months Ended								Year Ended
	12/31/07			9/30/07(1)			12/31/06(1)			12/31/07			9/30/07			Change %		12/31/07			12/31/06			Change %
Total Hospital:
Property count	37			37			35			26			26					26			26
Investment	$	1,456,951		$	1,457,514		$	1,336,802		$	714,391		$	714,391		—		$	714,391		$	713,806		0.1
Beds	4,402			4,402			3,526			3,217			3,217			—		3,217			3,217			—
Occupancy %	55.4			55.8			56.6			55.5			55.9			(0.4	)	55.5			56.5			(1.0	)
EBITDAR	$	250,028		$	221,058		$	218,972		$	214,158		$	195,763		9.4		$	214,158		$	177,287		20.8
CFC/DSC	2.38		x	2.20		x	2.27		x	2.34		x	2.15		x	8.8		2.34		x	2.15		x	8.8
NOI:
Rental revenues										$	23,471		$	24,290		(3.4	)	$	92,839		$	91,506		1.5
Operating expenses										—			(4		)	(100.0	)	(6		)	—			—
										$	23,471		$	24,286		(3.4	)	$	92,833		$	91,506		1.5
Adjusted NOI:
Straight-line rents										(260		)	(260		)	—		(1,084		)	(1,313		)	(17.4	)
										$	23,211		$	24,026		(3.4	)	$	91,749		$	90,193		1.7

Lease Expirations

		Annualized Base Rent
	Properties	Amount		%
2008	2	$	2,644	3
2009	7	41,019		40
2010	1	2,973		3
2011	3	5,606		5
2012	3	2,765		3
2013	—	—		—
2014	—	—		—
2015	3	3,873		4
2016	—	—		—
2017	3	5,426		5
Thereafter	15	37,641		37
	37	$	101,947	100

(1)Amounts are reflected as originally reported.

See Reporting Definitions and Supplemental Financial Measures Disclosures

40

Skilled Nursing Portfolio

As of and for the year ended December 31, 2007, dollars in thousands

	Property			Rental		Operating		Average			Cash Flow Coverage
Owned Property Portfolio	Count	Investment		Revenues		Expenses		Age (Years)	Beds	Occupancy %	EBITDAR		CFC
Skilled nursing	60	$	303,233	$	43,133	$	77	22	6,995	86.2	$	57,482	1.48	x

	Property			Interest		Average			Debt Service Coverage
Secured Loan Portfolio	Count	Investment		Income		Age (Years)	Beds	Occupancy %	EBITDAR		DSC
Skilled nursing	3	$	15,585	$	1,752	29	442	84.5	$	5,229	2.13	x
Repaid loans				852
				$	2,604

			Interest
Mezzanine Loans	Investment		Income
Skilled nursing	$	903,154	$	3,147

Portfolio Diversification

						Rental Revenues and
	Properties		Investment			Interest Income
Operator	Count	% Pooled	Amount		%	Amount		%	Beds	Occupancy %	CFC/DSC
HCR ManorCare	—	—	$	903,154	73	$	3,147	7	N/A	N/A	N/A
Trilogy Health Services	12	92	68,294		6	9,164		19	1,250	93.7	1.42	x
Formation Capital	9	100	63,100		5	6,762		14	934	95.0	1.72	x
Covenant Care	12	—	60,056		5	8,515		18	1,329	84.4	1.35	x
Kindred	9	100	33,100		3	8,144		17	1,288	85.6	1.22	x
Other	21	33	94,268		8	12,300		25	2,636	80.5	1.87	x
	63	57	$	1,221,972	100	$	48,032	100	7,437	86.1	1.52	x

See Reporting Definitions and Supplemental Financial Measures Disclosures

41

Skilled Nursing Portfolio

As of and for the year ended December 31, 2007, dollars in thousands

Geographic Concentration(1)

	Property	Investment			Rental Revenues & Interest Income
State	Count	Amount		%	Amount		%	Beds	Occupancy	CFC/DSC
IN	15	$	80,594	25	$	11,013	25	1,558	90.2	1.24	x
VA	9	63,100		20	6,762		15	934	95.0	1.72	x
OH	8	41,766		13	6,700		15	1,077	78.8	1.34	x
TX	4	24,484		8	2,710		6	570	76.5	1.51	x
CO	4	22,223		7	3,068		7	602	90.2	2.15	x
CA	5	18,486		6	2,901		6	598	85.8	2.28	x
Other	18	68,165		21	11,731		26	2,098	84.4	1.49	x
	63	$	318,818	100	$	44,885	100	7,437	86.1	1.52	x

Portfolio Trends

	Total Portfolio						Same Property Portfolio
	Year-to-Date						Three Months Ended								Year Ended
	12/31/07		9/30/07(2)		12/31/06(2)		12/31/07			9/30/07			Change %		12/31/07			12/31/06			Change %
Total Skilled nursing:
Property count	63		65		69		59			59					59			59
Investment	$	1,221,972	$	321,572	$	333,167	$	298,166		$	297,525		0.2		$	298,166		$	295,887		0.8
Beds	7,437		7,560		8,000		6,907			6,907			—		6,907			6,907			—
Occupancy %	86.1		86.4		85.2		86.1			86.4			(0.3	)	86.1			85.0			1.1
EBITDAR	$	62,711	$	63,650	$	70,464	$	56,517		$	56,644		(0.2	)	$	56,517		$	62,148		(9.1	)
CFC/DSC	1.52 x		1.55 x		1.55 x		1.48 x			1.50 x			(1.3	)	1.48 x			1.54 x			(3.9	)
NOI:
Rental revenues							$	10,831		$	10,694		1.3		$	42,567		$	40,313		5.6
Operating expenses							45			(74		)	(160.8	)	(76		)	(27		)	181.5
							$	10,876		$	10,620		2.4		$	42,491		$	40,286		5.5
Adjusted NOI:
Straight-line rents							(164		)	(175		)	(6.3	)	(728		)	(216		)	237.0
Above/below market rents							29			29			—		116			116			—
							$	10,741		$	10,474		2.5		$	41,879		$	40,186		4.2

