HCP, INC. (Form: 10-Q, Received: 05/05/2015 08:47:17)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 3 1 , 201 5 .


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-08895

HCP, INC.

(Exact name of registrant as specified in its charter)


Maryland		33-0091377
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1920 Main Street, Suite 1200

Irvine, CA 92614

(Address of principal executive offices)

(949) 407-0700

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer ☒		Accelerated Filer ☐

Non-accelerated Filer ☐		Smaller Reporting Company ☐
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES ☐ NO ☒

As of April 30 , 2015, there were 461,676,261 shares of the registrant’s $1.00 par value common stock outstanding.

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HCP, I nc .

CONSOLIDATED BALANCE SHEET S

(In thousands, except share and per share data)

(Unaudited)


	March 31,		December 31,
	2015		2014
ASSETS
Real estate:
Buildings and improvements	$	10,980,848	$	10,972,973
Development costs and construction in progress		293,492		275,233
Land		1,882,476		1,889,438
Accumulated depreciation and amortization		(2,319,791)		(2,250,757)
Net real estate		10,837,025		10,886,887
Net investment in direct financing leases		6,827,596		7,280,334
Loans receivable, net		1,025,278		906,961
Investments in and advances to unconsolidated joint ventures		642,795		605,448
Accounts receivable, net of allowance of $3,629 and $3,785 , respectively		40,153		36,339
Cash and cash equivalents		137,170		183,810
Restricted cash		47,279		48,976
Intangible assets, net		458,249		481,013
Other assets, net		1,008,897		940,172
Total assets (1)	$	21,024,442	$	21,369,940
LIABILITIES AND EQUITY
Bank line of credit	$	358,555	$	838,516
Term loans		530,038		213,610
Senior unsecured notes		8,022,533		7,626,194
Mortgage debt		979,890		984,431
Other debt		95,747		97,022
Intangible liabilities, net		80,387		84,723
Accounts payable and accrued liabilities		314,226		432,934
Deferred revenue		87,420		95,411
Total liabilities (2)		10,468,796		10,372,841
Commitments and contingencies
Common stock, $1.00 par value: 750,000,000 shares authorized; 461,583,731 and 459,746,267 shares issued and outstanding , respectively		461,584		459,746
Additional paid-in capital		11,493,988		11,431,987
Cumulative dividends in excess of earnings		(1,633,841)		(1,132,541)
Accumulated other comprehensive loss		(28,461)		(23,895)
Total stockholders’ equity		10,293,270		10,735,297
Joint venture partners		75,397		73,214
Non-managing member unitholders		186,979		188,588
Total noncontrolling interests		262,376		261,802
Total equity		10,555,646		10,997,099
Total liabilities and equity	$	21,024,442	$	21,369,940

(1) The Company’s consolidated total assets at March 31 , 201 5 and December 31, 2014 include assets of certain variable interest entities (“VIEs”) that can only be used to settle the liabilities of those VIEs. Total assets at March 31, 2015 include VIE assets as follows: buildings and improvements $ 6 99 million ; land $ 11 4 million; accumulated depreciation and amortization $1 2 0 million; accounts receivable $ 15 million; cash $ 36 million; and other assets , net $ 1 4 million. Total assets at December 31, 201 4 include VIE assets as follows: buildings and improvements $6 77 million ; land $113 million; accumulated depreciation and amortization $1 11 million; accounts receivable $ 5 million; cash $4 2 million; and other assets , net of $ 23 million from VIEs. See Note 1 7 to the Consolidated Financial Statements for additional information.

(2) The Company’s consolidated total liabilities at March 3 1 , 201 5 and December 31, 201 4 include certain liabilities of VIEs for which the VIE creditors do not have recourse to HCP, Inc. Total liabilities at March 3 1 , 201 5 include accounts payable and accrued liabilities of $ 3 3 million and deferred revenue of $9 million from VIEs. Total liabilities at December 31, 201 4 include accounts payable and accrued liabilities of $ 34 million and deferred revenue of $1 2 million from VIEs. See Note 1 7 to the Consolidated Financial Statements for additional information.

See accompanying Notes to the Consolidated Financial Statements.

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HCP, I nc .

CONSOLIDATED STATE MENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended March 31,
	2015		2014
Revenues:
Rental and related revenues	$	275,082	$	284,823
Tenant recoveries		29,896		25,434
Resident fees and services		105,013		38,053
Income from direct financing leases		167,078		164,537
Interest income		33,262		16,696
Investment management fee income		460		449
Total revenues		610,791		529,992
Costs and expenses:
Interest expense		116,780		106,638
Depreciation and amortization		114,522		107,388
Operating		132,031		75,707
General and administrative		24,773		20,899
Acquisition and pursuit costs		3,390		495
Impairments		478,464		—
Total costs and expenses		869,960		311,127
Gains on sales of real estate, net of income taxes		6,264		—
Other income, net		1,724		1,930
(Loss) income before income taxes and equity income from unconsolidated joint ventures		(251,181)		220,795
Income taxes benefit (provision)		77		(1,446)
Equity income from unconsolidated joint ventures		13,601		14,528
(Loss) income from continuing operations		(237,503)		233,877

Discontinued operations:
Income before gain on sales of real estate, net of income taxes		—		1,736
Gain on sales of real estate, net of income taxes		—		28,010
Total discontinued operations		—		29,746
Net (loss) income		(237,503)		263,623
Noncontrolling interests’ share in earnings		(3,111)		(4,512)
Net (loss) income attributable to HCP, Inc.		(240,614)		259,111
Participating securities’ share in earnings		(335)		(1,064)
Net (loss) income applicable to common shares	$	(240,949)	$	258,047

Basic earnings per common share:
Continuing operations	$	(0.52)	$	0.50
Discontinued operations		—		0.06
Net (loss) income applicable to common shares	$	(0.52)	$	0.56
Diluted earnings per common share:
Continuing operations	$	(0.52)	$	0.50
Discontinued operations		—		0.06
Net (loss) income applicable to common shares	$	(0.52)	$	0.56
Weighted average shares used to calculate earnings per common share:
Basic		460,880		457,294
Diluted		460,880		457,674
Dividends declared per common share	$	0.565		0.545

See accompanying Notes to the Consolidated Financial Statements.

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HCP, I nc .

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOM E

(In thousands)

(Unaudited)


	Three Months Ended March 31,
	2015		2014
Net (loss) income	$	(237,503)	$	263,623

Other comprehensive loss:
Change in net unrealized gains (losses) on securities:
Unrealized gains (losses)		(5)		3
Change in net unrealized gains (losses) on cash flow hedges:
Unrealized gains (losses)		2,339		(695)
Reclassification adjustment realized in net (loss) income		(6)		605
Change in Supplemental Executive Retirement Plan obligation		69		54
Foreign currency translation adjustment		(6,963)		(50)
Total other comprehensive loss		(4,566)		(83)

Total comprehensive (loss) income		(242,069)		263,540
Total comprehensive income attributable to noncontrolling interests		(3,111)		(4,512)
Total comprehensive (loss) income attributable to HCP, Inc.	$	(245,180)	$	259,028

See accompanying Notes to the Consolidated Financial Statements.

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HCP, I nc .

CONSOLIDATED STATEMENTS OF EQUIT Y

(In thousands , except per share data )

(Unaudited)


						Cumulative		Accumulated
				Additional		Dividends		Other		Total		Total
	Common Stock			Paid-In		In Excess		Comprehensive		Stockholders’		Noncontrolling		Total
	Shares	Amount		Capital		Of Earnings		Loss		Equity		Interests		Equity
January 1, 2015	459,746	$	459,746	$	11,431,987	$	(1,132,541)	$	(23,895)	$	10,735,297	$	261,802	$	10,997,099
Net loss	—		—		—		(240,614)		—		(240,614)		3,111		(237,503)
Other comprehensive loss	—		—		—		—		(4,566)		(4,566)		—		(4,566)
Issuance of common stock, net	1,155		1,155		35,657		—		—		36,812		(1,608)		35,204
Repurchase of common stock	(128)		(128)		(5,968)		—		—		(6,096)		—		(6,096)
Exercise of stock options	811		811		26,410		—		—		27,221		—		27,221
Amortization of deferred compensation	—		—		6,165		—		—		6,165		—		6,165
Common dividends ($0.565 per share)	—		—		—		(260,686)		—		(260,686)		—		(260,686)
Distributions to noncontrolling interests	—		—		(263)		—		—		(263)		(3,861)		(4,124)
Issuance of noncontrolling interests	—		—		—		—		—		—		2,932		2,932
March 31, 2015	461,584	$	461,584	$	11,493,988	$	(1,633,841)	$	(28,461)	$	10,293,270	$	262,376	$	10,555,646


						Cumulative		Accumulated
				Additional		Dividends		Other		Total		Total
	Common Stock			Paid-In		In Excess		Comprehensive		Stockholders’		Noncontrolling		Total
	Shares	Amount		Capital		Of Earnings		Loss		Equity		Interests		Equity
January 1, 2014	456,961	$	456,961	$	11,334,041	$	(1,053,215)	$	(14,487)	$	10,723,300	$	207,834	$	10,931,134
Net income	—		—		—		259,111		—		259,111		4,512		263,623
Other comprehensive loss	—		—		—		—		(83)		(83)		—		(83)
Issuance of common stock, net	1,287		1,287		31,419		—		—		32,706		(73)		32,633
Repurchase of common stock	(208)		(208)		(7,860)		—		—		(8,068)		—		(8,068)
Exercise of stock options	4		4		91		—		—		95		—		95
Amortization of deferred compensation	—		—		4,890		—		—		4,890		—		4,890
Common dividends ($0.545 per share)	—		—		—		(250,198)		—		(250,198)		—		(250,198)
Distributions to noncontrolling interests	—		—		—		—		—		—		(3,975)		(3,975)
Issuance of noncontrolling interests	—		—		—		—		—		—		1,193		1,193
Purchase of noncontrolling interests	—		—		—		—		—		—		(1,671)		(1,671)
March 31, 2014	458,044	$	458,044	$	11,362,581	$	(1,044,302)	$	(14,570)	$	10,761,753	$	207,820	$	10,969,573

See accompanying Notes to the Consolidated Financial Statements.

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HCP, Inc .

CONSOLIDATED STATEMENTS OF CASH FLOW S

(In thousands)

(Unaudited)


	Three Months Ended March 31,
	2015		2014
Cash flows from operating activities:
Net (loss) income	$	(237,503)	$	263,623
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization of real estate, in-place lease and other intangibles		114,522		107,388
Amortization of market lease intangibles, net		(378)		(168)
Amortization of deferred compensation		6,165		4,890
Amortization of deferred financing costs, net		4,752		4,965
Straight-line rents		(9,546)		(13,968)
Loan and direct financing lease interest accretion		(21,032)		(21,503)
Deferred rental revenues		(902)		(145)
Equity income from unconsolidated joint ventures		(13,601)		(14,528)
Distributions of earnings from unconsolidated joint ventures		1,159		2,430
Lease termination income, net		(1,103)		—
Gain on sales of real estate		(6,264)		(28,010)
Marketable securities and other losses, net		134		63
Impairments		478,464		—
Changes in:
Accounts receivable, net		(3,814)		(1,045)
Other assets		(5,839)		(8,942)
Accounts payable and accrued liabilities		(75,146)		(47,869)
Net cash provided by operating activities		230,068		247,181
Cash flows from investing activities:
Acquisitions and pending acquisitions of real estate		(71,373)		(5,473)
Development of real estate		(61,805)		(33,983)
Leasing costs and tenant and capital improvements		(11,540)		(12,405)
Proceeds from sales of real estate, net		—		36,753
Contributions to unconsolidated joint ventures		(27,279)		—
Distributions in excess of earnings from unconsolidated joint ventures		1,022		772
Principal repayments on loans receivable		17,496		3,133
Investments in loans receivable and other		(176,504)		(42,281)
Decrease in restricted cash		1,697		6,933
Net cash used in investing activities		(328,286)		(46,551)
Cash flows from financing activities:
Net repayments under bank line of credit		(455,506)		—
Borrowings under term loan		333,014		—
Issuance of senior unsecured notes		595,110		350,000
Repayments of senior unsecured notes		(200,000)		(400,000)
Repayments of mortgage debt		(6,354)		(162,739)
Deferred financing costs		(7,687)		(9,239)
Issuance of common stock and exercise of options		62,425		32,728
Repurchase of common stock		(6,096)		(8,068)
Dividends paid on common stock		(260,686)		(250,198)
Issuance of noncontrolling interests		1,626		41
Distributions to and purchase of noncontrolling interests		(4,124)		(3,975)
Net cash provided by (used in) financing activities		51,722		(451,450)
Effect of foreign exchange on cash and cash equivalents		(144)		2
Net decrease in cash and cash equivalents		(46,640)		(250,818)
Cash and cash equivalents, beginning of period		183,810		300,556
Cash and cash equivalents, end of period	$	137,170	$	49,738

See accompanying Notes to the Consolidated Financial Statements.

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HCP, I nc .

NOTE S TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. Business

HCP, Inc., a Standard & Poor’s (“S&P”) 500 company, together with its consolidated entities (collectively, “HCP” or the “Company”), invests primarily in real estate serving the healthcare industry in the United States (“U.S.”). The Company is a Maryland corporation organized in 1985 and qualif ies as a self-administered real estate investment trust (“REIT”) . The Company is headquartered in Irvine, California, with offices in Nashville, Los Angeles, San Francisco and London . The Company acquires, develops, leases, manages and disposes of healthcare real estate, and provides financing to healthcare providers. The Company’s diverse portfolio is comprised of investments in the following healthcare segments: (i) senior housing, (ii) post-acute/skilled nursing, (iii) life science, (iv) medical office and (v) hospital.

NOTE 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Management is required to make estimates and assumptions in the preparation of financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from management’s estimates.

The consolidated financial statements include the accounts of HCP, Inc., its wholly-owned subsidiaries, joint ventures and VIEs that it controls through voting rights or other means. Intercompany transactions and balances have been eliminated upon consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows have been included. Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 201 5 . The accompanying unaudited interim financial information should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”).

Recent Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board ( the “FASB”) issued Accounting Standards Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 simplifies the presentation of debt issuance costs and requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability ( consistent with debt discounts ) . ASU 2015-03 is effective for fiscal years, and interim periods within, beginning after December 15, 2015. Early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2015-03 on January 1, 2016 to the Company’s consolidated financial position or results of operations.

In February 2015, the FASB issued Accounting Standards Update No. 2015-2, Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 requires amendments to both the variable interest entity and voting models. The amendments (i) rescind the indefinite deferral of certain aspects of accounting standards relating to consolidations and provide a permanent scope exception for registered money market funds and similar unregistered money market funds, (ii) modify (a) the identification of variable interests (fees paid to a decision maker or service provider), (b) the VIE characteristics for a limited partnership or similar entity and (c) the primary beneficiary determination under the VIE model, and (iii) eliminate the presumption within the current voting model that a general partner controls a limited partnership or similar entity. ASU 2015-02 is effective for fiscal years, and interim periods within, beginning after

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December 15, 2015. Early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2015-02 on January 1, 2016 to the Company’s consolidated financial position or results of operations.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). This update changes the guidance for recognizing revenue. ASU 2014-09 provides guidance for revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for fiscal years and interim periods beginning after December 15, 201 6, although on April 29, 2015, the FASB issued a proposal for public comment to defer the effective date by one year . Early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2014-09 on its current adoption date of January 1, 201 7 to the Company’s consolidated financial position or results of operations .

Reclassification

Certain amounts in the Company’s consolidated financial statements have been reclassified for prior periods to conform to the current period presentation. As a result of the Company’s increasing transaction volume, “acquisition and pursuit costs” are separately presented on the consolidated statements of operations from “general and administrative expenses.”

NOTE 3 . Brookdale Lease Amendments and Terminations and the Formation of Two RIDEA Joint Ventures (“Brookdale Transaction”)

On July 31, 2014, Brookdale Senior Living (“Brookdale”) completed its acquisition of Emeritus Corporation (“Emeritus”). On August 29, 2014, the Company and Brookdale completed a multiple-element transaction with three major components:

amended existing lease agreements on 153 HCP-owned senior housing communities previously leased and operated by Emeritus , that includ ed the termination of embedded purchase options in these leases relating to 30 properties and future rent reductions;

terminated existing lease agreements on 49 HCP-owned senior housing properties previously leased and operated by Emeritus, that included the termination of embedded purchase options in these leases relating to 19 properties. At closing, the Company contributed 48 of these properties to a newly formed consolidated partnership that is operated under a structure permitted by the Housing and Economic Recovery Act of 2008 (commonly referred to as “RIDEA”) (“RIDEA Subsidiaries”) ; the 49th property was contributed on January 1, 2015 . Brookdale owns a 20% noncontrolling equity interest in the RIDEA Subsidiaries and manages the facilities on behalf of the partnership ; and

entered into new unconsolidated joint venture s that own 14 campuses of continuing care retirement communities (“CCRC”) in a RIDEA structure (collectively, the “CCRC JV”) with the Company owning a 49% equity interest and Brookdale owning a 51% equity interest . Brookdale manage s these communities on behalf of this partnership .

NOTE 4 . Real Estate Property Investments

2015 Acquisitions

A summary of real estate acquisitions for the three months ended March 31, 2015 follows (in thousands):


	Consideration						Assets Acquired
			Liabilities		Noncontrolling				Net
Segment	Cash Paid		Assumed		Interest		Real Estate		Intangibles
Senior housing	$	34,068	$	626	$	1,306	$	34,350	$	1,650
Medical office		180		—		—		180		—
	$	34,248	$	626	$	1,306	$	34,530	$	1,650

Subsequent Acquisitions . I n April 2015, the Company convert ed £174 million of its HC-One Facility (see Note 7) to fee ownership in a portfolio of 36 care homes located throughout the United Kingdom (“ U.K . ”).

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Pending Acquisitions. In March 2015, HCP and Brookdale entered into a definitive agreement to acquire from Chartwell Retirement Residences a portfolio of 35 private pay senior housing communities , including two leasehold interests, representing 5,025 units (the “ Chartwell Portfolio”) for $849 million. The Chartwell Portfolio will be acquired in a RIDEA structure and Brookdale will acquir e a 10% noncontrolling interest. Brookdale has operated these communities since 2011 after its acquisition of Horizon Bay, and will continue to manage the communities post-closing under a long-term management agreement , which is cancellable under certain conditions subject to a fee if terminated within the next seven years . The Company made a deposit of $37 million related to this pending acquisition, which is included in other assets, net. The closing of this acquisition is expected in the third quarter of 2015 and remains subject to regulatory approvals and other customary closing conditions .

In April 2015, the Company acquire d a medical office building (“MOB”) for $161 million. The MOB is located in Philadelphia, Pennsylvania.

In April 2015, the Company exercise d its purchase option right from a $41 million development loan to acquire a newly developed assisted living and memory care facility in Germantown, Tennessee for $72 million. The facility will be managed by Brookdale and placed in a RIDEA structure with Brookdale acquiring a 10% noncontrolling interest. The Company expects to close this acquisition in the second quarter of 2015, subject to customary closing conditions .

2014 Acquisitions

A summary of real estate acquisitions for the three months ended March 3 1 , 201 4 follows (in thousands):


	Consideration						Assets Acquired
			Liabilities		Noncontrolling
Segment	Cash Paid		Assumed		Interest		Real Estate
Senior housing	$	5,473	$	1	$	1,152	$	6,626

Completed Developments

During the three months ended March 31, 2014, the Company placed in service the following: (i) two life science facilities, (ii) a medical office building and (iii) a post-acute/skilled nursing facility . These completed development s represent $ 25 million of gross real estate on the Company’s c onsolidated b alance s heets as of December 31, 2014. There were no completed developments during the three months ended March 31, 2015.

Construction, Tenant and Other Capital Improvements

A summary of the Company’s funding for construction, tenant and other capital improvement s follows (in thousands ):


	Three Months Ended March 31,
Segment	2015		2014
Senior housing	$	16,172	$	6,950
Post-acute/skilled nursing		1,960		2,381
Life science		27,391		26,762
Medical office		19,233		12,975
Hospital		37		—
	$	64,793	$	49,068

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NOTE 5 . Dispositions of Real Estate and Discontinued Operations

During the three months ended March 31, 2015 , the Company sold eight senior housing facilities for $51 million resulting from Brookdale’s purchase option exercise it received as part of the Brookdale Transaction .

During the three months ended March 3 1 , 201 4 , the Company sold two post-acute/skilled nursing facilities for $22 million and a hospital for $17 million .

The Company separately presented as discontinued operations the results of operations for all consolidated assets disposed of and all properties held for sale, if any, prior to the adoption of ASU 2014-08 , Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity , on April 1, 2014 (the “adoption date”). The amounts included in discontinued operations, for the three months March 31, 201 4 , represent the activity for properties sold prior to the adoption date. No properties sold subsequent to the adoption date met the new criteria for reporting discontinued operations.

The following table summarizes operating income from discontinued operations and gain on sales of real estate included in discontinued operations (dollars in thousands):



	Three Months Ended March 31, 2014
Rental and related revenues	$	1,810

Operating expenses		54
Other expenses, net		20
Income before gain on sales of real estate, net of income taxes	$	1,736
Gain on sales of real estate, net of income taxes	$	28,010

Number of properties included in discontinued operations		3

NOTE 6 . Net Investment in Direct Financing Leases

The components of net investment in direct financing leases (“ DFLs ”) consisted of the following (dollars in thousands):


	March 31,		December 31,
	2015		2014
Minimum lease payments receivable	$	26,825,121	$	24,182,525
Estimated residual values		3,910,830		4,126,426
Less unearned income		(23,908,355)		(21,028,617)
Net investment in direct financing leases	$	6,827,596	$	7,280,334
Properties subject to direct financing leases		363		363

HCR ManorCare, Inc.

The Company acquired 334 post-acute, skilled nursing and assisted living facilities in its 2011 transaction with HCR Manor C are Inc. (“HCRMC”) and entered into a triple-net lease agreement (the “Master Lease”) with a subsidiary (“Lessee”) of HCRMC .

During the first quarter of 2015, the Company and HCRMC agreed to market for sale the real estate and operations associated with 50 non-strategic assets that are under the Master Lease. HCRMC will receive a n annual rent reduction under the Master L ease based on 7.75% of the net sales proceeds received by HCP . The asset sales are expected to occur during the second half of 2015 and the first quarter of 2016.

On March 29, 2015, certain subsidiaries of the Company entered into an amendment to the Master Lease (the “ HCRMC Lease Amendment”) effective April 1, 2015. The HCRMC Lease Amendment reduced initial annual rent by a net $68 million from $541 million to $473 million. Commencing on April 1, 2016, the minimum rent escalation shall be reset to

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3 .0 % for each lease year through the expiration of the initial term of each applicable pool of facilities . Prior to t he HCRMC Lease Amendment, rent payments would have increased 3.5% on April 1, 2015 and 2016 and 3.0% thereafter. The initial term was extended five years to an average of 16 years and the extension options’ aggregate term s remained the same .

As consideration for the rent reduction , the Company received a Deferred Rent Obligation from Lessee equal to an aggregate amount of $525 million , which was allocated into two tranches (i) a Tranche A Deferred Rent Obligation of $275 million and (ii) a Tranche B Deferred Rent Obligation of $250 million. Until the entire Tranche A Deferred Rent Obligation is paid in full, Lessee will make rental payments equal to 6.9% of its outstanding amount ( representing $19 million) for the initial lease year (the “Tranche A Current Payment”) increased each year thereafter by 3.0% . Commencing on April 1, 2016, until the Tranche B Deferred Rent Obligation is paid in full, the outstanding principal balance of Tranche B Deferred Rent Obligation will be increased annually by (i) 3.0% ini tially, (ii) 4.0% commencing on April 1, 2019, (iii) 5.0% commencing on April 1, 2020, and (iv) 6.0% com mencing on April 1, 2021 and for the remainder of its term. The Deferred Rent Obligation is due and payable on the earlier of (i) certain capital or liquidity events of HCRMC, including an IPO or sale, or (ii) March 31, 2029 , which is not subject to any extensions. The HCRMC Lease Amendment also imposes certain restrictions on Lessee and HCRMC until the Deferred Rent Obligation is paid in full, including with respect to the payment of dividends and the transfer of interest in HCRMC.

Additionally, HCRMC agreed to sell, and HCP agreed to purchase, nine post-acute facilities for an aggregate purchase price of $275 million . The proceeds from the nine facilities will be used to reduce the Tranche A Deferred Rent Obligation as the sales are consummated. The closing of the sales of these facilities will be subject to certain customary conditions and approvals. If the closing with respect to any of these facilities has not occurred by April 1, 201 6 , the obligation to purchase any unsold facilities will terminate. Following the sale of a facility, Lessee will lease such facility from the Company pursuant to the Master Lease. The nine facilities will contribute an aggregate of $19 million of annual rent (subject to escalation) under the Master Lease.

During the three months ended March 31, 2015, t he Company record ed a n et impairment charge of $4 78 million related to its DFL investments with HCRMC. The impairment charge reduced the carrying value of the HCRMC DFL investments from $6.6 billion to $6.1 billion, based on the present value of the future lease payments effective April 1, 2015 under the HCRMC Lease Amendment discounted at the original DFL investments ’ effective lease rate . There is no related allowance for credit losses recorded within the carrying value of the HCRMC DFL investments.

See Note 8 for additional discussion on the Company’s 9.4% equity interest in HCRMC and the U.S. Department of Justice action related to HCRMC .

Direct Financing Lease Internal Ratings

The following table summarizes the Company’s internal ratings for net investment in DFLs at March 31, 2015 ( dollars in thousands):


	Carrying		Percentage of DFL	Internal Ratings
Investment Type	Amount		Portfolio	Performing DFLs		Watch List DFLs		Workout DFLs
Senior housing	$	1,562,875	23	$	1,193,903	$	368,972	$	—
Post-acute/skilled nursing		5,140,830	75		5,140,830		—		—
Hospital		123,891	2		123,891		—		—
	$	6,827,596	100	$	6,458,624	$	368,972	$	—

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Beginning September 30, 2013, the Company placed a 14 -property senior housing DFL (the “DFL Portfolio”) on non-accrual status. The Company determined that the collection of all rental payments was and continues to be no longer reasonably assured; therefore, rental revenue for the DFL Portfolio is recognized on a cash basis. The Company re-assessed the DFL Portfolio for impairment on March 31, 201 5 and determined that the DFL Portfolio was not impaired based on its belief that : (i) it was not probable that it will not collect all of the rental payments under the terms of the lease; and (ii) the fair value of the underlying collateral exceeded the DFL Portfolio’s carrying amount. The fair value of the DFL Portfolio was estimated based on a discounted cash flow model, the inputs to which are considered to be a Level 3 measurement within the fair value hierarchy. Inputs to this valuation model include real estate capitalization rates, industry growth rates and operating margins, some of which influence the Company’s expectation of future cash flows from the DFL Portfolio and, accordingly, the fair value of its investment . During the three months ended March 31, 2015 and 2014 , the Company recognized DFL income of $ 4 million and $5 million, respectively, and received cash payments of $ 5 million and $6 million, respectively, from the DFL Portfolio. The carrying value of the DFL Portfolio was $3 69 million and $37 0 million at March 31, 2015 and December 31, 2014 , respectively. At March 31, 2015 , the Company continues to believe that the fair value of the underlying collateral is in excess of the carrying value of this DFL .

As a result of HCRMC related events , the Company reassessed the collectability of all contractual rent payments under the amended Master Lease. The Company has concluded that the collection of the amended rent payments is reasonably assured and has assigned an internal rating of “ Performing ” to its HCRMC DFL investments .

NOTE 7 . Loans Receivable

The following table summarizes the Company’s loans receivable (in thousands):


	March 31, 2015						December 31, 2014
	Real Estate		Other				Real Estate		Other
	Secured		Secured		Total		Secured		Secured		Total
Mezzanine	$	—	$	930,587	$	930,587	$	—	$	799,064	$	799,064
Other (1)		122,514		—		122,514		135,363		—		135,363
Unamortized discounts, fees and costs		—		(14,413)		(14,413)		—		(14,056)		(14,056)
Allowance for loan losses		—		(13,410)		(13,410)		—		(13,410)		(13,410)
	$	122,514	$	902,764	$	1,025,278	$	135,363	$	771,598	$	906,961

(1) Represents construction loans outstanding related to senior housing development projects. At March 31, 2015 , the Company had $ 8 million remaining under its commitments to fund development projects.

Loans Receivable Internal Ratings

The following table summarizes the Company’s internal ratings for loans receivable at March 31, 2015 ( dollars in thousands):


	Carrying		Percentage of Loan	Internal Ratings
Investment Type	Amount		Portfolio	Performing Loans		Watch List Loans		Workout Loans
Real estate secured	$	122,514	12	$	122,514	$	—	$	—
Other secured		902,764	88		885,777		—		16,987
	$	1,025,278	100	$	1,008,291	$	—	$	16,987

Other Secured Loans

HC-One Facility. In November 2014, the Company was the lead investor in the financing for Formation Capital and Safanad’s acquisition of NHP, a company that, at closing, owned 273 nursing and residential care homes representing over 12,500 beds in the U.K. principally operated by HC-One. The Company provided a loan facility (the “ HC-One Facility”), secured by substantially all of NHP’s assets, totaling £395 million, with £363 million ($574 million) drawn at closing. The HC-One Facility has a five -year term and was initially funded by a £355 million draw on the Company’s revolving line of

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credit facility that is discussed in Note 11. In February 2015, the Company increased the HC-One Facility by £108 million ( $164 million) to £502 million ( $795 million) , in conjunction with HC-One’s acquisition of Meridian Healthcare.

Tandem Health Care Loan. On July 31, 2012, the Company closed a mezzanine loan facility to lend up to $205 million to Tandem Health Care (“Tandem”), as part of the recapitalization of a post-acute/skilled nursing portfolio. The Company funded $100 million (the “First Tranche”) at closing and funded an additional $102 million (the “Second Tranche”) in June 2013. At March 31, 2015 , the loans were subordinate to $ 4 35 million of senior mortgage debt. The loans bear interest at fixed rates of 12% and 14% per annum for the First and Second Tranches, respectively. This loan facility matures in October 2017 , is prepayable at the borrower’s option and is secured by real estate partnership interests. The loans are subject to prepayment premiums if repaid on or before the third anniversary from the First Tranche closing date of July 31, 2012 .

Delphis Operations, L.P. Loan. The Company holds a secured term loan made to Delphis Operations, L.P. (“Delphis” or the “Borrower”) that is collateralized by assets of the Borrower. The Borrower’s collateral is comprised primarily of a partnership interest in an operating surgical facility that leases a property owned by the Company. This loan is on cost recovery status and has an internal rating of “ workout ” . The carrying value of the loan, net of an allowance for loan losses, was $17 million at both March 31, 2015 and December 31, 2014 . During the three months ended March 31, 2015 , the Company received cash payments of $0.5 million from the Borrower. At both March 31, 2015 and December 31, 2014, the allowance related to the Company’s senior secured loan to Delphis was $13 million with no additional allowances recognized during the three months ended March 31, 2015 or the year ended December 31, 2014. At March 31, 2015 , the Company believes the fair value of the collateral supporting this loan is in excess of its carrying value.

Subsequent Event . In April 2015, the Company converted £174 million of the HC-One Facility into a sale-leaseback transaction for 36 nursing and residential care homes located throughout the U.K. (see Note 4).

NOTE 8. Investments in and Advances to Unconsolidated Joint Ventures

On March 30, 2015, the Company and MBK Senior Living (“MBK”), a subsidiary of Mitsui & Co. Ltd, formed a new RIDEA joint venture (“MBK JV”) that owns three senior housing facilities with the Company and MBK each owning a 50% equity interest. MBK manages these communities on behalf of the joint venture. The Company contributed $ 27 million of cash and MBK contributed the three senior housing facilities with a fair value of $126 million, which were encumbered by $78 million of mortgage debt at closing. The Company accounts for this joint venture as an equity method investment.

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The Company owns interests in the following entities that are accounted for under the equity method at March 31, 2015 (dollars in thousands):


Entity (1)	Segment	Investment (2)		Ownership%
CCRC JV (3) (4)	senior housing	$	455,750		49
HCRMC	post-acute/skilled nursing		51,649		9.4
MBK JV	senior housing		27,279		50
HCP Ventures III, LLC	medical office		6,658		30
HCP Ventures IV, LLC (4)	medical office and hospital		26,206		20
HCP Life Science (5)	life science		69,758	50	–	63
Suburban Properties, LLC	medical office		5,312		67
Advances to unconsolidated joint ventures, net			183
		$	642,795

Edgewood Assisted Living Center, LLC	senior housing	$	(448)		45
Seminole Shores Living Center, LLC	senior housing		(635)		50
		$	(1,083)

(1)

These entities are not consolidated because the Company does not control, through voting rights or other means, the joint ventures.

(2)

Represents the carrying value of the Company’s investment in the unconsolidated joint ventures. Negative balances are recorded in accounts payable and accrued liabilities on the Company’s c onsolidated b alance s heets.

(3)

Includes two unconsolidated joint ventures in a RIDEA structure : (i) “ CCRC PropCo ” and (ii) “ CCRC OpCo ” .

(4)

Represents VIEs, see Note 17.

(5)

Includes three unconsolidated joint ventures between the Company and an institutional capital partner for which the Company is the managing member. HCP Life Science includes the following partnerships (and the Company’s ownership percentage): (i) Torrey Pines Science Center, LP ( 50% ); (ii) Britannia Biotech Gateway, LP ( 55% ); and (iii) LASDK, LP ( 63% ) .

Summarized combined financial information for the Company’s unconsolidated joint ventures follows (in thousands):


	March 31,		December 31,
	2015		2014
Real estate, net	$	5,230,958	$	5,134,587
Goodwill and other assets, net		5,048,919		4,986,310
Total assets	$	10,279,877	$	10,120,897

Capital lease obligations and debt	$	7,218,361	$	7,197,940
Accounts payable		1,093,859		1,015,912
Other partners’ capital		1,316,030		1,281,413
HCP’s capital (1)		651,627		625,632
Total liabilities and partners’ capital	$	10,279,877	$	10,120,897

(1)

The combined basis difference of the Company’s investments in these joint ventures of $10 million, as of March 31, 2015, is primarily attributable to goodwill, real estate, capital lease obligations, deferred tax assets and lease-related net intangibles.

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	Three Months Ended March 31,
	2015		2014
Total revenues	$	1,166,454	$	1,067,491
Income (loss) from discontinued operations		1,100		(2,600)
Net income		9,783		7,996
HCP’s share of earnings (1)		13,601		14,528
Fees earned by HCP		460		449
Distributions received by HCP		2,181		3,202

(1)

The Company’s joint venture interest in HCRMC is accounted for using the equity method and results in an ongoing elimination of DFL income proportional to HCP’s ownership in HCRMC. The elimination of the respective proportional lease expense at the HCRMC level in substance results in $16 million of DFL income that is recharacterized to the Company’s share of earnings from HCRMC (equity income from unconsolidated joint ventures) for both the three months ended March 31, 2015 and 2014.

Subsequent Event . On April 20, 2015 , t he U.S. Department of Justice (“DOJ”) unsealed a previously filed complaint in the United States District Court for the Eastern District of Virginia against HCRMC and certain of its affiliates in three consolidated cases following a civil investigation arising out of three lawsuits filed by former employees of HCRMC under the qui tam provisions of the federal False Claims Act. The DOJ’s complaint in intervention is captioned United States of America, ex rel. Ribik, Carson, and Slough v. HCR ManorCare, Inc., ManorCare Inc., HCR ManorCare Services, LLC and Heartland Employment Services, LLC (Civil Action Numbers: 1:09cv13; 1:11cv1054; 1:14cv1228 (CMH/TCB)). The complaint alleges that HCRMC submitted claims to Medicare for therapy services that were not covered by the skilled nursing facility benefit, were not medically reasonable and necessary, and were not skilled in nature, and therefore not entitled to Medicare reimbursement. While this litigation is at an early stage and HCRMC has indicated that it believes the claims are unjust and it will vigorously defend against them, a significant adverse judgment against HCRMC or significant settlement obligation could impact the carrying value of the Company’s investments in HCRMC’s operations and/or DFLs investment further ( see Note 6) .

NOTE 9 . Intangibles

At March 31, 2015 and December 31, 2014 , gross intangible lease assets, comprised of lease-up intangibles, above market tenant lease intangibles and below market ground lease intangibles, were $ 8 19 million and $ 8 30 million, respectively. At March 31, 2015 and December 31, 2014 , the accumulated amortization of intangible assets was $ 3 61 million and $34 9 million, respectively.

At March 31, 2015 and December 31, 2014 , gross intangible lease liabilities, comprised of below market lease intangibles and above market ground lease intangibles were $20 7 millio n and $20 9 million , respectively . At March 31, 2015 and December 31, 2014 , the accumulated amortization of intangible liabilities was $ 12 7 million and $1 24 million, respectively.

NOTE 10 . Other Assets

The Company’s other assets consisted of the following (in thousands):


	March 31,		December 31,
	2015		2014
Straight-line rent assets, net of allowance of $34,231 and $34,182 , respectively	$	359,311	$	355,864
Marketable debt securities, net		221,379		231,442
Leasing costs and inducements, net		158,347		146,500
Deferred financing costs, net		52,597		47,592
Goodwill		50,346		50,346
Other		166,917		108,428
Total other assets	$	1,008,897	$	940,172

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At March 31, 2015, other assets include a $37 million deposit related to the pending Portfolio acquisition from Chartwell Retirement Residences (see Note 4). At March 31, 2015 and December 31, 2014, other assets include a non-interest bearing short-term receivable of $22 million and $26 million, respectively, from Brookdale payable in eight quarterly installments. At March 31, 2015 and December 31, 2014, other assets include a loan receivable of $17 million and $15 million, respectively, from HCP Ventures IV, LLC, an unconsolidated joint venture (see Note 8) with an interest rate of 12% which matures in May 2016. The loan is senior to equity distributions to the Company’s joint venture partner.

Marketable debt securities, net primarily represent senior unsecured notes that mature in June 2020 and are non-callable through June 2016. These senior unsecured notes are accounted for as marketable debt securities and classified as held-to-maturity.

