HCP Reports Results for the Quarter and Year Ended December 31, 2007

LONG BEACH, Calif.--(Business Wire)--
HCP (the "Company" or "we") (NYSE:HCP) announced results for the
quarter and year ended December 31, 2007. Funds from operations
("FFO") applicable to common shares was $117.2 million, or $0.54 per
diluted share of common stock, for the quarter ended December 31,
2007, compared to FFO applicable to common shares of $65.6 million, or
$0.35 per diluted share of common stock, in the year ago period. FFO
applicable to common shares for the year ended December 31, 2007 was
$449.1 million, or $2.14 per diluted share of common stock, compared
to FFO applicable to common shares of $272.8 million, or $1.82 per
diluted share of common stock, in the year ago period.

FFO applicable to common shares for the quarter ended December 31,
2007 includes the impact of merger-related charges of $3.8 million, or
$0.01 per diluted share of common stock, compared to merger-related
charges and impairments of $18.4 million, or $0.10 per diluted share
of common stock, in the year ago period. FFO applicable to common
shares for the year ended December 31, 2007 includes the impact of
merger-related charges of $21.8 million, or $0.10 per diluted share of
common stock, compared to merger-related charges and impairments of
$23.6 million, or $0.16 per diluted share of common stock, in the year
ago period. We did not incur any impairments in 2007. Merger-related
charges in the 2007 and 2006 periods include the amortization and
write-off of fees associated with our acquisition financing for Slough
Estates USA Inc. ("SEUSA") and CNL Retirement Properties, Inc.
("CRP"), severance and retention-related compensation, as well as
other SEUSA and CRP integration costs. FFO is a supplemental non-GAAP
financial measure that the Company believes is helpful in evaluating
the operating performance of real estate investment trusts.

Net income applicable to common shares for the quarter ended
December 31, 2007 was $45.0 million, or $0.21 per diluted share of
common stock, compared to net income applicable to common shares of
$236.0 million, or $1.28 per diluted share of common stock, in the
year ago period. Net income applicable to common shares for the year
ended December 31, 2007 was $567.9 million, or $2.71 per diluted share
of common stock, compared to net income applicable to common shares of
$396.4 million, or $2.66 per diluted share of common stock, in the
year ago period. Net income applicable to common shares for the
quarter ended December 31, 2007 includes the impact of gains on sales
of real estate of $11.3 million, compared to $228.7 million in the
year ago period. Net income applicable to common shares for the year
ended December 31, 2007 includes the impact of gains on sales of real
estate and real estate interest of $413.7 million, compared to gains
on sales of real estate of $275.3 million in the year ago period.

INVESTMENT TRANSACTIONS

During the year ended December 31, 2007, we made investments of
approximately $4.7 billion, that had a weighted average yield of
approximately 7.7%, in the following segments: (i) 67% life science,
(ii) 20% skilled nursing, (iii) 6% medical office, (iv) 6% hospital
and (v) 1% senior housing. During the quarter ended December 31, 2007,
we made investments of approximately $1.0 billion, which include the
following:

-- An investment in mezzanine loans having an aggregate face
value of $1.0 billion, at a discount, for approximately $900
million, as part of the financing for The Carlyle Group's $6.3
billion purchase of Manor Care, Inc. These loans bear interest
on the face amounts at a floating rate of LIBOR plus 4.0%,
mature in January 2013, are pre-payable at any time subject to
yield maintenance during the first twelve months and are
mandatorily pre-payable in January 2012 unless the borrower
satisfies certain financial conditions. These loans are
secured by an indirect pledge of the equity ownership in HCR
ManorCare's 339 facilities located in 30 states and were
subordinate to approximately $3.6 billion of other debt at
closing.

-- The acquisition of three life science buildings for
approximately $46 million at a weighted average yield of
approximately 7.1%, and the funding of $59 million of
development and other capital projects.

During the year ended December 31, 2007, our sales of properties
and marketable securities aggregated approximately $975 million and
were made from the following segments: (i) 59% senior housing, (ii)
32% skilled nursing, (iii) 5% hospital and (iv) 4% medical office.
During the quarter ended December 31, 2007, we sold eight properties
for $27 million.