(1)	Geographic concentration excludes mezzanine loans as the investment and revenues associated with these assets cannot be allocated to a particular geographic region. In addition, geographic concentration also excludes interest income from secured loans, which were repaid as of December 31, 2007.
(2)	Amounts are reflected as originally reported.

See Reporting Definitions and Supplemental Financial Measures Disclosures

42

Skilled Nursing Portfolio

As of and for the year ended December 31, 2007, dollars in thousands

Lease Expirations

		Annualized Base Rent
	Properties	Amount		%
2008	1	$	637	2
2009	4	2,240		5
2010	—	—		—
2011	—	—		—
2012	—	—		—
2013	10	6,622		16
2014	9	6,547		16
2015	5	2,744		7
2016	14	10,701		26
2017	11	8,411		20
Thereafter	9	3,186		8
	63	$	41,088	100

See Reporting Definitions and Supplemental Financial Measures Disclosures

43

Unconsolidated Operating Portfolio

As of and for the year ended December 31, 2007, dollars and square feet in thousands

	Property			Rental		Operating		Average	Capacity		Cash Flow Coverage
HCP Ventures II (35%)	Count	Investment		Revenues		Expenses		Age (Years)	(Units)	Occupancy %	EBITDAR		CFC
Assisted living	2	$	11,077	$	875	$	—	8	111	81.1	$	422	0.56	x
Independent living	20	978,522		74,089		7		17	5,080	92.4	60,187		0.97	x
CCRCs	3	107,668		8,348		—		8	444	94.0	6,571		0.95	x
	25	$	1,097,267	$	83,312	$	7	15	5,635	92.3	$	67,180	0.96	x

	Property			Rental		Operating		Average	Capacity
HCP Ventures III (30%)	Count	Investment		Revenues		Expenses		Age (Years)	(Square Feet)	Occupancy %
On-Campus	9	$	108,112	$	13,148	$	4,288	6	606	98.1
Off-Campus	4	32,458		4,281		1,602		5	183	100.0
	13	$	140,570	$	17,429	$	5,890	6	789	98.6

	Property			Rental		Operating		Average
HCP Ventures IV (20%)	Count	Investment		Revenues		Expenses		Age (Years)	Capacity(1)	Occupancy %(1)
Medical office:
On-Campus	23	$	229,324	$	17,400	$	7,670	18	1,226 Sq. Ft.	84.1
Off-Campus	27	313,816		21,241		8,012		16	1,342 Sq. Ft.	87.8
Life science	4	23,870		1,331		118		6	111 Sq. Ft.	100.0
Hospital:
LTACH	1	12,184		874		248		1	N/A	N/A
Rehab	1	13,965		787		12		1	N/A	N/A
Specialty	2	55,224		3,660		495		2	N/A	N/A
	58	$	648,383	$	45,293	$	16,555	15

(1)           Information not provided by the respective operator/tenant.

See Reporting Definitions and Supplemental Financial Measures Disclosures

44

Unconsolidated Operating Portfolio

As of and for the year ended December 31, 2007, dollars in thousands

Portfolio Diversification

Geographic Concentration

	Investment			Rental		Operating
State	Amount		%	Revenues		Expenses
TX	$	605,132	32	$	43,578	$	7,888
FL	435,013		23	33,512		4,089
IL	235,353		12	17,855		1,402
RI	200,885		11	16,898		1
AZ	112,456		6	8,550		1,983
CA	73,850		4	5,184		—
AL	57,957		3	6,807		2,011
TN	34,320		2	3,262		1,230
MO	33,148		2	2,339		869
NC	23,870		1	1,331		118
Other	74,236		4	6,718		2,861
	$	1,886,220	100	$	146,034	$	22,452

See Reporting Definitions and Supplemental Financial Measures Disclosures

45

Reporting Definitions

Acute Care Hospitals.  Acute care hospitals offer a wide range of services such as fully-equipped operating and recovery rooms, obstetrics, radiology, intensive care, open heart surgery and coronary care, neurosurgery, neonatal intensive care, magnetic resonance imaging, nursing units, oncology, clinical laboratories, respiratory therapy, physical therapy, nuclear medicine, rehabilitation services and outpatient services.

Annualized Base Rent.  The most recent monthly base rent due to HCP as of period end annualized for twelve months.  Annualized Base Rent does not include additional rent.  The Company uses Annualized Base Rent in Lease Expirations schedules.

Annualized Debt Service.  The most recent monthly interest and principal amortization due to HCP as of period end annualized for twelve months.  The Company uses Annualized Debt Service for purposes of determining Debt Service Coverage.