NOTE 11 . Debt

Bank Line of Credit and Term Loan s

T he Company ’s $2.0 billion unsecured revolving line of credit facility (the “Facility”) matures on March 31, 2018 and contains a one -year extension option. Borrowings under the Facility accrue interest at LIBOR plus a margin that depends upon the Company’s debt ratings. The Company pays a facility fee on the entire revolving commitment that depends on its debt ratings. Based on the Company’s debt ratings at March 31, 2015 , the margin on the Facility was 0.925% , and the facility fee was 0.15% . The Facility also includes a feature that will allow the Company to increase the borrowing capacity by an aggregate amount of up to $500 million, subject to securing additional commitments from existing lenders or new lending institutions. At March 31, 2015 , the Company had £242 mill ion ( $359 million) outstanding under the Facility with a weighted average effective interest rate of 1. 72 % .

On January 12, 2015, the Company entered into a credit agreement with a syndicate of banks for a £220 million ( $3 27 million at March 31, 2015 ) four -year unsecured term loan (the “2015 Term Loan ”) that accrues interest at a rate of GBP LIBOR plus 0.975% , subject to adjustments based on the Company’s credit ratings. Proceeds from this term loan were used to repay a £220 million draw on the Facility to fund the November 2014 HC-One debt investment (see Note 7). Concurrently, the Company entered into a three -year interest rate swap agreement that effectively fixes the interest rate of the 2015 Term Loan at 1.79% (see Note 20) . The 2015 Term Loan contains a one -year committed extension option.

The Facility and t erm l oan s contain certain financial restrictions and other customary requirements, including cross-default provisions to other indebtedness. Among other things, these covenants, using terms defined in the agreements, (i) limit the ratio of Consolidated Total Indebtedness to Consolidated Total Asset Value to 60% , (ii) limit the ratio of Secured Debt to Consolidated Total Asset Value to 30% , (iii) limit the ratio of Unsecured Debt to Consolidated Unencumbered Asset Value to 60% and (iv) require a minimum Fixed Charge Coverage ratio of 1.5 times. The Facility and Term Loan s also require a Minimum Consolidated Tangible Net Worth of $9.5 billion at March 31, 2015 . At March 31, 2015 , the Company was in compliance with each of these restrictions and requirements of the Facility and Term Loan s .

Senior Unsecured Notes

At March 31, 2015 , the Company had senior unsecured notes outstanding with an aggregate principal balance of $ 8.1 billion. The senior unsecured notes contain certain covenants including limitations on debt, maintenance of unencumbered assets, cross-acceleration provisions and other customary terms. The Company believes it was in compliance with these covenants at March 31, 2015 .

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The following table summarizes the Company’s senior unsecured note issuances for the period s presented (dollars in thousands):


Period	Amount		Coupon Rate			Maturity Date		Net Proceeds
Three months ending March 31, 2015:
January 21, 2015	$	600,000		3.400	%		2025	$	591,000
Year ending December 31, 2014:
August 14, 2014	$	800,000		3.875	%		2024	$	792,000
February 21, 2014	$	350,000		4.200	%		2024	$	346,000

The following table summarizes the Company’s senior unsecured notes payoffs for the periods presented (dollars in thousands):


Period	Amount		Coupon Rate
Three months ending March 31, 2015:
March 1, 2015	$	200,000		6.00	%
Year ending December 31, 2014:
February 1, 2014	$	400,000		2.70	%
June 14, 2014	$	62,000		6.00	%
June 14, 2014	$	25,000		3 Month LIBOR+0.9	%

Mortgage Debt

At March 31, 2015 , the Company had $ 981 m illion in aggregate principal amount of mortgage debt outstanding secured by 70 healthcare facilities (including redevelopment properties) , which have a carrying value of $1. 3 billion. At March 31, 2015 , interest rates on the mortgage debt ranged from 0.4 2 % to 8. 38 % with a weighted average effective interest rate of 6. 15 % and a weighted average maturity of three years.

Mortgage debt generally requires monthly principal and interest payments, is collateralized by real estate assets and is generally non-recourse. Mortgage debt typically restricts transfer of the encumbered assets, prohibits additional liens, restricts prepayment, requires payment of real estate taxes, requires maintenance of the assets in good condition, requires maintenance of insurance on the assets and includes conditions to obtain lender consent to enter into or terminate material leases. Some of the mortgage debt is also cross-collateralized by multiple assets and may require tenants or operators to maintain compliance with the applicable leases or operating agreements of such real estate assets .

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Debt Maturities

The following table summarizes the Company’s stated debt maturities and scheduled principal repayments at March 31, 2015 (in thousands):


					Senior
	Bank Line of				Unsecured		Mortgage
Year	Credit (1)		Term Loans (2)		Notes (3)		Debt		Total (4)
2015 (Nine months)	$	—	$	—	$	200,000	$	35,549	$	235,549
2016		—		203,404		900,000		292,222		1,395,626
2017		—		—		750,000		581,891		1,331,891
2018		358,555		—		600,000		6,583		965,138
2019		—		326,634		450,000		2,072		778,706
Thereafter		—		—		5,150,000		63,170		5,213,170
		358,555		530,038		8,050,000		981,487		9,920,080
Discounts, net		—		—		(27,467)		(1,597)		(29,064)
	$	358,555	$	530,038	$	8,022,533	$	979,890	$	9,891,016

(1) Represents £ 24 2 million translated into U.S. dollars.

( 2 ) Represents £ 3 5 7 million translated into U.S. dollars.

(3) Interest rates on the notes ranged from 2.79% to 6.99% with a weighted average effective interest rate of 4. 82 % and a weighted average maturity of six years.

( 4 ) Excludes $ 9 6 million of other debt that represents Life Care Bonds and D emand N otes that have no scheduled maturities.

Other Debt

At March 31, 2015 , the Company had $70 million of non-interest bearing life care bonds at two of its continuing care retirement communities and non-interest bearing occupancy fee deposits at two of its senior housing facilities, all of which were payable to certain residents of the facilities (collectively, “Life Care Bonds”). The Life Care Bonds are generally refundable to the residents upon the termination of the contract or upon the successful resale of the unit.

In conjunction with the Brookdale Transaction, on August 29, 2014, the Company borrowed $2 6 million from the CCRC JV in the form of on - demand note s (“Demand Notes”) . The Demand Notes bear interest at a rate of 4.5 % .

NOTE 12 . Commitments and Contingencies

Legal Proceedings

From time to time, the Company is a party to legal proceedings, lawsuits and other claims that arise in the ordinary course of the Company’s business. The Company is not aware of any legal proceedings or claims that it believes may have, individually or taken together, a material adverse effect on the Company’s business, prospects, financial condition, results of operations or cash flows. The Company’s policy is to expense legal costs as they are incurred.

Liquidity Support Arrangement

The Company has a 20% equity investment in an unconsolidated joint venture, HCP Ventures IV, LLC (“HCP Ventures IV”) , which has $107 million of contractual secured debt obligations (“Contractual Obligations”) coming due through February 2016. In the event HCP Ventures IV is (i) unable to refinance these Contractual Obligations with third party lenders or (ii) the equity members do not jointly agree to make additional capital contributions to repay such Contractual Obligations , the Company has committed to provide the necessary level of financial support in the form of a shortfall loan to enable HCP Ventures IV to repay such Contractual Obligations . Additionally, the Company has committed to fund, in the form of a shortfall loan, up to $24.5 million for prior and future capital expenditures of which $ 17 million has been funded as of March 31, 2015 and included in other assets, net . This liquidity support arrangement is permitted under the joint venture agreement between members , and any such funding will earn an interest rate equal to 12% per annum from the date actually advanced until the date it is repaid in full (see Notes 8 , 10 and 17 ).

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NOTE 13 . Equity

Common Stock

The following table lists the common stock cash dividends declared by the Company in 201 5 :


		Amount		Dividend
Declaration Date	Record Date	Per Share		Payable Date
January 29	February 9	$	0.565	February 24
April 30	May 11		0.565	May 26

The following is a summary of the Company’s common stock issuances (shares in thousands):


	Three Months Ended March 31,
	2015	2014
Dividend Reinvestment and Stock Purchase Plan	829	875
Conversion of DownREIT units (1)	38	2
Exercise of stock options	811	4
Vesting of restricted stock units	288	411
Repurchase of common stock	128	208

(1) Non-managing member LLC units.

Accumulated Other Comprehensive Loss

The following is a summary of the Company’s accumulated other comprehensive loss (in thousands):


	March 31,		December 31,
	2015		2014
Cumulative foreign currency translation adjustment	$	(17,710)	$	(10,747)
Unrealized losses on cash flow hedges, net		(7,291)		(9,624)
Supplemental Executive Retirement Plan minimum liability		(3,468)		(3,537)
Unrealized gains on available for sale securities		8		13
Total accumulated other comprehensive loss	$	(28,461)	$	(23,895)

Noncontrolling Interests

At March 31, 2015 , non-managing members held an aggregate of 4 million units in five limited liability companies (“DownREITs”), for which the Company is the managing member. At March 31, 2015 , the carrying and fair values of these DownREIT units were $18 7 million and $2 61 million, respectively.

NOTE 14 . Segment Disclosures

The Company evaluates its business and makes resource allocations based on its five business segments: (i) senior housing, (ii) post-acute/skilled nursing, (iii) life science, (iv) medical office and (v) hospital. Under the medical office segment, the Company invests through the acquisition and development of MOBs, which generally require a greater level of property management. Otherwise, the Company primarily invests, through the acquisition and development of real estate, in single tenant and operator properties and debt issued by tenants and operators in these sectors. The accounting policies of the segments are the same as those described in Note 2 to the Consolidated Financial Statements herein and in the Company’s 2014 Annual Report on Form 10-K filed with the SEC. There were no intersegment sales or transfers during the three months ended March 31, 2015 and 2014 . The Company evaluates performance based upon property net operating income from continuing operations (“NOI”), adjusted NOI (cash NOI) and interest income of the combined investments in each segment.

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Non-segment assets consist primarily of corporate assets , including cash and cash equivalents, restricted cash, accounts receivable, net, marketable equity securities, deferred financing costs and, if any, real estate held for sale. Interest expense, depreciation and amortization , and non-property specific revenues and expenses are not allocated to individual segments in determining the Company’s segment-level performance . See Note 1 8 for other information regarding concentrations of credit risk.

Summary information for the reportable segments follows (in thousands):

For the three months ended March 31, 2015 :


							Investment
	Rental		Resident Fees		Interest		Management		Total				Adjusted
Segments	Revenues (1)		and Services		Income		Fee Income		Revenues		NOI (2)		(Cash) NOI (2)
Senior housing	$	127,382	$	105,013	$	7,394	$	—	$	239,789	$	156,885	$	150,472
Post-acute/skilled		140,576		—		25,868		—		166,444		140,043		121,960
Life science		83,551		—		—		1		83,552		66,852		63,777
Medical office		98,305		—		—		459		98,764		60,053		58,187
Hospital		22,242		—		—		—		22,242		21,205		21,457
Total	$	472,056	$	105,013	$	33,262	$	460	$	610,791	$	445,038	$	415,853

For the three months ended March 3 1 , 201 4 :


							Investment
	Rental		Resident Fees		Interest		Management		Total				Adjusted
Segments	Revenues (1)		and Services		Income		Fee Income		Revenues		NOI (2)		(Cash) NOI (2)
Senior housing	$	150,085	$	38,053	$	3,284	$	—	$	191,422	$	163,590	$	150,375
Post-acute/skilled		137,780		—		13,412		—		151,192		137,248		118,099
Life science		76,122		—		—		1		76,123		61,961		58,829
Medical office		89,262		—		—		448		89,710		53,746		53,029
Hospital		21,545		—		—		—		21,545		20,595		20,661
Total	$	474,794	$	38,053	$	16,696	$	449	$	529,992	$	437,140	$	400,993

(1)

Represents rental and related revenues, tenant recoveries and income from DFLs.

(2)

NOI and Adjusted NOI are non-GAAP supplemental financial measures used to evaluate the operating performance of real estate. The Company defines NOI as rental and related revenues, including tenant recoveries, resident fees and services, and income from DFLs, less property level operating expense; NOI excludes all other financial statement amounts included in net (loss) income as presented below. The Company believes NOI provides relevant and useful information because it reflects only income and operating expense items that are incurred at the property level and presents them on an unleveraged basis. Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL accretion, amortization of market lease intangibles and lease termination fees. Adjusted NOI is oftentimes referred to as “cash NOI.” The Company uses NOI and adjusted NOI to make decisions about resource allocations and to assess and compare property level performance. The Company believes that net (loss) income is the most directly comparable GAAP measure to NOI. NOI should not be viewed as an alternative measure of operating performance to net (loss) income as defined by GAAP because it does not reflect various excluded items. Further, the Company’s definition of NOI may not be comparable to the definition used by other REITs or real estate companies, as those companies may use different methodologies for calculating NOI .

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The following is a reconciliation of reported net (loss) income to NOI and adjusted NOI (in thousands):


	Three Months Ended March 31,
	2015		2014
Net (loss) income	$	(237,503)	$	263,623
Interest income		(33,262)		(16,696)
Investment management fee income		(460)		(449)
Interest expense		116,780		106,638
Depreciation and amortization		114,522		107,388
General and administrative		24,773		20,899
Acquisition and pursuit costs		3,390		495
Impairments		478,464		—
Gains on sales of real estate, net of income taxes		(6,264)		—
Other income, net		(1,724)		(1,930)
Income taxes (benefit) provision		(77)		1,446
Equity income from unconsolidated joint ventures		(13,601)		(14,528)
Total discontinued operations		—		(29,746)
NOI		445,038		437,140
Straight-line rents		(9,546)		(13,968)
DFL accretion		(20,304)		(21,422)
Amortization of above and below market lease intangibles, net		(378)		(168)
Lease termination fees		1,043		(578)
NOI adjustments related to discontinued operations		—		(11)
Adjusted (Cash) NOI	$	415,853	$	400,993

The Company’s total assets by segment were (in thousands):


	March 31,		December 31,
Segments	2015		2014
Senior housing	$	8,445,616	$	8,383,345
Post-acute/skilled nursing		6,488,822		6,875,122
Life science		4,171,320		4,154,789
Medical office		2,997,583		2,988,888
Hospital		639,807		640,253
Gross segment assets		22,743,148		23,042,397
Accumulated depreciation and amortization		(2,680,584)		(2,600,072)
Net segment assets		20,062,564		20,442,325
Other non-segment assets		961,878		927,615
Total assets	$	21,024,442	$	21,369,940

At both March 31, 2015 and December 31, 2014 , goodwill of $50 million was allocated to segment assets as follows: (i) senior housing— $31 million, (ii) post-acute/skilled nursing —$3 million, (iii) medical office—$11 million, and (iv) hospital—$5 million.

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NOTE 15 . Earnings Per Common Share

The following table illustrates the computation of basic and diluted earnings per share (in thousands, except per share amounts):


	Three Months Ended March 31,
	2015		2014
Numerator
(Loss) income from continuing operations	$	(237,503)	$	233,877
Noncontrolling interests’ share in continuing operations		(3,111)		(3,335)
(Loss) income from continuing operations applicable to HCP, Inc.		(240,614)		230,542
Participating securities’ share in continuing operations		(335)		(1,064)
(Loss) income from continuing operations applicable to common shares		(240,949)		229,478
Discontinued operations		—		29,746
Noncontrolling interests’ share in discontinued operations		—		(1,177)
Net (loss) income applicable to common shares	$	(240,949)	$	258,047

Denominator
Basic weighted average common shares		460,880		457,294
Dilutive potential common shares		—		380
Diluted weighted average common shares		460,880		457,674

Basic earnings per common share
(Loss) income from continuing operations	$	(0.52)	$	0.50
Discontinued operations		—		0.06
Net (loss) income applicable to common shares	$	(0.52)	$	0.56

Diluted earnings per common share
(Loss) income from continuing operations	$	(0.52)	$	0.50
Discontinued operations		—		0.06
Net (loss) income applicable to common shares	$	(0.52)	$	0.56

Restricted stock and certain of the Company’s performance restricted stock units are considered participating securities, because dividend payments are not forfeited even if the underlying award does not vest, which require s the use of the two-class method when computing basic and diluted earnings per share. Options to purchase approximately 0.5 million and 1.6 million shares of common stock that had an exercise price (including deferred compensation expense) in excess of the average closing market price of the Company’s common stock during the three months ended March 31, 2015 and 2014 , respectively, were not included in the Company’s earnings per share calculations because they are anti-dilutive. Restricted stock and performance restricted stock units representing 0. 4 million and 0.9 million shares of common stock during the three months ended March 31, 2015 and 2014 , respectively, were not included because they are anti-dilutive. Additionally, 6 million shares issuable upon conversion of 4 million DownREIT units during the three months ended March 31, 2015 and 2014 were not included because they are anti-dilutive.

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NOTE 16 . Supplemental Cash Flow Information

The following table provides supplemental cash flow information (in thousands):


	Three Months Ended March 31,
	2015		2014
Supplemental cash flow information:
Interest paid, net of capitalized interest	$	168,165	$	152,423
Income taxes paid		383		629
Capitalized interest		1,698		3,125
Supplemental schedule of non-cash investing activities:
Accrued construction costs		32,236		21,715
Supplemental schedule of non-cash financing activities:
Vesting of restricted stock units		288		411
Cancellation of restricted stock		—		(1)
Conversion of non-managing member units into common stock		1,608		73
Noncontrolling interest issued in connection with real estate acquisition		1,306		1,152
Noncontrolling interest assumed in connection with real estate disposition		—		1,671
Mortgages and other liabilities assumed with real estate acquisitions		626		1
Unrealized gains (losses) on available-for-sale securities and derivatives designated as cash flow hedges, net		2,334		(692)

NOTE 17 . Variable Interest Entities

Unconsolidated Variable Interest Entities

At March 31, 2015 , the C ompany had investments in: (i) two unconsolidated VIE joint venture s ; (ii) 48 properties leased to VIE tenants; (iii) a loan to a VIE borrower; and (iv) marketable debt securities of a VIE borrower. The Company has determined that it is not the primary beneficiary of these VIEs. The Company does not consolidate these VIEs because it does not have the ability to control the activities that most significantly impact the se VIEs’ economic performance. Except for the Company’s equity interest in the unconsolidated joint venture s (CCRC OpCo and HCP Ventures IV discussed below ) , the Company has no formal involvement in these VIEs beyond its investments .

The Company holds an equity interest in CCRC OpCo that has been identified as a VIE (see Note s 3 and 8 ). The equity members of CCRC OpCo “lack power” because they share certain operating rights with Brookdale as manager of the CCRCs. The assets of CCRC OpCo primarily consist of the CCRCs that it owns and leases, resident fees receivable, notes receivable , and cash and cash equivalents; its obligations primarily consist of operating lease obligations and accounts payable and expense accruals associated with the cost of its CCRCs’ operations. Assets generated by the CCRC operations (primarily rents from CCRC residents) of CCRC OpCo may only be used to settle its contractual obligations (primarily the rental costs and operating expenses incurred to manage such facilities ).

In the first quarter of 2015, upon the occurrence of a reconsideration event, it was determined that HCP Ventures IV is a VIE because this entity is “thinly capitalized.” The assets of HCP Ventures IV primarily consist of MOBs and hospitals that it owns and leases, intangible assets, straight-line rents receivable , and cash and cash equivalents; its obligations primarily consist of mortgage debt, member loans, intangible liabilities, deferred revenue, and accounts payable and accrued liabilities associated with the cost of its rental properties. Assets generated by the operations (primarily rental revenues) of HCP Ventures IV may only be used to settle its contractual obligations (primarily operating expenses ).

The Company lease s 48 properties to a total of seven tenants that have been identified as VIEs (“VIE tenants”) because these VIE tenants are “thinly capitalized” entities that rely on the operating cash flows generated from the senior housing facilities to pay operating expenses, including the rent obligations under their leases .

The Company holds an interest-only, senior secured term loan made to a borrower (Delphis Operations, L.P.) that has been identified as a VIE because it is a “thinly capitalized” entity (see Note 7). The loan is collateralized by all of the assets of

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the borrower (comprised primarily of interests in partnerships that operate surgical facilities, of which one partnership is a tenant of the Company ).

The Company holds commercial mortgage-backed securities (“CMBS”) issued by Federal Home Loan Mortgage Corporation (“Freddie MAC”) through a special purpose entity that has been identified as a VIE. The CMBS issued by the VIE are backed by mortgage obligations on senior housing facilities .

The classification of the related assets and liabilities and their maximum loss exposure as a result of the Company’s involvement with these VIEs at March 31, 2015 are presented below (in thousands):


	Maximum Loss			Carrying
VIE Type	Exposure (1)		Asset/Liability Type	Amount
CCRC OpCo	$	245,321	Investments in unconsolidated joint ventures	$	245,321
HCP Ventures IV		157,706	Investments in unconsolidated joint ventures		26,206
VIE tenants—operating leases		12,341	Lease intangibles, net and straight-line rent receivables		12,341
VIE tenants—DFLs		599,414	Net investment in DFLs		599,414
Loan—senior secured		16,987	Loans receivable, net		16,987
CMBS		17,546	Marketable debt securities		17,546

(1)

The Company’s maximum loss exposure related to CCRC OpCo , VIE tenants, and loans and marketable debt securities to VIE borrowers represents the aggregate carrying amount of such investments. The Company’s maximum loss exposure related to HCP Ventures IV represents the aggregate carrying amount of its investment plus $107 million in committed support, which may be mitigated by the refinancing of HCP Ventures IV’s Contractual Obligations which it expects to occur as such debt becomes due in late 2015 and early 2016 (see Note 12 ) .

With the exception of HCP Ventures IV, a s of March 31, 2015 , the Company has not provided, and is not required to provide, financial support through a liquidity arrangement or otherwise, to its unconsolidated VIEs, including circumstances in which it could be exposed to further losses (e.g., cash shortfalls ). At March 31, 2015, the Company has funded a loan of $17 million to HCP Ventures IV. HCP Ventures IV has $107 million of Contractual Obligations coming due through February 2016. The Company has committed to provide the necessary level of financial support , in the form of a shortfall loan, to HCP Ventures IV in the event the joint venture is (i) unable to refinance its Contractual Obligations with third party lenders or (ii) the equity members do not jointly agree to make additional capital contributions to repay its Contractual Obligations . See Notes 3, 6, 7 , 8 , 10 and 12 for additional descriptions of the nature, purpose and operating activities of the Company’s unconsolidated VIEs and interests therein .

Consolidated Variable Interest Entities

RIDEA 1. The Company holds a 90% ownership interest in a joint venture entity formed in September 2011 that operates senior housing properties in a RIDEA structure (“RIDEA OpCo”). The Company consolidates RIDEA OpCo as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of RIDEA OpCo primarily consist of leasehold interests in senior housing facilities (operating leases), resident fees receivable, and cash and cash equivalents; its obligations primarily consist of lease payments to a non-VIE consolidated subsidiary of the Company and operating expenses of its senior housing facilities (accounts payable and accrued expenses). Assets generated by the senior housing operations (primarily senior housing resident rents) of RIDEA OpCo may only be used to settle its contractual obligations (primarily the rental costs and operating expenses incurred to manage such facilities ) .

RIDEA 2 . The Company holds an 80% equity interest in joint venture entities that own and operate senior housing properties in the RIDEA Subsidiaries. The Company consolidates the RIDEA Subsidiaries (SH PropCo and SH OpCo) as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIEs’ economic performance. The assets of SH PropCo primarily consist of leased properties (net real estate), rents receivable , and cash and cash equivalents; its obligations primarily consist of a note payable to a non-VIE consolidated subsidiary of the Company. The assets of SH OpCo primarily consist of leasehold interests in senior housing facilities (operating leases), resident fees receivable , and cash and cash equivalents; its obligations primarily consist of lease payments to SH PropCo and operating expenses of its senior housing facilities (accounts payable and accrued expenses). Assets generated by the

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senior housing operations (primarily senior housing resident rents) of the RIDEA Subsidiaries may only be used to settle its contractual obligations (primarily the rental costs and operating expenses incurred to manage such facilities).

Other consolidated VIEs . The Company made a loan to an entity that entered into a tax credit structure (“Tax Credit Subsidiary”) and a loan to an entity that made an investment in a development joint venture (“Development JV”) both of which are considered VIEs. The Company consolidates the Tax Credit Subsidiary and Development JV because it is the primary beneficiary as it has the ability to control the activities that most significantly impact the VIEs’ economic performance. The assets and liabilities of the Tax Credit Subsidiary and Development JV substantially consist of development in progress, notes receivable, prepaid expenses, notes payable , and accounts payable and accrued liabilities generated from their operating activities. Assets generated by the operating activities of the Tax Credit Subsidiary and Development JV may only be used to settle their contractual obligations .

NOTE 18 . Concentration of Credit Risk

Concentrations of credit risk arise when one or more tenants, operators or obligors related to the Company’s investments are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions. The Company regularly monitors various segments of its portfolio to assess potential concentrations of risks. The Company does not have significant foreign operations .

The following table provides information regarding the Company’s concentrations with respect to certain tenants and operators; the information provided is presented for the gross assets and revenues that are associated with certain tenants and operators as percentages of their respective segment’s and total Company’s gross assets and revenues :

The following table lists the Company’s senior housing concentrations:


	Percentage of				Percentage of
	Senior Housing Gross Assets				Senior Housing Revenues
	March 31,		December 31,		Three Months Ended March 31,
Operators	2015		2014		2015		2014
Brookdale (1)	32	%	36	%	25	%	46	%
HCRMC	11	%	11	%	8	%	10	%

The following table lists the Company’s post-acute/skilled nursing concentrations:


	Percentage of Post-Acute/				Percentage of Post-Acute/
	Skilled Nursing Gross Assets				Skilled Nursing Revenues
	March 31,		December 31,		Three Months Ended March 31,
Operators	2015		2014		2015		2014
HCRMC	79	%	82	%	80	%	86	%

The following table lists the total Company concentrations:


	Percentage of				Percentage of
	Total Company Assets				Total Company Revenues
	March 31,		December 31,		Three Months Ended March 31,
Operators	2015		2014		2015		2014
HCRMC	29	%	31	%	25	%	28	%
Brookdale (1)	13	%	13	%	10	%	17	%

(1)

On July 31, 2014, Brookdale completed its acquisition of Emeritus. These percentages of segment revenues and total revenues for the three months ended March 31, 2014 are prepared on a pro forma basis to reflect the combined concentration for Brookdale and Emeritus, as if the merger had occurred as of the beginning of the period presented . On August 29, 2014, the Company and Brookdale amended or terminated all former leases with Emeritus and entered into two RIDEA joint ventures (see Note 3). Percentages do not include senior housing facilities that Brookdale manages (is not a tenant) under a RIDEA structure .

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HCRMC’s summarized consolidated financial information follows (in millions):


	March 31,		December 31,
	2015		2014
Real estate and other property, net	$	2,915.4	$	2,934.4
Cash and cash equivalents		141.6		127.9
Goodwill, intangible and other assets, net		4,646.1		4,621.7
Total assets	$	7,703.1	$	7,684.0

Debt and financing obligations	$	6,071.0	$	6,108.3
Accounts payable, accrued liabilities and other		975.6		932.7
Total equity		656.5		643.0
Total liabilities and equity	$	7,703.1	$	7,684.0


	Three Months Ended March 31,
	2015		2014
Revenues	$	1,054.0	$	1,041.9
Operating, general and administrative expense		(897.9)		(888.8)
Depreciation and amortization expense		(35.9)		(35.2)
Interest expense		(100.3)		(102.3)
Other income, net		2.8		2.9
Income from continuing operations before income tax expense		22.7		18.5
Income tax expense		(10.1)		(7.5)
Income from continuing operations		12.6		11.0
Income (loss) from discontinued operations, net of taxes		1.1		(2.6)
Net income	$	13.7	$	8.4

As of March 31, 2015, Brookdale provided comprehensive property management and accounting services with respect to 70 of the Company’s senior housing facilities and 14 CCRCs owned by the CCRC JV, for which the Company or joint venture pay s annual management fees pursuant to long-term management agreements. Most of the management agreements have terms ranging from 10 to 15 years, with 5 -year renewals. The base management fees are 4.5% to 5.0% of gross revenues (as defined) generated by the RIDEA facilities. In addition, there are incentive management fees payable to Brookdale if operating results of the RIDEA properties exceed pre-established EBITDAR (as defined) thresholds.

Brookdale is subject to the registration and reporting requirements of the SEC and is required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. The information related to Brookdale contained or referred to in this report has been derived from SEC filings made by Brookdale or other publicly available information, or was provided to the Company by Brookdale, and the Company has not verified this information through an independent investigation or otherwise. The Company has no reason to believe that this information is inaccurate in any material respect, but the Company cannot assure the reader of its accuracy. The Company is providing this data for informational purposes only and encourages the reader to obtain Brookdale’s publicly available filings, which can be found on the SEC’s website at www.sec.gov .

To mitigate the credit risk of leasing properties to certain senior housing and post-acute/skilled nursing operators, leases with operators are often combined into portfolios that contain cross-default terms, so that if a tenant of any of the properties in a portfolio defaults on its obligations under its lease, the Company may pursue its remedies under the lease with respect to any of the properties in the portfolio. Certain portfolios also contain terms whereby the net operating profits of the properties are combined for the purpose of securing the funding of rental payments due under each lease.

Subsequent Event . The DOJ filed a complaint against HCRMC that was released from seal on April 20, 2015 (s ee Note 8 ) .

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NOTE 19 . Fair Value Measurements

Items Measured at Fair Value on a Recurring Basis

The following table illustrates the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2015 in the consolidated balance sheets (in thousands):


Financial Instrument (1)	Fair Value		Level 1		Level 2		Level 3
Marketable equity securities	$	38	$	38	$	—	$	—
Interest-rate swap liabilities		(7,820)		—		(7,820)		—
Currency swap assets		3,603		—		3,603		—
Warrants		3,004		—		—		3,004
	$	(1,175)	$	38	$	(4,217)	$	3,004

(1)

Interest rate and currency swaps , as well as common stock warrant fair values , are determined based on observable and unobservable market assumptions utilizing standardized derivative pricing models.

Recognized gains and losses are recorded in other income, net on the Company’s consolidated statements of operations . During the three months ended March 31, 2015, there were no transfers of financial assets or liabilities within the fair value hierarchy.

Disclosures About Fair Value of Financial Instruments

Cash and cash equivalents, r estricted cash, a ccounts receivable net , and a ccounts payable and accrued liabilities – The carrying values are reasonable estimates of fair value because of the short-term maturities of these instruments.

Loans receivable, net and m ortgage debt – The fair value s are based on discounting future cash flows utilizing current market rates for loans and debt of the same type and remaining maturity.

Marketable debt securities – The fair value is based on quoted prices from inactive markets.

Marketable equity securities and s enior unsecured notes – The fair value s are based on quoted prices in active markets.

Warrants – The fair value is based on significant unobservable market inputs utilizing standardized derivative pricing models.

Bank line of credit , t erm loans and o ther debt – The carrying value s are a reasonable estimate of fair value because the borrowings are primarily based on market interest rates and the Company’s current credit ratings.

Interest-rate swaps – The fair value is based on observable inputs utilizing standardized pricing models that consider forward yield curves and discount rates which are observable in active and inactive markets.

Currency swaps – The fair value is based on observable inputs utilizing standardized pricing models that consider the future value of the currency exchange rates, comprised of current spot and traded forward points, and calculating a present value of the net amount using discount rates based on observable traded interest rates.

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The table below summarizes the carrying values and fair values of the Company’s financial instruments (in thousands):


	March 31, 2015				December 31, 2014
	Carrying				Carrying
	Value		Fair Value		Value		Fair Value
Loans receivable, net (2)	$	1,025,278	$	1,040,540	$	906,961	$	898,522
Marketable debt securities (2)		221,379		229,881		231,442		252,125
Marketable equity securities (1)		38		38		43		43
Warrants (3)		3,004		3,004		2,220		2,220
Bank line of credit (2)		358,555		358,555		838,516		838,516
Term loans (2)		530,038		530,038		213,610		213,610
Senior unsecured notes (1)		8,022,533		8,579,285		7,626,194		8,187,458
Mortgage debt (2)		979,890		1,039,562		984,431		1,025,091
Other debt (2)		95,747		95,747		97,022		97,022
Interest-rate swap assets (2)		—		—		178		178
Interest-rate swap liabilities (2)		7,820		7,820		7,663		7,663
Currency swap assets (2)		3,603		3,603		929		929

(1)

Level 1: Fair value calculated based on quoted prices in active markets.

(2)

Level 2: Fair value based on quoted prices for similar or identical instruments in active or inactive markets, respectively, or calculated utilizing standardized pricing models in which significant inputs or value drivers are observable in active markets.

(3)

Level 3: Fair value determined based on significant unobservable market inputs using standardized derivative pricing models.

NOTE 20 . Derivative Financial Instruments

The following table summarizes the Company’s outstanding interest-rate and foreign currency swap contracts as of March 31, 2015 (dollars and GBP in thousands):


			Fixed
		Hedge	Rate/Buy			Floating/Exchange	Notional/
Date Entered	Maturity Date	Designation	Amount			Rate Index	Sell Amount		Fair Value (1)
Interest rate:
July 2005 (2)	July 2020	Cash Flow		3.82	%	BMA Swap Index	$	45,600	$	(6,129)
November 2008 (3)	October 2016	Cash Flow		5.95	%	1 Month LIBOR+1.50%	$	25,600	$	(1,540)
July 2012 (3)	June 2016	Cash Flow		1.81	%	1 Month GBP LIBOR+1.20%	£	137,000	$	(84)
January 2015 (3)	October 2017	Cash Flow		1.79	%	1 Month GBP LIBOR+0.975%	£	220,000	$	(67)
Foreign currency:
July 2012 (4)	June 2016	Cash Flow	$	34,100		Buy USD/Sell GBP	£	21,700	$	1,887
July 2014 (5)	December 2015	Cash Flow	$	5,600		Buy USD/Sell GBP	£	3,300	$	732
January 2015 (6)	October 2017	Cash Flow	$	49,300		Buy USD/Sell GBP	£	32,500	$	983

(1)

Derivative assets are recorded in other assets, net and derivative liabilities are recorded in accounts payable and accrued liabilities on the consolidated balance sheets.

(2)

Represents three interest-rate swap contracts, which hedge fluctuations in interest payments on variable-rate secured debt due to overall changes in hedged cash flows.

(3)

Hedges fluctuations in interest payments on variable-rate unsecured debt due to fluctuations in the underlying benchmark interest rate.

(4)

Currency swap contract (buy USD/sell GBP) hedges the foreign currency exchange risk related to a portion of the Company’s forecasted interest receipts on GBP denominated senior unsecured notes. Represents a currency swap to sell £7.2 million at a rate of 1.5695 on various dates through June 2016.

(5)

Currency swap contract (buy USD/sell GBP) hedges the foreign currency exchange risk related to the Company’s forecasted GBP denominated interest receipts on intercompany loans. Represents a currency swap to sell £0.4 million at a rate of 1.7060 on various dates through December 2015.

(6)

Currency swap contract (buy USD/sell GBP) hedges the foreign currency exchange risk related to the Company’s forecasted GBP denominated interest receipts on its HC-One F acility . Represents a currency swap to sell approximately £ 1.0 million monthly at a rate of 1. 5149 through October 20 17 .

The Company uses derivative instruments to mitigate the effects of interest rate and foreign currency fluctuations on specific forecasted transactions as well as recognized financial obligations or assets. Utilizing derivative instruments allows the Company to manage the risk of fluctuations in interest and foreign currency rates related to the potential impact these

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changes could have on future earnings and forecasted cash flows. The Company does not use derivative instruments for speculative or trading purposes.

The primary risks associated with derivative instruments are market and credit risk. Market risk is defined as the potential for loss in value of a derivative instrument due to adverse changes in market prices. Credit risk is the risk that one of the parties to a derivative contract fails to perform or meet their financial obligation. The Company does not obtain collateral associated with its derivative contracts, but monitors the credit standing of its counterparties on a regular basis. Should a counterparty fail to perform, the Company would incur a financial loss to the extent that the associated derivative contract was in an asset position. At March 31, 2015 , the Company does not anticipate non-performance by the counterparties to its outstanding derivative contracts.

On January 12, 2015, the Company entered into a n interest-rate swap contract that is designated as hedging the interest payments on its GBP denominated 2015 Term Loan due to fluctuations in the underlying benchmark interest rate (see additional discussion of the Term Loan in Note 11). The cash flow hedge has a notional amount of £220 million and expires in October 2017.

On January 12, 2015, the Company entered into a foreign currency swap contract to hedge the foreign currency exchange risk related to GBP interest receipts on the Company’s HC-One Facility (see additional discussion of the HC-One Facility in Note 7). The cash flow hedge has a fixed GBP / USD exchange rate of 1. 5149 (b uy approximately $ 1 . 5 million and sell £ 1.0 million monthly) and matures in October 201 7 .

During the three months ended March 31, 2015 , the Company determined a portion of a cash flow hedge was ineffective and reclassified $0 .1 million of unrealized gains related to this interest-rate swap contract into other income, net. T he Company expects that the hedged forecasted transactions for each of the outstanding qualifying cash flow hedging relationships remain probable of occurring, and as a result, no additional gains or losses recorded to accumulated other comprehensive loss are expected to be reclassified to earnings for any other outstanding hedges , other than discussed above .