During the year ended December 31, 2007, we contributed an
aggregate of $1.7 billion of senior housing, medical office and
hospital properties into institutional joint ventures.

FINANCING TRANSACTIONS

During the year ended December 31, 2007, we raised $6.3 billion in
capital through the issuance of common stock, senior unsecured notes
and mortgage debt, and financing related to the closing of our SEUSA
acquisition. During the quarter ended December 31, 2007, we completed
the following financing transactions:

-- The issuance of 9 million shares of common stock and receipt
of net proceeds of approximately $303 million, which were used
to repay outstanding borrowings under our bridge loan.

-- The issuance of $600 million of 6.70% senior unsecured notes
due in 2018. The notes were priced at 99.793% of the principal
amount for an effective yield of 6.73%. We received net
proceeds of approximately $595 million, which were used to
repay outstanding borrowings under our bridge loan.

DIVIDENDS

On January 28, 2008, we announced that our Board of Directors
declared a quarterly common stock cash dividend of $0.455 per share.
The common stock dividend will be paid on February 21, 2008 to
stockholders of record as of the close of business on February 7,
2008. The annualized rate of distribution for 2008 is $1.82, compared
with $1.78 for 2007.

FUTURE OPERATIONS

For the full year 2008, we presently expect net income applicable
to common shares to range between $2.02 and $2.10 per diluted common
share, FFO applicable to common shares to range between $2.26 and
$2.34 per diluted common share, and FFO applicable to common shares,
before giving effect to merger-related charges, to range between $2.28
and $2.36 per diluted common share.

COMPANY INFORMATION

HCP has scheduled a conference call and webcast for Tuesday,
February 12, 2008 at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time)
in order to present the Company's performance and operating results
for the quarter and year ended December 31, 2007. The conference call
is accessible by dialing (866) 362-4829 (U.S.) or (617) 597-5346
(International). The participant pass code is 82731675. The webcast is
accessible via the Company's website at www.hcpi.com. The link can be
found on the "Event Calendar" page, which is under the "Investor
Relations" tab. A webcast replay of the conference call will be
available after 11:00 a.m. Pacific Time (2:00 p.m. Eastern Time) on
February 12, 2008 through February 26, 2008 on the Company's website.
The Company's supplemental information package for the current period
will also be available on the Company's website in the "Presentations"
section of the "Investor Relations" tab.

ABOUT HCP

HCP, Inc. is a self-administered REIT that, together with its
consolidated subsidiaries, invests primarily in real estate serving
the healthcare industry in the United States. As of December 31, 2007,
the Company's portfolio of properties, excluding assets held for sale
but including mortgage loans and properties owned by unconsolidated
joint ventures, totaled 753 properties among the following segments:
275 senior housing, 105 life science, 269 medical office, 41 hospital
and 63 skilled nursing. For more information, visit the Company's
website at www.hcpi.com.

FORWARD-LOOKING STATEMENTS

"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: The statements contained in this release which are
not historical facts are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements include the
Company's estimates of yields, net income applicable to common shares
on a diluted basis, FFO applicable to common shares on a diluted
basis, FFO applicable to common shares on a diluted basis before
giving effect to merger-related charges, gains on sales of real
estate, real estate depreciation and amortization, joint venture
adjustments and merger-related charges for the full year of 2008.
These statements are made as of the date hereof and are subject to
known and unknown risks, uncertainties, assumptions and other factors
-- many of which are out of the Company's control and difficult to
forecast -- that could cause actual results to differ materially from
those set forth in or implied by forward-looking statements. These
risks and uncertainties include but are not limited to: the Company's
ability to access external sources of capital when desired and on
reasonable terms; the Company's ability to manage its indebtedness
levels; the Company's ability to maintain its credit ratings; the
Company's ability to achieve its expected benefits from acquisitions,
including integrating and preserving the goodwill of those companies;
competition for lessees and mortgagors (including new leases and
mortgages and the renewal or rollover of existing leases); continuing
reimbursement uncertainty in the skilled nursing segment; competition
in the senior housing segment specifically and in the healthcare
industry in general; the Company's ability to acquire, sell or lease
facilities and the timing of acquisitions, sales and leasings; the
Company's ability to realize the benefits of its mezzanine
investments; changes in the financial condition of the Company's
lessees and obligors; changes in healthcare laws and regulations and
other changes in the healthcare industry which affect the operations
of the Company's lessees or obligors; changes in the Company's
management; litigation claims and developments; costs of compliance
with building regulations; changes in tax laws and regulations;
changes in rules governing financial reporting, including new
accounting pronouncements; changes in economic conditions, including
changes in interest rates and the availability and cost of capital,
which affect opportunities for profitable investments; and other risks
described from time to time in the Company's Securities and Exchange
Commission filings. The Company assumes no, and hereby disclaims any,
obligation to update any of the foregoing or any other forward-looking
statements as a result of new information or new or future
developments.