Annualized Revenues.  The most recent monthly base rent, income from direct financing leases and/or interest income accrued to HCP as of period end annualized for twelve months.  Annualized Revenues do not include additional rents and non-cash revenue adjustments (i.e., straight-line rents, amortization of above and below market lease intangibles and deferred revenues).  The Company uses Annualized Revenues for the purpose of determining Relationship Concentrations.

Assets Held for Sale.  Assets of discontinued operations in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

Assisting Living Facility (“ALF”).  A senior housing facility that predominantly consists of assisted living units is classified by the Company as an ALF.

Beds/Units/Square Feet.  Senior housing facilities are measured in units (e.g., studio, one or two bedroom units).  MOBs and life science facilities are measured in square feet. Hospitals and skilled nursing facilities are measured in licensed bed count.

Book Value.  The carrying amount as reported in the Company’s financial statements.

Cash Flow Coverage (“CFC”).  Facility EBITDAR for the most recent twelve months of available data divided by the Same Period Rent.  Cash Flow Coverage is a supplemental measure of a property’s ability to generate cash flows for the operator/tenant (not the Company) to meet the operator’s/tenant’s related rent and other obligations to the Company.  However, its usefulness is limited by, among other things, the same factors that limit the usefulness of Facility EBITDAR.  The coverages shown exclude newly completed facilities under start-up, vacant facilities and facilities for which data is not available or meaningful.

Consolidated Assets.  Total assets as reported in the Company’s consolidated financial statements.

Consolidated Book Capitalization.  The carrying amount of (i) Consolidated Debt, plus (ii) total minority interests, plus (iii) total stockholders’ equity, as reported in the Company’s consolidated financial statements.

Consolidated Debt.  The carrying amount of bank lines of credit, bridge loans (if applicable), term loans (if applicable), senior unsecured notes, mortgage debt and other debt as reported in the Company’s consolidated financial statements.

Consolidated Gross Assets.  The carrying amount of total assets, excluding investments in and advances to unconsolidated joint ventures, after adding back accumulated depreciation and amortization, as reported in the Company’s consolidated financial statements.

Consolidated Market Capitalization.  Consolidated Debt at Book Value plus Consolidated Market Equity.

Consolidated Market Equity.  The total number of outstanding shares of the Company’s common stock multiplied by the closing price per share of its common stock on the New York Stock Exchange as of period end, plus the total number of convertible partnership units multiplied by the closing price per share of its common stock on the New York Stock Exchange as of period end (adjusted for stock splits), plus the total number of outstanding shares of the Company’s preferred stock multiplied by the closing price of its preferred stock on the New York Stock Exchange as of period end.

Consolidated Secured Debt.  Mortgage debt secured by real estate as reported in the Company’s consolidated financial statements.

Consolidated Undepreciated Book Capitalization.  Consolidated Book Capitalization after adding back accumulated depreciation and amortization on the Company’s real estate assets, as reported in the Company’s consolidated financial statements.

Continuing Care Retirement Community (“CCRC”).  A senior housing facility which provides at least three levels of care (i.e., independent living, assisted living and skilled nursing) is classified by the Company as a CCRC.

Debt Service.  The periodic payment of interest expense and principal amortization on secured loans.

Debt Service Coverage (“DSC”).  Facility EBITDAR for the most recent twelve months of available data divided by the Annualized Debt Service. Debt Service Coverage is a supplemental measure of the property’s ability to generate sufficient cash flows for the operator/tenant (not the Company) to meet the operator’s/tenant’s related obligations to the Company under loan agreements.  However, its usefulness is limited by the same factors that limit the usefulness of Facility EBITDAR.  The coverages shown exclude newly completed facilities under start-up, vacant facilities and facilities for which data is not available or meaningful.

Direct Financing Lease (“DFL”).  The Company uses the direct finance method of accounting to record income from DFLs.  For leases accounted for as DFLs, future minimum lease payments are recorded as a receivable.  The difference between the future minimum lease payments and the estimated residual values less the cost of the properties is recorded as unearned income.  Unearned income is deferred and amortized to income over the lease terms to provide a constant yield.  Investments in direct financing leases, as reported in the Company’s consolidated financial statements, are presented net of unamortized interest income.  DFLs have initial terms that range from 5 to 35 years.

46

Reporting Definitions

Estimated Completion Date.  Management’s estimate of the date the core and shell structure improvements are expected to be completed.

Facility EBITDAR (“EBITDAR”).  Earnings before interest, taxes, depreciation, amortization and rent for a particular facility accruing to the operator/tenant of the property (not the Company).  The Company uses Facility EBITDAR in determining Cash Flow Coverage and Debt Service Coverage.  Facility EBITDAR has limitations as an analytical tool.  Facility EBITDAR does not reflect historical cash expenditures or future cash requirements for facility capital expenditures or contractual commitments.  In addition, Facility EBITDAR does not represent a property’s net income or cash flow from operations and should not be considered an alternative to those indicators.  However, the Company receives periodic financial information from operators/tenants regarding the performance of the Company’s facilities under the operator’s/tenant’s management.  The Company utilizes Facility EBITDAR as a supplemental measure of the ability of those properties to generate sufficient liquidity to meet related obligations to the Company.  Facility EBITDAR includes the greater of (i) contractual management fees or (ii) an imputed management fee of 2% for acute care hospitals and 5% for skilled nursing facilities and senior housing facilities which the Company believes represents typical management fees in their respective industries.  All facility financial performance data was derived solely from information provided by operators/tenants and borrowers without independent verification by the Company.