To illustrate the effect of movements in the interest rate and foreign currency markets, the Company performed a market sensitivity analysis on its outstanding hedging instruments. The Company applied various basis point spreads to the underlying interest rate curves and foreign currency exchange rates of the derivative portfolio in order to determine the instruments’ change in fair value. The following table summarizes the results of the analysis performed (dollars in thousands):


		Effects of Change in Interest and Foreign Currency Rates
		+50 Basis		-50 Basis		+100 Basis		-100 Basis
Date Entered	Maturity Date	Points		Points		Points		Points
Interest rate:
July 2005	July 2020	$	1,082	$	(1,184)	$	2,215	$	(2,317)
November 2008	October 2016		200		(190)		396		(386)
July 2012	June 2016		1,242		(1,205)		2,466		(2,429)
January 2015	October 2017		4,165		(4,180)		8,338		(8,353)
Foreign currency:
July 2012	June 2016		1,745		2,067		1,584		2,228
July 2014	December 2015		711		760		687		784
January 2015	October 2017		831		1,313		590		1,554

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Language Regarding Forward-Looking Statements

Statements in this Quarterly Report on Form 10-Q that are not historical factual statements are “forward-looking statements.” We intend to have our forward-looking statements covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with those provisions. Forward-looking statements include, among other things, statements regarding our and our officers’ intent, belief or expectation as identified by the use of words such as “may,” “will,” “project,” “expect,” “believe,” “intend,” “anticipate,” “seek,” “forecast,” “plan,” “potential,” “estimate,” “could,” “would,” “should” and other comparable and derivative terms or the negatives thereof. Any such forward-looking statements reflect our current expectations and views about future events and are subject to a number of risks and uncertainties that could significantly affect the Company’s future financial condition and results of operations. While forward-looking statements reflect our good faith belief and reasonable assumptions based upon current information, we can give no assurance that our expectations or forecasts will be attained . Further, we cannot guarantee the accuracy of any such forward-looking statement contained in this Quarterly Report, and such forward-looking statements are subject to known and unknown risks and uncertainties that are difficult to predict . As more fully set forth under “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 201 4 , as updated by Item 1A hereof, risks and uncertainties that may cause our actual results to differ materially from the expectations contained in the forward-looking statements include, among other things :

(a)

our ability to fully evaluate HCRMC’s ability to meet its contractual obligations under the HCRMC Lease Amendment and risks related to the impact of the Department of Justice lawsuit against HCRMC, including the possibility of larger than expected litigation costs, adverse results and related developments ;

(b)

our reliance on a concentration of a small number of tenants and operators for a significant portion of our revenues ;

(c)

the financial weakness of tenants and operators, including potential bankruptcies , significant litigation exposure and downturns in their businesses, which results in uncertainties regarding our ability to continue to realize the full benefit of such tenants’ and/or operators’ leases ;

(d)

the ability of our tenants and operators to conduct their respective businesses in a manner sufficient to maintain or increase their revenues and to generate sufficient income to make rent and loan payments to us and our ability to recover investments made, if applicable, in their operations ;

(e)

competition for tenants and operators, including with respect to new leases and mortgages and the renewal or rollover of existing leases ;

(f)

availability of suitable properties to acquire at favorable prices and the competition for the acquisition and financing of those properties ;

(g)

our ability to negotiate the same or better terms with new tenants or operators if existing leases are not renewed or we exercise our right to replace an existing tenant or operator upon default ;

(h)

the risks associated with our investments in joint ventures and unconsolidated entities, including our lack of sole decision making authority and our reliance on our partners’ financial condition and continued cooperation ;

(i)

the risk that we may not be able to achieve the benefits of investments within expected time frames or at all, or within expected cost projections ;

(j)

the potential impact of future litigation matters, including the possibility of larger than expected litigation costs, adverse results and related developments ;

(k)

the effect on healthcare providers of legislation addressing entitlement programs and related services, including Medicare and Medicaid, which may result in future reductions in reimbursements ;

(l)

changes in federal, state or local laws and regulations, including those affecting the healthcare industry that affect our costs of compliance or increase the costs, or otherwise affect the operations, of our tenants and operators ;

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(m)

volatility or uncertainty in the capital markets, the availability and cost of capital as impacted by interest rates, changes in our credit ratings, and the value of our common stock, and other conditions that may adversely impact our ability to fund our obligations or consummate transactions, or reduce the earnings from potential transactions ;

(n)

changes in global, national and local economic conditions, and currency exchange rates ;

(o)

changes in the credit ratings on United States (“U.S.”) government debt securities or default or delay in payment by the U.S. of its obligations ;

(p)

our ability to manage our indebtedness level and changes in the terms of such indebtedness ; and

(q)

the ability to maintain our qualification as a real estate investment trust .

Except as required by law, we undertake no, and hereby disclaim any, obligation to update any forward - looking statements, whether as a result of new information, changed circumstances or otherwise.

The information set forth in this Item 2 is intended to provide readers with an understanding of our financial condition, changes in financial condition and results of operations. We will discuss and provide our analysis in the following order:

Executive Summary

201 5 Transaction Overview

Dividends

Results of Operations

Liquidity and Capital Resources

Contractual Obligations

Off-Balance Sheet Arrangements

Inflation

Non-GAAP Financial Measures Reconciliations

Critical Accounting Policies

Recent Accounting Pronouncements

Executive Summary

HCP, an S&P 500 company, invests primarily in real estate serving the healthcare industry in the United States. We are a Maryland corporation organized in 1985 and qualify as a self-administered real estate investment trust (“REIT”) . We acquire, develop, lease, manage and dispose of healthcare real estate, and provide financing to healthcare providers. At March 3 1 , 201 5 , our portfolio of investments, including properties in our unconsolidated joint ventures , consisted of interests in 1, 1 9 6 facilities.

We invest and manage our real estate portfolio for the long-term to maximize the benefit to our stockholders and support the growth of our dividends. The core elements of our strategy are: (i) to acquire, develop, lease, own and manage a diversified portfolio of quality healthcare properties across multiple business segments and geographic locations (including Europe); (ii) to align ourselves with leading healthcare companies, operators and service providers, which over the long-term should result in higher relative rental rates, net operating cash flows and appreciation of property values; (iii) to concentrate on longer-term escalating triple-net leases with high-quality tenants, while using RIDEA structures for properties that have higher growth potential; (iv) to maintain adequate liquidity with long-term fixed rate debt financing with staggered maturities, which supports the longer-term nature of our investments, while reducing our exposure to interest rate volatility and refinancing risk at any point in the interest rate or credit cycles; and (v) to continue to manage our balance sheet with a targeted financial leverage of 40% relative to our assets .

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We believe that our longer-term escalating triple-net leases with financially strong tenants and operators enhance the quality, stability and growth of our rental income. Further, we believe many of our existing properties hold the potential for increased future cash flows due to their high quality and desirable locations within markets where the creation of new supply is limited by the lack of available sites and the difficulty of obtaining the necessary licensing, other approvals and/or financing. Our strategy for maximizing the benefits from these opportunities is to: (i) work with new or existing tenants and operators to address their space and capital needs and (ii) provide high-quality property management services in order to motivate tenants to renew, expand or relocate into our properties .

The delivery of healthcare services requires real estate and, as a result, tenants and operators depend on real estate, in part, to maintain and grow their businesses. We believe that the healthcare real estate market provides investment opportunities due to the: (i) compelling demographics driving the demand for healthcare services; (ii) specialized nature of healthcare real estate investing; and (iii) ongoing consolidation of the fragmented healthcare real estate sector.

While we emphasize healthcare real estate ownership, we may also provide real estate secured financing to, or invest in equity or debt securities of, healthcare operators or other entities engaged in healthcare real estate ownership. We may also acquire all or substantially all of the securities or assets of other REITs, operating companies or similar entities where such investments would be consistent with our investment strategies. We may co-invest alongside institutional or development investors through partnerships or limited liability companies.

We monitor, but do not limit, our investments based on the percentage of our total assets that may be invested in any one property type, investment vehicle or geographic location, the number of properties that may be leased to a single tenant or operator, or loans that may be made to a single borrower. In allocating capital to our multiple segments, we target opportunities with the most attractive risk/reward profile for our portfolio as a whole. We may take additional measures to mitigate risk, including diversifying our investments (by sector, geography, tenant or operator), structuring transactions as master leases, requiring tenant or operator insurance and indemnifications, and obtaining credit enhancements in the form of guarantees, letters of credit or security deposits.

Because our REIT qualification requires us to distribute at least 90% of our REIT taxable income (excluding net capital gains), we regularly access the public equity and debt markets to raise the funds necessary to finance acquisitions and debt investments, develop and redevelop properties, and refinance maturing debt.

We maintain a conservative balance sheet by actively managing our debt to equity levels, using long-term fixed rate debt and staggering our contractual maturities. We also utilize multiple sources of capital including equity, unsecured bonds, revolving line of credit facilities, term loans, and secured debt. We have relationships with institutional joint venture partners which has been a source of capital for our joint ventures .

We evaluate multiple sources of capital when financing our investments. For debt investments, we may utilize our revolving line of credit facility or originate bank term loans. Typically we fund long term real estate investments with common stock and long term unsecured bonds. Additionally, in connection with joint ventures, we typically utilize non-recourse mortgage debt .

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201 5 Transaction Overview

HCR ManorCare Updates

During the quarter ended March 31, 2015, HCP and HCRMC agreed to market for sale the real estate and operations associated with up to 50 non-strategic assets that are under the Master Lease and Security Agreement (the “Master Lease”) for an estimated total gross sales price between $250 million and $350 million. Six assets are currently under a letter of intent for sale. HCRMC will receive an annual rent reduction under the Master Lease based on 7.75% of the net sales proceeds received by HCP. The asset sales are expected to occur during the second half of 2015 and the first quarter of 2016 .

Additionally, HCP and HCRMC agreed to amend the Master Lease (the “HCRMC Lease Amendment”). Commencing April 1, 2015, HCP provided an annual net rent reduction of $68 million, which equates to initial lease year rent of $473 million, compared to $541 million that would have commenced April 1, 2015 prior to the HCRMC Lease Amendment. The contractual rent will increase by 3.0% annually during the initial term. In exchange, HCP will receive the following consideration :

Fee ownership in nine post-acute facilities valued at $275 million with a median age of four years, currently owned and operated by HCRMC, which transfer is expected to be completed within the next 12 months, subject to customary licensing and regulatory approvals; until the transfer is complete, HCP will retain a lease receivable of equal value, earning income of $19 million annually (included in the amended initial lease year rent of $473 million above ) ;

A second lease receivable with an initial amount of $250 million, payable by HCRMC upon the earlier of: (i) the end of the initial term of the first renewal pool under the HCRMC Lease Amendment, or (ii) certain capital or liquidity events of HCRMC, including an IPO or sale. The $250 million lease receivable amount will increase each year as follows: 3.0% in April 2016 through 2018, 4.0% in 2019, 5.0% in 2020 and 6.0% in 2021 until the end of the initial lease term ; and

Extension of the initial lease term by five years, to an average of 16 years .

We recorded a non-cash impairment charge of $478 million related to our direct financing lease (“DFL”) investments with HCRMC. The non-cash charge reduced the carrying value of the HCRMC DFL investments from $6.6 billion to $6.1 billion, which represents the present value of the future lease payments under the HCRMC Lease Amendment .

HCRMC’s operating performance for the quarter ended March 31, 2015 reflects year-over-year EBITDAR growth of 3.6%, driven by reimbursement rate increases and continued cost controls. HCRMC’s normalized fixed charge coverage ratio for the trailing twelve months ended March 31, 2015 of 1.08x is consistent with the prior quarter and does not reflect the net $68 million annual rent reduction from the HCRMC Lease Amendment (effective on April 1, 2015) or the potential asset sales discussed above. At March 31, 2015, HCRMC’s cash and cash equivalents increased to $142 million .

See Note 6 to the Consolidated Financial Statements for additional discussion on the HCRMC Lease Amendment and impairment of our HCRMC direct financing lease investment. The United States Department of Justice (“DOJ”) filed a complaint against HCRMC that was released from seal on April 20, 201 5 ( see Note 8 to the Consolidated Financial Statements ) .

The Cove Development

In February 2015, we began construction on the first phase, $177 million, of The Cove at Oyster Point, a life science development in South San Francisco, California. The first phase includes two “class A” buildings totaling 253,000 sq. ft. that are expected to be completed in the third quarter of 2016 .

HC-O ne Investment in U.K.

In February 2015, we increased our U.K. HC-One debt investment (“HC-One Facility”) by £108 million to £502 million in conjunction with HC-One’s acquisition of Meridian Healthcare. The HC-One Facility is secured by 303 nursing and residential care homes representing over 13,900 beds in the U.K., primarily located in England and Scotland .

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In April 2015, we converted £174 million of our HC-One Facility to fee ownership in a portfolio of 36 care homes under long term triple-net leases that provide aggregate rent in the first year of £13 million. The contractual rent will increase annually by the Retail Price Index (“RPI”) and will be reset to fair market rent at the end of lease years 15 and 25. The triple-net leases have initial terms of 30 years with lessee termination options at the end of lease years 15 and 25 .

Other Investment Transactions

In March 2015, we formed a new RIDEA joint venture (“MBK JV”) with MBK Senior Living (“MBK”), a subsidiary of Mitsui & Co. Ltd, that acquired three senior housing facilities for $126 million with HCP and MBK each owning a 50% equity interest. MBK manages these communities on behalf of this joint venture. At closing, we contributed $27 million of cash and MBK contributed the three senior housing facilities, which were encumbered by $78 million of mortgage debt. The MBK JV intends to acquire additional senior housing facilities by focusing on off-market transactions .

During the quarter ended M arch 31, 2015, we commenced on $65 million of other development projects .

In March 2015, we exercise d the purchase option under our $18 million development loan and acquire a newly developed assisted living and memory care facility in Houston, Texas for $36 million. The facility is managed by Brookdale Senior Living Inc. (“Brookdale”) and at closing was 98.9% occupied and placed in a RIDEA structure with Brookdale acquiring a 10% noncontrolling interest .

$849 Million Acquisition of Private Pay Senior Housing Portfolio

In March 2015, HCP and Brookdale entered into a definitive agreement to acquire from Chartwell Retirement Residences a portfolio of 35 private pay senior housing communities, including two leasehold interests, representing 5,025 units (the “Chartwell Portfolio”) for $849 million. The Chartwell Portfolio will be acquired in a RIDEA structure, and Brookdale will acquire a 10% noncontrolling interest. Brookdale has operated these communities since 2011 after its acquisition of Horizon Bay, and will continue to manage the communities post-closing under a long-term management agreement, which is cancellable under certain conditions, subject to a fee if terminated within the next seven years. The closing of this acquisition is expected in the third quarter and remains subject to regulatory approvals and other customary closing conditions .

Additional Investments Through May 5, 2015

In April 2015, we acquired a medical office building (“MOB”) for $161 million. The MOB is located in Philadelphia, Pennsylvania with 705,000 rentable sq. ft. and is currently 85% occupied .

In April 2015, we exercised our purchase option under our $41 million development loan to acquire a newly developed assisted living and memory care facility in Germantown, Tennessee for $72 million. The facility will be managed by Brookdale and placed in a RIDEA structure with Brookdale acquiring a 10% noncontrolling interest. We expect to close this acquisition in the second quarter of 2015, subject to customary closing conditions .

Financing Activities

In January 2015, we issued $600 million of 3.40% senior unsecured notes due 2025. The notes were priced at 99.185% of the principal amount with a yield-to-maturity of 3.497%. Net proceeds were used to repay the entire $105 million U.S. dollar amount outstanding on our revolving credit facility at closing and $200 million of 6.00% senior unsecured notes that matured on March 1, 2015. We intend to use the remaining proceeds to repay $200 million of 7.00% senior unsecured notes maturing in June 2015 and for general corporate purposes .

In January 2015, to economically hedge a portion of our foreign currency risk from the HC-One Facility, we completed a £220 million four-year unsecured term loan that accrues interest at GBP LIBOR plus 0.975%, subject to adjustments based on our credit ratings. Concurrently, we entered into a three-year interest rate swap agreement that fixes the rate of the term loan at 1.79%, and a foreign currency swap agreement that fixes the GBP/USD exchange rate at 1.5149 on interest income from the HC-One debt investment in excess of interest payments on the term loan. Proceeds from this term loan repaid £220 million of the GBP balance drawn on our revolving credit facility that were used to fund our HC-One debt investment in November 2014 .

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Dividends

On April 30 , 201 5 , we announced that our Board declared a quarterly common stock cash dividend of $0.5 6 5 per share. The common stock dividend will be paid on May 26 , 201 5 to stockholders of record as of the close of business on May 11 , 201 5 .

Results of Operations

We evaluate our business and allocate resources among our business segments: (i) senior housing, (ii) post-acute/skilled nursing, (iii) life science, (iv) medical office and (v) hospital. Under the senior housing, post-acute/skilled nursing, life science and hospital segments, we primarily invest, through the acquisition and development, in single operator or tenant properties and debt issued by operators in these sectors. Under the medical office segment, we invest, through the acquisition and development, in single or multi-tenant medical office buildings (“MOBs”) , which generally require a greater level of property management.

Non-GAAP Financial Measures

Net Operating Income (“NOI”)

NOI and adjusted NOI are non-GAAP supplemental financial measures used to evaluate the operating performance of real estate. NOI is defined as rental and related revenues, including tenant recoveries, resident fees and services, and income from direct financing leases (“ DFLs ”) , less property level operating expense; NOI excludes all other financial statement amounts included in net (loss) income as presented in Note14 to the Consolidated Financial Statements. Management believes NOI provides relevant and useful information because it reflects only income and operating expense items that are incurred at the property level and presents them on an unleveraged basis. Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL accretion, amortization of market lease intangibles and lease termination fees. Adjusted NOI is oftentimes referred to as “cash NOI.” We use NOI and adjusted NOI to make decisions about resource allocations and to assess and compare property level performance. We believe that net (loss) income is the most directly comparable GAAP measure to NOI. NOI should not be viewed as an alternative measure of operating performance to net (loss) income as defined by GAAP because it does not reflect various excluded items. Further, our definition of NOI may not be comparable to the definition used by other REITs or real estate companies, as those companies may use different methodologies for calculating NOI . NOI and adjusted NOI are non-GAAP supplemental financial measures; for a reconciliation of net (loss) income to NOI and adjusted NOI and other relevant disclosure, refer to Note 14 to the Consolidated Financial Statements .

Operating expenses generally relate to leased medical office and life science properties and senior housing RIDEA properties. We generally recover all or a portion of our leased medical office and life science property expenses through tenant recoveries. We present expenses as operating or general and administrative based on the underlying nature of the expense. Periodically, we review the classification of expenses between categories and make revisions based on changes in the underlying nature of the expenses .

Same Property Portfolio (“SPP”)

Our evaluation of results of operations by each business segment includes an analysis of NOI and adjusted NOI of our SPP and our total property portfolio. We believe NOI provides relevant and useful information because it reflects only income and operating expense items that are incurred at the property level and presents them on an unleveraged basis. We use NOI and adjusted NOI to make decisions about resource allocations and to assess and compare property level performance. SPP NOI and adjusted NOI information allows us to evaluate the performance of our property portfolio under a consistent population by eliminating changes in the composition of our portfolio of properties. We identify our SPP as stabilized properties that remained in operations and were consistently reported as leased properties or RIDEA properties for the duration of the year over year comparison periods presented. Accordingly, it takes a stabilized property a minimum of 12 months in operations under a consistent reporting structure to be included in our SPP. Newly acquired operating assets are generally considered stabilized at the earlier of lease up (typically when the tenant(s) controls the physical use of at least 80% of the space) or 12 months from the acquisition date. Newly completed developments and redevelopments are considered stabilized at the earlier of lease up or 24 months from the date the property is placed in service. SPP NOI excludes certain non - property specific operating expenses that are allocated to each operating segment on a consolidated

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basis. A property is removed from our SPP when it is sold, placed into redevelopment or contributed to partnerships under a RIDEA structure .

Funds From Operations (“FFO”)

We believe FFO applicable to common shares, diluted FFO applicable to common shares, and diluted FFO per common share are important supplemental non-GAAP measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets utilizes straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. The term FFO was designed by the REIT industry to address this issue.

FFO as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) is net (loss) income applicable to common shares (computed in accordance with GAAP), excluding gains or losses from sales of property, impairments of, or related to, depreciable real estate, plus real estate and DFL depreciation and amortization, and after adjustments for joint ventures. Adjustments for joint ventures are calculated to reflect FFO on the same basis. FFO does not represent cash generated from operating activities in accordance with GAAP, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net (loss) income. We compute FFO in accordance with the current NAREIT definition; however, other REITs may report FFO differently or have a different interpretation of the current NAREIT definition from ours.

In addition, we present FFO before the impact of severance related charges, litigation settlement charges, preferred stock redemption charges, impairments (recoveries) of non - depreciable assets and transaction - related items (defined below) (“FFO as adjusted”). Transaction-related items include acquisition and pursuit costs (e.g., due diligence and closing) and gains/charges incurred as a result of mergers and acquisitions and lease amendment or termination activities. Management believes that FFO as adjusted provides a meaningful supplemental measurement of our FFO run-rate. This measure is a modification of the NAREIT definition of FFO and should not be used as an alternative to net (loss) income (determined in accordance with GAAP) or NAREIT FFO . FFO and FFO as adjusted are non-GAAP supplemental financial measures; for a reconciliation of net (loss) income to FFO and FFO as adjusted and othe r relevant disclosure, refer to “ Non-GAAP Financial Measures Reconcil i ations” below .

Funds Available for Distribution (“FAD”)

FAD is defined as FFO as adjusted after excluding the impact of the following: (i) amortization of acquired market lease intangibles, net; (ii) amortization of deferred compensation expense; (iii) amortization of deferred financing costs, net; (iv) straight-line rents; (v) accretion and depreciation related to DFLs and lease incentive amortization (reduction of straight-line rents) ; and (vi) deferred revenues, excluding amounts amortized into rental income that are associated with tenant funded improvements owned/recognized by us and up-front cash payments made by tenants to reduce their contractual rents. Also, FAD is: (i) computed after deducting recurring capital expenditures, including leasing costs and second generation tenant and capital improvements; and (ii) includes lease restructure payments and adjustments to compute our share of FAD from our unconsolidated joint ventures and those related to CCRC non-refundable entrance fees. Other REITs or real estate companies may use different methodologies for calculating FAD, and accordingly, our FAD may not be comparable to those reported by other REITs. Although our FAD computation may not be comparable to that of other REITs, management believes FAD provides a meaningful supplemental measure of our performance and is frequently used by analysts, investors, and other interested parties in the evaluation of our performance as a REIT. FAD does not represent cash generated from operating activities determined in accordance with GAAP, is not necessarily indicative of cash available to fund cash needs, and should not be considered as an alternative to net (loss) income determined in accordance with GAAP . FAD is a non-GAAP supplemental financial measure; for a reconciliation of net (loss) income to FAD , as defined, and other relevant disclosure, refer to “Non-GAAP Financial Measures Reconcil i ations” below .

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Comparison of the Three Months Ended March 31, 2015 to the Three Months Ended March 31 , 201 4

Overview (1)

Results are for the three months ended March 31, 201 5 and 2014 (dollars in thousands except per share data):


	Three Months Ended				Three Months Ended				Per
	March 31, 2015				March 31, 2014				Share
	Amount		Per Share		Amount		Per Share		Change
FFO	$	(117,572)	$	(0.26)	$	343,139	$	0.75	$	(1.01)
FFO as adjusted		364,282		0.79		343,634		0.75		0.04
FAD		319,581		0.69		287,516		0.63		0.06
Net (loss) income applicable to common shares		(240,949)		(0.52)		258,047		0.56		(1.08)

________________________________________

(1 ) For the reconciliation, see “Non-GAAP Financial Measures Reconciliations ” section below .

FFO as adjusted and FAD increased $0.0 4 and $0.0 6 per share, respectively, primarily as a result of increased NOI from our SPP , 201 4 acquisitions and incremental interest income from the repayment of a development loan resulting from our share in the appreciation of the underlying real estate asset .

FFO and e arnings per share ("EPS") de creased primarily as a result of a $4 7 8 million impairment related to our DFL investments with HCRMC , partially offset by the aforementioned events impacting FFO as adjusted and FAD .

Segment NOI and Adjusted NOI

The tables below provide selected operating information for our SPP and total property portfolio for each of our business segments. Our consolidated SPP consists of 1,0 1 1 properties representing properties acquired or placed in service and stabilized on or prior to January 1, 201 4 and that remained in operations under a consistent reporting structure through March 31, 2015 . Our consolidated total property portfolio represents 1, 1 01 and 1,0 8 0 properties at March 31, 2015 and 2014 , respectively, and excludes properties that were sold.

Results are as of and for the three months ended March 31, 2015 and 2014 (dollars and square feet in thousands except per capacity data):

Senior Housing


	SPP							Total Portfolio
	Three Months Ended March 31,							Three Months Ended March 31,
	2015		2014		Change			2015		2014		Change
Rental revenues (1)	$	124,266	$	124,762	$	(496)		$	127,382	$	150,085	$	(22,703)
Resident fees and services		39,269		38,048		1,221			105,013		38,053		66,960
Total segment revenues		163,535		162,810		725			232,395		188,138		44,257
Operating expenses		(24,344)		(24,028)		(316)			(75,510)		(24,548)		(50,962)
NOI		139,191		138,782		409			156,885		163,590		(6,705)
Straight-line rents		(4,657)		(9,090)		4,433			(5,040)		(10,524)		5,484
DFL accretion		(2,323)		(2,544)		221			(2,323)		(2,544)		221
Amortization of above and below market lease intangibles, net		(153)		(153)		—			(153)		(147)		(6)
Lease termination fees		—		—		—			1,103		—		1,103
Adjusted NOI	$	132,058	$	126,995	$	5,063		$	150,472	$	150,375	$	97
Adjusted NOI % change						4.0	%
Property count (2)		383		383					458		444
Average capacity (units) (3)		38,363		38,393					44,908		45,560
Average annual rent per unit (4)	$	13,808	$	13,272				$	13,481	$	13,283

(1)

Represents rental and related revenues and income from DFLs.

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(2)

From our past presentation of SPP for the three months ended March 3 1 , 201 4 , we removed eight senior housing propert ies from SPP that were sold and 5 1 senior housing properties that were contributed to partnerships under a RIDEA structure as part of the 2014 Brookdale Transaction and no longer meet our criteria for SPP as of the date of contribution.

(3)

Represents average capacity as reported by the respective tenants or operators for the twelve-month period and a quarter in arrears from the periods presented.

(4)

Average annual rent per unit for RIDEA properties is based on NOI.

SPP Adjusted NOI . SPP adjusted NOI improved as a result of annual rent increases and improved performance from RIDEA properties .

Total Portfolio NOI . O ur total portfolio NOI de creased primarily as a result of contributing three assets into the CCRC JV in August 2014 and the sale of eight assets in January 2015 as part of the 2014 Brookdale Transaction (see Note 3 to the Consolidated Financial Statements) , partially offset by the impact from our SPP and senior housing acquisitions in 2014 .

Post-Acute/Skilled Nursing


	SPP							Total Portfolio
	Three Months Ended March 31,							Three Months Ended March 31,
	2015		2014		Change			2015		2014		Change
Rental revenues (1)	$	140,357	$	137,310	$	3,047		$	140,576	$	137,780	$	2,796
Operating expenses		(79)		(73)		(6)			(533)		(532)		(1)
NOI		140,278		137,237		3,041			140,043		137,248		2,795
Straight-line rents		(97)		(282)		185			(113)		(282)		169
DFL accretion		(17,981)		(18,831)		850			(17,981)		(18,878)		897
Amortization of above and below market lease intangibles, net		11		11		—			11		11		—
Adjusted NOI	$	122,211	$	118,135	$	4,076		$	121,960	$	118,099	$	3,861
Adjusted NOI % change						3.5	%
Property count (2)		301		301					301		302
Average capacity (beds) (3)		38,282		38,279					38,282		38,464
Average annual rent per bed	$	12,777	$	12,351				$	12,798	$	12,336

(1)

Represents rental and related revenues and income from DFLs.

(2)

From our past presentation of SPP for the three months ended March 3 1 , 201 4 , we removed a post-acute/skilled nursing propert y from SPP that was sold.

(3)

Represents average capacity as reported by the respective tenants or operators for the twelve-month period and a quarter in arrears from the periods presented.

NOI and Adjusted NOI . SPP and total portfolio NOI and adjusted NOI increased primarily as a result of annual rent escalations from our HCRMC DFL investments .

See “2015 Transaction Overview” above for further discussion of developments with HCRMC .

During the quarter ended March 31, 2015 we recorded a net impairment charge of $478 million related to our DFL investments with HCRMC. The impairment charge reduced the carrying value of the HCRMC DFL investments from $6.6 billion to $6.1 billion. The impairment determination resulted from recent discussions with HCRMC in which they expressed an increasing desire to reduce rent in consideration of potential economic trades to HCP prior to the April 1, 2015 rental increase of 3.5% under the Master Lease (without regard to the HCRMC Lease Amendment). HCRMC indicated that they sought an amendment of the Master Lease to provide financial flexibility to meet the reimbursement and competitive challenges they face in operating and growing their business, and to remove any uncertainty that could result from any further deterioration in their operating results and corresponding ability to remain in compliance with the covenants under their credit facilities .

See Note 6 to the Consolidated Financial Statements for additional discussion on the HCRMC Lease Amendment and the impairment of our HCRMC DFL investment. The DOJ filed a complaint against HCRMC that was released from seal on April 20, 2015 ( see Note 8 to the Consolidated Financial Statements ) .

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Life Science


	SPP									Total Portfolio
	Three Months Ended March 31,									Three Months Ended March 31,
	2015			2014			Change			2015			2014			Change
Rental and related revenues	$	64,852		$	61,905		$	2,947		$	69,504		$	64,781		$	4,723
Tenant recoveries		12,811			10,871			1,940			14,047			11,341			2,706
Total segment revenues		77,663			72,776			4,887			83,551			76,122			7,429
Operating expenses		(13,983)			(12,493)			(1,490)			(16,699)			(14,161)			(2,538)
NOI		63,680			60,283			3,397			66,852			61,961			4,891
Straight-line rents		(2,637)			(2,322)			(315)			(3,159)			(2,580)			(579)
Amortization of above and below market lease intangibles, net		52			(1)			53			84			18			66
Lease termination fees		—			—			—			—			(570)			570
Adjusted NOI	$	61,095		$	57,960		$	3,135		$	63,777		$	58,829		$	4,948
Adjusted NOI % change								5.4	%
Property count (1)		106			106						111			111
Average occupancy		96.3	%		91.0	%					96.2	%		91.1	%
Average occupied square feet		6,616			6,240						7,046			6,411
Average annual total segment revenues per occupied square foot	$	45		$	45					$	46		$	46
Average annual base rent per occupied square foot	$	38		$	38					$	38		$	38

(1)

From our past presentation of SPP for the three months ended March 3 1 , 201 4 , we removed a life science facilit y from SPP that was placed into land held for development and a life science facility that was placed into redevelopment in 2014 , which no longer meet our criteria for SPP as of the date placed into development or redevelopment .

SPP NOI and Adjusted NOI . SPP NOI and adjusted NOI increased primarily as a result of increased occupancy. Additionally, SPP adjusted NOI increased as a result of annual rent escalations.

Total Portfolio NOI and Adjusted NOI . In addition to the impact of our SPP, our total portfolio NOI and adjusted NOI increased primarily as a result of the impact of our life science development projects placed in to service during 201 4 .

During the three months ended March 31, 2015 , 215 ,000 square feet of new and renewal leases commenced at an average annual base rent of $ 37.24 per square foot compared to 119 ,000 square feet of expiring leases with an average annual base rent of $ 29.01 per square foot.

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Medical Office


	SPP									Total Portfolio
	Three Months Ended March 31,									Three Months Ended March 31,
	2015			2014			Change			2015			2014			Change
Rental and related revenues	$	75,450		$	75,051		$	399		$	83,119		$	75,765		$	7,354
Tenant recoveries		13,504			13,420			84			15,186			13,497			1,689
Total segment revenues		88,954			88,471			483			98,305			89,262			9,043
Operating expenses		(33,688)			(33,498)			(190)			(38,252)			(35,516)			(2,736)
NOI		55,266			54,973			293			60,053			53,746			6,307
Straight-line rents		(1,156)			(999)			(157)			(1,829)			(1,002)			(827)
Amortization of above and below market lease intangibles, net		164			271			(107)			23			293			(270)
Lease termination fees		(60)			(8)			(52)			(60)			(8)			(52)
Adjusted NOI	$	54,214		$	54,237		$	(23)		$	58,187		$	53,029		$	5,158
Adjusted NOI % change								—	%
Property count (1)		205			205						215			207
Average occupancy		90.5	%		91.4	%					90.2	%		90.9	%
Average occupied square feet		12,642			12,762						13,750			12,861
Average annual total segment revenues per occupied square foot	$	28		$	27					$	28		$	27
Average annual base rent per occupied square foot	$	23		$	23					$	24		$	23

(1)

From our past presentation of SPP for the three months ended March 3 1 , 201 4 , we removed a MOB from SPP that was sold.

Total Portfolio NOI and Adjusted NOI . O ur t otal portfolio NOI and adjusted NOI in creased primarily as a result of the impact of our medical office acquisitions in 2014.

During the three months ended March 31, 2015 , 388 ,000 square feet of new and renewal leases commenced at an average annual base rent of $ 25 . 91 per square foot compared to 451 ,000 square feet of expiring and terminated leases with an average annual base rent of $ 2 6 .8 1 per square foot.

Hospital


	SPP							Total Portfolio
	Three Months Ended March 31,							Three Months Ended March 31,
	2015		2014		Change			2015		2014		Change
Rental revenues (1)	$	21,567	$	20,935	$	632		$	21,580	$	20,948	$	632
Tenant recoveries		662		597		65			662		597		65
Total segment revenues		22,229		21,532		697			22,242		21,545		697
Operating expenses		(1,037)		(947)		(90)			(1,037)		(950)		(87)
NOI		21,192		20,585		607			21,205		20,595		610
Straight-line rents		594		408		186			594		408		186
Amortization of above and below market lease intangibles, net		(342)		(342)		—			(342)		(342)		—
Adjusted NOI	$	21,444	$	20,651	$	793		$	21,457	$	20,661	$	796
Adjusted NOI % change						3.8	%
Property count		16		16					16		16
Average capacity (beds) (2)		2,221		2,221					2,221		2,221
Average annual rent per bed	$	40,488	$	38,898				$	40,511	$	38,921

(1)

Represents rental and related revenues and income from DFLs .

(2)

Represents capacity as reported by the respective tenants or operators for the twelve-month period and a quarter in arrears from the periods presented. Certain operators in our hospital portfolio are not required under their respective leases to provide operational data.

NOI and Adjusted NOI . SPP and total portfolio NOI and adjusted NOI increased primarily as a result of additional rents earned in 201 5 due to exceeding pre-established thresholds and annual rent escalations.

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Other Income and Expense Items

Interest income

Interest income in creased $ 17 million to $ 33 million for the three months ended March 31, 2015 . The in crease was primarily the result of income from our HC-One F acility in November 2014 and February 2015 (see Note 7 to the Consolidated Financial Statements) and incremental interest income from the repayment of a development loan resulting from the appreciation of the underlying real estate asset .

Interest expense

Interest expense in creased $ 10 million to $ 117 million for the three months ended March 31, 2015 . The in crease was primarily the result of : (i) our senior unsecured notes offering s during 201 4 and 201 5 , (ii) increased borrowings from our term loan originated in 2015, (iii) increased borrowings under our line of credit facility and (iv) lower capitalized interest. The increases in interest expense were partially offset by repayments of senior unsecured notes and mortgage debt that matured during 201 4 and 201 5 .

Our exposure to expense fluctuations related to our variable rate indebtedness is substantially mitigated by our interest rate swap contracts. For a more detailed discussion of our interest rate risk, see “Quantitative and Qualitative Disclosures About Market Risk” in Item 3.

The table below sets forth information with respect to our debt, excluding premiums and discounts (dollars in thousands):


	As of March 31, (1)
	2015			2014
Balance:
Fixed rate	$	9,553,025		$	8,371,372
Variable rate		367,055			33,955
Total	$	9,920,080		$	8,405,327
Percent of total debt:
Fixed rate		96.3	%		99.6	%
Variable rate		3.7	%		0.4	%
Total		100.0	%		100.0	%
Weighted average interest rate at end of period:
Fixed rate		4.80	%		5.16	%
Variable rate		1.70	%		1.15	%
Total		4.68	%		5.14	%

(1)

A t March 31, 2015 , excludes $9 6 million of other debt that represents non-interest bearing life care bonds and occupancy fee deposits at certain of our senior housing facilities and d emand n otes that have no scheduled maturities . A t March 3 1 , 201 4 , excludes $7 4 million of other debt that represents non-interest bearing life care bonds and occupancy fee deposits at certain of our senior housing facilities. At March 31, 2015 and 2014 , $7 1 million and $72 million, respectively, of variable-rate mortgages and £357 million and £137 million ( $530 million and $2 2 8 million) , respectively, of term loan s are presented as fixed-rate debt as the interest payments were swapped from variable to fixed.

Depreciation and amortization expense

Depreciation and amortization expense increased $ 7 million to $ 115 million for the three months ended March 31, 2015 . The increase was primarily the result of the impact of our acquisitions and re development projects placed in service during 201 4 .

General and administrative expenses

General and administrative expenses in creased $ 4 million to $ 25 million for the three months ended March 31, 2015 . The in crease was primarily the result of higher compensation expenses .

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Acquisition and pursuit costs

Acquisition and pursuit costs in creased $ 3 million to $ 3 million for the three months ended March 31, 2015. The increase was primarily due to higher levels of transactional activity in 201 5 . Acquisition and pursuit costs were previously included in general and administrative expenses .

Impairments

During the three months ended March 31, 201 5 , we recognized an impairment charge of $ 4 7 8 million related to our DFL investments with HCRMC (see Note 6 to the Consolidated Financial Statements).

Equity income from unconsolidated joint ventures

Equity income from unconsolidated joint ventures de creased $ 1 million to $ 14 million for the three months ended March 31, 2015 . The de crease was primarily the result of our share of losses recognized from our CCRC JV , partially offset by an increase in our share of earnings from our HCRMC investment .

Gain on sales of real estate

During the three months ended March 3 1 , 2015 , we sold eight senior housing faci lities and recognized gains of $ 6 million . During the three months ended March 3 1 , 201 4 , we sold two post-acute/skilled nursing facilities and a hospital and recognized gain s of $ 2 8 million.

Liquidity and Capital Resources

During the three months ended March 31, 201 5 , distributions to stockholders and noncontrolling interest holders exceeded cash flows from operations by approximately $ 35 million, which was funded by cash on hand. We anticipate satisfying our distributions to our stockholders and non-controlling interest members for the next 12 months by primarily using cash flow from operations and available cash balances. Additionally, we expect to meet our scheduled financing maturities for 2015 (excluding future acquisitions) with the proceeds from our January 2015 $600 million senior unsecured note offering .

Our principal investing liquidity needs for the next 12 months are to :

fund capital expenditures, including tenant improvements and leasing costs; and

fund future acquisition, transactional and development activities

We anticipate satisfying these future investing needs using one or more of the following :

issuance of common or preferred stock ;

issuance of additional debt, including unsecured notes and mortgage debt ;

draws on our credit facilities; and/or

sale or exchange of ownership interests in properties .

Access to capital markets impacts our cost of capital and ability to refinance maturing indebtedness, as well as our ability to fund future acquisitions and development through the issuance of additional securities or secured debt. Credit ratings impact our ability to access capital and directly impact our cost of capital as well. For example, as noted below, our revolving line of credit facility accrues interest at a rate per annum equal to LIBOR plus a margin that depends upon our credit ratings. We also pay a facility fee on the entire revolving commitment that depends upon our credit ratings. As of April 30, 2015, we had a credit rating of BBB+ from Fitch, Baa1 from Moody’s and BBB+ from S&P on our senior unsecured debt securities .