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HCP, Inc.
Summary of Information
In thousands, except per share data
(Unaudited)

Three Months Ended Year Ended
December 31, December 31,
------------------ -----------------
2007 2006 2007 2006
--------- -------- -------- --------

Revenues $ 273,121 $212,758 $982,509 $534,891

Net income applicable to common
shares $ 45,013 $235,992 $567,885 $396,417

Basic earnings per common share $ 0.21 $ 1.28 $ 2.73 $ 2.67
--------- -------- -------- --------

Diluted earnings per common share $ 0.21 $ 1.28 $ 2.71 $ 2.66
--------- -------- -------- --------

Weighted average shares used to
calculate diluted earnings per
common share 216,917 183,736 209,254 148,841
--------- -------- -------- --------

Funds from operations applicable
to common shares (1) $ 117,241 $ 65,629 $449,091 $272,753
--------- -------- -------- --------

Diluted funds from operations
applicable to common shares (1) $ 122,087 $ 65,629 $464,024 $280,585
--------- -------- -------- --------

Basic funds from operations per
common share (1) $ 0.54 $ 0.36 $ 2.16 $ 1.84
--------- -------- -------- --------

Diluted funds from operations per
common share (1) $ 0.54 $ 0.35 $ 2.14 $ 1.82
--------- -------- -------- --------

Weighted average shares used to
calculate diluted funds from
operations per common share (1) 227,014 185,278 217,240 153,831
--------- -------- -------- --------

Impact of merger-related charges
and impairments:
Merger-related charges $ 3,789 $ 13,503 $ 21,846 $ 14,010
Impairments _ 4,870 _ 9,581
--------- -------- -------- --------
$ 3,789 $ 18,373 $ 21,846 $ 23,591
--------- -------- -------- --------

Per common share impact of
merger-related charges and
impairments on diluted funds
from operations $ 0.01 $ 0.10 $ 0.10 $ 0.16
*T

________________________________________

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(1) The Company believes that funds from operations applicable to
common shares, diluted funds from operations applicable to common
shares and basic and diluted funds from operations per common
share are important supplemental measures of operating
performance for a real estate investment trust. Because the
historical cost accounting convention used for real estate assets
requires straight-line depreciation (except on land), such
accounting presentation implies that the value of real estate
assets diminishes predictably over time. Since real estate values
instead have historically risen and fallen with market
conditions, presentations of operating results for a real estate
investment trust that uses historical cost accounting for
depreciation could be less informative. The term funds from
operations ("FFO") was designed by the real estate investment
trust industry to address this issue.

FFO is defined as net income applicable to common shares (computed
in accordance with U.S. generally accepted accounting
principles), excluding gains or losses from real estate
dispositions, plus real estate depreciation and amortization,
with 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 U.S. generally accepted accounting principles, is
not necessarily indicative of cash available to fund cash needs
and should not be considered an alternative to net income. The
Company's computation of FFO may not be comparable to FFO
reported by other real estate investment trusts that do not
define the term in accordance with the current National
Association of Real Estate Investment Trusts ("NAREIT")
definition or that have a different interpretation of the current
NAREIT definition from the Company. A reconciliation of net
income applicable to common shares to FFO applicable to common
shares is provided herein.
*T

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HCP, Inc.
Consolidated Statements of Income
In thousands, except per share data
(Unaudited)