Future Minimum Rents.  Future minimum lease payments to be received by HCP, excluding operating expense reimbursements, from lessees under non-cancelable operating leases as of period end.

GAAP.  U.S. generally accepted accounting principles.

HCP MOP.  Prior to November 30, 2006, HCP Medical Office Portfolio, LLC (“HCP MOP”), was an unconsolidated joint venture formed between the Company and an affiliate of General Electric Company (“GE”), for which the Company was the managing member and in which it had a 33% interest. Since that date, the Company has been the 100% owner of HCP MOP.

HCP Ventures II.  An unconsolidated joint venture formed on January 5, 2007 between the Company and an institutional capital partner, for which the Company is the managing member and in which it has a 35% interest.

HCP Ventures III.  An unconsolidated joint venture formed on October 27, 2006 between the Company and an institutional capital partner, for which the Company is the managing member and in which it has an effective 25.5% interest.

HCP Ventures IV.  An unconsolidated joint venture formed on April 30, 2007 between the Company and an institutional capital partner, for which the Company is the managing member and in which it has a 20% interest.

Independent Living Facility (“ILF”).  A senior housing facility that predominantly consists of independent living units is classified by the Company as an ILF.

Investment.  The carrying amount of real estate assets, including intangibles, after adding back accumulated depreciation and amortization and the carrying amount of mortgage loans receivable.  Excludes real estate assets held for sale and classified as discontinued operations, unless otherwise specified.

Life Science.  Laboratory and office space primarily for biotechnology and pharmaceutical companies, scientific research institutions, government agencies and other entities involved in the life science industry.

Long-Term Acute Care Hospitals (“LTACHs”).  LTACHs provide care for patients with complex medical conditions that require longer stays and more intensive care, monitoring or emergency back-up than that available in most skilled nursing-based programs.

Marketable Securities.  The Company classifies its existing marketable equity and debt securities as available-for-sale in accordance with provisions of SFAS No. 115. These securities are carried at fair market value, with unrealized gains and losses reported in stockholders’ equity as a component of accumulated other comprehensive income.

MOB.  Medical office building.

Occupancy.  For MOBs and life science facilities, occupancy represents the percentage of total rentable square feet leased and occupied, including month-to-month leases, as of the date reported. For hospitals, skilled nursing facilities and senior housing facilities, occupancy represents the facilities’ operating occupancy for each quarter based on the most recent quarter of available data.  The percentages are calculated based on licensed beds, available beds and units for hospitals, skilled nursing facilities and senior housing facilities, respectively.  The percentages shown exclude newly completed facilities under start-up, vacant facilities and facilities for which data is not available or meaningful.  All facility financial performance data were derived solely from information provided by operators/tenants and borrowers without independent verification by the Company.

Operating Portfolio.  Represents owned properties, direct financing leases, loans and marketable debt securities, and excludes properties under development.

Other Debt Investments.  Marketable debt securities and loans not secured by real estate.

Percentage Pre-leased.  Represents the percentage of a development project’s estimated square footage attributed to signed leases.

Pooled Leases.  Two or more leases to the same operator/tenant or subsidiaries of the same operator/tenant, the lessee’s or lessees’ performance obligations under which are combined by virtue of a master lease, a pooling agreement or cross-guaranties.

Rehabilitation Hospitals (“Rehab”).  Rehabilitation hospitals provide inpatient and outpatient care for patients who have sustained traumatic injuries or illnesses, such as spinal cord injuries, strokes, head injuries, orthopedic problems, work-related disabilities and neurological diseases.

Rental Revenues.  Represents rental and related revenues, tenant recoveries and income from direct financing leases.

Same Period Rent.  The base rent plus additional rent due to the Company over the most recent trailing twelve-month period as of period end.  The Company uses Same Period Rent for purposes of determining property-level Cash Flow Coverage.

47

Reporting Definitions

Same Property Portfolio (“SPP”).  An important component of the Company’s evaluation of the operating performance of its properties.  The Company defines its same property portfolio each quarter as those properties that have been in operation throughout the current year and the prior year and that were also in operation at January 1st of the prior year.  Newly acquired assets, developments in process and assets classified in discontinued operations are excluded from the same property portfolio.  Same property statistics allow management to evaluate the NOI of its real estate portfolio as a consistent population from period to period and eliminates the effects of changes in the composition of the properties on performance measures.

Senior Housing.  ALFs, ILFs and CCRCs.  For reporting purposes, the Company’s senior housing portfolio also includes a school formerly operated as an assisted living facility and six health and wellness centers.

Specialty Hospitals.  Specialty hospitals are licensed as acute care hospitals but focus on providing care in specific areas such as cardiac, orthopedic and women’s conditions, or specific procedures such as surgery and are less likely to provide emergency services.

Square Feet Owned.  The square footage for properties owned by the Company or its consolidated joint ventures, and excludes square footage for development properties prior to completion.

Total Book Capitalization.  Total Debt plus the carrying amount of minority interests plus the carrying amount of stockholders’ equity.

Total Debt.  Consolidated Debt at Book Value plus the Company’s pro rata share of debt from unconsolidated joint ventures.