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Cash Flow Summary

The following summary discussion of our cash flows is based on the c onsolidated s tatements of c ash f lows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below .

Cash and cash equivalents were $1 37 million and $ 184 million at March 31, 201 5 and December 31, 201 4 , respectively, representing a decrease of $ 47 million. The following table sets forth changes in cash flows (dollars in thousands) :


	Three Months Ended March 31,
	2015		2014		Change
Net cash provided by operating activities	$	230,068	$	247,181	$	(17,113)
Net cash used in investing activities		(328,286)		(46,551)		(281,735)
Net cash provided by (used in) financing activities		51,722		(451,450)		503,172

The de crease in operating cash flows is primarily the result of the following: increases in accounts receivables and other assets, and decreases in accounts payable and accrued liabilities. The decreases in operating cash flows were partially offset by increases as a result of (i) the impact from our investments, (ii) redevelopment assets placed in service and (iii) rent escalations and resets . Our cash flows from operations are dependent upon the occupancy levels of our buildings, rental rates on leases, our tenants’ performance on their lease obligations, the level of operating expenses and other factors .

The following are significant investing and financing activities for the three months ended March 3 1 , 201 5 :

made investments of $ 3 49 million (development and acquisition of real estate , and investments in unconsolidated joint ventures and loans);

paid dividends on common stock of $ 261 million, which were generally funded by cash provided by our operating activities and cash on hand ; and

raised proceeds of $ 99 1 m illion primarily from sales of senior unsecured notes , borrowings under the term loan originated in January 2015 and issuances of common stock; and repaid $ 662 million of borrowings under our bank line of credit, senior unsecured notes and mortgages .

Debt

Bank Line of Credit and Term Loan

Our $2.0 billion unsecured revolving line of credit facility (the “Facility”) matures on March 31, 2018 and contains a one-year extension option. Borrowings under the Facility accrue interest at LIBOR plus a margin that depends upon our debt ratings. We pay a facility fee on the entire revolving commitment that depends on its debt ratings. Based on our debt ratings at April 3 0 , 2015, the margin on the Facility was 0.925%, and the facility fee was 0.15%. The Facility also includes a feature that will allow us to increase the borrowing capacity by an aggregate amount of up to $500 million, subject to securing additional commitments from existing lenders or new lending institutions. At March 31, 2015, we had £24 2 million ( $359 million ) outstanding under the Facility with a weighted average effective interest rate of 1.72 % .

On January 12, 2015, we entered into a credit agreement with a syndicate of banks for a £220 million ( $327 million at March 31, 2015) four -year unsecured term loan (the “2015 Term Loan ”) that accrues interest at a rate of GBP LIBOR plus 0.975%, subject to adjustments based on our credit ratings. Proceeds from this term loan were used to repay £220 million draw on the Facility to fund the November 2014 HC-One debt investment (see Note 7). Concurrently, we entered into a three -year interest rate swap agreement that effectively fixes the interest rate of the 2015 Term Loan at 1.79% (see Note 20). The 2015 Term Loan contains a one -year committed extension option.

The Facility and t erm l oan s contain certain financial restrictions and other customary requirements. Among other things, these covenants, using terms defined in the agreements, (i) limit the ratio of Consolidated Total Indebtedness to Consolidated Total Asset Value to 60%, (ii) limit the ratio of Secured Debt to Consolidated Total Asset Value to 30%,

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(iii) limit the ratio of Unsecured Debt to Consolidated Unencumbered Asset Value to 60% and (iv) require a minimum Fixed Charge Coverage ratio of 1.5 times. The Facility and Term Loan s also require a Minimum Consolidated Tangible Net Worth of $9.5 billion at March 31, 2015 . At March 31, 2015 , we were in compliance with each of these restrictions and requirements of the Facility and Term Loan s .

Senior Unsecured Notes

At March 31, 2015 , we had senior unsecured notes outstanding with an aggregate principal balance of $ 8.1 billion. Interest rates on the notes ranged from 2.79% to 6.99% with a weighted average effective interest rate of 4. 82 % and a weighted average maturity of six years at March 31, 2015 . The senior unsecured notes contain certain covenants including limitations on debt, maintenance of unencumbered assets, cross-acceleration provisions and other customary terms. We believe we were in compliance with these covenants at March 31, 2015 .

Mortgage Debt

At March 31, 2015 , we had $ 981 million in aggregate principal amount of mortgage debt outstanding is secured by 70 healthcare facilities (including redevelopment properties) , which have a carrying value of $1. 3 billion. Interest rates on the mortgage debt ranged from 0.42% to 8.38% with a weighted average effective interest rate of 6. 15 % and a weighted average maturity of three years at March 31, 2015 .

Mortgage debt generally requires monthly principal and interest payments, is collateralized by real estate assets and is generally non-recourse. Mortgage debt typically restricts transfer of the encumbered assets, prohibits additional liens, restricts prepayment, requires payment of real estate taxes, requires maintenance of the assets in good condition, requires maintenance of insurance on the assets, and includes conditions to obtain lender consent to enter into and terminate material leases. Some of the mortgage debt is also cross-collateralized by multiple assets and may require tenants or operators to maintain compliance with the applicable leases or operating agreements of such real estate assets.

Equity

At March 31, 2015 , we had 4 62 million shares of common stock outstanding. At March 31, 2015 , equity totaled $1 0.6 billion and our equity securities had a market value of $ 20.2 billion.

At March 31, 2015 , non-managing members held an aggregate of 4 million units in five limited liability companies (“DownREITs”) for which we are the managing member. The DownREIT units are exchangeable for an amount of cash approximating the then-current market value of shares of our common stock or, at our option, shares of our common stock (subject to certain adjustments, such as stock splits and reclassifications).

Capital Market Outlook

The capital markets have facilitated our continued growth , including our international expansion. For the 15 months ended March 31, 2015, we have raised $1.75 billion in senior unsecured notes, originated a £220 million ($333 million) four-year unsecured term loan and increased our Facility from $1.5 to $2.0 billion. The capital raised, in combination with available cash and borrowing capacity under our Facility, supported $2.1 billion and $332 million of investments completed during the year ended December 31, 2014 and three months ended March 31, 2015, respectively. We believe our equity and debt investors , as well as our banking relationships , will provide additional capital as we pursue new investment opportunities .

Shelf Registration

We have a prospectus that we filed with the U.S. Securities and Exchange Commission (the “SEC”) as part of a registration statement on Form S-3ASR, using a shelf registration process which expires in July 2015. Under the “shelf” process, we may sell any combination of the securities described in the prospectus in one or more offerings. The securities described in the prospectus include common stock, preferred stock, depositary shares, debt securities and warrants.

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Contractual Obligations

The following table summarizes our material contractual payment obligations and commitments at March 31, 2015 (in thousands):


			Less than						More than
	Total (1)		One Year		2016-2017		2018-2019		Five Years
Bank line of credit (2)	$	358,555	$	—	$	—	$	358,555	$	—
Term loans (3)		530,038		—		203,404		326,634		—
Senior unsecured notes		8,050,000		200,000		1,650,000		1,050,000		5,150,000
Mortgage debt		981,487		35,549		874,113		8,655		63,170
Construction loan commitments (4)		7,891		7,891		—		—		—
Development commitments (5)		129,365		108,020		21,345		—		—
Ground and other operating leases		249,391		5,437		12,985		12,142		218,827
HCP Ventures IV support commitment		114,220		—		114,220		—		—
Interest (6)		2,594,490		270,305		758,281		491,710		1,074,194
Total	$	13,015,437	$	627,202	$	3,634,348	$	2,247,696	$	6,506,191

(1)

Excludes $9 6 million of other debt that represents Life Care Bonds and Demand Notes that have no scheduled maturities .

(2)

Represents £ 24 2 million translated into U.S. dollars.

(3)

Represents £ 357 million translated into U.S. dollars .

(4)

Represents commitments to finance development projects and related working capital.

(5)

Represents construction and other commitments for developments in progress.

(6)

Interest on variable-rate debt is calculated using rates in effect at March 31, 2015 .

Off-Balance Sheet Arrangements

We own interests in certain unconsolidated joint ventures as described under Note 8 to the Consolidated Financial Statements. Except in limited circumstances, our risk of loss is limited to our investment in the joint venture and any outstanding loans receivable (see Note 17 to the Consolidated Financial Statements) . In addition, we have certain properties which serve as collateral for debt that is owed by a previous owner of certain of our facilities. Our risk of loss for these certain properties is limited to the outstanding debt balance plus penalties, if any. We have no other material off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources except those described below under “ Contractual Obligations . ”

Inflation

Our leases often provide for either fixed increases in base rents or indexed escalators, based on the Consumer Price Index or other measures, and/or additional rent based on increases in the tenants’ operating revenues. Most of our MOB leases require the tenant to pay a share of property operating costs such as real estate taxes, insurance and utilities. Substantially all of our senior housing, life science, post-acute/skilled nursing and hospital leases require the operator or tenant to pay all of the property operating costs or reimburse us for all such costs. We believe that inflationary increases in expenses will be offset, in part, by the operator or tenant expense reimbursements and contractual rent increases described above.

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Non-GAAP Financial Measures Reconciliations

Funds From Operations and Funds Available for Distribution

The following is a reconciliation from net (loss) income applicable to common shares, the most directly comparable financial measure calculated and presented in accordance with GAAP, to FFO , FFO as adjusted and FAD (in thousands, except per share data) :


	Three Months Ended March 31,
	2015		2014
Net (loss) income applicable to common shares	$	(240,949)	$	258,047
Depreciation and amortization of real estate, in-place lease and other intangibles		114,522		107,388
Other depreciation and amortization		6,684		3,846
Gain on sales of real estate		(6,264)		(28,010)
Equity income from unconsolidated joint ventures		(13,601)		(14,528)
FFO from unconsolidated joint ventures		24,849		16,961
Noncontrolling interests’ and participating securities’ share in earnings		3,446		5,576
Noncontrolling interests’ and participating securities’ share in FFO		(6,259)		(6,141)
FFO applicable to common shares		(117,572)		343,139
Distributions on dilutive convertible units		—		3,420
Diluted FFO applicable to common shares	$	(117,572)	$	346,559

Diluted FFO per common share	$	(0.26)	$	0.75

Weighted average shares used to calculate diluted FFO per common share		460,880		463,661

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	Three Months Ended March 31,
	2015		2014

Net (loss) income applicable to common shares	$	(0.52)	$	0.56
Depreciation and amortization of real estate, in-place lease and other intangibles		0.25		0.23
Other depreciation and amortization		0.01		0.01
Gain on sales of real estate		(0.01)		(0.06)
Joint venture and participating securities FFO adjustments		0.01		0.01
Diluted FFO applicable to common shares	$	(0.26)	$	0.75

Impact of adjustments to FFO:
Other impairment (1)	$	478,464	$	—
Transaction-related items (2)		3,390		495
	$	481,854	$	495

FFO as adjusted applicable to common shares	$	364,282	$	343,634
Distributions on dilutive convertible units and other		3,194		3,420
Diluted FFO as adjusted applicable to common shares	$	367,476	$	347,054

Diluted FFO as adjusted per common share	$	0.79	$	0.75

Weighted average shares used to calculate diluted FFO as adjusted per common share		467,229		463,661

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	Three Months Ended March 31,
	2015		2014
FFO as adjusted applicable to common shares	$	364,282	$	343,634
Amortization of market lease intangibles, net		(378)		(168)
Amortization of deferred compensation		6,165		4,890
Amortization of deferred financing costs, net		4,752		4,965
Straight-line rents		(9,546)		(13,968)
DFL accretion (3)		(20,304)		(21,422)
Other depreciation and amortization		(6,684)		(3,846)
Deferred revenues – tenant improvement related		(744)		(482)
Deferred revenues – additional rents		(158)		337
Leasing costs and tenant and capital improvements		(11,540)		(12,405)
Lease restructure payments		5,135		—
Joint venture adjustments – CCRC entrance fees		6,193		—
Joint venture and other FAD adjustments (3)		(17,592)		(14,019)
FAD applicable to common shares	$	319,581	$	287,516
Distributions on dilutive convertible units		3,568		2,251
Diluted FAD applicable to common shares	$	323,149	$	289,767
Diluted FAD per common share	$	0.69	$	0.63
Weighted average shares used to calculate diluted FAD per common share		467,229		461,804

(1)

The other impairment charge of $ 478 million relates to our DFL investments with HCRMC .

(2)

Transaction-related items include acquisition and pursuit costs (e.g., due diligence and closing) and gains/charges incurred as a result of mergers and acquisitions and lease amendment or termination activities.

(3)

Our ownership interest in HCRMC is accounted for using the equity method, which requires an ongoing elimination of DFL income that is proportional to our ownership in HCRMC. Further, our share of earnings from HCRMC (equity income) increases for the corresponding elimination of related lease expense recognized at the HCRMC entity level, which we present as a non-cash joint venture FAD adjustment.

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Critical Accounting Policies

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to use judgment in the application of accounting policies, including making estimates and assumptions. We base estimates on the best information available to us at the time, our experience and on various other assumptions believed to be reasonable under the circumstances. These estimates affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of our consolidated financial statements. From time to time, we re-evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 201 4 in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”; our critical accounting policies have not changed during 201 5 .

Recent Accounting Pronouncements

See Note 2 to the Consolidated Financial Statements for the impact of new accounting standards. There are no accounting pronouncements that have been issued, but not yet adopted by us, that we believe will materially impact our consolidated financial statements ; however we are still evaluating their impacts upon adoption .

Item 3. Quantitative and Qualitativ e Disclosures About Market Risk

We are exposed to vario us market risks, including the p otential loss arising from adverse changes in interest rates and forei g n currency exchange rates , specifically the pound sterling (“GBP”) . We use derivative financial instruments in the normal course of business to mitigate interest rate and foreign currency risk. We do not use derivative financial instruments for speculative or trading purposes. Derivatives are recorded on the consolidated balance sheets at fair value (s ee Note 20 to the Consolidated Financial Statements ) .

To illustrate the effect of movements in the interest rate and foreign currency markets, we performed a market sensitivity analysis on our hedging instruments. We applied various basis point spreads to the underlying interest rate curves and foreign currency exchange rates of the derivative portfolio in order to determine the change in fair value. Assuming a one percentage point change in the underlying interest rate curve and foreign currency exchange rates, the estimated change in fair value of each of the underlying derivative instruments would not exceed $ 8 million (s ee Note 20 to the Consolidated Financial Statements ) .

Interest Rate Risk. At March 31, 2015 , we are exposed to market risks related to fluctuations in interest rates primarily on variable rate debt , which has been predominately hedge d through interest rate swap contracts .

Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed rate debt and assets until their maturity or earlier prepayment and refinancing. If interest rates have risen at the time we seek to refinance our fixed rate debt, whether at maturity or otherwise, our future earnings and cash flows could adversely be affected by additional borrowing costs. Conversely, lower interest rates at the time of refinancing may reduce our overall borrowing costs . However, interest rate changes will affect the fair value of our fixed rate instruments. Conversely, changes in interest rates on variable rate debt and investments would change our future earnings and cash flows, but not significantly affect the fair value of those instruments. Assuming a one percentage point increase in the interest rate related to the variable-rate debt and variable-rate investments , and assuming no other changes in the outstanding balance as of March 31, 2015 , net interest expense would increase by approximately $ 3 million , or less than $0.01 per common sh are on a diluted basis.

Foreign Currency Risk. At March 31, 2015 , our exposure to foreign currencies primarily relates to U . K . investments in leased real estate, senior unsecured notes and related GBP denominated cash flows. Our foreign currency exposure is partially mitigated through the use of GBP denominated borrowings and foreign currency swap contracts. Based solely on our operating results for the three months ended March 31, 2015, including the impact of existing hedging arrangements,

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if the value of the GBP relative to the U.S. dollar were to increase or decrease by 10% compared to the average exchange rate during the quarter ended March 31, 2015, our cash flows would have decreased or increased, as applicable, by less than $ 1 million .

Market Risk. We have investments in marketable debt securities classified as held-to-maturity because we have the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are recorded at amortized cost and adjusted for the amortization of premiums and discounts through maturity. We consider a variety of factors in evaluating an other-than-temporary decline in value, such as: the length of time and the extent to which the market value has been less than our current adjusted carrying value; the issuer’s financial condition, capital strength and near-term prospects; any recent events specific to that issuer and economic conditions of its industry; and our investment horizon in relationship to an anticipated near-term recovery in the market value, if any. At March 31, 2015 , the fair value and carrying value of marketable debt securities were $ 2 30 million and $2 21 million, respectively.

Item 4. Controls and Procedure s

Evaluation of Disclosure Controls and Procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934), management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2015 . Based upon that evaluation, our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1A. Risk Factors

In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A of our most recent Annual Report on Form 10-K, which could materially affect our business, financial condition, or future results. The following updates the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014 :

Our ownership interest in, and lease with, our largest tenant, HCRMC, accounts for a significant portion of our assets and revenues. Adverse litigation, regulatory or operational developments in HCRMC’s business or financial condition could have a material adverse effect on us.

HCRMC is a provider of a range of healthcare services, primarily in post-acute care, skilled nursing care and assisted living, and our largest tenant representing 29 % and 25 % of our gross assets and revenues, respectively, as of and for the quarter ended March 31, 2015. We also own a 9.4% equity interest in HCRMC, which we acquired together with our April 2011 $6 billion acquisition of substantially all the real estate assets of HCRMC. In December 2014, we recorded an impairment charge of $36 million for our equity ownership interest in HCRMC, primarily resulting from our review of their 2015 preliminary base financial forecast and other financial information provided by HCRMC that reflected a continued shift in patient payor sources from Medicare to Medicare Advantage, which negatively impacts reimbursement rates and length of stay for HCRMC’s skilled nursing segment. In March 2015, w e also recorded a net impairment charge of $478 million relating to our investments in direct financing leases (“DFLs”) with HCRMC, which reduced the carrying value of the HCRMC DFL investments from $6.6 billion to $6.1 billion, based on the present value of the future lease payments under the amendment to our master lease with HCRMC that became effective April 1, 2015 .

On April 20, 2015 the U.S. Department of Justice (“DOJ”) unsealed a previously filed complaint in the United States District Court for the Eastern District of Virginia against HCRMC and certain of its affiliates in three consolidated cases following a civil investigation arising out of three lawsuits filed by former employees of HCRMC under the qui tam provisions of the federal False Claims Act. The DOJ’s complaint in intervention is captioned United States of America, ex rel. Ribik, Carson, and Slough v. HCR ManorCare, Inc., ManorCare Inc., HCR ManorCare Services, LLC and Heartland Employment Services, LLC (Civil Action Numbers: 1:09cv13; 1:11cv1054; 1:14cv1228 (CMH/TCB)). The complaint alleges that HCRMC submitted claims to Medicare for therapy services that were not covered by the skilled nursing facility benefit, were not medically reasonable and necessary, and were not skilled in nature, and therefore not entitled to Medicare reimbursement.

HCRMC has advised HCP that it believes the claims are unjust and it intends to vigorously defend the civil action. Since the case is at a preliminary stage, the ultimate outcome is uncertain. However, this litigation could, among other things, (1) require substantial time and costs of HCRMC to defend; (2) involve a substantial judgment against HCRMC; (3) result in a settlement requiring a substantial payment by HCRMC; (4) result in HCRMC being subject to oversight of the Department of Health and Human Services, Office of Inspector General (“OIG”) under a corporate integrity agreement and/or OIG determining that HCRMC and/or certain of its employees are excluded from the right to seek reimbursements from Medicare or Medicaid; or (5) result in additional investigations or follow-on lawsuits by state Medicare or Medicaid authorities, state attorneys general, private insurers, or other public or private plaintiffs .

Consequences such as those described above relating to the DOJ complaint, continued deterioration in HCRMC’s operating performance or other adverse developments in its business, operating and regulatory affairs, or financial condition could reduce the revenues we earn under our master lease with HCRMC and/or further impair the value of our master lease with HCRMC, either of which could have a material adverse effect on us .

See additional information regarding the aforementioned impairment charge, 9.4% equity interest in HCRMC and M aster L ease with HCRMC in: (i) Item 7 “Results of Operations” (post-acute/skilled nursing segment 2014/2013 comparison) of our Annual Report on Form 10-K for the year ended December 31, 2014 and Note 17 (Impairments) to the Consolidated Financial Statements included therein; and (ii) Note 6 (Net Investment in Direct Financing Leases), Note 8 (Investments

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in and Advances to Unconsolidated Joint Ventures) and Note 18 (Concentration of Credit Risk) to the Consolidated Financial Statements included in this Quarterly Report on Form 10-Q .

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The table below sets forth information with respect to purchases of our common stock made by us or on our behalf or by any “affiliated purchaser,” as such term is defined in Rule 10b-18(a)(3) of the Securities Exchange Act of 1934, as amended, during the three months ended March 31, 2015 .


					Maximum Number (Or
				Total Number Of Shares	Approximate Dollar Value)
		Average		(Or Units) Purchased As	Of Shares (Or Units) That
	Total Number	Price		Part Of Publicly	May Yet Be Purchased
	Of Shares	Paid Per		Announced Plans Or	Under The Plans Or
Period Covered	Purchased (1)	Share		Programs	Programs
January 1-31, 2015	79,355	$	47.94	—	—
February 1-28, 2015	42,239		47.18	—	—
March 1-31, 2015	6,869		43.49	—	—
Total	128,463		47.45	—	—

(1)

Represents restricted shares withheld under our equity incentive plans to offset tax withholding obligations that occur upon vesting of restricted shares and restricted stock units. The value of the shares withheld is based on the closing price of our common stock on the last trading day prior to the date the relevant transaction occurs .

Item 6. Exhibits

Pursuant to the rules and regulations of the SEC, we have filed certain agreements as exhibits to this Quarterly Report on Form 10-Q. These agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties were made solely for the benefit of the other parties to the applicable agreement and

were not intended to be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

may have been qualified in such agreement by disclosures that were made to the other party in connection with the negotiation of the applicable agreement;

may apply contract standards of “materiality” that are different from “materiality” under the applicable securities laws; and

were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. The Company acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Form 10-Q not misleading.



3.1		Articles of Restatement of HCP (incorporated herein by reference to Exhibit 3.1 to HCP’s Registration Statement on Form S-3 (Registration No. 333-182824), filed July 24, 2012).

3.2		Fifth Amended and Restated Bylaws of HCP (incorporated herein by reference to Exhibit 3.1 to HCP’s Current Report on Form 8-K (File No. 1-08895), filed February 11, 2015 ).

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4.1		Fifth Supplemental Indenture dated January 21, 2015, between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.1 to HCP’s Current Report on Form 8-K (File No. 1-08895) filed January 21, 2015 ).

10. 1		Second Amendment to Amended and Restated Master Lease and Security Agreement, dated as of January 1, 2015, by and among the entities collectively defined therein as Lessor, consisting of HCP, Inc. and certain of its subsidiaries, the entities collectively defined therein as Lessee, each a subsidiary of Brookdale Senior Living Inc., and Brookdale Senior Living Inc. as guarantor (incorporated herein by reference to Exhibit10.22.2 to HCP’s Annual Report on Form 10-K (File No. 1-08895) filed February 10, 2015 . †

10. 2		Tenth Amendment to Master Lease and Security Agreement, dated as of March 29, 2015, by and among the parties signatory thereto and HCR III Healthcare, LLC . * †

10.3		Form of CEO 3-Year LTIP RSU Agreement.*††

10.4		Form of CEO 1-Year LTIP RSU Agreement.*††

10.5		Form of CEO Retentive LTIP RSU Agreement.*††

10.6		Form of NEO 3-Year LTIP RSU Agreement.*††

10.7		Form of NEO 1-Year LTIP RSU Agreement.*††

10.8		Form of NEO Retentive LTIP RSU Agreement.*††

10.9		Form of Non-Employee Director RSU Agreement.*††

31.1		Certification by Lauralee E. Martin, HCP’s Principal Executive Officer, Pursuant to Securities Exchange Act Rule 13a-14(a). *

31.2		Certification by Timothy M. Schoen, HCP’s Principal Financial Officer, Pursuant to Securities Exchange Act Rule 13a-14(a). *

32.1		Certification by Lauralee E. Martin, HCP’s Principal Executive Officer, Pursuant to Securities Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350. **

32.2		Certification by Timothy M. Schoen, HCP’s Principal Financial Officer, Pursuant to Securities Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350. **

101.INS		XBRL Instance Document. *

101.SCH		XBRL Taxonomy Extension Schema Document. *

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document. *

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document. *

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document. *

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document. *

* Filed herewith.

* * Furnished herewith.

† Portions of this exhibit have been omitted pursuant to a request for confidential treatment with the SEC .

†† Management Contract or Compensatory Plan or Arrangement .

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: May 5 , 201 5	HCP, Inc.

	(Registrant)

	/s/ LAURALEE E. MARTIN
	Lauralee E. Martin
	President and Chief Executive Officer
	(Principal Executive Officer)


	/s/ TIMOTHY M. SCHOEN
	Timothy M. Schoen
	Executive Vice President and
	Chief Financial Officer
	(Principal Financial Officer)


	/s/ SCOTT A. ANDERSON
	Scott A. Anderson
	Senior Vice President and
	Chief Accounting Officer
	(Principal Accounting Officer)

Exhibit 10.2

Execution Copy

TENTH AMENDMENT TO MASTER LEASE AND SECURITY AGREEMENT

This TENTH AMENDMENT TO MASTER LEASE AND SECURITY AGREEMENT (this “ Amendment ” ) is made and entered into as of March 29 , 2015 and effective as of April 1, 2015 (the “ Effective Date ” ) by and among the parties signatory hereto, as lessors (collectively, “ Lessor ” ) , HCR III Healthcare, LLC, as lessee ( “ Lessee ”), and HCR ManorCare, Inc., as guarantor (“ Guarantor ”).

RECITALS

A. Lessor is the current “ Lessor ” and Lessee is the current “ Lessee ” pursuant to that certain Master Lease and Security Agreement , dated as of April 7, 2011, as amended by that certain First Amendment to Master Lease and Security Agreement , dated as of April 7, 2011, as further amended by that certain Second Amendment to Master Lease and Security Agreement , dated as of May 16, 2011, Third Amendment to Master Lease and Security Agreement , dated as of January 10, 2012, Fourth Amendment to Master Lease and Security Agreement , dated as of April 18, 2012, Fifth Amendment to Master Lease and Security Agreement , dated as of May 5, 2012, Sixth Amendment to Master Lease and Security Agreement , dated as of July 30, 2012, Seventh Amendment to Mast er Lease and Security Agreement, dated as of February 11, 2013, Eighth Amendment to Master Lease and Security Agreement , dated as of July 31, 2014, and Ninth Amendment to Master Lease and Security Agreement , dated as of September 30, 2014 (as so amended, collectively, the “ Master Lease ” ).

B. Lessee ’ s obligations under the Master Lease are guaranteed by HCR ManorCare, Inc., a Delaware corporation, successor in interest to HCR ManorCare LLC, a Delaware limited liability company, pursuant to that certain Guaranty of Obligations , dated as of April 7, 2011 (as the same may heretofore have been or may hereafter be further amended, modified, or reaffirmed from time to time , the “ Guaranty ”) .

C. The Master Lease currently covers the “ Leased Property ” of the Pool 1 Facilities described on Exhibit A-1 to the Master Lease, the Pool 2 Facilities described on Exhibit A-2 to the Master Lease, the Pool 3 Facilities described on Exhibit A-3 to the Master Lease, and the Pool 4 Facilities described on Exhibit A-4 to the Master Lease.

D. Lessor and Lessee desire to modify certain terms and provisions of the Master Lease as more particularly provided herein.

E. Effective as of the Effective Date, Lessor and Lessee have agreed to reduce Lessee’s obligation to pay current Minimum Rent and to provide for Lessee to pay a Deferred Rent Obligation (as hereinafter defined) each as provided in this Amendment.

AGREEMENT

NOW THEREFORE, in consideration of the foregoing recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:

1. Recitals . The foregoing recitals are adopted by Lessor and Lessee as true and correct and, by this reference, are incorporated herein as if set forth herein in full.

2. Definitions; References to Master Lease . All capitalized terms used herein shall have the meanings ascribed to them in the Master Lease, unless otherwise defined herein or modified by the terms of this Amendment. The term “this Lease” as used in the Master Lease shall mean the Master Lease, as amended and modified by this Amendment. The Master Lease, as amended and modified by this Amendment, is the “Lease”.

3. Amendments to Section 2.1 of the Master Lease . Section 2.1 of the Master Lease, Definitions , is hereby modified and amended as follows:

(a) The following terms are hereby deleted in their entirety and replaced with the following in lieu thereof:

“ Extended Term(s) : Any one or more of the Pool 1 Sub-A First Extended Term, Pool 1 Sub-A Second Extended Term , Pool 1 Sub-B First Extended Term, Pool 1 Sub-B Second Extended Term , Pool 1 Sub-C First Extended Term, Pool 1 Sub-C Second Extended Term, Po ol 1 Sub-D First Extended Term, Pool 1 Sub-D Second Extended Term, Pool 2 Sub-A First Extended Term, Pool 2 Sub-A Second Extended Term, Pool 2 Sub-B First Extended Term, Pool 2 Sub-B Second Extended Term, Pool 2 Sub-C First Extended Term, Pool 2 Sub-C Second Extended Term, Pool 2 Sub-D First Extended Term, Pool 2 Sub-D Second Extended Term, Pool 2 Sub-E First Extended Term, Pool 2 Sub-E Second Extended Term, Pool 3 Sub-A First Extended Term, Pool 3 Sub-A Second Extended Term, Pool 3 Sub-B First Extended Term, Pool 3 Sub-B Second Extended Term, Pool 3 Sub-C First Extended Term, Pool 3 Sub-C Second Extended Term, Pool 3 Sub-D First Extended Term, Pool 3 Sub-D Second Extended Term, Pool 3 Sub-E First Extended Term, Pool 3 Sub-E Second Extended Term, Pool 4 Sub-A First Extended Term, Pool 4 Sub-A Second Extended Term, Pool 4 Sub-B First Extended Term, Pool 4 Sub-B Second Extended Term, Pool 4 Sub-C First Extended Term, Pool 4 Sub-C Second Extended Term, Pool 4 Sub-D First Extended Term and/or Pool 4 Sub-D Second Extended Term (including, without limitation, all of them collectively), as the context requires.”

“ Pool 1 Fixed Term : The period of time commencing on the Commencement Date and ending at 11:59 p.m. Los Angeles time on March 31, 2029.”

“ Pool 2 Fixed Term : The period of time commencing on the Commencement Date and ending at 11:59 p.m. Los Angeles time on March 31, 2030.”

“ Pool 3 Fixed Term : The period of time commencing on the Commencement Date and ending at 11:59 p.m. Los Angeles time on March 31, 2032.”

“ Pool 4 Fixed Term : The period of time commencing on the Commencement Date and ending at 11:59 p.m. Los Angeles time on March 31, 2033.”

(b) The following new definition is inserted in its appropriate alphabetical order:

“ Cooperation Agreement : T hat certain letter agreement, dated February 6, 2015, between Lessor and Lessee .”

“ Effective Date : As defined in the Tenth Amendment.”

“ Sale Properties : As defined in the Cooperation Agreement.”

“ Tenth Amendment : That certain Tenth Amendment to Master Lease and Security Agreement, dated as of March 29, 2015 by and among Lessor, Lessee and Guarantor.”

4. Reduction of Minimum Rent .

(a) Minimum Rent . From and after the Effective Date, t he Master Lease is hereby modified and amended by deleting Exhibit A-1 , Exhibit A-2, Exhibit A-3 and Exhibit A-4 attached to the Master Lease in their entirety and replacing such exhibits with a replacement Exhibit A-1, Exhibit A-2, Exhibit A-3 and Exhibit A-4 attached to this Amendment and incorporated into the Master Lease .

5. Modification of Extension Term . Section 1(d) and (e) and Section 2 of Exhibit D to the Master Lease shall be deleted in its entirety and replaced with Exhibit B attached to this Amendment and incorporated into the Master Lease.

6. Minimum Rent Escalation . Exhibit D attached to the Master Lease is hereby modified and amended as follows :

(a) Section 1(b) of Exhibit D to the Master Lease shall be deleted in its entirety and replaced with the following in lieu thereof: “Intentionally Omitted.”.

(b) Section 1(c) of Exhibit D to the Master Lease shall be amended to replace “Commencing upon the expiration of the (6 th ) Lease Year” with “Commencing on April 1, 2016”.

7. Deferred Rent Obligation . Article 3 of the Master Lease is hereby modified and amended by inserting the following at the end of such Article :

“Section 3.5. Deferred Rent Obligation and Related Matters .

3.5.1 As a result of the modification of the Minimum Rent as provided in the Tenth Amendment, a portion of the Minimum Rent is being deferred in an amount equal to $525,000,000 in the aggregate (the “ Initial Deferred Rent Obligation ”). Lessee acknowledges that the entire Initial Deferred Rent Obligation is deferred and payable as provided in this Section 3.5. The Initial Deferred Rent Obligation shall be allocated into tranches as follows: (i) Tranche A: $275,000,000 (the “ Tranche A Deferred Rent Obligation ”) and (ii) Tranche B: $250,000,000 (the “ Tranche B Initial Deferred Rent Obligation ”).

3.5.2 From and after the Effective Date, until the entire Tranche A Deferred Rent Obligation is paid in full to Lessor, Lessee shall pay to Lessor a current annual rent factor payment (the “ Tranc h e A Current Payment ”) in an amount equal to (a) the then applicable Tranche A Rental Factor (as hereinafter defined) times (b) the outstanding amount of the Tranche A Deferred Rent Obligation. For the purposes hereof, the “ Tranche A Rental Factor ” means (i) six and nine-tenths percent (6.9%) per annum for the first Lease Year following the Effective Date and (ii) for each Lease Year thereafter occurring during the Term, the Tranche A Rental Factor shall be increased by three percent (3.0%) per annum compounded annually. For example, the Tranche A Rental Factor for the Lease Year commencing on April 1, 2016 shall be seven and eleven hundredths percent (7.11%) (i.e., 6.9% times 1.03) and for the Lease Year commencing on April 1, 2017, shall be seven and thirty-two hundredths percent (7.32%), and so on. Commencing on the Effective Date, one twelfth (1/12) of the then applicable Tranche A Current Payment shall be payable by Lessee to Lessor monthly, in advance, together with the payment of each installment of Minimum Rent.

3.5.3 Commencing on April 1, 2016, the amount of the outstanding Tranche B Initial Deferred Rent Obligation shall be increased until the Tranche B Deferred Rent Obligation (as hereafter defined) is paid in full to Lessor by an amount equal to (a) the then applicable Tranche B Rental Factor (as hereinafter defined) times (b) the outstanding amount of the Tranche B Deferred Rent Obligation. For the purposes hereof, the “ Tranche B Rental Factor ” means (i) initially three percent (3.0%), (ii) commencing on April 1, 2019, four percent (4.0%), (iii) commencing on April 1, 2020, five percent (5.0%), and (iv) commencing on April 1, 2021 and for the remainder of the Term, six percent (6.0%). The Tranche B Initial Deferred Rent Obligation, as increased by the Tranche B Rental Factor shall be referred to as the “ Tranche B Deferred Rent Obligation ”. The Tranche A Deferred Rent Obligation, together with the Tranche B Deferred Rent Obligation, shall be referred to collectively as the “ Deferred Rent Obligation ”.

3.5.4 The entire outstanding Deferred Rent Obligation shall be due and payable by Lessee to Lessor on the earliest to occur of (a) an Event of Default for failure to pay Minimum Rent under this Lease; (b) Lessee shall fail to pay any installment of the Tranche A Current Payment when the same becomes due and payable and such failure is not cured by Lessee within a period of five (5) Business Days after notice thereof from Lessor ; (c) any other Event of Default that results in a termination of all or any part of this Lease but only to the extent that Lessor has terminated this Lease with respect to a number of Facilities equal to seven percent (7%) or more (in the aggregate) of the number of Facilities then subject to this Lease (excluding, however, any partial termination resulting from a Separation Event or in connection with any Sale Properties (as designated pursuant to the Cooperation Agreement)); (d) the expiration of the Pool 1 Fixed Term; (e) any initial public offering of Guarantor or its Subsidiaries in which Carlyle Funds or members of the executive management team of Guarantor sell shares or receive proceeds; (f) any sale or transfer of a direct or indirect controlling interest in Guarantor or any Controlling Person, other than any Transfer described in clause (a) of the de finition of Permitted Transfer ; and (g ) other than in connection with the Additional Facility Purchase Transaction or the sale of any Sale Properties pursuant to and in compliance with the Cooperation Agreement, any sale or transfer of a majority interest in any material assets of Guarantor or any of its material Subsidiaries, including, without limitation, the hospice business and/or the home healthcare business, except to the extent the net after tax proceeds are actually applied to payment of obligations under HCR Healthcare, LLC’s credit facilities as in effect from time to time (including any refinancings or replacements thereof) or are actually applied to payment of the Deferred Rent Obligation.

3.5.5 Notwithstanding any provision of this Lease to the contrary, a ll or any portion of the Deferred Rent Obligation may be prepaid at any time, or from time to time, at the option of Lessee or Guarantor, as applicable, without premium or penalty . Any repayment or voluntary prepayment of the Deferred Rent O bligation pursuant to this Section 3. 5 shall be applied as follows: first , to payment of the Tranche B Deferred Rent Obligation until repaid in full, and second , to payment of the Tranche A Deferred Rent Obligation. Notwithstanding the foregoing, any repayment or voluntary prepayment of the Deferred Rent Obligation from proceeds received from the Additional Facilities Purchase Transaction shall be applied as follows : first , to payment of the Tranche A Deferred Rent Obligation until repaid in full, and second , to payment of the Tranche B Deferred Rent Obligation.