Three Months Ended Year Ended
December 31, December 31,
------------------ -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Revenues:
Rental and related revenues $233,453 $183,996 $835,722 $483,921
Tenant recoveries 23,334 12,534 69,354 32,067
Income from direct financing
leases 14,815 15,008 63,852 15,008
Investment management fee
income 1,519 1,220 13,581 3,895
-------- -------- -------- --------
273,121 212,758 982,509 534,891
-------- -------- -------- --------

Costs and expenses:
Interest 101,105 109,882 357,024 211,869
Depreciation and
amortization 79,232 53,184 274,348 132,916
Operating 52,963 32,289 186,550 88,521
General and administrative 17,463 22,163 70,930 47,195
Impairments _ 3,577 _ 3,577
-------- -------- -------- --------
250,763 221,095 888,852 484,078
-------- -------- -------- --------

Operating income (loss): 22,358 (8,337) 93,657 50,813
Equity income from
unconsolidated joint
ventures 1,887 751 5,645 8,331
Gain on sale of real estate
interest _ _ 10,141 _
Interest and other income,
net 20,921 8,852 75,676 34,816
Minority interests' share of
earnings (6,364) (3,347) (24,356) (14,805)
-------- -------- -------- --------
Income (loss) from continuing
operations 38,802 (2,081) 160,763 79,155
-------- -------- -------- --------

Discontinued operations:
Operating income 178 15,966 24,668 69,113
Impairments _ (1,293) _ (6,004)
Gains on sales of real
estate 11,315 228,682 403,584 275,283
-------- -------- -------- --------
11,493 243,355 428,252 338,392
-------- -------- -------- --------

Net income 50,295 241,274 589,015 417,547
Preferred stock dividends (5,282) (5,282) (21,130) (21,130)
-------- -------- -------- --------

Net income applicable to
common shares $ 45,013 $235,992 $567,885 $396,417
-------- -------- -------- --------

Basic earnings (loss) per
common share:
Continuing operations $ 0.16 $ (0.04) $ 0.67 $ 0.39
Discontinued operations 0.05 1.32 2.06 2.28
-------- -------- -------- --------
Net income applicable to
common shares $ 0.21 $ 1.28 $ 2.73 $ 2.67
-------- -------- -------- --------

Diluted earnings (loss) per
common share:
Continuing operations $ 0.16 $ (0.04) $ 0.67 $ 0.39
Discontinued operations 0.05 1.32 2.04 2.27
-------- -------- -------- --------
Net income applicable to
common shares $ 0.21 $ 1.28 $ 2.71 $ 2.66
-------- -------- -------- --------

Weighted average shares used
to calculate earnings per
common share:
Basic 215,645 183,736 207,924 148,236
-------- -------- -------- --------

Diluted 216,917 183,736 209,254 148,841
-------- -------- -------- --------
*T

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HCP, Inc.
Funds From Operations Information
In thousands, except per share data
(Unaudited)

Three Months Ended Year Ended
December 31, December 31,
------------------- ---------------------
2007 2006 2007 2006
--------- ---------- ---------- ----------

Net income applicable to
common shares $ 45,013 $ 235,992 $ 567,885 $ 396,417
Depreciation and
amortization of real
estate, in-place lease and
other intangibles:
Continuing operations 79,232 53,184 274,348 132,916
Discontinued operations 67 5,060 6,831 21,153
Gains on sales of real
estate and real estate
interest (11,315) (228,682) (413,725) (275,283)
Equity income from
unconsolidated joint
ventures (1,887) (751) (5,645) (8,331)
FFO from unconsolidated
joint ventures 6,981 1,631 22,800 7,321
Minority interests' share of
earnings 6,364 3,347 24,356 14,805
Minority interests' share of
FFO (7,214) (4,152) (27,759) (16,245)
-------- --------- --------- ---------
Funds from operations
applicable to common shares
(1) $117,241 $ 65,629 $ 449,091 $ 272,753
-------- --------- --------- ---------

Distributions on convertible
units $ 4,846 $ _ $ 14,933 $ 7,832
-------- --------- --------- ---------

Diluted funds from
operations applicable to
common shares (1) $122,087 $ 65,629 $ 464,024 $ 280,585
-------- --------- --------- ---------