The following table details the calculation of Total Debt at December 31, 2007 and 2006:

	December 31,
In thousands	2007		2006
Bank lines of credit	$	951,700	$	624,500
Bridge and term loans	1,350,000		504,593
Senior unsecured notes	3,819,950		2,748,522
Mortgage debt(1)	1,280,761		2,216,654
Other debt	108,496		107,746
Consolidated debt	7,510,907		6,202,015
HCP’s share of unconsolidated mortgage debt	340,506		27,519
Total debt	$	7,851,413	$	6,229,534

Total Gross Assets.  Consolidated Gross Assets plus the Company’s pro rata share of total assets from unconsolidated joint ventures, after adding back accumulated depreciation and amortization.

The following table details the calculation of Total Gross Assets at December 31, 2007 and 2006:

	December 31,
In thousands	2007			2006
Consolidated total assets	$	12,521,772		$	10,012,749
Investments in and advances to unconsolidated joint ventures	(248,894		)	(25,389		)
Accumulated depreciation and amortization	830,420			569,688
Accumulated depreciation and amortization from assets held for sale and contribution	—			7,489
Consolidated gross assets	$	13,103,298		$	10,564,537
HCP’s share of unconsolidated total assets(2)	555,343			45,208
HCP’s share of unconsolidated accumulated depreciation and amortization(2)	17,593			849
Total gross assets	$	13,676,234		$	10,610,594

48

Total Market Capitalization.  Total Debt plus Consolidated Market Equity.

The following table details the calculation of Total Market Capitalization at December 31, 2007:

	December 31, 2007
In thousands, except price data	Shares/Units	Price		Value
Common stock	216,819	$	34.78	$	7,540,965
Convertible partnership units
2 for 1(3)	2,516	69.56		175,013
1 for 1(4)	5,066	34.78		176,195
				351,208
Preferred stock:
7.25% Series E	4,000	19.61		78,440
7.10% Series F	7,820	19.20		150,144
				228,584
Consolidated market equity				$	8,120,757
Consolidated debt				7,510,907
Consolidated market capitalization				$	15,631,664
HCP’s share of unconsolidated mortgage debt				340,506
Total market capitalization				$	15,972,170

(1)	Includes mortgage debt on assets held for contribution and held for sale at December 31, 2006.
(2)	Includes pro-rata share of our unconsolidated institutional joint ventures, HCP Venture II, HCP Venture III and HCP Venture IV. Prior to November 30, 2006, HCP MOP was an unconsolidated joint venture formed between the Company and an affiliate of GE, for which the Company was the managing member and had a 33% interest therein. HCP’s share of EBITDA and interest expense from HCP MOP excludes amounts subsequent to HCP’s acquisition of GE’s interest.
(3)	Each convertible partnership unit is exchangeable for an amount of cash approximating the then-current market value of two shares of the Company’s common stock at time of conversion or, at the Company’s option, two shares of the Company’s common stock.
(4)	Each convertible partnership unit is exchangeable for an amount of cash approximating the then-current market value of one share of the Company’s common stock at time of conversion or, at the Company’s option, one share of the Company’s common stock.

49

Reporting Definitions

Total Secured Debt.  Consolidated secured debt plus the Company’s pro rata share of mortgage debt from unconsolidated joint ventures.

Total Undepreciated Book Capitalization.  Total Book Capitalization after adding back accumulated depreciation and amortization on the Company’s real estate assets and the Company’s pro rata share of accumulated depreciation and amortization on real estate assets in unconsolidated joint ventures.

The following table details the calculation of Total Undepreciated Book Capitalization at December 31, 2007 and 2006:

	December 31,
In thousands	2007		2006
Total debt	$	7,851,413	$	6,229,534
Total minority interests	339,271		161,765
Total stockholders’ equity	4,103,709		3,294,036
Total book capitalization	12,294,393		9,685,335
Accumulated depreciation and amortization	830,420		569,688
Accumulated depreciation and amortization from assets held for sale and contribution	—		7,489
HCP’s share of unconsolidated accumulated depreciation and amortization(1)	17,593		849
Total undepreciated book capitalization	$	13,142,406	$	10,263,361

Yield.  Yield is calculated as Net Operating Income, as adjusted, divided by total investment.  For acquisitions, initial yields are calculated as projected Net Operating Income, twelve months forward, as adjusted, as of the closing date divided by total acquisition cost.  The total acquisition cost basis includes the initial purchase price, the effects of adjusting assumed debt to market, lease intangible adjustments and all transaction costs.  For dispositions, exit yields are calculated as Net Operating Income (trailing twelve months), as adjusted, divided by total disposition price.

(1)Includes pro-rata share of our unconsolidated institutional joint ventures, HCP Venture II, HCP Venture III and HCP Venture IV.  Prior to November 30, 2006, HCP MOP was an unconsolidated joint venture formed between the Company and an affiliate of GE, for which the Company was the managing member and had a 33% interest therein.  HCP’s share of EBITDA and interest expense from HCP MOP excludes amounts subsequent to HCP’s acquisition of GE’s interest.