3.5.6 Notwithstanding anything in this Lease or the Guaranty to the contrary, until the Deferred Rent Obligation has been paid in full by Lessee to Lessor, (a) Guarantor shall not (i) (A) pay any dividend s or make any distribution s to holders of its equity interests, other than for payment of taxes or dividends payable of Guarantor’s currently outstanding preferred stock (which dividends payable on such preferred stock shall not exceed $200,000 per annum) or (B) incur or cause or permit any Subsidiary of Guarantor to incur any indebtedness for borrowed money or guaranty indebtedness for

borrowed money in excess of Five Hundred Million Dollars ($500,000,000) (including indebtedness of Guarantor incurred on or prior to the Commencement Date, but excluding (x) any indebtedness refinancing such indebtedness, and (y) for the avoidance of doubt, any capitalized rent or other capitalized obligations under this Lease), other than revolving credit facility borrowings of not more than $175,000,000 of at any time outstanding; or (ii) repurchase any outstanding equity securities of Guarantor held by any Carlyle Fund or any of their successors or assigns; (b) Guarantor and its Subsidiaries shall not incur additional Indebtedness for borrowed money not then existing as of the Effective Date, other than any Indebtedness permitted to be incurred pursuant to HCR Healthcare LLC’s credit facilities as in effect from time to time (including any refinancings or replacements thereof); and (c) Guarantor and its Subsidiaries shall not (i) sell, transfer, assign, encumber or convey any direct or indirect controlling interest in Guarantor or any Controlling Person, other than any Transfer described in clause (a) of the de finition of Permitted Transfer , or (ii) other than in connection with the Additional Facility Purchase Transaction or the sale of any Sale Properties pursuant to and in compliance with the Cooperation Agreement, sell, transfer, assign, encumber or convey a majority interest in any material assets of Guarantor or any material Subsidiary of Guarantor, including, without limitation, Guarantor’s hospice business or the home healthcare business, in each case without the prior written consent of Lessor ; except to the extent the net after tax proceeds are actually applied to payment of obligations under HCR Healthcare, LLC’s credit facilities as in effect from time to time (including any refinancings or replacements thereof) or are actually applied to payment of the Deferred Rent Obligation , which consent shall not be unreasonably conditioned, withheld or delayed .

3.5.7 U ntil the Deferred Rent Obligatio n has been paid in full by Lessee to Lessor, and notwithstanding anything to the contrary contained in this Lease or the Guaranty, Guarantor and its Subsidiaries shall defer payment of the following: (a) any fe es to the Carlyle Funds, any direct or indirect general partner of any Carlyle Fund, or Carlyle Investment Management, L.P. or their respective successors or assigns, and ( b) (i) prior to the consummation of an initial public offering , any fees to any directors of Guarantor or any successor of Guarantor for service in such capacity ( other than normal and customary board service fees (as determined in the reasonable discretion of Guarantor) to those directors of Guarantor receiving board fees as of the Effective Date up to Five Hundred Thousand Dollars ($500,000) per annum, in the aggregate, in any calendar year with respect to fees to such directors receiving board fees as of the Effective Date), and (ii) following the consummation of an initial public offering , any fees to any directors of Guarantor or any successor of Guarantor for service in such capacity in excess of reasonable and customary fees paid to directors of public companies (as determined in the reasonable discretion of Guarantor).

3.5.8 (a) Except as otherwise set forth in this paragraph below, Minimum Rent, the Tranche A Current Payment, and all payments attributable to the Deferred Rent Obligation (including any amounts attributable to the Tranche B Rental Factor) payable

hereunder are intended to constitute “fixed rent” (as such term is defined in Treasury Regulation § 1.467-1(h)(3)). For purposes of Section 467 of the Internal Revenue Code, the rent attributable to the Minimum Rent, the Tranche A Current Payment, and all payments attributable to the Deferred Rent Obligation (including any amounts attributable to the Tranche B Rental Factor) shall be allocated as set forth on Schedule 2 to the Tenth Amendment. Lessor and Lessee agree that, for income tax purposes, the Allocated Rent allocated pursuant to this Section 3.5.8 and Schedule 2 to the Tenth Amendment shall represent and be the amount of rent on account of the use of the Leased Property, for each calendar month of the Term. It is the intention of the parties hereto that the allocation of rent as provided above constitutes a specific allocation of fixed rent within the meaning of Treasury Regulation § 1.467-1(c)(2)(ii)(A), with the effect that pursuant to Treasury Regulation §§ 1.467-1(d) and 1.467-2 the Lessor and Lessee, on any federal income tax returns filed by each of them (or on any return on which their income is included), shall accrue the amounts of rental income and rental expense, respectively, set forth in this Section 3.5.8 and in Schedule 2 to the Tenth Amendment; (b) upon the occurrence of any event described in Section 3.5.4 that results in a termination of this Lease, any amount of Tranche A Deferred Rent Obligation in excess of the balance of the related Section 467 Loan as described on Schedule 2 to the Tenth Amendment (whether such related Section 467 Loan is treated as being made from Lessor to Lessee or from Lessee to Lessor), plus, in the event there is a related Section 467 Loan from Lessee to Lessor, the balance of such Section 467 Loan from Lessee to Lessor, shall be treated as a payment for termination of this Lease; and (c) upon the occurrence of any event described in Section 3.5.4 or any repayment or prepayment described in Section 3.5.5 that, in either case, does not result in a termination of this Lease, any amount of Tranche A Deferred Rent Obligation in excess of the balance of a related Section 467 Loan as described on Schedule 2 to the Tenth Amendment (whether such related Section 467 Loan is treated as being made from Lessor to Lessee or from Lessee to Lessor) shall be treated as an additional rent payment which is paid and allocated at the time of payment.”

8. Impound Accounts Waiver Extension . Section 4.4 of the Master Lease, Impound Accounts , is hereby modified and amended as follows:

(a) The first sentence of Section 4.4.1 shall be amended to replace “Upon the occurrence” with “Beginning on May 1, 2016, upon the occurrence”.

(b) The first sentence of Section 4.4.2 shall be amended to replace “Upon the occurrence” with “Beginning on May 1, 2016, upon the occurrence”.

9. Renewal Terms . The first sentence of Section 19.1(a) of the Master Lease, Renewal Terms , is hereby deleted in its entirety and replaced with the following:

“ Provided that no Event of Default, or event which, with notice or lapse of time or both, would constitute a monetary Event of Default, has occurred and is continuing, either at the date of exercise or upon the commencement of an Extended Term, then Lessee shall

have the right to renew this Lease (x) with respect to all (but not less than all) of, respectively, the Pool 1 Facilities, the Pool 2 Facilities, the Pool 3 Facilities and the Pool 4 Facilities then covered by this Lease , for the first Extended Terms for such Facilities set forth on Exhibit D attached hereto and (x) with respect to all (but not less than all) of, respectively, Pool 1 Sub-A Facilities, Pool 1 Sub-B Facilities, Pool 1 Sub-C Facilities, Pool 1 Sub-D Facilities, Pool 2 Sub-A Facilities, Pool 2 Sub-B Facility, Pool 2 Sub-C Facilities, Pool 2 Sub-D Facilities, Pool 2 Sub-E Facilities, Pool 3 Sub-A Facilities, Pool 3 Sub-B Facility, Pool 3 Sub-C Facilities, Pool 3 Sub-D Facilities, Pool 3 Sub-E Facilities, Pool 4 Sub-A Facilities, Pool 4 Sub-B Facility, Pool 4 Sub-C Facilities, Pool 4 Sub-D Facilities then covered by this Lease, for the second Extended Terms for such Facilities set forth on Exhibit D attached hereto.”

10. Reporting Requirements . Section 25.1.2 of the Master Lease , Statements , is hereby modified and amended (i) to delete the requirement that Lessee deliver annual and quarterly financial statements of Lessee to Lessor; provided that Lessee shall continue to be obligated to deliver annual and quarterly financial statements of Guarantor and its consolidated Subsidiaries to the extent provided in Section 25.1.2 of the Master Lease, and (ii) by inserting the following at the end of such Section :

“(j) Lessee sha ll provide Lessor with (i) annual facility level detail ed projections; and (ii) to the extent the same have been provided to the Guarantor’s board of directors, the lenders (as a whole and in their capacity as such) under HCR Healthcare, LLC’s credit facilities or any rating agency, multi-year detailed projections by asset class into a consolidated financial model complete with income statement, balance sheet and statement of cash flows , including setting forth the key underlying assumptions related thereto on not less than an annual basis.”

11. Capital Addition Financing . During the four (4) year period immediately following the Effective Date , Lessor shall, at Lessee’ s request, provide to Lessee an amount not to exceed One Hundred Million Dollars ($ 100,00 0,000) in the aggregate to fund Capital Addition Costs approved by Lessor , in Lessor’s reasonable discretion, pursuant to Sections 10.1 and 10.2 of the Master Lease ( “ Capital Addition Financing ” ), provided , however , that Lessor shall not be obligated to advance more than Fifty Million Dollars ($50,000,000) in Capital Addition Financing in any Lease Year . In the event that Lessee elects to avail itself of such Capital Addition Financing , prior to disbursement or advance of any Capital Addition Financing , Lessee shall enter an amendment to the Master Lease, providing for (a) a customary disbursement mechanism of the proceeds of the Capital Addition Financing and (b) an increase in the Allocated Minimum Rent for the applicable Facility for which Capital Addition Costs will be funded with the Capital Addition Financing in an amount equal to the product of (x ) the amount disbursed by Lessor on account of the Capital Addition Financing for such Facility times (y) at the time of any such disbursement, the greater of (A) seven and three quarters percent ( 7.75% ) and (B) 500 basis points in excess of the then current 10-year Treasury Rate . Lessee shall pay all reasonable out-of-pocket costs, fees and expenses (including reasonable attorneys’ fees and expenses ) incurred by Lessor in connection with the review of the Capital Addition

Financing and with the preparation, negotiation and execution of all documents related thereto. Such Capital Additional Financing shall be structured in a REIT tax compliant fashion.

12. Purchase of Additional Facilities .

(a) Subject to the satisfaction of the conditions set forth in Section 12 (c) , Guarantor shall cause the owners (each, an “ Additional Facility Owner ” and collectively, the “ Additional Facilities Owners ”) of the nine (9) properties listed on Schedule 1 attached hereto (each, an “ Additional Facility ” and collectively, the “ Additional Facilities ”) to convey the Additional Facilities to Lessor or its Affiliates designated by Lessor (each, a “ Grantee ”), and Lessor or such Grantee will purchase each of the Additional Facilities from the applicable Additional Facility Owner (with respect to each Additional Facility, an “ Additional Facilities Purchase Transaction ”), subject to and in accordance with the terms of this Section 12 ; it being agreed that the Additional Facility Purchase Transaction shall include all of the applicable Additional Facility Owner’s right, title and interest in the Personal Property at the Additional Facility, without any additional consideration therefor . Unless otherwise agreed by Guarantor and Lessor, (i) the closing for each Additional Facilities Purchase Transaction (each, an “ Additional Facilities Closing Date ”), other than the closing of the purchase and sale of the Additional Facility located in Sterling Heights, Michigan, shall occur on the second Business Day following satisfaction or waiver of the conditions set forth in Section 12 ( c ) with respect to such Additional Facility and (ii) the closing of the purchase and sale of the Additional Facility located in Sterling Heights, Michigan shall occur on the later of (A) the second Business Day following satisfaction or waiver of the conditions set forth in Section 12 ( c ) with respect to such Additional Facility and (B) the second Business Day of the 2016 calendar year; provided , however , that, if the Additional Facilities Closing Date for either of the Additional Facilities located in Lacey, Washington and Salmon Creek, Washington (each, an “ Additional Washington Facility ”) would otherwise occur prior to the second Business Day of the 2016 calendar year, at the option of Guarantor, Guarantor may delay the Additional Facilities Closing Date for such Additional Washington Facility until the second Business Day of the 2016 calendar year, which option may be exercised by Guarantor by providing written notice to Lessor on or before the date on which the Additional Facilities Closing Date for the applicable Additional Washington Facility would have otherwise occurred.

(b) Guarantor shall, at least twenty (20) days prior to the date of the applicable Additional Facilities Closing Date, cause the applicable Additional Facility Owner to provide to Lessor the following:

(i) a pro forma owner’s title insurance policy (“ Pro Forma ”) showing fee title to each Additional Facility vested in the applicable Additional Facility Owner, or Grantee, in an amount reasonably acceptable to Lessor, subject to no financial encumbrances (other than tax liens not yet due and payable), and containing the following endorsements (in each case, where and if applicable): owner’s comprehensive; same as survey; access and entry; separate tax parcel; location; street assessments; zoning; environmental protection lien;

subdivision; mechanic’s lien; deletion of arbitration; and other endorsements reasonably requested by Lessor;

(ii) copies of all underlying documents for any exceptions shown on the Pro Forma;

(iii) an ALTA survey which accurately depicts each Additional Facility, certified to Grantee (and such other parties as may be reasonably requested by Lessor) and an affidavit of no change to survey reasonably acceptable to the title company for the purpose of removing the standard survey exception and issuing any survey-related endorsements;

(iv) a Phase I environmental report of each Additional Facility (completed within the six (6) month period prior to the date of the Additional Facilities Closing Date) and any other environmental reports concerning each Additional Facility in Guarantor, Lessee, or the applicable Additional Facility Owner’s possession or control or reasonably available to Guarantor, Lessee or such Additional Facility Owner, in each case, which report(s) shall be certified to Grantee (or the consultant(s) preparing such reports shall issue a reliance letter establishing a relationship between such consultant and Grantee);

(v) if applicable and requested by Lessor, a property condition report for each Additional Facility;

(vi) if applicable and requested by Lessor, a zoning report for each Additional Facility (which shall include a zoning letter from the applicable municipal agency, provided that such agency issues such letters);

(vii) copies of all agreements and documents pursuant to which each Additional Facility Owner purchased, or has contracted to purchase, each Additional Facility; and

(viii) forms of any conveyance documents (e.g., deeds, bills of sale, etc.) and any other documents required to be executed by the applicable Additional Facility Owner or Grantee in connection with conveyance of each Ad ditional Facility to Grantee (collectively, the “ Conveyance Documents ”).

(i) Grantee ’s receipt of an owner’s title policy in the form of the Pro Forma for the applicable Additional Facility (including all requested endorsements thereto in accordance with the terms hereof) approved by Lessor (“ Owner’s Policy ”);

(ii) delivery of original, executed (and acknowledged, if applicable) Conveyance Documents by the parties thereto with respect to the applicable Additional Facility;

(iii) Lessee’s payment of all reasonable out-of-pocket costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses , but excluding recording costs and transfer taxes due and payable in connection with the transfer of such Additional Facility addressed in clauses (iv) and (v) below ) incurred by Lessor and Grantee in connection with such Additional Facilities Purchase Transaction and the preparation, negotiation and documentation of any documents or agreements in connection therewith , each of which amounts shall constitute Additional Charges payable by Lessee under the Master Lease ;

(iv) Lessee’s payment of one-half (1/2) of all recording costs, transfer taxes and title insurance premiums due and payable in connection with the transfer of such Additional Facility ;

(v) Lessor’s payment of one-half (1/2) of all recording costs, transfer taxes and title insurance premiums due and payable in connection with the transfer of such Additional Facility, provided that the Minimum Rent shall be increased by an amount equal to six and nine tenths percent (6.9%) of the amo unt of such recording costs, transfer taxes and title insurance premiums paid by Lessor (subject to increase each year in accordance with Exhibit B to the Master Lease); and

(vi) all approvals, consents, permissions of, and all filings and notices to, any Governmental Authority required in connection with the purchase and sale of the applicable Additional Facility contemplated by this Section 12 shall have been obtained or made, as applicable .

(d) On each applicable Additional Facilities Closing Date , the parties will exchange duplicate original, executed counterparts of the Conveyance Documents and an addendum to the Master Lease in the form attached hereto as Exhibit C (the “ Addendum ” ) with respect to the Applicable Additional Facility and Guarantor shall cause the original Owner’s Policy to be delivered to Grantee.

(e) The applicable purchase price for all of the Additional Facilities Purchase Transactions shall be Two Hundred Seventy Five Million Dollars ($275,000,000) in the aggregate (the “ Additional Facilities Purchase Price ”), as allocated to each Additional Facility as set forth on Schedule 1 attached hereto (based on Allocated Initial Investment) . The Additional Facility Purchase Price allocated to each Additional Facility shall be payable by Lessor on each Additional Facilities Closing Date in cash, by wire transfer of immediately available funds to an account of an escrow agent mutually acceptable to, and designated by, Lessee, Guarantor and Lessor (the “ Escrow Agent ”). On such Additional Facilities Closing Date, Lessee, Lessor and Guarantor shall execute and deliver to the Escrow Agent joint written instructions instructing the Escrow Agent to pay the portion of the Additional Facilities Purchase Price paid by Lessor on such Additional Facilities Closing Date to Lessor as a pre-payment of the Tranche A Deferred Rent Obligation, which shall constitute such a prepayment of the Tranche A Deferred Rent Obligation in the amount of such payment. On each Additional Facilities Closing Date, the applicable Additional Facility Owner shall transfer the applicable Additional Facility to the

applicable Grantee free of any liens and encumbrances (other than tax liens not yet due and payable and encumbrances set forth on the Owner’s Policy) and such Additional Facility Owner shall execute all documents and take any actions reasonably necessary to evidence the transfer of such ownership and discharge any liens and encumbrances thereon (other than tax liens not yet due and payable and encumbrances set forth on the Owner’s Policy) and otherwise comply with Sections 12 (c) and 12 (d) above. Additionally, promptly following Lessor’s written request therefor, Guarantor shall cause the applicable Additional Facility Owner to supply or cause to be supplied to Lessor all material documents and information pertaining to the operation of the applicable Additional Facilities as Lessor shall reasonably request including, without limitation, copies of the certificates of occupancy for each applicable Additional Facility, copies of all necessary permits, approvals, healthcare licenses and Medicare certifications necessary for the operation of each applicable Additional Facilities.

(f) Guarantor and Lessor shall use all commercially reasonable efforts to obtain all necessary consents and approvals of, and make any filings and notifications of, any Governmental Authority required to consummate each Additional Facilities Purchase Transaction on or prior to October 1, 2015.

(g) Upon the c losing of each Additional Facilities Purchase Transaction on each Additional Facilities Closing Date , the Master Lease shall be automatically amended to add the applicable Additional Facility to Exhibit A-4 of the Master Lease as “Pool 4 Facilities” with the information as shown on Schedule 1 attached hereto, which shall be memorialized by the entering into of an Addend um in connection therewith.

(h) Lessor or its Affiliate may elect to purchase the Additional Facilities from the Additional Facilities Owners through a 1031 Exchange (the “ Additional Facilities 1031 Exchange ” ). In the event that Lessor or its Affiliate shall so elect, Lessor or its Affiliate shall give written notice to Guarantor and any escrow holder of such election and the following shall apply: ( i ) Lessor or its Affiliate may attempt to identify before the closing other property which qualifies as “ like-kind ” property for a 1031 Exchange (the “ Target Property ” ) by giving written notice to Guarantor and any escrow holder and identifying to such escrow holde r the Target Property prior to the applicable Additional Facilities Closing Date or (ii) i f Lessor or its Affiliate has not so identified the Target Property before the applicable Additional Facilities Closing Date , then Lessor or its Affiliate shall proceed with the closing unless Lessor or its Affiliate at its option enters into an exchange agreement with an accommodation party ( “ Accommodator ” ) in order to facilita te a non-simultaneous exchange. If a n Accommodator is so designated, Lessor or its Affiliate shall cause the Accommodator (A ) to acquire title to the Additional Facilities from the Additional Facilities Owners at or before the applicable Additional Facilities Closing Date and ( B ) to transfer title in the applicable Additional Facilities to Lessor at the applicable closing for the applicable portion of the Additional Facilities Purchase Price . Guarantor shall (at the sole cost and expense of Lessor) (i) reasonably cooperate with any such Additional Facilities 1031 Exchange, including but not limited to executing and delivering additional documents reasonably requested or approved by Lessor or its Affiliate and (ii) reasonably cooperate with Lessor in connection with the satisfaction of disclosure and reporting obligations of Lessor or its Affiliate

arising pursuant to applicable Legal Requirements ; provided , however , that in the case of each of clause (i) and clause (ii), such cooperation does (a) not delay the applicable Additional Facilities Closing Date or (b) result in the Guarantor incurring additional costs (except to the extent reimbursed by Lessor) or assuming additional liabilities.

(i) Guarantor acknowledges that the sale of the Additional Facilities to Lessor as contemplated by this Section 12 and the addition of the applicable Additional Facilities to the Pool 4 Facilities as provided for herein is in the best interest of Guarantor and Guarantor, as the indirect parent entity of Lessee, expects to derive substantial benefit therefrom and has received fair and equivalent value therefor.

(j) Unless otherwise agreed by Guarantor and Lessor, in the event that the purchase and sale of any of the Additional Facilities contemplated by this Section 12 has not been consummated on or prior to the first anniversary of the Effective Date, the obligations of the parties under this Section 12 with respect to such Additional Facility shall automatically terminate and be of no further force and effect and no party hereto shall have any further obligation or liability under this Section 12 with respect to such Additional Facility, other than with respect to any breach of this Section 1 2 occurring prior to such termination.

(k) Opco Subleases .

(i) The definition of Opco Subleases is hereby deleted in its entirety and replaced with the following in lieu thereof:

“ Opco Subleases : Those existing operating subleases of an entire facility between Lessee and a wholly-owned Subsidiary of Lessee described on Schedule 4 hereto, and any sublease of an entire Additional Facility to an Additional Facility Owner or a Subsidiary of an Additional Facility Owner, each of which is pre-approved by Lessor subject to Lessee’s delivery to Lessor of (i) a fully executed Agreement Regarding Sublease in the form attached hereto as Exhibit H-1 and made a part hereof, with respect to each such sublease (provided that, for the purpose of any sublease with respect to the Additional Facilities, such Agreement Regarding Sublease shall not include Section 5 of Exhibit H-1 so long as such Additional Facility Owner, as subtenant under the Opco Sublease is not a Subsidiary of Lessee), and (ii) an amendment to, or modification or replacement of such operating sublease that in all material substance, conforms to the terms and provisions set forth in the form of Sublease attached hereto as Exhibit H-2 and made a part hereof. ”

(ii) In the event that an Opco Sublease with respect to any Additional Facility is entered by Lessee with a wholly owned Additional Facility Owner or a Subsidiary of an Additional Facility Owner, the Master Lease shall be automatically amended to add the description of such operating sublease to Schedule 4 thereto, which shall be memorialized by the entering of an Addendum in connection therewith.

(iii) Notwithstanding anything to the contrary contained in the Master Lease and specifically for purposes of Exhibit H-1 of the Master Lease, all requirements that a

Sublessee be a wholly-owned subsidiary of Lessee and any representations with respect to the same shall instead also permit a Sublessee to be an Additional Facility Owner or a Subsidiary of an Additional Facility Owner.

(iv) Section 2(b) of Exhibit H-1 of the Master Lease shall be deleted in its entirety and replaced with the following in lieu thereof:

“(b) Subordination to Lease. Each Sublease (and the rights of Sublessee thereunder, including, without limitation, any options to extend granted therein) and any other documents, instruments or understandings between Lessee and Sublessee relative to any Sublease, any Subleased Premises and/or the operation thereof, shall be subject and subordinate to all of the terms and conditions of the Lease, including, without limitation, those governing proposed improvements, alterations, insurance, security interests in favor of Lessor granted by Lessee under the Lease (including, without limitation Section 16.9 thereof), casualty and Condemnation. Without limiting the foregoing, nothing contained herein shall (i) bind Lessor to any of the terms, conditions or covenants of any Sublease or (ii) be deemed Lessor's consent or agreement to any change or modification to the Lease. Each of Lessee and Sublessee acknowledges that (A) it has reviewed the Lease, (B) certain provisions of the Subleases are or may be in conflict with provisions of the Lease and that in the event of any conflict, as between Lessor and the other parties hereto, the terms of the Lease shall control, and (C) neither Lessor's acknowledgement to any Sublease nor this Agreement constitutes Lessor's acceptance of any modification of the Lease. Nothing contained in this Agreement shall constitute an express or implied waiver by Lessor of any rights or benefits that it is entitled to under the Lease. In addition, and without limiting the foregoing, each of Lessee and Sublessee further acknowledges and agrees that, except as provided in Section 2(c) below, Sublessee shall not have any right to occupy or otherwise use any Subleased Premises (or the Personal Property thereat) following the expiration of the Term of the Lease or any earlier termination of the Lease with respect to such Subleased Premises, including, without limitation, any termination by reason of (w) an Event of Default, (x) any damage or destruction, (y) a Condemnation, or (z) the mutual termination thereof by Lessee and Lessor.”

13. Reaffirmation of Guaranty . By execution of this Amendment, Guarantor (a) reaffirms , ratifies and confirms all of the terms, covenants and conditions of the Guaranty and acknowledges that the Guaranteed Obligations (as defined in the Guaranty) remain in full force and effect; and that the Guaranteed Obligations shall include Lessee’s obligation to pay the Deferred Rent Obligation as provided in this Amendment, (b) agrees that its obligations thereunder are not released, diminished, impaired or reduced or otherwise adversely affected by this Amendment and agrees to be bound by the obligations and covenants of Guarantor provided in this Amendment. All references in the Guaranty to “the Lease” shall mean the Master Lease, as amended by this Amendment and as the Master Lease may hereafter be amended or modified.

Guarantor covenants, represents, and warrants that (i) as of the date hereof, Guarantor has no defenses, offsets, or counterclaims to its undertakings, obligations, agreements, or indemnities contained in the Guaranty to the enforcement of Lessor’s rights and remedies thereunder or to the payment of any amounts that may become payable thereunder, (ii) the Guaranty, as hereby ratified and confirmed, is Guarantor’s legal, valid, and binding obligation, (iii) Guarantor has received and reviewed, and is satisfied with, all terms and conditions of this Amendment, (iv) Guarantor is the indirect parent entity of Lessee, and Guarantor continues to deem the granting, execution and delivery of the Master Lease, as amended hereby, to be in Guarantor’s best interest, and Guarantor expects to derive substantial benefit therefrom, and (v) there is no action or proceeding pending, or, to the best of Guarantor’s knowledge, threatened, against Guarantor before any court or administrative agency that may adversely affect Guarantor’s obligations under the Guaranty, as ratified and confirmed hereby.

14. Cooperation Agreement . By execution of this Amendment, Lessor and Lessee reaffirm and restate the terms and conditions of the Cooperation Agreement. All terms and conditions of the Cooperation Agreement shall remain unchanged and continue in full force and effect .

15. Costs and Expenses . Notwithstanding anything contained in Section 42.2 of the Master Lease to the contrary, each party shall bear its own costs and expenses, including, without l imitation, attorneys ’ fees, expenses and disbursements, relating to the preparation and execution of this Amendment and related documents.

16. Further Assurances . The parties agree to promptly sign all documents reasonably requested to give effect to the provisions of this Amendment.

17. Full Force and Effect; Acknowledgement . In the event of any inconsistencies between this Amendment and the Master Lease, the terms of this Amendment shall govern and control. Except a s modified by this Amendment , all other terms and conditions of the Master Lease shall remain unchanged and continue in full force and effect and the parties hereby reaffirm the terms and conditions of the Master Lease, as modified by this Amendment.

18. Governing Law . THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (WITHOUT REGARD OF PRINCIPLES OR CONFLICTS OF LAW) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT THAT ALL PROVISIONS HEREOF RELATING TO THE CREATION OF THE LEASEHOLD ESTATE AND ALL REMEDIES SET FORTH IN ARTICLE XVI RELATING TO RECOVERY OF POSSESSION OF THE LEASED PROPERTY OF ANY FACILITY (SUCH AS AN ACTION FOR UNLAWFUL DETAINER OR OTHER SIMILAR ACTION) SHALL BE CONSTRUED AND ENFORCED ACCORDING TO, AND GOVERNED BY, THE LAWS OF THE STATE IN WHICH THE LEASED PROPERTY OF SUCH FACILITY IS LOCATED.

19. Counterparts; Facsimile or Electronically Transmitted Signatures . This Amendment may be executed in any number of counterparts, all of which shall constitute one and the same instrument. Signatures transmitted by facsimile or other electronic means may be used in place of original signature s on this Amendment, and Lessor, Guarantor and Lessee each intend to be bound by the signatures on the document transmitted by facsimile or such other electronic means.

20. Severability . If any term, condition or provision of this Amendment or the application thereof to any circumstance or party hereto shall be invalid or unenforceable to any extent, the remaining terms, conditions and provisions of this Amendment or the application thereof to any circumstance or party hereto, other than that held invalid or unenforceable, shall not be affected thereby and each remaining term, condition and provision of this Amendment shall be valid and enforceable to the fullest extent permitted by law.

21. Changes in Writing . Th is Amendment may not be orally changed or terminated, nor any of its provisions waived, except by an agreement in writing signed by the party against whom enforcement of any changes, termination or waiver is sought.

22. Headings . The captions contained herein are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of the Lease or this A mendment nor the intent of any provision thereof or hereof.

23. Authority . Guarantor, Lessee and Lessor each hereby represents and warrants that it has full right, power and authority to enter into this A mendment and that the person executing this Agreement on behalf of Guarantor, Lessee and Lessor , respectively, is duly authorized to do so.

24. No Presumption . This A mendment has been freely negotiated by the parties hereto and in any controversy, dispute, or contest over the meaning, interpretation, validity, or enforceability of this A mendment or any of its terms or conditions, there shall be no inference, presumption, or conclusion drawn whatsoever against either party by virtue of that party having drafted this A mendment or any portion thereof.

25. Entire Agreement . The Master Lease, as amended by this Amendment (including any Exhibits and Schedules referred to therein or herein) , the Guaranty and the Cooperation Agreement contain the entire agreement between the parties and all understandings and agreements previously made between the parties (and not referred to above) are merged herein with respect to the subject matter hereof, which, together with any contemporaneously executed agreements, alone fully and completely expresses their agreement.

26. Inducement . In order to induce Lessor to enter into this Amendment, Guarantor and Lessee, jointly and severally, represent and warrant to Lessor that, s ubject to receipt of the approval of Governmental Authorities required in connection with the Additional Facilities Purchase Transaction , the execution and delivery of this Amendment and compliance with the provisions hereof (including the sale of the Additional Facilities to Grantee and the leaseback of

any Additional Facilities to Lessee as contemplated by any Addendum to be entered into in connection with any Additional Facilities Purchase Transaction) will not result in a material breach or violat ion of, or the acceleration of any material obligation under, any material agreement or instrument to which Guarantor, Lessee or their Subsidiaries is a counterparty or is bound . In order to induce Lessee and Guarantor to enter into this Amendment, Lessor represents and warrants to Lessee and Guarantor that, s ubject to receipt of the approval of Governmental Authorities required in connection with the Additional Facilities Purchase Transaction , the execution and delivery of this Amendment and compliance with the provisions hereof (including the purchase of the Additional Facilities and the leaseback of any Additional Facilities to Lessee as contemplated by any Addendum to be entered into in connection with any Additional Facilities Purchase Transaction) will not result in a material breach or violat ion of, or the acceleration of any material obligation under, any material agreement or instrument to which Less or or its Subsidiaries is a counterparty or is bound .

27. Confidentiality . This Amendment shall be subject to the confidentiality provisions of Section 45.1.7 of the Master Lease and Section 45.1.7 of the Master Lease is hereby incorporated by reference herein mutatis mutandi .

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first written above.


	“LESSOR”

	HCP PROPERTIES, LP, a Delaware limited partnership


	By: HCP I-B Properties, LLC, a Delaware limited liability company, its General Partner

	HCP WEST VIRGINIA PROPERTIES, LLC, a Delaware limited liability company

	HCP PROPERTIES OF ALEXANDRIA VA, LLC, a Delaware limited liability company

	HCP PROPERTIES OF ARLINGTON VA, LLC, a Delaware limited liability company

	HCP PROPERTIES OF MIDWEST CITY OK, LLC, a Delaware limited liability company

	HCP PROPERTIES OF OKLAHOMA CITY (NORTHWEST), LLC, a Delaware limited liability company

	HCP PROPERTIES OF OKLAHOMA CITY (SOUTHWEST), LLC, a Delaware limited liability company

	HCP PROPERTIES OF TULSA OK, LLC, a Delaware limited liability company

	HCP PROPERTIES-ARDEN COURTS OF ANNANDALE VA, LLC, a Delaware limited liability company

	HCP PROPERTIES-CHARLESTON OF HANAHAN SC, LLC, a Delaware limited liability company

	HCP PROPERTIES-COLUMBIA SC, LLC, a Delaware limited liability company

[Signature Page to Tenth Amendment to Master Lease and Security Agreement]


	HCP PROPERTIES-FAIR OAKS OF FAIRFAX VA, LLC, a Delaware limited liability company

	HCP PROPERTIES-IMPERIAL OF RICHMOND VA, LLC, a Delaware limited liability company

	HCP PROPERTIES-LEXINGTON SC, LLC, a Delaware limited liability company

	HCP PROPERTIES-MEDICAL CARE CENTER-LYNCHBURG VA, LLC, a Delaware limited liability company

	HCP PROPERTIES-OAKMONT EAST-GREENVILLE SC, LLC, a Delaware limited liability company

	HCP PROPERTIES-OAKMONT OF UNION SC, LLC, a Delaware limited liability company

	HCP PROPERTIES-OAKMONT WEST-GREENVILLE SC, LLC, a Delaware limited liability company

	HCP PROPERTIES-STRATFORD HALL OF RICHMOND VA, LLC, a Delaware limited liability company

	HCP PROPERTIES-WEST ASHLEY-CHARLESTON SC, LLC, a Delaware limited liability company

	HCP MARYLAND PROPERTIES, LLC, a Delaware limited liability company


	By:	/s/ Paul Gallagher
	Name:	Paul Gallagher
	Title:	Executive Vice President

[Signature Page to Tenth Amendment to Master Lease and Security Agreement]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first written above.


	“LESSEE”

	HCR III HEALTHCARE, LLC,
	a Delaware limited liability company

	By:	/s/ Paul A. Ormond
	Name:	Paul A. Ormond
	Title:	President

[Signature Page to Tenth Amendment to Master Lease and Security Agreement]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first written above.


	“GUARANTOR”

	HCR MANORCARE, INC.,
	a Delaware corporation


	By:	/s/ Paul A. Ormond
	Name:	Paul A. Ormond
	Title:	President

[Signature Page to Tenth Amendment to Master Lease and Security Agreement]

EXHIBIT A-1

Replacement Exhibit A-1 to Master Lease

(see attached)

EXHIBIT A-1

Facility	Facility Owner/ Lessor	Facility Description and Primary Intended Use	Initial Monthly Allocated Minimum Rent	Allocated Initial Investment	Fixed Term	1st Extended Term	2nd Extended Term	HCP ID
Sub-A
Manor Care of Pike Creek 5651 Limestone Road Wilmington, DE 19808	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 167 beds	[***]	[***]	18 years	17 years	5 years	1657
Arden Court of West Delray 16150 Jog Road Delray Beach, FL 33446	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	18 years	17 years	5 years	1658
Arden Court of Sarasota 5509 Swift Road Sarasota, FL 34231	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	18 years	17 years	5 years	1659
Manor Care of Venice 1450 East Venice Avenue Venice, FL 34292	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 129 beds	[***]	[***]	18 years	17 years	5 years	1660
Manor Care of Dunedin 870 Patricia Avenue Dunedin, FL 34698	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	18 years	17 years	5 years	1661
HHCC Kendall 9400 Southwest 137th Avenue Kendall, FL 33186	HCP Properties, LP	Skilled nursing facility / long term care / assisted living facility consisting of 174 beds	[***]	[***]	18 years	17 years	5 years	1662
HHCC Miami Lakes 5725 Northwest 186th Street Hialeah, FL 33015	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	18 years	17 years	5 years	1663
Manor Care of West Palm Beach 2300 Village Boulevard West Palm Beach, FL 33409	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	18 years	17 years	5 years	1915
Manor Care of Boynton Beach 3001 South Congress Avenue Boynton Beach, FL 33426	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 180 beds	[***]	[***]	18 years	17 years	5 years	1916
HHCC Ft. Myers 1600 Matthew Drive Ft. Myers, FL 33907	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	18 years	17 years	5 years	1664
HHC & Rehab Ctr Boca 7225 Boca Del Mar Drive Boca Raton, FL 33433	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	18 years	17 years	5 years	1665

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.


Arden Court of Palos Height s 7880 West College Drive Palos Heights, IL 60463	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	18 years	17 years	5 years	1666
Arden Court of Northbrook 3240 Milwaukee Avenue Northbrook, IL 60062	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	18 years	17 years	5 years	1667
HHCC Henry 1650 Indiantown Road Henry, IL 61537	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 94 beds	[***]	[***]	18 years	17 years	5 years	1668
Manor Care of Potomac 10714 Potomac Tennis Lane Potomac, MD 20854	HCP Maryland Properties, LLC	Skilled nursing facility / long term care facility consisting of 158 beds	[***]	[***]	18 years	17 years	5 years	1669
Oakland 925 West South Boulevard Troy, MI 48085 ( this facility also includes additional property identified as assessor’s parcel number 88-20 03-102-022 )	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	18 years	17 years	5 years	1670
MCHS Mountainside 1180 Route 22 Mountainside, NJ 07092	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 151 beds	[***]	[***]	18 years	17 years	5 years	1671
Heartland of Marion 400 Barks Road West Marion, OH 43302	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	18 years	17 years	5 years	1672
Heartland of Miamisburg 450 Oak Ridge Boulevard Miamisburg, OH 45342	HCP Properties, LP	Skilled nursing facility / long term care facility /assisted living facility consisting of 160 beds	[***]	[***]	18 years	17 years	5 years	1673
Heartland of Bellefontaine 221 North School Street Bellefontaine, OH 43311	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 100 beds	[***]	[***]	18 years	17 years	5 years	1674
Heartland of Waterville 8885 Browning Drive Waterville, OH 43566	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 141 beds	[***]	[***]	18 years	17 years	5 years	1675
Arden Court of Parma 9205 Sprague Road Parma, OH 44133	HCP Properties, LP	Assisted living facility consisting of 59 beds	[***]	[***]	18 years	17 years	5 years	1676
Heartland of Centerville 1001 East Alex Bell Road Centerville, OH 45459	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 140 beds	[***]	[***]	18 years	17 years	5 years	1677
Arden Court of Monroeville 120 Wyngate Drive Monroeville, PA 15146	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	18 years	17 years	5 years	1678
Arden Court of North Hills 1125 Perry Highway Pittsburgh, PA 15237	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	18 years	17 years	5 years	1679

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.