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Supplemental Financial Measures Disclosures

Adjusted Fixed Charge Coverage. Adjusted EBITDA divided by Fixed Charges.  The Company uses Adjusted Fixed Charge Coverage, a non-GAAP financial measure, as a measure of liquidity. The Company believes Adjusted Fixed Charge Coverage provides investors, particularly fixed income investors, relevant and useful information because it measures the Company’s ability to meet its interest payments on outstanding debt and pay dividends to its preferred stockholders. The Company’s various debt agreements contain covenants that require the Company to maintain ratios similar to Adjusted Fixed Charge Coverage and credit rating agencies utilize similar ratios in evaluating and determining the credit rating on certain debt instruments of the Company.  However, since this ratio is derived from Adjusted EBITDA and Fixed Charges, its usefulness is limited by the same factors that limit the usefulness of Adjusted EBITDA and Fixed Charges.  Further, the Company’s computation of Adjusted Fixed Charge Coverage may not be comparable to similar fixed charge coverage ratios reported by other companies.

The following table details the calculation of Adjusted Fixed Charge Coverage for the three months and years ended December 31, 2007 and 2006:

	Three Months Ended						Year Ended
	December 31,						December 31,
In thousands	2007			2006			2007			2006
Net income	$	50,295		$	241,274		$	589,015		$	417,547
Interest expense:
Continuing operations	101,105			109,882			357,024			211,869
Discontinued operations	454			748			1,810			1,462
Income taxes	1,638			145			2,669			254
Depreciation and amortization of real estate, in-place lease and other intangibles:
Continuing operations	79,232			53,184			274,348			132,916
Discontinued operations	67			5,060			6,831			21,153
Equity income from unconsolidated joint ventures	(1,887		)	(751		)	(5,645		)	(8,331		)
HCP’s share of EBITDA from unconsolidated joint ventures(1)	9,901			3,599			36,067			15,963
Other joint venture adjustments	642			—			2,251			—
EBITDA	241,447			413,141			1,264,370			792,833
Minority interests’ share of earnings	6,364			3,347			24,356			14,805
Impairments	—			4,870			—			9,581
Gains on sales of real estate and real estate interest	(11,315		)	(228,682		)	(413,725		)	(275,283		)
Adjusted EBITDA	$	236,496		$	192,676		$	875,001		$	541,936
Interest expense:
Continuing operations	$	101,105		$	109,882		$	357,024		$	211,869
Discontinued operations	454			748			1,810			1,462
HCP’s share of interest expense from unconsolidated joint ventures(1)	5,032			1,344			18,466			4,294
Capitalized interest	8,322			307			12,346			895
Preferred stock dividends	5,282			5,282			21,130			21,130
Fixed charges	$	120,195		$	117,563		$	410, 776		$	239,650
Adjusted fixed charge coverage	2.0		x	1.6		x	2.1		x	2.3		x

(1) Includes pro-rata share of our unconsolidated institutional joint ventures, HCP Ventures II, HCP Ventures III and HCP Ventures IV. Prior to November 30, 2006, HCP MOP was an unconsolidated joint venture formed between the Company and an affiliate of GE, for which the Company was the managing member and had a 33% interest therein. HCP’s share of EBITDA and interest expense from HCP MOP excludes amounts subsequent to HCP’s acquisition of GE’s interest.

51

Supplemental Financial Measures Disclosures

EBITDA and Adjusted EBITDA.  The real estate industry uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP financial measure, as a measure of both operating performance and liquidity.  Adjusted EBITDA is calculated as EBITDA excluding minority interests’ share of earnings, impairments and gains or losses from real estate dispositions.  The Company uses EBITDA and Adjusted EBITDA to measure both its operating performance and liquidity.  The Company considers Adjusted EBITDA to provide investors relevant and useful information because it permits investors to view income from its operations on an unleveraged basis before the effects of taxes, non-cash depreciation and amortization, impairments and gains or losses from real estate dispositions.  By excluding interest expense, Adjusted EBITDA allows investors to measure the Company’s operating performance independent of its capital structure and indebtedness and, therefore, allows for a more meaningful comparison of its operating performance between quarters as well as annual periods and to compare its operating performance to that of other companies, both in the real estate industry and in other industries.  The Company considers Adjusted EBITDA to be a useful supplemental measure for reviewing its comparative performance with other companies because, by excluding non-cash depreciation expense, Adjusted EBITDA can help the investing public compare the performance of a real estate company to that of companies in other industries.  As a liquidity measure, the Company believes that EBITDA and Adjusted EBITDA help investors analyze the Company’s ability to meet its interest payments on outstanding debt and to make preferred dividend payments.  The Company’s various debt agreements contain covenants that require the Company to maintain ratios similar to Adjusted Fixed Charge Coverage and credit rating agencies utilize similar ratios in evaluating and determining the credit rating on certain debt instruments of the Company.  The Company believes investors should consider EBITDA and Adjusted EBITDA, in conjunction with net income (the primary measure of the Company’s performance) and the other required GAAP measures of its performance and liquidity, to improve their understanding of the Company’s operating results and liquidity, and to make more meaningful comparisons of its performance between periods and as against other companies.  By excluding interest, taxes, depreciation and amortization, impairments and gains or losses from real estate dispositions when assessing the Company’s financial performance, an investor is assessing the earnings generated by the Company’s operations, but not taking into account the eliminated expenses or gains or losses from real estate dispositions incurred in connection with such operations.  As a result, EBITDA and Adjusted EBITDA have limitations as analytical tools and should be used in conjunction with the Company’s required GAAP presentations.  EBITDA and Adjusted EBITDA do not reflect the Company’s historical cash expenditures or future cash requirements for capital expenditures or contractual commitments.  Also, EBITDA and Adjusted EBITDA do not reflect the cash required to make interest and principal payments on the Company’s outstanding debt.  While Adjusted EBITDA is a relevant and widely used measure of operating performance and liquidity, it does not represent net income or cash flow from operations as defined by GAAP and it should not be considered as an alternative to those indicators in evaluating operating performance or liquidity.  Further, the Company’s computation of EBITDA and Adjusted EBITDA may not be comparable to similar measures reported by other companies.

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The following table reconciles Adjusted EBITDA from net cash provided by operating activities for the three months and years ended December 31, 2007 and 2006:

	Three Months Ended						Year Ended
	December 31,						December 31,
In thousands	2007			2006			2007			2006
Net cash provided by operating activities	$	143,230		$	86,703		$	453,051		$	341,196
Changes in:
Accounts receivable	10,489			(658		)	13,115			(1,295		)
Other assets	(3,763		)	1,365			14,621			8,263
Accounts payable and accrued liabilities	(29,762		)	(8,286		)	(26,634		)	(28,579		)
Securities gains, net	(2,641		)	309			2,233			1,861
Gains on sales of real estate and real estate interest	11,315			228,682			413,725			275,283
Impairments	—			(4,870		)	—			(9,581		)
Minority interests’ share of earnings	(6,364		)	(3,347		)	(24,356		)	(14,805		)
Distributions of earnings from unconsolidated joint ventures	(2,116		)	(751		)	(5,264		)	(8,331		)
Equity income from unconsolidated joint ventures	1,887			751			5,645			8,331
Deferred rental revenue	(90		)	878			(9,027		)	518
Interest accretion	2,311			2,513			8,739			2,513
Straight-line rents	10,258			10,774			49,725			18,210
Recovery of loan losses	—			—			386			—
Amortization of debt issuance costs	(5,139		)	(11,787		)	(20,413		)	(14,533		)
Stock-based compensation	(2,892		)	(2,172		)	(11,408		)	(8,232		)
Amortization of above and (below) market lease intangibles, net	2,871			(586		)	6,056			797
Depreciation and amortization of real estate, in-place lease and other intangibles:
Continuing operations	(79,232		)	(53,184		)	(274,348		)	(132,916		)
Discontinued operations	(67		)	(5,060		)	(6,831		)	(21,153		)
Net income	50,295			241,274			589,015			417,547
Interest expense:
Continuing operations	101,105			109,882			357,024			211,869
Discontinued operations	454			748			1,810			1,462
Income taxes	1,638			145			2,669			254
Depreciation and amortization of real estate, in-place lease and other intangibles:
Continuing operations	79,232			53,184			274,348			132,916
Discontinued operations	67			5,060			6,831			21,153
Equity income from unconsolidated joint ventures	(1,887		)	(751		)	(5,645		)	(8,331		)
HCP’s share of EBITDA from unconsolidated joint ventures(1)	9,901			3,599			36,067			15,963
Other joint venture adjustments	642			—			2,251			—
EBITDA	241,447			413,141			1,264,370			792,833
Minority interests’ share of earnings	6,364			3,347			24,356			14,805
Impairments	—			4,870			—			9,581
Gains on sales of real estate and real estate interest	(11,315		)	(228,682		)	(413,725		)	(275,283		)
Adjusted EBITDA	$	236,496		$	192,676		$	875,001		$	541,936

(1) Includes pro-rata share of our unconsolidated institutional joint ventures, HCP Ventures II, HCP Ventures III and HCP Ventures IV. Prior to November 30, 2006, HCP MOP was an unconsolidated joint venture formed between the Company and an affiliate of GE, for which the Company was the managing member and had a 33% interest therein. HCP’s share of EBITDA and interest expense from HCP MOP excludes amounts subsequent to HCP’s acquisition of GE’s interest.

53

Supplemental Financial Measures Disclosures

Fixed Charges.  Total interest expense plus capitalized interest plus preferred stock dividends.  The Company uses Fixed Charges to measure its interest payments on outstanding debt and dividends to its preferred stockholders for purposes of presenting Fixed Charge Coverage and Adjusted Fixed Charge Coverage.  However, the usefulness of Fixed Charges is limited as, among other things, it does not include all contractual obligations.  The Company’s computation of Fixed Charges should not be considered an alternative to fixed charges as defined by Item 503(d) of Regulation S-K and may not be comparable to fixed charges reported by other companies.

Funds From Operations (“FFO”).  The Company believes that net income as defined by GAAP is the most appropriate earnings measure.  The Company also believes that Funds From Operations, or FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), FFO applicable to common shares, Diluted FFO applicable to common shares, and Basic and Diluted FFO per common share are important non-GAAP supplemental measures of operating performance for a real estate investment trust.  Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time.  However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a real estate investment trust that use historical cost accounting for depreciation could be less informative.  Thus, NAREIT created FFO as a supplemental measure of operating performance for real estate investment trusts that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined as net income, computed in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization, with adjustments to derive the Company’s pro rata share of FFO from consolidated and unconsolidated joint ventures.  Adjustments for joint ventures are calculated to reflect FFO on the same basis.  The Company believes that the use of FFO, combined with the required GAAP presentations, improves the understanding of operating results of real estate investment trusts among investors and makes comparisons of operating results among such companies more meaningful.  The Company considers FFO to be a useful measure for reviewing comparative operating and financial performance because, by excluding gains or losses related to sales of previously depreciated operating real estate assets and real estate depreciation and amortization, FFO can help investors compare the operating performance of a real estate investment trust between periods or as compared to other companies. While FFO is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. FFO also does not consider the costs associated with capital expenditures related to the Company’s real estate assets nor is FFO necessarily indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of FFO may not be comparable to FFO reported by other real estate investment trusts that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently from the Company. For a reconciliation of FFO to net income, please refer to the slide in this supplemental information package captioned “Consolidated Funds From Operations.”