Manor Care of Monroeville 885 MacBeth Drive Monroeville, PA 15146	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	18 years	17 years	5 years	1680
Manor Care of Bethel Park 60 Highland Road Bethel Park, PA 15102	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 160 beds	[***]	[***]	18 years	17 years	5 years	1681
Arden Court of Susquehanna 2625 Ailanthus Lane Harrisburg, PA 17110	HCP Properties, LP	Assisted living facility consisting of 64 beds	[***]	[***]	18 years	17 years	5 years	1682
Whitehall Borough 505 Weyman Road Pittsburgh, PA 15236	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 150 beds	[***]	[***]	18 years	17 years	5 years	1683
Arden Court of Austin 11630 Four Iron Drive Austin, TX 78750	HCP Properties, LP	Assisted living facility consisting of 60 beds	[***]	[***]	18 years	17 years	5 years	1684
Arden Court of Arlington 1501 Northeast Green Oaks Boulevard Arlington, TX 76006	HCP Properties, LP	Assisted living facility consisting of 60 beds	[***]	[***]	18 years	17 years	5 years	1685
Manor Care of Gig Harbor 3309 45th Street Court Northwest Gig Harbor, WA 98335	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	18 years	17 years	5 years	1686
MCHS Pewaukee N26W23977 Watertown Road Waukesha, WI 53188	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	18 years	17 years	5 years	1687
Sub-B
Manor Care of Sunnyvale 1150 Tilton Drive Sunnyvale, CA 94087	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 140 beds	[***]	[***]	18 years	12 years	5 years	1629
Arden Court of West Palm Beach 2330 Village Boulevard West Palm Beach, FL 33409	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	18 years	12 years	5 years	1630
HHCC Jacksonville 3648 University Boulevard South Jacksonville, FL 32216	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 117 beds	[***]	[***]	18 years	12 years	5 years	1631
Manor Care of Marietta (GA) 4360 Johnson Ferry Place Marietta, GA 30068	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 117 beds	[***]	[***]	18 years	12 years	5 years	1632
Arden Court South Holland 2045 East 170th Street South Holland, IL 60473	HCP Properties, LP	Assisted living facility consisting of 60 beds	[***]	[***]	18 years	12 years	5 years	1633
Manor Care of South Holland 2145 East 170th Street South Holland, IL 60473	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 200 beds	[***]	[***]	18 years	12 years	5 years	1634

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.


Riverview Senior Living Community / HHCC-Riverview 500 Centennial Drive East Peoria, IL 61611	HCP Properties, LP	Skilled nursing facility / long term care facility / assisted living facility consisting of 307 beds	[***]	[***]	18 years	12 years	5 years	1635
Manor Care of Overland Park 5211 West 103rd Street Overland Park, KS 66207	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 248 beds	[***]	[***]	18 years	12 years	5 years	1636
Manor Care of Towson 509 East Joppa Road Towson, MD 21286	HCP Maryland Properties, LLC	Skilled nursing facility / long term care facility consisting of 127 beds	[***]	[***]	18 years	12 years	5 years	1637
Manor Care of Bethesda 6530 Democracy Boulevard Bethesda, MD 20817	HCP Maryland Properties, LLC	Skilled nursing facility / long term care facility consisting of 110 beds	[***]	[***]	18 years	12 years	5 years	1638
Manor Care of Rossville 6600 Ridge Road Rossville, MD 21237	HCP Maryland Properties, LLC	Skilled nursing facility / long term care facility consisting of 172 beds	[***]	[***]	18 years	12 years	5 years	1639
HHCC Plymouth Court 105 Haggerty Road Plymouth, MI 48170	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 109 beds	[***]	[***]	18 years	12 years	5 years	1640
HHCC Dorvin 29270 Morlock Street Livonia, MI 48152	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 124 beds	[***]	[***]	18 years	12 years	5 years	1641
HHCC Whitehall 916 East Lewis Street Whitehall, MI 49461	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 125 beds	[***]	[***]	18 years	12 years	5 years	1642
Heartland of Willow Lane 416 South High Street Butler, MO 64730	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 98 beds	[***]	[***]	18 years	12 years	5 years	1643
Arden Court of Westlake 28400 Center Ridge Road Westlake, OH 44145	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	18 years	12 years	5 years	1644
Manor Care of North Olmsted 23225 Lorain Road North Olmsted, OH 44070	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 178 beds	[***]	[***]	18 years	12 years	5 years	1645
Manor Care of Mayfield Heights 6757 Mayfield Road Mayfield Heights, OH 44124	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 150 beds	[***]	[***]	18 years	12 years	5 years	1646
Heartland of Springfield 2615 Derr Road Springfield, OH 45503	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 126 beds	[***]	[***]	18 years	12 years	5 years	1647
Heartland Beavercreek 1974 North Fairfield Road Dayton, OH 45432	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 100 beds	[***]	[***]	18 years	12 years	5 years	1648

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.


Arden Court of King of Prussia 620 West Valley Forge Road King of Prussia, PA 19406	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	18 years	12 years	5 years	1649
Manor Care of Carlisle 940 Walnut Bottom Road Carlisle, PA 17015	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 150 beds	[***]	[***]	18 years	12 years	5 years	1650
Manor Care of Easton 2600 Northampton Street Easton, PA 18045	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 227 beds	[***]	[***]	18 years	12 years	5 years	1651
HHCC at Willowbrook 13631 Ardfield Drive Houston, TX 77070	HCP Properties, LP	Skilled nursing facility / long term care / assisted living facility consisting of 186 beds	[***]	[***]	18 years	12 years	5 years	1652
MCHS South Ogden 5540 South 1050 East South Ogden, UT 84405	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 140 beds	[***]	[***]	18 years	12 years	5 years	1653
Arden Court of Fair Oaks 12469 Lee Jackson Mem Highway Fairfax, VA 22033	HCP Properties-Fair Oaks of Fairfax VA, LLC	Assisted living facility consisting of 56 beds	[***]	[***]	18 years	12 years	5 years	1654
Heartland of Clarksburg 100 Parkway Drive Clarksburg, WV 26301	HCP West Virginia Properties, LLC	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	18 years	12 years	5 years	1655
Sub-C
Manor Care of Decatur (GA) 2722 North Decatur Road Decatur, GA 30033	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 140 beds	[***]	[***]	18 years	9 years	5 years	1608
Manor Care of Cedar Rapids 1940 1st Avenue Northeast Cedar Rapids, IA 52402	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 105 beds	[***]	[***]	18 years	9 years	5 years	1609
Manor Care of Wilmette 432 Poplar Drive Wilmette, IL 60091	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 80 beds	[***]	[***]	18 years	9 years	5 years	1610
HHCC Galesburg 280 East Losey Street Galesburg, IL 61401	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 84 beds	[***]	[***]	18 years	9 years	5 years	1611
Manor Care of Indy South 8549 South Madison Avenue Indianapolis, IN 46227	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 140 beds	[***]	[***]	18 years	9 years	5 years	1612
MCHS Kingsford 1225 Woodward Avenue Kingsford, MI 49802	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 107 beds	[***]	[***]	18 years	9 years	5 years	1613

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.


Manor Care of Fargo 1315 University Drive South Fargo, ND 58103	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 131 beds	[***]	[***]	18 years	9 years	5 years	1614
MC Health Srvcs New Providence 144 Gales Drive New Providence, NJ 07974	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 106 beds	[***]	[***]	18 years	9 years	5 years	1615
Heartland of Eaton 515 South Maple Street Eaton, OH 45320	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 100 beds	[***]	[***]	18 years	9 years	5 years	1616
Manor Care of Northwest OKC 5301 North Brookline Oklahoma City, OK 73112	HCP Properties of Oklahoma City (Northwest), LLC	Skilled nursing facility / long term care facility consisting of 132 beds	[***]	[***]	18 years	9 years	5 years	1617
Manor Care of Tulsa 2425 South Memorial Drive Tulsa, OK 74129	HCP Properties of Tulsa OK, LLC	Skilled nursing facility / long term care facility consisting of 118 beds	[***]	[***]	18 years	9 years	5 years	1618
Manor Care of West Reading SNF 425 Buttonwood Street West Reading, PA 19611	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 176 beds	[***]	[***]	18 years	9 years	5 years	1619
Manor Care South York 200 Pauline Drive York, PA 17402	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 151 beds	[***]	[***]	18 years	9 years	5 years	1620
Manor Care of Elizabethtown 320 South Market Street Elizabethtown, PA 17022	HCP Properties, LP	Skilled nursing facility / long term care / assisted living facility consisting of 99 beds	[***]	[***]	18 years	9 years	5 years	1621
Manor Care of Kingston Court 2400 Kingston Court York, PA 17402	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 151 beds	[***]	[***]	18 years	9 years	5 years	1622
Oakmont West 600 Sulphur Springs Road Greenville, SC 29617	HCP Properties-Oakmon t West-Greenville SC, LLC	Skilled nursing facility / long term care facility consisting of 125 beds	[***]	[***]	18 years	9 years	5 years	1623
Manor Care of Aberdeen 400 8th Avenue Northwest Aberdeen, SD 57401	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 99 beds	[***]	[***]	18 years	9 years	5 years	1624
Manor Care of Sharpview 7505 Bellerive Houston, TX 77036	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 134 beds	[***]	[***]	18 years	9 years	5 years	1625
Manor Care of Green Bay West 1760 Shawano Avenue Green Bay, WI 54303	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 105 beds	[***]	[***]	18 years	9 years	5 years	1626

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.


MCHS Kenosha 3100 Washington Road Kenosha, WI 53144	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 153 beds	[***]	[***]	18 years	9 years	5 years	1627
Heartland of Martinsburg 209 Clover Street Martinsburg, WV 25404	HCP West Virginia Properties, LLC	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	18 years	9 years	5 years	1628
Sub-D
Heartland of Holland 493 West 32nd Street Holland, MI 49423	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 103 beds	[***]	[***]	18 years	5 years	5 years	1606
MCHS Cherry Hill 1412 Marlton Pike East Cherry Hill, NJ 08034	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 108 beds	[***]	[***]	18 years	5 years	5 years	1607

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

EXHIBIT A-2

Replacement Exhibit A-2 to Master Lease

(see attached)

EXHIBIT A-2

		Primary Intended Use	Allocated Minimum Rent
Facility	Facility Owner/ Lessor	Facility Description and Primary Intended Use	Initial Monthly Allocated Minimum Rent	Allocated Initial Investment	Fixed Term	1st Extended Term	2nd Extended Term	HCP ID
Sub-A
Arden Courts MCHS Avon 100 Fisher Drive Avon, CT 06001	HCP Properties, LP	Assisted living facility consisting of 64 beds	[***]	[***]	19 years	16 years	5 years	1742
Arden Court of Wilmington 700 1/2 Foulk Road Wilmington, DE 19803	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	19 years	16 years	5 years	1743
Manor Care of Palm Harbor 2851 Tampa Road Palm Harbor, FL 34684	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 180 beds	[***]	[***]	19 years	16 years	5 years	1744
Manor Care of Boca Raton 375 Northwest 51st Street Boca Raton, FL 33431	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 180 beds	[***]	[***]	19 years	16 years	5 years	1745
Heartland of Tamarac 5901 Northwest 79th Avenue Tamarac, FL 33321	HCP Properties, LP	Skilled nursing facility / long term care /assisted living facility consisting of 163 beds	[***]	[***]	19 years	16 years	5 years	1746
HHCC-Boynton Beach 3600 Old Boynton Road Boynton Beach, FL 33436	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	19 years	16 years	5 years	1747
HHCC Jacksonville 8495 Normandy Boulevard Jacksonville, FL 32221	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	19 years	16 years	5 years	1748
HHCC Prosperity Oaks 11375 Prosperity Farms Road Palm Beach Gardens, FL 33410	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	19 years	16 years	5 years	1749
Hrtlnd Hlth Care & Rehab Ctr S 5401 Sawyer Road Sarasota, FL 34233	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 140 beds	[***]	[***]	19 years	16 years	5 years	1750
HHCC Lauderhill 2599 Northwest 55th Avenue Lauder Hill, FL 33313	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 109 beds	[***]	[***]	19 years	16 years	5 years	1751

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.


Arden Court of Winter Springs 1057 Willa Springs Drive Winter Springs, FL 32708	HCP Properties, LP	Assisted living facility consisting of 60 beds	[***]	[***]	19 years	16 years	5 years	1752
MCHS West Des Moines 5010 Grand Ridge Drive West Des Moines, IA 50265	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	19 years	16 years	5 years	1753
MCHS Elk Grove Village SNF 1920 Nerge Road Elk Grove Village, IL 60007	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 190 beds	[***]	[***]	19 years	16 years	5 years	1754
HHCC Canton 2081 North Main Street Canton, IL 61520	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 90 beds	[***]	[***]	19 years	16 years	5 years	1755
HHCC Homewood 940 Maple Avenue Homewood, IL 60430	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	19 years	16 years	5 years	1756
Manor Care of Silver Spring 2501 Musgrove Road Silver Spring, MD 20904	HCP Maryland Properties, LLC	Skilled nursing facility / long term care facility consisting of 148 beds	[***]	[***]	19 years	16 years	5 years	1757
Springhouse of Pikesville 8911 Reisterstown Road Pikesville, MD 21208	HCP Maryland Properties, LLC	Assisted living facility consisting of 105 beds	[***]	[***]	19 years	16 years	5 years	1758
Manor Care of W Bloomfield 6950 Farmington Road West Bloomfield, MI 48322	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	19 years	16 years	5 years	1759
Arden Court of Livonia 32500 Seven Mile Road Livonia, MI 48152	HCP Properties, LP	Assisted living facility consisting of 60 beds	[***]	[***]	19 years	16 years	5 years	1760
Arden Courts MCHS West Orange 510 Prospect Avenue West Orange, NJ 07052	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	19 years	16 years	5 years	1761
Parma 9055 West Sprague Road Parma, OH 44133	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	19 years	16 years	5 years	1762
Arden Court of Anderson Twp 6870 Clough Pike Cincinnati, OH 45244	HCP Properties, LP	Assisted living facility consisting of 60 beds	[***]	[***]	19 years	16 years	5 years	1763
Manor Care Huntingdon Valley 3430 Huntingdon Pike Huntingdon Valley, PA 19006	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 130 beds	[***]	[***]	19 years	16 years	5 years	1764
Manor Care of King of Prussia 600 West Valley Forge Road King of Prussia, PA 19406	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 150 beds	[***]	[***]	19 years	16 years	5 years	1765

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

Canonsburg, PA 15317
Manor Care of McMurray 113 West McMurray Road Canonsburg, PA 15317	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 140 beds	[***]	[***]	19 years	16 years	5 years	1766
Manor Care of Imperial 1719 Bellevue Avenue Richmond, VA 23227	HCP Properties-Imperial of Richmond VA, LLC	Skilled nursing facility / long term care facility consisting of 128 beds	[***]	[***]	19 years	16 years	5 years	1767
Manor Care of Lynnwood 3701 188th Street, Southwest Lynnwood, WA 98037	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 113 beds	[***]	[***]	19 years	16 years	5 years	1768
Manor Care of Tacoma 5601 South Orchard Street Tacoma, WA 98409 ( this facility also includes additional property identified as assessor’s parcel number 5855000423 )	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 124 beds	[***]	[***]	19 years	16 years	5 years	1769
Sub-B
Manor Care of Walnut Creek 1226 Rossmoor Parkway Walnut Creek, CA 94595	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 155 beds	[***]	[***]	19 years	15 years	5 years	1741
Sub-C
Manor Care of Hemet 1717 West Stetson Avenue Hemet, CA 92545	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 178 beds	[***]	[***]	19 years	11 years	5 years	1712
Manor Care of Denver 290 South Monaco Parkway Denver, CO 80224	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 160 beds	[***]	[***]	19 years	11 years	5 years	1713
Arden Court of Palm Harbor 2895 Tampa Road Palm Harbor, FL 34684	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	19 years	11 years	5 years	1714
Manor Care Oak Lawn East 9401 South Kostner Avenue Oak Lawn, IL 60453	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 122 beds	[***]	[***]	19 years	11 years	5 years	1715
MCHS Prestwick 445 South County Road 525East Avon, IN 46123	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 140 beds	[***]	[***]	19 years	11 years	5 years	1716
Manor Care of Wichita 7101 East 21st Street North Wichita, KS 67206	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 118 beds	[***]	[***]	19 years	11 years	5 years	1717
MCHS Largo 600 Largo Road Upper Marlboro, MD 20774	HCP Maryland Properties, LLC	Skilled nursing facility / long term care facility consisting of 130 beds	[***]	[***]	19 years	11 years	5 years	1718

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.


Arden Court of Sterling Hts 11095 East Fourteen Mile Road Sterling Heights, MI 48312	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	19 years	11 years	5 years	1719
Fostrian AL 640 Sunnyside Drive Flushing, MI 48433	HCP Properties, LP	Assisted living facility consisting of 40 beds	[***]	[***]	19 years	11 years	5 years	1720
HHCC Fostrian 540 Sunnyside Drive Flushing, MI 48433	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 118 beds	[***]	[***]	19 years	11 years	5 years	1721
HHCC Georgian East 21401 Mack Avenue Grosse Pointe, MI 48236	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 80 beds	[***]	[***]	19 years	11 years	5 years	1722
Arden Courts MCHS Cherry Hill 2700 Chapel Avenue West Cherry Hill, NJ 08002	HCP Properties, LP	Assisted living facility consisting of 54 beds	[***]	[***]	19 years	11 years	5 years	1723
Heartland of Jackson 8668 State Route 93 Jackson, OH 45640	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 100 beds	[***]	[***]	19 years	11 years	5 years	1724
Heartland of Indian Lake Rehab 14442 U.S. Highway 33 Lakeview, OH 43331	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 51 beds	[***]	[***]	19 years	11 years	5 years	1725
Heartland of Bucyrus 1170 West Mansfield Street Bucyrus, OH 44820	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 96 beds	[***]	[***]	19 years	11 years	5 years	1726
Heartland of Kettering 3313 Wilmington Pike Kettering, OH 45429	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 100 beds	[***]	[***]	19 years	11 years	5 years	1727
Heartland of Marietta 5001 State Route 60 Marietta, OH 45750	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 101 beds	[***]	[***]	19 years	11 years	5 years	1728
Heartland of Portsmouth 20 Easter Drive Portsmouth, OH 45662	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 121 beds	[***]	[***]	19 years	11 years	5 years	1729
Heartland of Piqua 275 Kienle Drive Piqua, OH 45356	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 100 beds	[***]	[***]	19 years	11 years	5 years	1730
Manor Care of Allentown 1265 Cedar Crest Boulevard Allentown, PA 18103	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 166 beds	[***]	[***]	19 years	11 years	5 years	1731
Manor Care of Bethlehem 2021 2021 Westgate Drive Bethlehem, PA 18017	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 227 beds	[***]	[***]	19 years	11 years	5 years	1732

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

Chambersburg, PA 17201
Manor Care of Chambersburg 1070 Stouffer Avenue Chambersburg, PA 17201	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 210 beds	[***]	[***]	19 years	11 years	5 years	1733
Manor Care of Jersey Shore 1008 Thompson Street Jersey Shore, PA 17740	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	19 years	11 years	5 years	1734
Manor Care of Sunbury 800 Court Street Circle Sunbury, PA 17801	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 126 beds	[***]	[***]	19 years	11 years	5 years	1735
Manor Care of Camp Hill 1700 Market Street Camp Hill, PA 17011	HCP Properties, LP	Skilled nursing facility / long term care / assisted living facility consisting of 144 beds	[***]	[***]	19 years	11 years	5 years	1736
Heartland of West Ashley 1137 Sam Rittenberg Boulevard Charleston, SC 29407	HCP Properties-West Ashley- Charleston SC, LLC	Skilled nursing facility / long term care facility consisting of 99 beds	[***]	[***]	19 years	11 years	5 years	1737
Oakmont East 601 Sulphur Springs Road Greenville, SC 29617	HCP Properties-Oakmont East- Greenville SC, LLC	Skilled nursing facility / long term care facility consisting of 132 beds	[***]	[***]	19 years	11 years	5 years	1738
Heartland of Keyser 135 Southern Drive Keyser, WV 26726	HCP West Virginia Properties, LLC	Skilled nursing facility / long term care facility consisting of 122 beds	[***]	[***]	19 years	11 years	5 years	1739
Sub-D
Manor Care of Davenport 815 East Locust Street Davenport, IA 52803	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 105 beds	[***]	[***]	19 years	8 years	5 years	1690
HHCC-Normal 510 Broadway Normal, IL 61761	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 116 beds	[***]	[***]	19 years	8 years	5 years	1691
Manor Care of Rolling Meadows 4225 Kirchoff Road Rolling Meadows, IL 60008	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 155 beds	[***]	[***]	19 years	8 years	5 years	1692
HHCC Macomb 8 Doctors Lane Macomb, IL 61455	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 80 beds	[***]	[***]	19 years	8 years	5 years	1693
HHCC Moline 833 Sixteenth Avenue Moline, IL 61265	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 149 beds	[***]	[***]	19 years	8 years	5 years	1694
Manor Care of Wheaton 11901 Georgia Avenue Wheaton, MD 20902	HCP Maryland Properties, LLC	Skilled nursing facility / long term care facility consisting of 94 beds	[***]	[***]	19 years	8 years	5 years	1695

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

Chevy Chase, MD 20815
Manor Care of Chevy Chase 8700 Jones Mill Road Chevy Chase, MD 20815	HCP Maryland Properties, LLC	Skilled nursing facility / long term care facility consisting of 172 beds	[***]	[***]	19 years	8 years	5 years	1696
HHCC Allen Park 9150 Allen Road Allen Park, MI 48101	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 171 beds	[***]	[***]	19 years	8 years	5 years	1697
HHCC Crestview 625 36th Southwest Wyoming, MI 49509	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 92 beds	[***]	[***]	19 years	8 years	5 years	1698
Heartland of Woodridge AL 3801 Woodridge Boulevard Fairfield, OH 45014	HCP Properties, LP	Assisted living facility consisting of 184 beds	[***]	[***]	19 years	8 years	5 years	1699
Heartland of Woodridge SNF 3801 Woodridge Boulevard Fairfield, OH 45014	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 112 beds	[***]	[***]	19 years	8 years	5 years	1700
Heartland of Centerburg 212 Fairview Avenue Centerburg, OH 43011	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 82 beds	[***]	[***]	19 years	8 years	5 years	1701
Manor Care of Midwest City 2900 Parklawn Drive Midwest City, OK 73110	HCP Properties of Midwest City OK, LLC	Skilled nursing facility / long term care facility consisting of 116 beds	[***]	[***]	19 years	8 years	5 years	1702
Manor Care of Lancaster 100 Abbeyville Road Lancaster, PA 17603	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 172 beds	[***]	[***]	19 years	8 years	5 years	1703
Manor Care of Yeadon 14 Lincoln Avenue Yeadon, PA 19050	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 198 beds	[***]	[***]	19 years	8 years	5 years	1704
Twinbrook Medical Center 3805 Field Street Erie, PA 16511	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	19 years	8 years	5 years	1705
Donahoe Manor 136 Donahoe Manor Road Bedford, PA 15522	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 72 beds	[***]	[***]	19 years	8 years	5 years	1706
Manor Care of Ft Worth NRH 7625 Glenview Drive Fort Worth, TX 76180	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 163 beds	[***]	[***]	19 years	8 years	5 years	1707
Manor Care of Ft Worth NW 2129 Skyline Drive Fort Worth, TX 76114	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 104 beds	[***]	[***]	19 years	8 years	5 years	1708
Manor Care of Webster 750 West Texas Avenue Webster, TX 77598	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 113 beds	[***]	[***]	19 years	8 years	5 years	1709

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

Alexandria, VA 22308
MCHS Alexandria 1510 Collingwood Road Alexandria, VA 22308	HCP Properties of Alexandria VA, LLC	Skilled nursing facility / long term care facility consisting of 96 beds	[***]	[***]	19 years	8 years	5 years	1710
MCHS Platteville 1300 North Water Street Platteville, WI 53818	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 99 beds	[***]	[***]	19 years	8 years	5 years	1711
Sub-E
Manor Care of Anderson 1345 North Madison Avenue Anderson, IN 46011	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 228 beds	[***]	[***]	19 years	4 years	5 years	1688
Heartland Fairfield 7820 Pleasantville Road Pleasantville, OH 43148	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 150 beds	[***]	[***]	19 years	4 years	5 years	1689

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

EXHIBIT A-3

Replacement Exhibit A-3 to Master Lease

(see attached)

EXHIBIT A-3

Facility	Facility Owner/ Lessor	Facility Description and Primary Intended Use	Initial Monthly Allocated Minimum Rent	Allocated Initial Investment	Fixed Term	1st Extended Term	2nd Extended Term	HCP ID
Sub-A
Arden Court of Seminole 9300 Antilles Drive Seminole, FL 33776	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	21 years	14 years	5 years	1824
Manor Care of West Delray 16200 Jog Road Delray Beach, FL 33446	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	21 years	14 years	5 years	1825
Arden Court of Lely Palms 6125 Rattlesnake Hammock Road Naples, FL 34113	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	21 years	14 years	5 years	1826
Manor Care of Sarasota 5511 Swift Road Sarasota, FL 34231	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 178 beds	[***]	[***]	21 years	14 years	5 years	1827
Heartland of Brooksville 575 Lamar Avenue Brooksville, FL 34601	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	21 years	14 years	5 years	1828
Heartland of Zephyrhills 38220 Henry Drive Zephyrhills, FL 33542	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	21 years	14 years	5 years	1829
Arden Court of Tampa 14950 Casey Road Tampa, FL 33624	HCP Properties, LP	Assisted living facility consisting of 60 beds	[***]	[***]	21 years	14 years	5 years	1830
Manor Care of Libertyville 1500 South Milwaukee Libertyville, IL 60048	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 150 beds	[***]	[***]	21 years	14 years	5 years	1831
Manor Care of Palos Heights 7850 West College Drive Palos Heights, IL 60463	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 174 beds	[***]	[***]	21 years	14 years	5 years	1832
Arden Courts of Hazel Crest 3701 West 183rd Street Hazel Crest, IL 60429	HCP Properties, LP	Assisted living facility consisting of 64 beds	[***]	[***]	21 years	14 years	5 years	1833
HHCC Paxton 1001 East Pells Street Paxton, IL 60957	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 106 beds	[***]	[***]	21 years	14 years	5 years	1834
Arden Court of Louisville 10451 Linn Station Road Louisville, KY 40223	HCP Properties, LP	Assisted living facility consisting of 64 beds	[***]	[***]	21 years	14 years	5 years	1835

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

MCHS-Woodbridge Valley 1525 North Rolling Road Catonsville, MD 21228	HCP Maryland Properties, LLC	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	21 years	14 years	5 years	1836
Arden Courts of Kensington 4301 Knowles Avenue Kensington, MD 20895	HCP Maryland Properties, LLC	Assisted living facility consisting of 64 beds	[***]	[***]	21 years	14 years	5 years	1837
Heartland of Canton 7025 Lilley Road Canton, MI 48187 ( this facility also includes additional property identified as assessor’s parcel number 71 042-0200197-301 )	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	21 years	14 years	5 years	1838
HHCC Ann Arbor 4701 East Huron River Drive Ann Arbor, MI 48105	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 180 beds	[***]	[***]	21 years	14 years	5 years	1839
Arden Court of Bingham Farms 24005 West 13 Mile Road Bingham Farms, MI 48025	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	21 years	14 years	5 years	1840
Arden Courts MCHS Whippany 18 Eden Lane Whippany, NJ 07981	HCP Properties, LP	Assisted living facility consisting of 60 beds	[***]	[***]	21 years	14 years	5 years	1841
Manor Care of Reno 3101 Plumas Street Reno, NV 89509	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 189 beds	[***]	[***]	21 years	14 years	5 years	1842
Arden Courts of Chagrin Falls 8100 East Washington Street Chagrin Falls, OH 44023	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	21 years	14 years	5 years	1843
Arden Courts of Bath 171 North Cleveland Massillon Road Akron, OH 44333	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	21 years	14 years	5 years	1844
Arden Court of Warminster 779 West County Line Road Hatboro, PA 19040	HCP Properties, LP	Assisted living facility consisting of 60 beds	[***]	[***]	21 years	14 years	5 years	1845
Manor Care of Yardley 1480 Oxford Valley Road Yardley, PA 19067	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 150 beds	[***]	[***]	21 years	14 years	5 years	1846
Manor Care of Lansdale 640 Bethlehem Pike Montgomeryville, PA 18936	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 170 beds	[***]	[***]	21 years	14 years	5 years	1847
Old Orchard Health Care Center 4100 Freemansburg Avenue Easton, PA 18045	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 180 beds	[***]	[***]	21 years	14 years	5 years	1848
HHCC Charleston 1800 Eagle Landing Boulevard Hanahan, SC 29410	HCP Properties-Charleston of Hanahan SC, LLC	Skilled nursing facility / long term care facility consisting of 135 beds	[***]	[***]	21 years	14 years	5 years	1849

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

HHCC Austin 11406 Rustic Rock Drive Austin, TX 78750	HCP Properties, LP	Skilled nursing facility / long term care / assisted living facility consisting of 180 beds	[***]	[***]	21 years	14 years	5 years	1850
Arden Courts of Richardson 410 Buckingham Road Richardson, TX 75081	HCP Properties, LP	Assisted living facility consisting of 60 beds	[***]	[***]	21 years	14 years	5 years	1851
Manor Care of Fair Oaks 12475 Lee Jackson Memorial Highway Fairfax, VA 22033	HCP Properties-Fair Oaks of Fairfax VA, LLC	Skilled nursing facility / long term care facility consisting of 155 beds	[***]	[***]	21 years	14 years	5 years	1852
Arden Court of Annandale 7104 Braddock Road Annandale, VA 22003	HCP Properties-Arden Courts of Annandale VA, LLC	Assisted living facility consisting of 60 beds	[***]	[***]	21 years	14 years	5 years	1853
Sub-B
HCR-Manor Care Tice Valley 1975 Tice Valley Boulevard Walnut Creek, CA 94595	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	21 years	13 years	5 years	1656
Sub-C
Manor Care of Citrus Heights 7807 Upland Way Citrus Heights, CA 95610	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 148 beds	[***]	[***]	21 years	9 years	5 years	1790
Manor Care of Fountain Valley 11680 Warner Avenue Fountain Valley, CA 92708	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 151 beds	[***]	[***]	21 years	9 years	5 years	1791
Manor Care of Boulder 2800 Palo Parkway Boulder, CO 80301	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 150 beds	[***]	[***]	21 years	9 years	5 years	1792
Manor Care of Wilmington 700 Foulk Road Wilmington, DE 19803	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 138 beds	[***]	[***]	21 years	9 years	5 years	1793
Arden Court of Largo 300 Highland Avenue Northeast Largo, FL 33770	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	21 years	9 years	5 years	1794
Arden Ct of Elk Grove Village 1940 Nerge Road Elk Grove Village, IL 60007	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	21 years	9 years	5 years	1795
HHCC-Champaign 309 East Springfield Avenue Champaign, IL 61820	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 102 beds	[***]	[***]	21 years	9 years	5 years	1796
Arden Court of Potomac 10718 Potomac Tennis Lane Potomac, MD 20854	HCP Maryland Properties, LLC	Assisted living facility consisting of 52 beds	[***]	[***]	21 years	9 years	5 years	1797
Springhouse of Silver Spring 2201 Colston Drive Silver Spring, MD 20910	HCP Maryland Properties, LLC	Assisted living facility consisting of 115 beds	[***]	[***]	21 years	9 years	5 years	1798

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

Manor Care of Ruxton 7001 North Charles Street Towson, MD 21204	HCP Maryland Properties, LLC	Skilled nursing facility / long term care facility consisting of 179 beds	[***]	[***]	21 years	9 years	5 years	1799
HHCC University 28550 Five Mile Road Livonia, MI 48154	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 172 beds	[***]	[***]	21 years	9 years	5 years	1800
HHCC Kalamazoo 3625 West Michigan Avenue Kalamazoo, MI 49006	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 172 beds	[***]	[***]	21 years	9 years	5 years	1801
HHCC Grand Rapids 2320 East Beltline Southeast Grand Rapids, MI 49546	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 198 beds	[***]	[***]	21 years	9 years	5 years	1802
Manor Care of Pinehurst 205 Rattlesnake Trail Pinehurst, NC 28374	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	21 years	9 years	5 years	1803
MCHS West Deptford 550 Jessup Road Paulsboro, NJ 08066	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 156 beds	[***]	[***]	21 years	9 years	5 years	1804
Manor Care of Barberton 85 Third Street, Southeast Barberton, OH 44203	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	21 years	9 years	5 years	1805
Heartland of Oregon 3953 Navarre Avenue Oregon, OH 43616	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 110 beds	[***]	[***]	21 years	9 years	5 years	1806
Heartland of Madeira 5970 Kenwood Road Madeira, OH 45243	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 165 beds	[***]	[***]	21 years	9 years	5 years	1807
Manor Care of Akron 1211 West Market Street Akron, OH 44313	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 117 beds	[***]	[***]	21 years	9 years	5 years	1808
Heartland of Perrysburg 10540 Fremont Pike Perrysburg, OH 43551	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 131 beds	[***]	[***]	21 years	9 years	5 years	1809
Perrysburg Commons 10542 Fremont Pike Perrysburg, OH 43551	HCP Properties, LP	Assisted living facility consisting of 115 beds	[***]	[***]	21 years	9 years	5 years	1810

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

Heartland of Chillicothe 1058 Columbus Street Chillicothe, OH 45601	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 101 beds	[***]	[***]	21 years	9 years	5 years	1811
Heartland of Hillsboro 1141 Northview Drive Hillsboro, OH 45133	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 100 beds	[***]	[***]	21 years	9 years	5 years	1812
Heartland of Riverview 7743 County Road 1 South Point, OH 45680	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 100 beds	[***]	[***]	21 years	9 years	5 years	1813
Arden Court of Yardley 493 Stony Hill Road Yardley, PA 19067	HCP Properties, LP	Assisted living facility consisting of 52 beds	[***]	[***]	21 years	9 years	5 years	1814
Manor Care of Lebanon 900 Tuck Street Lebanon, PA 17042	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 159 beds	[***]	[***]	21 years	9 years	5 years	1815
MCHS Pottsville 420 Pulaski Drive Pottsville, PA 17901	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 179 beds	[***]	[***]	21 years	9 years	5 years	1816
Manor Care of Williamsport N 300 Leader Drive Williamsport, PA 17701	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 152 beds	[***]	[***]	21 years	9 years	5 years	1817
Manor Care of Bethlehem 2029 2029 Westgate Drive Bethlehem, PA 18017	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 217 beds	[***]	[***]	21 years	9 years	5 years	1818
Manor Care of Sinking Spring 3000 Windmill Road Sinking Spring, PA 19608	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 214 beds	[***]	[***]	21 years	9 years	5 years	1819
Sky Vue Terrace 2170 Rhine Street Pittsburgh, PA 15212	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 100 beds	[***]	[***]	21 years	9 years	5 years	1820
Manor Care of San Antonio N 7703 Briaridge San Antonio, TX 78230	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 106 beds	[***]	[***]	21 years	9 years	5 years	1821
Manor Care of Arlington 550 South Carlin Springs Road Arlington, VA 22204	HCP Properties of Arlington VA, LLC	Skilled nursing facility / long term care facility consisting of 161 beds	[***]	[***]	21 years	9 years	5 years	1822
Heartland of Preston County 300 Miller Road Kingwood, WV 26537	HCP West Virginia Properties, LLC	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	21 years	9 years	5 years	1823

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

Sub-D
HHCC - North Sarasota 3250 12th Street Sarasota, FL 34237	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 87 beds	[***]	[***]	21 years	6 years	5 years	1772
HHCC-Decatur 444 West Harrison Avenue Decatur, IL 62526	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 112 beds	[***]	[***]	21 years	6 years	5 years	1773
Manor Care of Naperville 200 Martin Avenue Naperville, IL 60540	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 118 beds	[***]	[***]	21 years	6 years	5 years	1774
Manor Care of Kankakee 900 West River Place Kankakee, IL 60901	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 107 beds	[***]	[***]	21 years	6 years	5 years	1775
ManorCare of Dulaney 111 West Road Towson, MD 21204	HCP Maryland Properties, LLC	Skilled nursing facility / long term care facility consisting of 139 beds	[***]	[***]	21 years	6 years	5 years	1776
HHCC Adelphi 1801 Metzerott Road Adelphi, MD 20783	HCP Maryland Properties, LLC	Skilled nursing facility / long term care facility consisting of 170 beds	[***]	[***]	21 years	6 years	5 years	1777
HHCC Greenview 1700 Leonard Street, Northeast Grand Rapids, MI 49505	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 69 beds	[***]	[***]	21 years	6 years	5 years	1778
HHCC Battle Creek 200 Roosevelt Avenue East Battle Creek, MI 49017	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 65 beds	[***]	[***]	21 years	6 years	5 years	1779
HHCC Jackson 434 West North Street Jackson, MI 49202	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 100 beds	[***]	[***]	21 years	6 years	5 years	1780
HHCC Ionia 814 East Lincoln Avenue Ionia, MI 48846	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	21 years	6 years	5 years	1781
Heartland Holly Glen 4293 Monroe Street Toledo, OH 43606	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 100 beds	[***]	[***]	21 years	6 years	5 years	1782

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

Manor Care of Southwest OKC 5600 South Walker Avenue Oklahoma City, OK 73109	HCP Properties of Oklahoma City (Southwest), LLC	Skilled nursing facility / long term care facility consisting of 112 beds	[***]	[***]	21 years	6 years	5 years	1783
Manor Care of Pottstown 724 North Charlotte Street Pottstown, PA 19464	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 165 beds	[***]	[***]	21 years	6 years	5 years	1784
Heartland Health Care Ctr Pitt 550 South Negley Avenue Pittsburgh, PA 15232	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 224 beds	[***]	[***]	21 years	6 years	5 years	1785
Heartland of Columbia 2601 Forest Drive Columbia, SC 29204	HCP Properties-Columbia SC, LLC	Skilled nursing facility / long term care facility consisting of 132 beds	[***]	[***]	21 years	6 years	5 years	1786
Manor Care of Stratford Hall / Village at Stratford Hall 2125 Hilliard Road Richmond, VA 23228	HCP Properties-Stratford Hall of Richmond VA, LLC	Skilled nursing facility / long term care facility / assisted living facility consisting of 264 beds	[***]	[***]	21 years	6 years	5 years	1787
MCHS Green Bay East 600 South Webster Avenue Green Bay, WI 54301	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 79 beds	[***]	[***]	21 years	6 years	5 years	1788
Manor Care of Fond du Lac 265 South National Avenue Fond du Lac, WI 54935	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 108 beds	[***]	[***]	21 years	6 years	5 years	1789
Sub-E
Manor Care of Elgin 180 South State Street Elgin, IL 60123	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 88 beds	[***]	[***]	21 years	2 years	5 years	1770
Manor Care of Dallas 3326 Burgoyne Street Dallas, TX 75233	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 204 beds	[***]	[***]	21 years	2 years	5 years	1771

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

EXHIBIT A-4

Replacement Exhibit A-4 to Master Lease

(see attached)

EXHIBIT A-4

Facility	Facility Owner/ Lessor	Facility Description and Primary Intended Use	Initial Monthly Allocated Minimum Rent	Allocated Initial Investment	Fixed Term	1st Extended Term	2nd Extended Term	HCP ID
Sub-A
Arden Courts MCHS Hamden 153 Leeder Hill Drive Hamden, CT 06517	HCP Properties, LP	Assisted living facility consisting of 60 beds	[***]	[***]	22 years	13 years	5 years	1912
Manor Care of Naples 3601 Lakewood Boulevard Naples, FL 34112	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	22 years	13 years	5 years	1913
Manor Care of Carrollwood 3030 West Bearss Avenue Tampa, FL 33618	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	22 years	13 years	5 years	1914
MCHS Plantation 6931 West Sunrise Boulevard Plantation, FL 33313	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	22 years	13 years	5 years	1917
HHCC Orange Park 570 Wells Road Orange Park, FL 32073	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	22 years	13 years	5 years	1918
Arden Court of Ft Myers 15950 McGregor Boulevard Ft. Myers, FL 33908	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	22 years	13 years	5 years	1919
MCHS Ft Myers SNF 13881 Eagle Ridge Drive Ft. Myers, FL 33912	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	22 years	13 years	5 years	1920
Manor Care Palos Heights West 11860 Southwest Hwy Palos Heights, IL 60463	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 130 beds	[***]	[***]	22 years	13 years	5 years	1921
Manor Care of Northbrook 3300 Milwaukee Avenue Northbrook, IL 60062	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 158 beds	[***]	[***]	22 years	13 years	5 years	1922
Manor Care of Westmont 512 East Ogden Avenue Westmont, IL 60559	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 155 beds	[***]	[***]	22 years	13 years	5 years	1923
Glen Ellyn 2 South 706 Park Boulevard Glen Ellyn, IL 60137	HCP Properties, LP	Assisted living facility consisting of 60 beds	[***]	[***]	22 years	13 years	5 years	1924
Arden Court of Geneva 2388 Bricher Road Geneva, IL 60134	HCP Properties, LP	Assisted living facility consisting of 60 beds	[***]	[***]	22 years	13 years	5 years	1925
Arden Court of Pikesville 8909 Reisterstown Road Pikesville, MD 21208	HCP Maryland Properties, LLC	Assisted living facility consisting of 56 beds	[***]	[***]	22 years	13 years	5 years	1926
Manor Care of Roland Park 4669 Falls Road Baltimore, MD 21209	HCP Maryland Properties, LLC	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	22 years	13 years	5 years	1927

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

Arden Courts Towson 8101 Bellona Avenue Towson, MD 21204	HCP Maryland Properties, LLC	Assisted living facility consisting of 60 beds	[***]	[***]	22 years	13 years	5 years	1928
HHCC Knollview 1061 West Hackley Avenue Muskegon, MI 49441	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 107 beds	[***]	[***]	22 years	13 years	5 years	1929
Arden Courts MCHS Wayne 800 Hamburg Turnpike Wayne, NJ 07470	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	22 years	13 years	5 years	1930
Voorhees 1086 Dumont Circle Voorhees, NJ 08043	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	22 years	13 years	5 years	1931
Arden Court of Kenwood 4580 East Galbraith Road Kenwood, OH 45236	HCP Properties, LP	Assisted living facility consisting of 62 beds	[***]	[***]	22 years	13 years	5 years	1932
Heartland of Mentor 8200 Mentor Hills Drive Mentor, OH 44060	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 167 beds	[***]	[***]	22 years	13 years	5 years	1933
Heartland of Marysville 755 South Plum Street Marysville, OH 43040	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 100 beds	[***]	[***]	22 years	13 years	5 years	1934
Manor Care of North Hills 1105 Perry Highway Pittsburgh, PA 15237	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 200 beds	[***]	[***]	22 years	13 years	5 years	1935
Manor Care of Greentree 1848 Greentree Road Pittsburgh, PA 15220	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 180 beds	[***]	[***]	22 years	13 years	5 years	1936
Linden Village (Lebanon) 100 Tuck Court Lebanon, PA 17042	HCP Properties, LP	Assisted living facility consisting of 64 beds	[***]	[***]	22 years	13 years	5 years	1937
Arden Court of San Antonio 15290 Huebner Road San Antonio, TX 78231	HCP Properties, LP	Assisted living facility consisting of 64 beds	[***]	[***]	22 years	13 years	5 years	1938
HHCC Bedford 2001 Forest Ridge Drive Bedford, TX 76021	HCP Properties, LP	Skilled nursing facility / long term care / assisted living facility consisting of 180 beds	[***]	[***]	22 years	13 years	5 years	1939
Sub-B
Manor Care of Palm Desert 74350 Country Club Drive Palm Desert, CA 92260	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 178 beds	[***]	[***]	22 years	8 years	5 years	1877
Arden Courts MCHS Farmington 45 South Road Farmington, CT 06032	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	22 years	8 years	5 years	1878
Springhouse of Lely Palms 1000 Lely Palms Drive Naples, FL 34113	HCP Properties, LP	Assisted living facility consisting of 212 beds	[***]	[***]	22 years	8 years	5 years	1879
Manor Care of Hinsdale 600 West Ogden Avenue Hinsdale, IL 60521	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 202 beds	[***]	[***]	22 years	8 years	5 years	1880
MCHS Summer Trace AL 12999 North Pennsylvania Street Carmel, IN 46032	HCP Properties, LP	Assisted living facility consisting of 176 beds	[***]	[***]	22 years	8 years	5 years	1881

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

Manor Care of Summer Trace 12999 North Pennsylvania Street Carmel, IN 46032	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 104 beds	[***]	[***]	22 years	8 years	5 years	1882
Manor Care of Topeka 2515 Southwest Wanamaker Road Topeka, KS 66614	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	22 years	8 years	5 years	1883
Christopher East Hlth Care Ctr 4200 Browns Lane Louisville, KY 40220	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 178 beds	[***]	[***]	22 years	8 years	5 years	1884
Arden Court of Silver Spring 2505 Musgrove Road Silver Spring, MD 20904	HCP Maryland Properties LLC	Assisted living facility consisting of 52 beds	[***]	[***]	22 years	8 years	5 years	1885
HHCC Dearborn Heights 26001 Ford Road Dearborn Heights, MI 48127	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 151 beds	[***]	[***]	22 years	8 years	5 years	1886
HHCC Georgian Bloomfield 2975 North Adams Road Bloomfield Hills, MI 48304	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 199 beds	[***]	[***]	22 years	8 years	5 years	1887
HHCC Briarwood 3011 North Center Road Flint, MI 48506 ( this facility also includes additional property identified as assessor’s parcel numbers 41-04 277-011, 41-04-277-090 and 41 04-277-064 )	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 117 beds	[***]	[***]	22 years	8 years	5 years	1888
HHCC Three Rivers 517 South Erie Street Three Rivers, MI 49093	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 100 beds	[***]	[***]	22 years	8 years	5 years	1889
HHCC Hampton 800 Mulholland Street Bay City, MI 48708	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 51 beds	[***]	[***]	22 years	8 years	5 years	1890
Heartland of Mt. Airy 2250 Banning Road Cincinnati, OH 45239	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 151 beds	[***]	[***]	22 years	8 years	5 years	1891
Manor Care of Willoughby 37603 Euclid Avenue Willoughby, OH 44094	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 157 beds	[***]	[***]	22 years	8 years	5 years	1892
ManorCare Euclid Beach 16101 Euclid Beach Boulevard Cleveland, OH 44110	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 202 beds	[***]	[***]	22 years	8 years	5 years	1893
Manor Care of Rocky River 4102 Rocky River Drive Cleveland, OH 44135	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 210 beds	[***]	[***]	22 years	8 years	5 years	1894
Manor Care of Belden Village 5005 Higbee Avenue, Northwest Canton, OH 44718	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 147 beds	[***]	[***]	22 years	8 years	5 years	1895
Heartland of Wauseon 303 West Leggett Street Wauseon, OH 43567	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 53 beds	[***]	[***]	22 years	8 years	5 years	1896
Heartland Lansing 68222 Commercial Drive Bridgeport, OH 43912	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 100 beds	[***]	[***]	22 years	8 years	5 years	1897

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

Arden Court of Allentown 5151 Hamilton Boulevard Allentown, PA 18106	HCP Properties, LP	Assisted living facility consisting of 56 beds	[***]	[***]	22 years	8 years	5 years	1898
Manor Care of Dallastown 100 West Queen Street Dallastown, PA 17313	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 202 beds	[***]	[***]	22 years	8 years	5 years	1899
Manor Care of Kingston East 200 Second Avenue Kingston, PA 18704	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 176 beds	[***]	[***]	22 years	8 years	5 years	1900
Manor Care of Laureldale 2125 Elizabeth Avenue Laureldale, PA 19605	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 198 beds	[***]	[***]	22 years	8 years	5 years	1901
Manor Care of Williamsport S 101 Leader Drive Williamsport, PA 17701	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 116 beds	[***]	[***]	22 years	8 years	5 years	1902
Manor Care North York 1770 Barley Road York, PA 17404	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 161 beds	[***]	[***]	22 years	8 years	5 years	1903
Arden Court of Jefferson Hills 380 Wray Large Road Jefferson Hills, PA 15025	HCP Properties, LP	Assisted living facility consisting of 60 beds	[***]	[***]	22 years	8 years	5 years	1904
Heartland of Lexington 2416 Sunset Boulevard West Columbia, SC 29169	HCP Properties-Lexington SC, LLC	Skilled nursing facility / long term care facility consisting of 132 beds	[***]	[***]	22 years	8 years	5 years	1905
Oakmont of Union 709 Rice Avenue Union, SC 29379	HCP Properties- Oakmont of Union SC, LLC	Skilled nursing facility / long term care / assisted living facility consisting of 128 beds	[***]	[***]	22 years	8 years	5 years	1906
HHCC West Houston at Royal Oak 2939 Woodland Park Drive Houston, TX 77082	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 161 beds	[***]	[***]	22 years	8 years	5 years	1907
Heartland of San Antonio 1 Heartland Drive San Antonio, TX 78247	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 162 beds	[***]	[***]	22 years	8 years	5 years	1908
Medical Care Center 2200 Landover Place Lynchburg, VA 24501	HCP Properties-Medical Care Center- Lynchburg VA, LLC	Skilled nursing facility / long term care facility consisting of 118 beds	[***]	[***]	22 years	8 years	5 years	1909
Manor Care of Spokane 6025 North Assembly Street Spokane, WA 99205	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 125 beds	[***]	[***]	22 years	8 years	5 years	1910
Heartland of Rainelle 606 Pennsylvania Avenue Rainelle, WV 25962	HCP West Virginia Properties, LLC	Skilled nursing facility / long term care facility consisting of 60 beds	[***]	[***]	22 years	8 years	5 years	1911
Sub-C
Manor Care of Tucson 3705 North Swan Road Tucson, AZ 85718	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 118 beds	[***]	[***]	22 years	5 years	5 years	1857
Manor Care of Waterloo 201 West Ridgeway Avenue Waterloo, IA 50701	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 97 beds	[***]	[***]	22 years	5 years	5 years	1858

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

Manor Care of Dubuque 901 West Third Street Dubuque, IA 52001	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 99 beds	[***]	[***]	22 years	5 years	5 years	1859
HHCC-Peoria 5600 North Glen Elm Drive Peoria, IL 61614	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 144 beds	[***]	[***]	22 years	5 years	5 years	1860
Manor Care Oak Lawn West 6300 West 95th Street Oak Lawn, IL 60453	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 192 beds	[***]	[***]	22 years	5 years	5 years	1861
Springhouse of Bethesda 4925 Battery Lane Bethesda, MD 20814	HCP Maryland Properties, LLC	Assisted living facility consisting of 98 beds	[***]	[***]	22 years	5 years	5 years	1862
HHCC Hyattsville 6500 Riggs Road Hyattsville, MD 20783	HCP Maryland Properties, LLC	Skilled nursing facility / long term care facility consisting of 160 beds	[***]	[***]	22 years	5 years	5 years	1863
Manor Care of Springfield 2915 South Fremont Springfield, MO 65804	HCP Properties, LP	Skilled nursing facility / long term care / assisted living facility consisting of 234 beds	[***]	[***]	22 years	5 years	5 years	1864
Manor Care of Florissant 1200 Graham Road Florissant, MO 63031	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 98 beds	[***]	[***]	22 years	5 years	5 years	1865
Manor Care of Minot 600 South Main Street Minot, ND 58701	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 114 beds	[***]	[***]	22 years	5 years	5 years	1866
Manor Care of Westerville 140 Old County Line Road Westerville, OH 43081	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 180 beds	[***]	[***]	22 years	5 years	5 years	1867
Heartland of Greenville 243 Marion Drive Greenville, OH 45331	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 92 beds	[***]	[***]	22 years	5 years	5 years	1868
Heartland of Urbana 741 East Water Street Urbana, OH 43078	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 100 beds	[***]	[***]	22 years	5 years	5 years	1869
The Village At Westerville NC 1060 Eastwind Drive Westerville, OH 43081	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 130 beds	[***]	[***]	22 years	5 years	5 years	1870
The Village At Westerville RC 215 Huber Village Boulevard Westerville, OH 43081	HCP Properties, LP	Assisted living facility consisting of 125 beds	[***]	[***]	22 years	5 years	5 years	1871
Manor Care of Devon 235 Lancaster Avenue Devon, PA 19333	HCP Properties, LP	Skilled nursing facility / long term care / assisted living facility consisting of 131 beds/150 beds	[***]	[***]	22 years	5 years	5 years	1872
Hampton House 1548 Sans Souci Parkway Hanover Township, PA 18706	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 104 beds	[***]	[***]	22 years	5 years	5 years	1873
Shadyside Nurs. and Rehab Ctr 5609 Fifth Avenue Pittsburgh, PA 15232	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 150 beds	[***]	[***]	22 years	5 years	5 years	1874
Wallingford Nursing & Rehab 115 South Providence Road Wallingford, PA 19086	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 207 beds	[***]	[***]	22 years	5 years	5 years	1875
ManorCare Hlth Serv-Shawano 1436 South Lincoln Street Shawano, WI 54166	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 100 beds	[***]	[***]	22 years	5 years	5 years	1876

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

Sub-D
HHCC Saginaw 2901 Galaxy Drive Saginaw, MI 48601	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 103 beds	[***]	[***]	22 years	1 years	5 years	1854
Heartland Victorian Village 920 Thurber Drive - West Columbus, OH 43215	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 148 beds	[***]	[***]	22 years	1 years	5 years	1855
Holiday Nursing Center 280 Moffett Drive, Hwy 87N Center, TX 75935	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 137 beds	[***]	[***]	22 years	1 years	5 years	1856

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

EXHIBIT B

Modification of Extension Term

Section 1(d) and (e) of Exhibit D to the Master Lease shall be deleted in its entirety and replaced with the following in lieu thereof:

“(d)(1) For each Pool 1 First Extended Term, Pool 2 First Extended Term, Pool 3 First Extended Term and Pool 4 First Extended Term, respectively, on the commencement thereof, Pool 1 Minimum Rent, Pool 2 Minimum Rent, Pool 3 Minimum Rent or Pool 4 Minimum Rent (as applicable) shall be reset in an amount equal to the greater of (i) the then Fair Market Rental for, as applicable, the Pool 1 Facilities, the Pool 2 Facilities, the Pool 3 Facilities or the Pool 4 Facilities, or (ii) the Pool 1 Minimum Rent, Pool 2 Minimum Rent, Pool 3 Minimum Rent or Pool 4 Minimum Rent (as applicable) for the immediately preceding Lease Year plus three percent (3.00%).”

(d)(2) For each Pool 1 Second Extended Term, Pool 2 Second Extended Term, Pool 3 Second Extended Term and Pool 4 Second Extended Term, respectively, on the commencement thereof, Pool 1 Minimum Rent, Pool 2 Minimum Rent, Pool 3 Minimum Rent or Pool 4 Minimum Rent (as applicable) shall be reset in an amount equal to the greater of (i) the then Fair Market Rental for, as applicable, the Pool 1 Facilities, the Pool 2 Facilities, the Pool 3 Facilities or the Pool 4 Facilities, or (ii) the Pool 1 Minimum Rent, Pool 2 Minimum Rent, Pool 3 Minimum Rent or Pool 4 Minimum Rent (as applicable) for the immediately preceding Lease Year plus three percent (3.00%).”

(e) Commencing upon the expiration of each Lease Year during each Pool 1 Extended Term, Pool 2 Extended Term, Pool 3 Extended Term and Pool 4 Extended Term, respectively (other than the last Lease Year of each of the Pool 1 First Extended Term, Pool 2 First Extended Term, Pool 3 First Extended Term and Pool 4 First Extended Term ), the Pool 1 Minimum Rent, Pool 2 Minimum Rent, Pool 3 Minimum Rent or Pool 4 Minimum Rent (as applicable) shall increase by a percentage equal to the greater of (i) three percent (3%) or (ii) the CPI Increase.

Section 2 of Exhibit D to the Master Lease is hereby deleted in its entirety and replaced with the following:

“2. Extended Terms

Subject in all respects to the provisions of Section 19.1 of this Lease and the Tenth Amendment and all other applicable terms of this Lease, Lessee shall be entitled to the renewal options with respect to the Facilities as follows:

(i) with respect to the Pool 1 Sub-A Facilities: (A) one (1) seventeen -year renewal term (the “Pool 1 Sub-A First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 1 Sub-A Second

Exhibit B - 1

Extended Term” together with the Pool 1 Sub-A First Extended Term, collectively, the “Pool 1 Sub-A Extended Term”);

(ii) with respect to the Pool 1 Sub-B Facilities: (A) one (1) twelve -year renewal term (the “Pool 1 Sub-B First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 1 Sub-B Second Extended Term” together with the Pool 1 Sub-B First Extended Term, collectively, the “Pool 1 Sub-B Extended Term”);

(iii) with respect to the Pool 1 Sub-C Facilities: (A) one (1) nine-year renewal term (the “Pool 1 Sub-C First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 1 Sub-C Second Extended Term” and together with the Pool 1 Sub-C First Extended Term, collectively, the “Pool 1 Sub-C Extended Term”);

(iv) with respect to the Pool 1 Sub-D Facilities: (A) one (1) five-year renewal term (the “Pool 1 Sub-D First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 1 Sub-D Second Extended Term” and together with the Pool 1 Sub-D First Extended Term, collectively, the “Pool 1 Sub-D Extended Term”);

(v) with respect to the Pool 2 Sub-A Facilities: (A) one (1) sixteen-year renewal term (the “Pool 2 Sub-A First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 2 Sub-A Second Extended Term” and together with the Pool 2 Sub-A First Extended Term, collectively, the “Pool 2 Sub-A Extended Term”);

(vi) with respect to the Pool 2 Sub-B Facility: (A) one (1) fifteen-year renewal term (the “Pool 2 Sub-B First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 2 Sub-B Second Extended Term” and together with the Pool 2 Sub-B First Extended Term, collectively, the “Pool 2 Sub-B Extended Term”);

(vii) with respect to the Pool 2 Sub-C Facilities: (A) one (1) eleven-year renewal term (the “ Pool 2 Sub-C First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 2 Sub-C Second Extended Term” and together with the Pool 2 Sub-C First Extended Term, collectively, the “Pool 2 Sub-C Extended Term”);

(viii) with respect to the Pool 2 Sub-D Facilities: (A) one (1) eight-year renewal term (the “Pool 2 Sub-D First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 2 Sub-D Second Extended Term” and together with the Pool 2 Sub-D First Extended Term, collectively, the “Pool 2 Sub-D Extended Term”);

Exhibit B - 2

(ix) with respect to the Pool 2 Sub-E Facilities: (A) one (1) four-year renewal term (the “Pool 2 Sub-E First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 2 Sub-E Second Extended Term” and together with the Pool 2 Sub-E First Extended Term, collectively, the “Pool 2 Sub-E Extended Term”);

(x) with respect to the Pool 3 Sub-A Facilities: (A) one (1) fourteen-year renewal term (the “Pool 3 Sub-A First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 3 Sub-A Second Extended Term” and together with the Pool 3 Sub-A First Extended Term, collectively, the “Pool 3 Sub-A Extended Term”);

(xi) with respect to the Pool 3 Sub-B Facility: (A) one (1) thirteen-year renewal term (the “Pool 3 Sub-B First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 3 Sub-B Second Extended Term” and together with the Pool 3 Sub-B First Extended Term, collectively, the “Pool 3 Sub-B Extended Term”);

(xii) with respect to the Pool 3 Sub-C Facilities: (A) one (1) nine-year renewal term (the “Pool 3 Sub-C First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 3 Sub-C Second Extended Term” and together with the Pool 3 Sub-C First Extended Term, collectively, the “Pool 3 Sub-C Extended Term”);

(xiii) with respect to the Pool 3 Sub-D Facilities: (A) one (1) six-year renewal term (the “Pool 3 Sub-D First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 3 Sub-D Second Extended Term” and together with the Pool 3 Sub-D First Extended Term, collectively, the “Pool 3 Sub-D Extended Term”);

(xiv) with respect to the Pool 3 Sub-E Facilities: (A) one (1) two-year renewal term (the “Pool 3 Sub-E First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 3 Sub-E Second Extended Term” and together with the Pool 3 Sub-E First Extended Term, collectively, the “Pool 3 Sub-E Extended Term”);

(xv) with respect to the Pool 4 Sub-A Facilities: (A) one (1) thirteen-year renewal term (the “ Pool 4 Sub-A First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 4 Sub-A Second Extended Term” and together with the Pool 4 Sub-A First Extended Term, collectively, the “Pool 4 Sub-A Extended Term”);

(xvi) with respect to the Pool 4 Sub-B Facilities: (A) one (1) eight-year renewal term (the “Pool 4 Sub-B First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 4 Sub-B Second

Exhibit B - 3

Extended Term” and together with the Pool 4 Sub-B First Extended Term, collectively, the “Pool 4 Sub-B Extended Term”);

(xvii) with respect to the Pool 4 Sub-C Facilities: (A) one (1) five-year renewal term (the “Pool 4 Sub-C First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 4 Sub-C Second Extended Term” and together with the Pool 4 Sub-C First Extended Term, collectively, the “Pool 4 Sub-C Extended Term”); and

(xviii) with respect to the Pool 4 Sub-D Facilities: (A) one (1) one-year renewal term (the “Pool 4 Sub-D First Extended Term”) and (B) if the Term therefor has been extended as provided in clause (A), one (1) five-year renewal term (the “Pool 4 Sub-D Second Extended Term” and together with the Pool 4 Sub-D First Extended Term, collectively, the “Pool 4 Sub-D Extended Term”).”

For purposes hereof:

(i) The Pool 1 Sub-A Second Extended Term, the Pool 1 Sub-B Second Extended Term, the Pool 1 Sub-C Second Extended Term and the Pool 1 Sub-D Second Extended Term are collectively referred to as the “ Pool 1 Second Extended Term ”;

(ii) The Pool 2 Sub-A Second Extended Term, the Pool 2 Sub-B Second Extended Term, the Pool 2 Sub-C Second Extended Term, the Pool 2 Sub-D Second Extended Term and the Pool 2 Sub-E Second Extended Term are collectively referred to as the “ Pool 2 Second Extended Term ”;

(iii) The Pool 3 Sub-A Second Extended Term, the Pool 3 Sub-B Second Extended Term, the Pool 3 Sub-C Second Extended Term, the Pool 3 Sub-D Second Extended Term and the Pool 3 Sub-E Second Extended Term are collectively referred to as the “ Pool 3 Second Extended Term ”; and

(iv) The Pool 4 Sub-A Second Extended Term, the Pool 4 Sub-B Second Extended Term, the Pool 4 Sub-C Second Extended Term and the Pool 4 Sub-D Second Extended Term are collectively referred to as the “ Pool 4 Second Extended Term ”.

Exhibit B - 4

EXHIBIT C

Form of Addendum

[ Addendum #__ ]

ADDENDUM #__ TO MASTER LEASE AND SECURITY AGREEMENT

This ADDENDUM #__ TO MASTER LEASE AND SECURITY AGREEMENT (this “ Addendum ” ) is made and entered into as of _________ __, 20__ , by and between the parties signatory hereto, as lessors (collectively, “ Lessor ” ) and HCR III Healthcare, LLC, as lessee ( “ Lessee ” ).

RECITALS

A. Lessor is the current “ Lessor ” and Lessee is the current “ Lessee ” pursuant to that certain Master Lease and Security Agree ment dated as of April 7, 2011 (as the same may have been amended , restated or otherwise modified prior to the date hereof , the “ Master Lease ” ). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Master Lease.

B. Lessee ’ s obligations under the Master Lease are guaranteed by HCR ManorCare, Inc., a Delaware corporation, successor in interest to HCR ManorCare, LLC, a Delaware limited liability company, pursuant to that certain Guaranty of Obligations dated as of April 7, 2011 (as the same may heretofore have been or may hereafter be further amended, modified or reaffirmed from time to time in accordance with the terms thereof, the “ Guaranty ” ).

C. Pursuant to Section 12 of that certain Tenth Amendment to Master Lease and Security Agreement, dated as of March 29 , 2015 (the “ Tenth Amendment ”), by and among Lessor, Lessee and Guarantor, Lessor, Lessee and Guarantor desire to add the real property more particularly described on Exhibit A attached hereto (the “ Additional Facility ”) to the Leased Property under the Master Lease.

AGREEMENT

NOW THEREFORE, in consideration of the foregoing Recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:

1. Lessee ’ s Representations and Warranties . Lessee hereby represents and warrants to Lessor that the Additional Facilities Owners have delivered to Lessor the materials and documentation required pursuant to Section 12 of the Tenth Amendment and that, to Lessee’s knowledge, (i) all such materials and documentation were true, correct and complete at the time delivered and (ii) there have been no changes affecting any such materials or documentation or any information disclosed thereby, that

Exhibit C - 1

would interfere with or materially adversely affect the consummation of the transactions contemplated hereby, that have not been previously disclosed by Lessee or Guarantor to Lessor in writing.

2. Additional Facility . The Master Lease is hereby amended to modify the “Pool 4 Facilities” to add the Additional Facility thereto and Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, as part of the Leased Property, all of Lessor ’ s right, title and interest in and to the Additional Facility, including any improvements currently and to be located thereon, subject to all of the terms, conditions and provisions of the Master Lease, as it is hereby, and may be hereafter, amended, supplemented , restated or otherwise modified.

3. Opco Sublease : Schedule 4 to the Master Lease is hereby amended to add the following operating sublease thereto: [____________________].

4. Effect of Addendum . All refere nces in the Master Lease to “this Lease ” shall be deemed to be references to the Master Lease as amended hereby.

5. Full Force and Effect; Acknowledgement . The Master Lease, as hereby amended, shall remain and con tinue in full force and effect.

6. Counterparts; Facsimile or Electronically Transmitted Signatures . This Addendum may be executed in any number of counterparts, all of which shall constitute one and the same instrument. Signatures transmitted by facsimile or other electronic means may be used in place of original signatures on this Addendum , and Lessor and Lessee both intend to be bound by the signatures on the document transmitted by facsimile or such other electronic means.

[NO FURTHER TEXT ON THIS PAGE]

Exhibit C - 2

IN WITNESS WHEREOF, the parties h ereto have caused this Addendum to be executed as of the day and year first written above.


	“LESSOR”

	HCP PROPERTIES, LP, a Delaware limited partnership

	By: HCP I-B Properties, LLC, a Delaware limited liability company, its General Partner

	HCP WEST VIRGINIA PROPERTIES, LLC, a Delaware limited liability company

	HCP PROPERTIES OF ALEXANDRIA VA, LLC, a Delaware limited liability company

	HCP PROPERTIES OF ARLINGTON VA, LLC, a Delaware limited liability company

	HCP PROPERTIES OF MIDWEST CITY OK, LLC, a Delaware limited liability company

	HCP PROPERTIES OF OKLAHOMA CITY (NORTHWEST), LLC, a Delaware limited liability company

	HCP PROPERTIES OF OKLAHOMA CITY (SOUTHWEST), LLC, a Delaware limited liability company

	HCP PROPERTIES OF TULSA OK, LLC, a Delaware limited liability company

	HCP PROPERTIES-ARDEN COURTS OF ANNANDALE VA, LLC, a Delaware limited liability company

	HCP PROPERTIES-CHARLESTON OF HANAHAN SC, LLC, a Delaware limited liability company

Exhibit C - S-1


	HCP PROPERTIES-COLUMBIA SC, LLC, a Delaware limited liability company

	HCP PROPERTIES-FAIR OAKS OF FAIRFAX VA, LLC, a Delaware limited liability company

	HCP PROPERTIES-IMPERIAL OF RICHMOND VA, LLC, a Delaware limited liability company

	HCP PROPERTIES-LEXINGTON SC, LLC, a Delaware limited liability company

	HCP PROPERTIES-MEDICAL CARE CENTER-LYNCHBURG VA, LLC, a Delaware limited liability company

	HCP PROPERTIES-OAKMONT EAST-GREENVILLE SC, LLC, a Delaware limited liability company

	HCP PROPERTIES-OAKMONT OF UNION SC, LLC, a Delaware limited liability company

	HCP PROPERTIES-OAKMONT WEST-GREENVILLE SC, LLC, a Delaware limited liability company

	HCP PROPERTIES-STRATFORD HALL OF RICHMOND VA, LLC, a Delaware limited liability company

	HCP PROPERTIES-WEST ASHLEY-CHARLESTON SC, LLC, a Delaware limited liability company

Exhibit C - S- 2


	HCP MARYLAND PROPERTIES, LLC, a Delaware limited liability company

	By:
	Name:

		Title:

Exhibit C - S- 3

IN WITNESS WHEREOF, the parties h ereto have caused this Addendum to be executed as of the day and year first written above.


	“LESSEE”


	HCR III HEALTHCARE, LLC, a Delaware limited liability company


	By:
		Name:
		Title:

Exhibit C - S- 4

[ Addendum #__ ]

CONSENT, REAFFIRMATION AND AGREEMENT OF GUARANTOR

Guarantor hereby (i) reaffirms all of its obligations under the Guaranty, (ii) consents to the foregoing Addendum and (iii) agrees that its obligations under the Guaranty shall extend to Lessee ’ s duties, covenants and obligations pursuant to the Master Lease, as amended or modified pursuant to the foregoing Addendum .


	HCR MANORCARE, INC., a Delaware corporation


	By:
		Name:
		Title:

Exhibit C – Consent, Reaffirmation and Agreement

EXHIBIT A

Legal Description of Additional Property

SCHEDULE 1

Additional Facilities

(see attached)

Additional Facilities

Facility	Facility Owner/ Lessor	Facility Description and Primary Intended Use	Initial Monthly Allocated Minimum Rent(1)	Allocated Initial Investment	Fixed Term	1st Extended Term	2nd Extended Term	HCP ID
To be included in Pool 4
MCNRC Winter Park 2075 Loch Lomond Dr Winter Park, FL 32792	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 138 beds	[***]	[***]	Coterminus with Pool 4 Facilities	13 years	5 years	TBD
MCHS Washington Twn 378 Fries Mill Road Sewell, NJ 08080	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	Coterminus with Pool 4 Facilities	13 years	5 years	TBD
MCHS Wingfield Hills 2350 Wingfield Hills Road Sparks, NV 89436	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	Coterminus with Pool 4 Facilities	13 years	5 years	TBD
MCHS Utica Ridge 3800 Commerce Blvd. Davenport, IA 52807	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	Coterminus with Pool 4 Facilities	13 years	5 years	TBD
MCHS Salmon Creek 2811 N.E. 139th Street Vancouver, WA 98686	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	Coterminus with Pool 4 Facilities	13 years	5 years	TBD
MCHS Lacey 4524 Intelco Loop SE Lacey, WA 98503	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	Coterminus with Pool 4 Facilities	13 years	5 years	TBD
MCHS Sterling Heights 38200 Schoenherr Road Sterling Heights, MI 48312	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	Coterminus with Pool 4 Facilities	13 years	5 years	TBD
Heartland of Dublin 4075 W. Dublin-Granville Road Dublin, OH 43017	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	Coterminus with Pool 4 Facilities	13 years	5 years	TBD
Heartland of Twinsburb 8551 Darrow Road Twinsburg, OH 44087	HCP Properties, LP	Skilled nursing facility / long term care facility consisting of 120 beds	[***]	[***]	Coterminus with Pool 4 Facilities	13 years	5 years	TBD

(1)

If the closing for any Additional Facility does not occur before April 1, 2016, then the Initial Monthly Allocated Minimum Rent for such Additional Facility will be increased by three percent (3%).

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with

the Securities and Exchange Commission.

SCHEDULE 2

Deferred Rent Obligation Allocation

[***]

Portions of this exhibit that have been marked by [***] have been omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission.

Exhibit 10. 3

HCP, INC.
2014 PERFORMANCE INCENTIVE PLAN

CEO 3-YEAR LTIP RSU AGREEMENT

THIS CEO 3-YEAR LTIP RSU AGREEMENT (this “ Agreement ”) is dated as of [ ], 20 ___ (the “ Award Date ”) by and between HCP, Inc., a Maryland corporation (the “ Corporation ”), and [_______________] (the “ Participant ”).

W I T N E S S E T H

WHEREAS , the Compensation Committee has determined that, based on the achievement of pre-established performance goals with respect to 20 ___ , the Partici pant is eligible to receive an award of restricted stock units , as described below, and

WHEREAS , pursuant to the HCP, Inc. 2014 Performance Incentive Plan, as amended and/or restated from time to time (the “ Plan ”), the Corporation hereby grants to the Participant, effective as of the date hereof, an award of restricted stock units under the Plan (the “ Award ”), upon the terms and conditions set forth herein and in the Plan.

NOW THEREFORE , in consideration of services rendered and to be rendered by the Participant, and the mutual promises made herein and the mutual benefits to be derived therefrom, the parties agree as follows:

1. Defined Terms . Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Plan.

2. Grant . Subject to the terms of this Agreement, the Corporation hereby grants to the Participant a target Award of [___ _____] stock units (the “ Performance Units ”) with respect to the performance period beginning on January 1, [ 201 5 ] and ending on December 31, [ 201 7 ] (the “ Performance Period ”). As used herein, the term “ stock unit” means a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Corporation’s Common Stock solely for purposes of the Plan and this Agreement. The Performance Units shall be used solely as a device for the determination of the payment to eventually be made to the Participant if such Performance Units vest pursuant to Section 3. The Performance Units shall not be treated as property or as a trust fund of any kind. The Compensation Committee (the “ Committee ”) of the Board is the A dministrator of the Plan for purposes of the Performance Units. The Performance Units are subject to all of the terms and conditions set forth in this Agreement, and are further subject to all of the terms and conditions of the Plan, as it may be amended from time to time, and any rules adopted by the Committee, as such rules are in effect from time to time.

3. Vesting . Subject to this Section 3, the number of Performance Units ultimately earned and vested under this Award shall be determined in accordance with Exhibit A attached hereto based on whether the Corporation has attained certain pre-established performance goals with respect to the Performance Period. The determination as to whether the Corporation has attained the performance goals set forth in Exhibit A

with respect to the Performance Period shall be made by the Committee (the “ Committee Determination ”). The Committee Determination shall be made no later than March 15 following the end of the Performance Period. The Performance Units shall not be deemed vested pursuant to any other provision of this Agreement earlier than the date that the Committee makes such determination, as required by Section 162(m) of the Code and the regulations promulgated thereunder.

4. Continuance of Employment . The vesting schedule requires continued employment through the date of the Committee Determination (the “ Vesting Period ”), as provided in Section 3, as a condition to the vesting of the Award and the rights and benefits under this Agreement. Employment for only a portion of the Vesting Period, even if a substantial portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment as provided in Section 8 below or under the Plan. Nothing contained in this Agreement or the Plan constitutes an employment or service commitment by the Corporation or any of its Subsidiaries , affects the Participant’s status as an employee at will who is subject to termination without C ause ( as defined herein) , confers upon the Participant any right to remain employed by or in service to the Corporation or any of its Subsidiaries, interferes in any way with the right of the Corporation or any of its Subsidiaries at any ti me to terminate such employment or services , or affects the right of the Corporation or any of its Subsidiaries to increase or decrease the Participant’s other compensation or benefits. Nothing in this paragraph, however, is intended to adversely affect any independent contractual right of the Participant without his or her consent thereto.

5 . Dividend and Voting Rights .

(a) Limitations on Rights Associated with Units. The Participant shall have no rights as a stockholder of the Corporation, no dividend rights (except as expressly provided in Section 5(b) with respect to Dividend Equivalent Rights) and no voting rights, with respect to the Performance Units and any shares of Common Stock underlying or issuable in respect of such Performance Units until such shares of Common Stock are actually issued to and held of record by the Participant.

(b) Dividend Equivalent Rights. During such time as each Performance Unit remains outstanding and prior to the distribution of such Performance Unit in accordance with Section 7, the Participant will have the right to receive, with respect to such Performance Unit, an amount equal to the amount of any ordinary cash dividend paid by the Corporation on a share of Common Stock (a “ Dividend Equivalent Right ”); provided, however, that any Dividend Equivalent Right credited with respect to an outstanding Performance Unit (including, without limitation, any dividend equivalent credited through and including the date of the Committee Determination) that does not vest pursuant to Section 3 hereof shall immediately terminate upon the forfeiture of such Performance Unit, and the Participant shall not be entitled to any payment with respect thereto. In the case of Dividend Equivalent Rights credited with respect to an outstanding Performance Unit that vests pursuant to Section 3, the Dividend Equivalent Rights will be

paid to the Participant in cash (without interest) as soon as practicable after the Committee Determination and in all events not later than March 15 of the year that follows the Performance Period. Dividend Equivalent Rights will not be paid to the Participant with respect to any Performance Units that are forfeited pursuant to Section 3 or 8 .

6. Restrictions on Transfer . Neither the Award, nor any interest therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a) transfers to the Corporation, or (b) transfers by will or the law s of descent and distribution.