FFO Payout Ratio per Common Share.  Dividends declared per common share divided by Diluted FFO per common share for a given period.  The Company believes the FFO Payout Ratio per Common Share provides investors relevant and useful information because it measures the portion of FFO being declared as dividends to common stockholders.  FFO Payout Ratio per Common Share is subject to the same limitations noted in the definition of FFO above.

Net Operating Income from Continuing Operations (“NOI”).  A non-GAAP supplemental financial measure used to evaluate the operating performance of real estate properties and SPP.  The Company defines NOI as rental revenues, including tenant reimbursements and income from direct financing leases, less property level operating expenses. NOI excludes gain on sale of real estate interest, depreciation and amortization, general and administrative expenses, impairments, interest expense and discontinued operations.  The Company believes NOI provides investors relevant and useful information because it measures the operating performance of the Company’s real estate at the property level on an unleveraged basis.  NOI, as adjusted, is calculated as NOI eliminating the effects of straight-line rents, amortization of above and below market lease intangibles, and lease termination fees. NOI, as adjusted, is sometimes referred as “adjusted NOI” or “cash basis NOI.”  The Company uses NOI and NOI, as adjusted, to make decisions about resource allocations, to assess and compare property level performance, and evaluate SPP.  The Company believes that net income is the most directly comparable GAAP measure to NOI.  NOI should not be viewed as an alternative measure of operating performance to net income as defined by GAAP since it does not reflect the aforementioned excluded items.  Further, NOI may not be comparable to that of other real estate investment trusts, as they may use different methodologies for calculating NOI.

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The following table reconciles NOI from net income for the three months and years ended December 31, 2007 and 2006:

	Three Months Ended						Year Ended
	December 31,						December 31,
In thousands	2007			2006			2007			2006
Net income	$	50,295		$	241,274		$	589,015		$	417,547
Investment management fee income	(1,519		)	(1,220		)	(13,581		)	(3,895		)
Interest expense	101,105			109,882			357,024			211,869
Depreciation and amortization	79,232			53,184			274,348			132,916
General and administrative	17,463			22,163			70,930			47,195
Impairments	—			3,577			—			3,577
Equity income from unconsolidated joint ventures	(1,887		)	(751		)	(5,645		)	(8,331		)
Gain on sale of real estate interest	—			—			(10,141		)	—
Interest and other income	(20,921		)	(8,852		)	(75,676		)	(34,816		)
Minority interests’ share of earnings	6,364			3,347			24,356			14,805
Total discontinued operations	(11,493		)	(243,355		)	(428,252		)	(338,392		)
Net operating income (“NOI”)	$	218,639		$	179,249		$	782,378		$	442,475

55

Supplemental Financial Measures Disclosures

The information in this supplemental information package should be read in conjunction with the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other information filed with the SEC.  The Reporting Definitions and Supplemental Financial Measures Disclosures are an integral part of the information presented herein.

On our internet website, www.hcpi.com, you can access, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.  The information contained on our website is not incorporated by reference into, and should not be considered a part of, this supplemental information package.  In addition, the SEC maintains an internet website that contains reports, proxy and information statements, and other information regarding issuers, including HCP, that file electronically with the SEC at www.sec.gov.

For more information, contact Mark A. Wallace, Executive Vice President, Chief Financial Officer and Treasurer at (562) 733-5100.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this supplemental information which are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include the Company’s estimate of (i) yields, (ii) completion dates, stabilization dates, rentable square feet and total investment for development projects in progress, and (iii) rentable square feet for land held for future development. These statements are made as of the date hereof and are subject to known and unknown risks, uncertainties, assumptions and other factors–many of which are out of the Company’s control and difficult to forecast–that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks and uncertainties include but are not limited to: the Company’s ability to access external sources of capital when desired and on reasonable terms; the Company’s ability to manage its indebtedness levels; the Company’s ability to maintain its credit ratings; the Company’s ability to achieve its expected benefits from acquisitions, including integrating and preserving the goodwill of those companies; competition for lessees and mortgagors (including new leases and mortgages and the renewal or rollover of existing leases); continuing reimbursement uncertainty in the skilled nursing segment; competition in the senior housing segment specifically and in the healthcare industry in general; the Company’s ability to acquire, sell or lease facilities and the timing of acquisitions, sales and leasings; the Company’s ability to realize the benefits of its mezzanine investments; changes in the financial condition of the Company’s lessees and obligors; changes in healthcare laws and regulations and other changes in the healthcare industry which affect the operations of the Company’s lessees or obligors; changes in the Company’s management; litigation claims and developments; costs of compliance with building regulations; changes in tax laws and regulations; changes in rules governing financial reporting, including new accounting pronouncements; changes in economic conditions, including changes in interest rates and the availability and cost of capital, which affect opportunities for profitable investments; and other risks  described from time to time in the Company’s Securities and Exchange Commission filings.  The Company assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements as a result of new information or new or future developments.

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