7. Timing and Manner of Payment. As soon as administratively practical following the Committee Determination (and in all events no later than March 15 following the end of the Performance Period), the Corporation shall deliver to the Participant a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Corporation in its discretion) equal to the number of Performance Units that vest in accordance with Section 3; provided, however, that in the event that the vesting and payment of the Performance Units is triggered by the Participant’s “separation from service” (within the meaning of Treasury Regulation Section 1.409A-1(h)) and the Participant is a “specified employee” (within the meaning of Treasury Regulation Section 1.409A-1(i)) on the date of such separation from service, the Participant shall not be entitled to any payment of the Performance Units until the earlier of (i) the date which is six (6) months after the Participant’s separation from service with the Corporation for any reason other than death, or (ii) the date of the Participant’s death, if and to the extent such delay in payment is required to comply with Section 409A of the Code. The Corporation’s obligation to deliver shares of Common Stock or otherwise make payment with respect to vested Performance Units is subject to the condition precedent that the Participant or other person entitled under the Plan to receive any shares with respect to the vested Performance Units deliver to the Corporation any representations or other documents or assurances that the Administrator may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements. The Participant shall have no further rights with respect to any Performance Units that are paid or that terminate pursuant to this Agreement.

8. Termination of Employment .

(a) Qualifying Termination . If, at any time during the Vesting Period, the Participant’s employment with the Corporation and its Subsidiaries is terminated (i) as a result of the Participant’s death, Disability or Retirement or (ii) by the Corporation without Cause or by the Participant for Good Reason, t he Performance Units will remain outstanding during the remainder of the Vesting Period and wil l remain subject to Section 3. The Participant will be entitled to a pro rata portion of the number of Performance Units the Participant would have received in accordance with Section 3, if any, had the Participant remained employed until the end of the Vesting Period. The pro rata portion will be based on the number of full months in the Performance Period during which the

Participant was employed as compared to the total number of months in the Performance Period. As used in this Agreement, “ Disability ” means a “permanent and total disability” (within the meaning of Section 22(e)(3) of the Code or as otherwise determined by the Administrator). As used in this Agreement, “ Retirement ” means, that, as of the date of termination of the Participant ’s employment, the Participant has attained age 65 and completed at least five (5) full years of service as an officer of the Corporation and its Subsidiaries. As used in this Agreement, “ Cause ” and “ Good Reason ” shall have the meanings set forth in the Participant’s applicable employment agreement en tered into with the Corporation .

(b) Forfeiture of Performance Units Upon Certain Terminations of Employment. If at any time during the Vesting Period, the Participant’s employment with the Corporation and its Subsidiaries is te rminated (i) by the Corporation or (ii) by the Participant, excluding any termination contemplated by Section 8(a) , all of the Performance Units shall be automatically forfeited and cancelled in full effective as of such termination of employment and this Agreement shall be null and void and of no further force and effect.

(c) Effect of Employment Agreement. Notwithstanding the foregoing Sections 8(a) and (b), in the event of the Participant’s severance and to the extent permitted under Section 409A of the Code , the Participant shall be entitled to any vesting with respect to the Performance Units provided for in the circumstances in, and subject to, the express terms of any written employment agreement entered into between the Participant and the Corporation or any of its Subsidiaries and that is in effect at the time of the severance .

9. Adjustments Upon Specified Events; Ch ange in Control Event .

(a) Adjustments. Upon the occurrence of certain events relating to the Corporation’s stock contemplated by Section 7.1 of the Plan (including, without limitation, an extraordinary cash dividend on such stock), the Administrator shall make adjustments in accordance with such section in the number of Performance Units then outstanding and the number and kind of securities that may be issued in respect of the Award. No such adjustment shall be made with respect to any ordinary cash dividend for which dividend equivalents are paid pursuant to Section 5(b).

(b) Change in Control Event. Notwithstanding any provision to the contrary in any employment agreement or the HCP, Inc. Change in Control Severance Plan (or successor plan) , i f a Change in Control Event with respect to the Corporation occurs at any time during the Vesting Period, the Performance Period for all outstanding Awards will be shortened , if such Performance Period has not already ended, so that the Performance Period will be deemed to have ended on the last day prior to such Change in Control Event and the Committee Determination pursuant to Section 3 shall be made within twenty (20) days following the Change in Control Event . A Participant shall become vested in a number of Performance Units, if any, determined in accordance with Section 3 based on such shortened Performance Period . On or as soon as administratively practical following the Change in Control Event (and in all events no later than thirty (30) days following such

Change in Control Event), the Corporation shall deliver to the Participant a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Corporation in its discretion) equal to the number of Performance Units that vest in accordance with this Section 9(b).

10. Tax Withholding . Upon vesting of any Performance Units or any distribution of shares of Common Stock in respect of the Performance Units, the Participant or other person entitled to receive such distribution may irrevocably elect, in such manner and at such time or times prior to any applicable tax date as may be permitted or required under Section 8.5 of the Plan and rules established by the Administrator, to have the Corporation reduce the number of shares to be delivered by (or otherwise reacquire) the appropriate number of whole shares, valued at their then fair market value to satisfy any withholding obligations of the Corporation or its Subsidiaries with respect to such distribution of shares at the minimum applicable withholding rates; provided, however, that in the event that the Corporation cannot legally satisfy such withholding obligations by such reduction of shares, or in the event of a cash payment or any other withholding event in respect of the Performance Units, the Corporation (or a Subsidiary) shall be entitled to require a cash payment by or on behalf of the Participant and/or to deduct from other compensation payable to the Participant any sums required by federal, state or local tax law to be withheld with respect to such distribution or payment.

11. Notices . Any notice to be given under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal office to the attention of the Secretary, and to the Participant at the Participant’s last address reflected on the Corporation’s payroll records. Any notice shall be delivered in person or shall be enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government. Any such notice shall be given only when received, but if the Participant is no longer an Eligible Person, shall be deemed to have been duly given five (5) business days after the date mailed in accordance with the foregoing provisions of this Section 11.

12. Plan . The Award and all rights of the Participant under this Agreement are subject to the terms and conditions of the provisions of the Plan, incorporated herein by reference. The Participant agrees to be bound by the terms of the Plan and this Agreement. The Participant acknowledges having read and understanding the Plan, the Prospectus for the Plan and this Agreement. Unless otherwise expressly provided in other sections of this Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not (and shall not be deemed to) create any rights in the Participant unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan after the date hereof.

13. Entire Agreement . This Agreement and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral,

of the parties hereto with respect to the subject matter hereof. The Plan and this Agreement may be amended pursuant to Section 8.6 of the Plan. Any such amendment must be in writing and signed by the Corporation. Any such amendment that materially and adversely affects the Participant’s rights under this Agreement requires the consent of the Participant in order to be effective with respect to the Award. The Corporation may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Participant hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof. The Participant acknowledges receipt of a copy of this Agreement, the Plan and the Prospectus for the Plan.

14. Limitation on Participant’s Rights . Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Corporation as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Participant shall have only the rights of a general unsecured creditor of the Corporation with respect to amounts credited and benefits payable, if any, with respect to the Performance Units, and rights no greater than the right to receive the Common Stock as a general unsecured creditor with respect to the Performance Units, as and when payable hereunder. The Award has been granted to the Participant in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Participant.

15. Counterparts . This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

16. Section Headings . The section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

17. Governing Law . This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Maryland without regard to conflict of law principles thereunder.

18. Construction . It is intended that the terms of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code. This Agreement shall be construed and interpreted consistent with that intent.

19. Clawback Policy . The Performance Units are subject to the terms of the Corporation’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Performance Units or any shares of Common Stock or other cash or property received with respect to the Performance Units (including any value received from a disposition of the shares acquired upon payment of the Performance Units).

The Participant’s acceptance of the Award through the electronic stock plan award recordkeeping system maintained by the Corporation or its designee constitutes the Participant’s agreement to the terms and conditions hereof, and that the Award is granted under and governed by the terms and conditions of the Plan and this Agreement.

* * *

[The remainder of this page is intentionally left blank.]

EXHIBIT A

Award Subject to Relative TSR Performance . One hundred percent (10 0%) of the Award (the “ TSR Award ”) shall be eligible to vest in accordance wit h this Exhibit A. The TSR Award will be subject to forfeiture and cancellation by the Corporation if the Corporation’s performance during the Performance Period does not meet or exceed the threshold goal for the Performance Period. P erformance at or above the threshold level will result in the TSR Award becoming vested in the amount set forth below. The vesting for performance between the threshold and extraordinary levels shall be based on linear interpolation.

Performance

Threshold

Target

High

Extraordinary

Relative Three-Year Annua lized Total
Shareholder Return

25 th percentile ranking

50 th percentile ranking

65 th percentile ranking

80 th percentile ranking

Percentage of TSR Award Vesting

50%

100%

150%

200%

“ Total Shareholder Return ” or “ TSR ” means total shareholder return as applied to the Corporation, meaning stock price appreciation from the beginning to the end of the Performance Period, plus dividends and distributions made or declared (assuming such dividends or distributions are reinvested in the common stock of the Corporation) during the Performance Period. For purposes of computing TSR, the stock price at the beginning of the Performance Period will be the closing price of a share of common stock on the first day of the Performance Period, and the stock price at the end of the Performance Period will be the average price of a share of common stock over the 2 0 trading days ending on the last day of the Performance Period, adjusted fo r changes in capital structure .

" Relative Three-Year Annualized Total Sh areholder Return " shall be based on the Corporation's three-year annualized TSR compared to the TSRs of the companies that constitute the FTSE NAREIT Equity Health Care Index on the date of the applicable determination and that, during the Performance Period, traded continuously on a national securities exchange, as such term is defined by the SEC.

Exhibit 10. 4

HCP, INC.
2014 PERFORMANCE INCENTIVE PLAN

CEO 1 -YEAR LTIP RSU AGREEMENT

THIS CEO 1 -YEAR LTIP RSU AGREEMENT (this “ Agreement ”) is dated as of [ ], 20 ___ (the “ Award Date ”) by and between HCP, Inc., a Maryland corporation (the “ Corporation ”), and [_______________] (the “ Participant ”).

W I T N E S S E T H

1. Defined Terms . Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Plan.

2. Grant . Subject to the terms of this Agreement, the Corporation hereby grants to the Participant a target Award of [___ _____] stock units (the “ Performance Units ”) with respect to the performance period beginning on January 1, [ 201 5 ] and ending on December 31, [ 201 5 ] (the “ Performance Period ”). As used herein, the term “ stock unit” means a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Corporation’s Common Stock solely for purposes of the Plan and this Agreement. The Performance Units shall be used solely as a device for the determination of the payment to eventually be made to the Participant if such Performance Units vest pursuant to Section 3. The Performance Units shall not be treated as property or as a trust fund of any kind. The Compensation Committee (the “ Committee ”) of the Board is the A dministrator of the Plan for purposes of the Performance Units. The Performance Units are subject to all of the terms and conditions set forth in this Agreement, and are further subject to all of the terms and conditions of the Plan, as it may be amended from time to time, and any rules adopted by the Committee, as such rules are in effect from time to time.

5 . Dividend and Voting Rights .

7 . Timing and Manner of Payment. As soon as administratively practical following the Committee Determination (and in all events no later than March 15 following the end of the Performance Period), the Corporation shall deliver to the Participant a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Corporation in its discretion) equal to the number of Performance Units that vest in accordance with Section 3; provided, however, that in the event that the vesting and payment of the Performance Units is triggered by the Participant’s “separation from service” (within the meaning of Treasury Regulation Section 1.409A-1(h)) and the Participant is a “specified employee” (within the meaning of Treasury Regulation Section 1.409A-1(i)) on the date of such separation from service, the Participant shall not be entitled to any payment of the Performance Units until the earlier of (i) the date which is six (6) months after the Participant’s separation from service with the Corporation for any reason other than death, or (ii) the date of the Participant’s death, if and to the extent such delay in payment is required to comply with Section 409A of the Code. The Corporation’s obligation to deliver shares of Common Stock or otherwise make payment with respect to vested Performance Units is subject to the condition precedent that the Participant or other person entitled under the Plan to receive any shares with respect to the vested Performance Units deliver to the Corporation any representations or other documents or assurances that the Administrator may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements. The Participant shall have no further rights with respect to any Performance Units that are paid or that terminate pursuant to this Agreement.

8. Termination of Employment .

(a) Qualifying Termination . If, at any time during the Vesting Period, the Participant’s employment with the Corporation and its Subsidiaries is terminated (i) as a result of the Participant’s death, Disability or Retirement or (ii) by the Corporation without Cause or by the Participant for Good Reason , t he Performance Units will remain outstanding during the remainder of the Vesting Period and will remain subject to Section 3. The Participant will be entitled to a pro rata portion of the number of Performance Units the Participant would have received in accordance with Section 3, if any, had the Participant remained employed until the end of the Vesting Period. The pro rata portion will be based on the number of full months in the Performance Period during which the

Participant was employed as compared to the total number of months in the Performance Period. A s used in this Agreement, “ Disability ” means a “permanent and total disability” (within the meaning of Section 22(e)(3) of the Code or as otherwise determined by the Administrator). As used in this Agreement, “ Retirement ” means, that, as of the date of termination of the Participant ’s employment, the Participant has attained age 65 and completed at least five (5) full years of service as an officer of the Corporation and its Subsidiaries. As used in this Agreement, “ Cause ” and “ Good Reason ” shall have the meanings set forth in the Participant’s applicable employment agreement entered into with the Corporation .

(c) Effect of Employment Agreement. Notwithstanding the foregoing Sections 8(a) and (b), in the event of the Participant’s severance and to the extent permitted under Section 409A of the Code, the Participant shall be entitled to any vesting with respect to the Performance Units provided for in the circumstances in, and subject to, the express terms of any written employment agreement entered into between the Participant and the Corporation or any of its Subsidiaries and that is in effect at the time of the severance .

9. Adjustments Upon Specified Events; Ch ange in Control Event .

13. Entire Agreement . This Agreement and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral,

16. Section Headings . The section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

17. Governing Law . This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Maryland without regard to conflict of law principles thereunder.

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EXHIBIT A

Performance

Threshold

Target

High

Extraordinary

Relative One -Year Annua lized Total
Shareholder Return

25 th percentile ranking

50 th percentile ranking

65 th percentile ranking

80 th percentile ranking

Percentage of TSR Award Vesting

50%

100%

150%

200 %

" Relative One -Year Annualized Total Sh areholder Return " shall be based on the Corporation's one -year annualized TSR compared to the TSRs of the companies that constitute the FTSE NAREIT Equity Health Care Index on the date of the applicable determination and that, during the Performance Period, traded continuously on a national securities exchange, as such term is defined by the SEC .

Exhibit 10.5

HCP, INC.

20 14 PERFORMANCE INCENTIVE PLAN

CEO RETENTIVE LTIP RSU AGREEMENT

THIS CEO RETENTIVE LTIP RSU AGREEMENT (this “ Agreement ” ) is dated as of [ ], 20 ___ (the “ Award Date ” ) by and between HCP, Inc., a Maryland corporation (the “ Corporation ” ), and [_______________] (the “ Participant ” ).

W I T N E S S E T H

WHEREAS , the Compensation Committee has determined that, based on the achievement of pre-established performance goals with respect to 20 ___ , the Participant is eligible to receive an award of restricted stock units, as described below, and

WHEREAS , pursuant to the HCP, Inc. 20 14 Performance Incentive Plan, as amended and/or restated from time to time (the “ Plan ” ), the Corporation hereby grants to the Participant, effective as of the date hereof, an award of restricted stock units under the Plan (the “ Award ” ), upon the terms and conditions set forth herein and in the Plan.

1. Defined Terms . Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Plan.

2. Grant . Subject to the terms of this Agreement, the Corporation hereby grants to the Participant an Award of [________] stock units (the “ Stock Units ” ). As used herein, the term “ stock unit ” means a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Corporation ’ s Common Stock solely for purposes of the Plan and this Agreement. The Stock Units shall be used solely as a device for the determination of the payment to eventually be made to the Participant if such Stock Units vest pursuant to Section 3. The Stock Units shall not be treated as property or as a trust fund of any kind. The Award is subject to all of the terms and conditions set forth in this Agreement and is further subject to all of the terms and conditions of the Plan, as it may be amended from time to time, and any rules adopted by the Administrator, as such rules are in effect from time to time.

3. Vesting . Subject to Section 8 below, the Award shall vest and become nonforfeitable with respect to one third (1/3 rd ) of the total number of the Stock Units on each of the first, second and third anniversaries of the Award Date.

4. Continuance of Employment . The vesting schedule requires continued employment through each applicable vesting date as a condition to the vesting of the applicable installment of the Award and the rights and benefits under this Agreement. Employment for only a portion of the vesting period, even if a substantial portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of

rights and benefits upon or following a termination of employment as provided in Section 8 below or under the Plan.

Nothing contained in this Agreement or the Plan constitutes an employment or service commitment by the Corporation or any of its Subsidiaries , affects the Participant ’ s status as an employee at will who is subject to termination without C ause (as defined in the Participant’s applicable employment agreement entered into with the Corporation) , confers upon the Participant any right to remain employed by or in service to the Corporation or any of its Subsidiaries, interferes in any way with the right of the Corporation or any of its Subsidiaries at any time to terminate such employment or services, or affects the right of the Corporation or any of its Subsidiaries to increase or decrease the Participant ’ s other compensation or benefits. Nothing in this paragraph, however, is intended to adversely affect any independent contractual right of the Participant without his or her consent thereto.

5. Dividend and Voting Rights .

(a) Limitations on Rights Associated with Units. The Participant shall have no rights as a stockholder of the Corporation, no dividend rights (except as expressly provided in Section 5(b) with respect to Dividend Equivalent Rights) and no voting rights, with respect to the Stock Units and any shares of Common Stock underlying or issuable in respect of such Stock Units until such shares of Common Stock are actually issued to and held of record by the Participant.

(b) Dividend Equivalent Rights. As of any date that the Corporation pays an ordinary cash dividend on its Common Stock, the Corporation shall pay the Participant an amount equal to the per share cash dividend paid by the Corporation on its Common Stock on such date multiplied by the number of Stock Units remaining subject to this Award as of the related dividend payment record date. No such payment shall be made with respect to any Stock Units which, as of such record date, have either been paid pursuant to Section 7 or terminated pursuant to Section 8.

7. Timing and Manner of Payment . A s soon as administratively practical following each vesting of the applicable portion of the total Award pursuant to the terms hereof (and in all events within sixty (60) days after such vesting event), the Corporation shall deliver to the Participant a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Corporation in its discretion) equal to the number of Stock Units subject to this Award that vest on the applicable vesting date; provided, however, that in the event that the vesting and payment of the Stock Units is triggered by the Participant ’ s “ separation

from service ” (within the meaning of Treasury Regulation Section 1.409A-1(h)) and the Participant is a “ specified employee ” (within the meaning of Treasury Regulation Section 1.409A-1(i)) on the date of such separation from service, the Participant shall not be entitled to any payment of the Stock Units until the earlier of (i) the date which is six (6) months after the Participant ’ s separation from service with the Corporation for any reason other than death, or (ii) the date of the Participant ’ s death, if and to the extent such delay in payment is required to comply with Section 409A of the Code. The Corporation ’ s obligation to deliver shares of Common Stock or otherwise make payment with respect to vested Stock Units is subject to the condition precedent that the Participant or other person entitled under the Plan to receive any shares with respect to the vested Stock Units deliver to the Corporation any representations or other documents or assurances that the Administrator may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements. The Participant shall have no further rights with respect to any Stock Units that are paid or that terminate pursuant to Section 8.

8. Effect of Termination of Employment or Services . If the Participant ceases to b e employed by the Corporation and its Subsidiaries (the date of such termination of employment is referred to as the Participant ’ s “ Severance Date ” ), the Participant ’ s Stock Units shall terminate to the extent such units have not become vested pursuant to Section 3 hereof upon the Severance Date regardless of the reason for the termination of the Participant ’ s employment; provided, however, that if the Participant ’ s employment is terminated as a result of the Participant ’ s death, Total Disability (as defined below) or Retirement (as defined below), the Participant ’ s Stock Units, to the extent such units are not then vested, shall become fully vested as of the Severance Date and shall be paid in accordance with Section 7. If any unvested Stock Units are terminated hereunder, such Stock Units shall automatically terminate and be cancelled as of the applicable Severance Date without payment of any consideration by the Corporation and without any other action by the Participant, or the Participant ’ s beneficiary or personal representative, as the case may be.

For purposes of the Award, “ Total Disability ” means a “ permanent and total disability ” (within the meaning of Section 22(e)(3) of the Code or as otherwise determined by the Administrator). For purposes of the Award, “ Retirement ” means, that, as of the date of termination of the Participant ’ s employment, the Participant has attained age 65 and completed at least five (5) full years of service as an officer of the C orporation and its Subsidiaries.

Notwithstanding the foregoing, to the extent permitted under Section 409A of the Code, the Participant shall be entitled to any accelerated vesting with respect to the Stock Units in connection with the Participant’s severance provided for in the circumstances in, and subject to, the express terms of any written employment agreement entered into between the Participant and the Corporation or any of its Subsidiaries and that is in effect on the Severance Date .

9. Adjustments Upon Specified Events; Change in Control Event .

(a) Adjustments. Upon the occurrence of certain events relating to the Corporation ’ s stock contemplated by Section 7.1 of the Plan (including, without limitation, an extraordinary cash dividend on such stock), the Administrator shall make adjustments in accordance with such section in the number of Stock Units then outstanding and the number and kind of securities that may be issued in respect of the Award. No such adjustment shall be made with respect to any ordinary cash dividend for which dividend equivalents are paid pursuant to Section 5(b).

(b) Change in Control Event. Upon the occurrence of an event contemplated by Section 7.2 or 7.3 of the Plan and notwithstanding any provision of Section 7.2 and 7.3 of the Plan or any employment agreement to the contrary, the Award (to the extent outstanding at the time of such event) shall continue in effect in accordance with its terms following such event (subject to adjustment in connection with such event pursuant to Section 7.1 of the Plan); provided, however, that the Administrator shall determine, in its sole discretion, whether the vesting of the Stock Units will accelerate in connection with such event and the extent of any such accelerated vesting; provided, further, that any Stock Units that are so accelerated will be paid on or as soon as administratively practical after (and in all events within sixty (60) days after) the first to occur of the original vesting date of such accelerated Stock Units set forth in Section 3 above or the Participant ’ s separation from service (and subject to the six-month delayed payment provision of Section 7 in the event payment is triggered by the Participant ’ s separation from service). Notwithstanding the foregoing, the Administrator may provide for payment of the Stock Units in connection with such event, to the extent such payment does not result in noncompliance with Section 409A of the Code, including providing for payment, in accordance with the requirements of Treasury Regulation 1.409A-3(j)(4)(ix)(A), (B) or (C) promulgated under Section 409A of the Code (or any similar successor provision), which regulation generally provides that a deferred compensation arrangement may be terminated in limited circumstances following a dissolution or change in control of the Corporation , provided that any otherwise outstanding and unvested units shall become vested upon (or, to the extent necessary to effect the acceleration, immediately prior to) such a termination.

10. Tax Withholding . Upon vesting of any Stock Units or any distribution of shares of Common Stock in respect of the Stock Units, the Participant or other person entitled to receive such distribution may irrevocably elect, in such manner and at such time or times prior to any applicable tax date as may be permitted or required under Section 8.5 of the Plan and rules established by the Administrator, to have the Corporation reduce the number of shares to be delivered by (or otherwise reacquire) the appropriate number of whole shares, valued at their then fair market value to satisfy any withholding obligations of the Corporation or its Subsidiaries with respect to such distribution of shares at the minimum applicable withholding rates; provided, however, that in the event that the Corporation cannot legally satisfy such withholding obligations by such reduction of shares, or in the event of a cash payment or any other withholding event in respect of the Stock Units, the Corporation (or a Subsidiary) shall be entitled to require a cash payment

by or on behalf of the Participant and/or to deduct from other compensation payable to the Participant any sums required by federal, state or local tax law to be withheld with respect to such distribution or payment.

11. Notices . Any notice to be given under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal office to the attention of the Secretary, and to the Participant at the Participant ’ s last address reflected on the Corporation ’ s payroll records. Any notice shall be delivered in person or shall be enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government. Any such notice shall be given only when received, but if the Participant is no longer an Eligible Person, shall be deemed to have been duly given five (5) business days after the date mailed in accordance with the foregoing provisions of this Section 11.

13. Entire Agreement . This Agreement and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. The Plan and this Agreement may be amended pursuant to Section 8.6 of the Plan. Any such amendment must be in writing and signed by the Corporation. Any such amendment that materially and adversely affects the Participant ’ s rights under this Agreement requires the consent of the Participant in order to be effective with respect to the Award. The Corporation may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Participant hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof. The Participant acknowledges receipt of a copy of this Agreement, the Plan and the Prospectus for the Plan.

Stock as a general unsecured creditor with respect to the Stock Units, as and when payable hereunder. The Award has been granted to the Participant in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Participant.

16. Section Headings . The section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

17. Governing Law . This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Maryland without regard to conflict of law principles thereunder.

19. Clawback Policy . The Stock Units are subject to the terms of the Corporation ’ s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Stock Units or any shares of Common Stock or other cash or property received with respect to the Stock Units (including any value received from a disposition of the shares acquired upon payment of the Stock Units) .

The Participant ’ s acceptance of the Award through the electronic stock plan award recordkeeping system maintained by the Corporation or its designee constitutes the Participant ’ s agreement to the terms and conditions hereof, and that the Award is granted under and governed by the terms and conditions of the Plan and this Agreement.

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Exhibit 10.6

HCP, INC.
2014 PERFORMANCE INCENTIVE PLAN

NEO 3-YEAR LTIP RSU AGREEMENT

THIS NEO 3-YEAR LTIP RSU AGREEMENT (this “ Agreement ” ) is dated as of [ ], 20 ___ (the “ Award Date ” ) by and between HCP, Inc., a Maryland corporation (the “ Corporation ” ), and [_______________] (the “ Participant ”) .

W I T N E S S E T H

WHEREAS , pursuant to the HCP, Inc. 2014 Performance Incentive Plan, as amended and/or restated from time to time (the “ Plan ” ), the Corporation hereby grants to the Participant, effective as of the date hereof, an award of restricted stock units under the Plan (the “ Award ” ), upon the terms and conditions set forth herein and in the Plan.

1. Defined Terms . Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Plan.

2. Grant . Subject to the terms of this Agreement, the Corporation hereby grants to the Participant a target Award of [___ _____] stock units (the “ Performance Units ” ) with respect to the performance period beginning on January 1, [ 201 5 ] and ending on December 31, [ 201 7 ] (the “ Performance Period ” ). As used herein, the term “ stock unit ” means a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Corporation ’ s Common Stock solely for purposes of the Plan and this Agreement. The Performance Units shall be used solely as a device for the determination of the payment to eventually be made to the Participant if such Performance Units vest pursuant to Section 3. The Performance Units shall not be treated as property or as a trust fund of any kind. The Compensation Committee (the “ Committee ” ) of the Board is the A dministrator of the Plan for purposes of the Performance Units. The Performance Units are subject to all of the terms and conditions set forth in this Agreement, and are further subject to all of the terms and conditions of the Plan, as it may be amended from time to time, and any rules adopted by the Committee, as such rules are in effect from time to time.

with respect to the Performance Period shall be made by the Committee (the “ Committee Determination ” ). The Committee Determination shall be made no later than March 15 following the end of the Performance Period. The Performance Units shall not be deemed vested pursuant to any other provision of this Agreement earlier than the date that the Committee makes such determination, as required by Section 162(m) of the Code and the regulations promulgated thereunder.

4. Continuance of Employment . The vesting schedule requires continued employment through the date of the Committee Determination (the “ Vesting Period ”), as provided in Section 3, as a condition to the vesting of the Award and the rights and benefits under this Agreement. Employment for only a portion of the Vesting Period, even if a substantial portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment as provided in Section 8 below or under the Plan. Nothing contained in this Agreement or the Plan constitutes an employment or service commitment by the Corporation or any of its Subsidiaries , affects the Participant ’ s status as an employee at will who is subject to termination without C ause (as defined herein) , confers upon the Participant any right to remain employed by or in service to the Corporation or any of its Subsidiaries, interferes in any way with the right of the Corporation or any of its Subsidiaries at any time to terminate such employment or services, or affects the right of the Corporation or any of its Subsidiaries to increase or decrease the Participant ’ s other compensation or benefits. Nothing in this paragraph, however, is intended to adversely affect any independent contractual right of the Participant without his or her consent thereto.

5 . Dividend and Voting Rights .

(b) Dividend Equivalent Rights. During such time as each Performance Unit remains outstanding and prior to the distribution of such Performance Unit in accordance with Section 7, the Participant will have the right to receive, with respect to such Performance Unit, an amount equal to the amount of any ordinary cash dividend paid by the Corporation on a share of Common Stock (a “ Dividend Equivalent Right ” ); provided, however, that any Dividend Equivalent Right credited with respect to an outstanding Performance Unit (including, without limitation, any dividend equivalent credited through and including the date of the Committee Determination) that does not vest pursuant to Section 3 hereof shall immediately terminate upon the forfeiture of such Performance Unit, and the Participant shall not be entitled to any payment with respect thereto. In the case of Dividend Equivalent Rights credited with respect to an outstanding Performance Unit that vests pursuant to Section 3, the Dividend Equivalent Rights will be

7 . Timing and Manner of Payment. As soon as administratively practical following the Committee Determination (and in all events no later than March 15 following the end of the Performance Period), the Corporation shall deliver to the Participant a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Corporation in its discretion) equal to the number of Performance Units that vest in accordance with Section 3; provided, however, that in the event that the vesting and payment of the Performance Units is triggered by the Participant ’ s “ separation from service ” (within the meaning of Treasury Regulation Section 1.409A-1(h)) and the Participant is a “ specified employee ” (within the meaning of Treasury Regulation Section 1.409A-1(i)) on the date of such separation from service, the Participant shall not be entitled to any payment of the Performance Units until the earlier of (i) the date which is six (6) months after the Participant ’ s separation from service with the Corporation for any reason other than death, or (ii) the date of the Participant ’ s death, if and to the extent such delay in payment is required to comply with Section 409A of the Code. The Corporation ’ s obligation to deliver shares of Common Stock or otherwise make payment with respect to vested Performance Units is subject to the condition precedent that the Participant or other person entitled under the Plan to receive any shares with respect to the vested Performance Units deliver to the Corporation any representations or other documents or assurances that the Administrator may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements. The Participant shall have no further rights with respect to any Performance Units that are paid or that terminate pursuant to this Agreement.

8. Termination of Employment . Notwithstanding any provisions to the contrary in any employment agreement or the HCP, Inc. Change in Control Severance Plan (or successor plan), the provisions set forth in this Section 8 are applicable in the event of a termination of the Participant’s employment with the Corporation and its Subsidiaries.

the Participant would have received in accordance with Section 3, if any, had the Participant remained employed until the end of the Vesting Period. The pro rata portion will be based on the number of full months in the Performance Period during which the Participant was employed as compared to the total number of months in the Performance Period.

As used in this Agreement, “ Disability ” means a “ permanent and total disability ” (within the meaning of Section 22(e)(3) of the Code or as otherwise determined by the Administrator). As used in this Agreement, “ Retirement ” means, that, as of the date of termination of the Participant ’ s employment, the Participant (1) has attained age 65 and completed at least five (5) full years of service as an employee of the Corporation and its Subsidiaries and/or a member of the Board, or (2) has attained age 60 and completed at least fifteen (15) full years of service as an employee of the Corporation and its Subsidiaries and/or a member of the Board. As used in this Agreement, “ Cause ” and “ Good Reason ” shall have the meanings set forth in the Participant’s applicable employment agreement entered into with the Corporation.

(b) Forfeiture of Performance Units Upon Certain Terminations of Employment. If at any time during the Vesting Period, the Participant ’ s employment with the Corporation and its Subsidiaries is terminated (i) by the Corporation, or (ii) by the Participant, excluding any termination contemplated by Section 8(a) , all of the Performance Units shall be automatically forfeited and cancelled in full effective as of such termination of employment and this Agreement shall be null and void and of no further force and effect.

9. Adjustments Upon Specified Events; Ch ange in Control Event .

(a) Adjustments. Upon the occurrence of certain events relating to the Corporation ’ s stock contemplated by Section 7.1 of the Plan (including, without limitation, an extraordinary cash dividend on such stock), the Administrator shall make adjustments in accordance with such section in the number of Performance Units then outstanding and the number and kind of securities that may be issued in respect of the Award. No such adjustment shall be made with respect to any ordinary cash dividend for which dividend equivalents are paid pursuant to Section 5(b).

(b) Change in Control Event. Notwithstanding any provision to the contrary in any employment agreement or the HCP, Inc. Change in Control Severance Plan (or successor plan), i f a Change in Control Event with respect to the Corporation occurs at any time during the Vesting Period, the Performance Period for all outstanding Awards will be shortened , if such Performance Period has not already ended, so that the Performance Period will be deemed to have ended on the last day prior to such Change in Control Event and the Committee Determination pursuant to Section 3 shall be made within twenty (20) days following the Change in Control Event . A Participant shall become vested in a number of Performance Units, if any, determined in accordance with Section 3 based on such shortened Performance Period . On or as soon as administratively practical following the Change in Control Event (and in all events no later than thirty (30) days following such Change in Control Event), the Corporation shall deliver to the Participant a number of

shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Corporation in its discretion) equal to the number of Performance Units that vest in accordance with this Section 9(b).

11. Notices . Any notice to be given under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal office to the attention of the Secretary, and to the Participant at the Participant ’ s last address reflected on the Corporation ’ s payroll records. Any notice shall be delivered in person or shall be enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government. Any such notice shall be given only when received, but if the Participant is no longer an Eligible Person, shall be deemed to have been duly given five (5) business days after the date mailed in accordance with the foregoing provisions of this Section 11.

Agreement may be amended pursuant to Section 8.6 of the Plan. Any such amendment must be in writing and signed by the Corporation. Any such amendment that materially and adversely affects the Participant ’ s rights under this Agreement requires the consent of the Participant in order to be effective with respect to the Award. The Corporation may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Participant hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof. The Participant acknowledges receipt of a copy of this Agreement, the Plan and the Prospectus for the Plan.

14. Limitation on Participant ’ s Rights . Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Corporation as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Participant shall have only the rights of a general unsecured creditor of the Corporation with respect to amounts credited and benefits payable, if any, with respect to the Performance Units, and rights no greater than the right to receive the Common Stock as a general unsecured creditor with respect to the Performance Units, as and when payable hereunder. The Award has been granted to the Participant in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Participant.

16. Section Headings . The section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

17. Governing Law . This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Maryland without regard to conflict of law principles thereunder.

19. Clawback Policy . The Performance Units are subject to the terms of the Corporation ’ s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Performance Units or any shares of Common Stock or other cash or property received with respect to the Performance Units (including any value received from a disposition of the shares acquired upon payment of the Performance Units).

The Participant ’ s acceptance of the Award through the electronic stock plan award recordkeeping system maintained by the Corporation or its designee constitutes the Participant ’ s agreement to the terms and conditions hereof, and that the Award is granted under and governed by the terms and conditions of the Plan and this Agreement.

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EXHIBIT A

Award Subject to Relative TSR Performance . One hundred percent (10 0%) of the Award (the “ TSR Award ”) shall be eligible to vest in accordance wit h this Exhibit A. The TSR Award will be subject to forfeiture and cancellation by the Corporation if the Corporation’s performance during the Performance Period does not meet or exceed the threshold goal for the Performance Period. Performance at or above the threshold level will result in the TSR Award becoming vested in the amount set forth below. The vesting for performance between the threshold and extraordinary levels shall be based on linear interpolation.

Performance

Threshold

Target

High

Extraordinary

Relative Three-Year Annua lized Total
Shareholder Return

25 th percentile ranking

50 th percentile ranking

65 th percentile ranking

80 th percentile ranking

Percentage of TSR Award Vesting

50%

100%

150%

200%

“Total Shareholder Return” or “TSR” means total shareholder return as applied to the Corporation, meaning stock price appreciation from the beginning to the end of the Performance Period, plus dividends and distributions made or declared (assuming such dividends or distributions are reinvested in the common stock of the Corporation) during the Performance Period. For purposes of computing TSR, the stock price at the beginning of the Performance Period will be the closing price of a share of common stock on the first day of the Performance Period, and the stock price at the end of the Performance Period will be the average price of a share of common stock over the 2 0 trading days ending on the last day of the Performance Period, adjusted fo r changes in capital structure.

" Relative Three-Year Annualized Total Sh areholder Return" shall be based on the Corporation's three-year annualized TSR compared to the TSRs of the companies that constitute the FTSE NAREIT Equity Health Care Index on the date of the applicable determination and that, during the Performance Period, traded continuously on a national securities exchange, as such term is defined by the SEC .

Exhibit 10.7

HCP, INC.
2014 PERFORMANCE INCENTIVE PLAN

NEO 1 -YEAR LTIP RSU AGREEMENT

THIS NEO 1 -YEAR LTIP RSU AGREEMENT (this “ Agreement ” ) is dated as of [ ], 20 ___ (the “ Award Date ” ) by and between HCP, Inc., a Maryland corporation (the “ Corporation ” ), and [_______________] (the “ Participant ”) .

W I T N E S S E T H

WHEREAS , pursuant to the HCP, Inc. 2014 Performance Incentive Plan, as amended and/or restated from time to time (the “ Plan ” ), the Corporation hereby grants to the Participant, effective as of the date hereof, an award of restricted stock units under the Plan (the “ Award ” ), upon the terms and conditions set forth herein and in the Plan.

1. Defined Terms . Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Plan.

2. Grant . Subject to the terms of this Agreement, the Corporation hereby grants to the Participant a target Award of [___ _____] stock units (the “ Performance Units ” ) with respect to the performance period beginning on January 1, [ 201 5 ] and ending on December 31, [ 201 5 ] (the “ Performance Period ” ). As used herein, the term “ stock unit ” means a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Corporation ’ s Common Stock solely for purposes of the Plan and this Agreement. The Performance Units shall be used solely as a device for the determination of the payment to eventually be made to the Participant if such Performance Units vest pursuant to Section 3. The Performance Units shall not be treated as property or as a trust fund of any kind. The Compensation Committee (the “ Committee ” ) of the Board is the A dministrator of the Plan for purposes of the Performance Units. The Performance Units are subject to all of the terms and conditions set forth in this Agreement, and are further subject to all of the terms and conditions of the Plan, as it may be amended from time to time, and any rules adopted by the Committee, as such rules are in effect from time to time.