Basic funds from operations
per common share (1) $ 0.54 $ 0.36 $ 2.16 $ 1.84
-------- --------- --------- ---------

Diluted funds from
operations per common share
(1) $ 0.54 $ 0.35 $ 2.14 $ 1.82
-------- --------- --------- ---------

Weighted average shares used
to calculate diluted funds
from operations per common
share (1) 227,014 185,278 217,240 153,831
-------- --------- --------- ---------

Impact of merger-related
charges and impairments:
Merger-related charges $ 3,789 $ 13,503 $ 21,846 $ 14,010
Impairments _ 4,870 _ 9,581
-------- --------- --------- ---------
$ 3,789 $ 18,373 $ 21,846 $ 23,591
-------- --------- --------- ---------

Per common share impact of
merger-related charges and
impairments on diluted
funds from operations $ 0.01 $ 0.10 $ 0.10 $ 0.16
*T

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(1) The Company believes that funds from operations applicable to
common shares, diluted funds from operations applicable to common
shares and basic and diluted funds from operations per common
share are important supplemental measures of operating
performance for a real estate investment trust. Because the
historical cost accounting convention used for real estate assets
requires straight-line depreciation (except on land), such
accounting presentation implies that the value of real estate
assets diminishes predictably over time. Since real estate values
instead have historically risen and fallen with market
conditions, presentations of operating results for a real estate
investment trust that uses historical cost accounting for
depreciation could be less informative. The term funds from
operations was designed by the real estate investment trust
industry to address this issue.

FFO is defined as net income applicable to common shares (computed
in accordance with U.S. generally accepted accounting
principles), excluding gains or losses from real estate
dispositions, plus real estate depreciation and amortization,
with 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 U.S. generally accepted accounting principles, is
not necessarily indicative of cash available to fund cash needs
and should not be considered an alternative to net income. The
Company's computation of FFO may not be comparable to FFO
reported by other real estate investment trusts that do not
define the term in accordance with the current NAREIT definition
or that have a different interpretation of the current NAREIT
definition from the Company.
*T

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HCP, Inc.
Consolidated Balance Sheets
In thousands, except share and per share data

December 31,
-------------------------
2007 2006
------------ ------------
Assets (unaudited)
Real estate:
Buildings and improvements $ 7,984,935 $ 5,755,944
Development costs and construction in
progress 372,947 42,346
Land 1,620,721 650,894
Less accumulated depreciation and
amortization (728,804) (519,965)
----------- -----------
Net real estate 9,249,799 5,929,219
----------- -----------

Net investment in direct financing leases 640,052 678,013
Loans receivable, net 1,065,485 196,480
Investments in and advances to
unconsolidated joint ventures 248,894 25,389
Accounts receivable, net of allowance of
$23,109 and $24,205, respectively 44,892 31,026
Cash and cash equivalents 96,269 58,405
Restricted cash 36,427 40,786
Intangible assets, net 623,650 380,568
Real estate held for sale, net 171 512,187
Real estate held for contribution, net _ 1,684,341
Other assets, net 516,133 476,335
----------- -----------

Total assets $12,521,772 $10,012,749
----------- -----------

Liabilities and Stockholders' Equity
Bank lines of credit $ 951,700 $ 624,500
Bridge and term loans 1,350,000 504,593
Senior unsecured notes 3,819,950 2,748,522
Mortgage debt 1,280,761 1,288,681
Mortgage debt on assets held for sale _ 38,617
Mortgage debt on assets held for
contribution _ 889,356
Other debt 108,496 107,746
Intangible liabilities, net 278,553 134,050
Accounts payable and accrued liabilities 233,342 200,088
Deferred revenue 55,990 20,795
----------- -----------
Total liabilities 8,078,792 6,556,948
----------- -----------
Minority interests:
Joint venture partners 33,436 34,211
Non-managing member unitholders 305,835 127,554
----------- -----------
Total minority interests 339,271 161,765
----------- -----------

Commitments and contingencies
Stockholders' equity:
Preferred stock, $1.00 par value:
50,000,000 shares authorized; 11,820,000
shares issued and outstanding, liquidation
preference of $25.00 per share 285,173 285,173
Common stock, $1.00 par value: 750,000,000
shares authorized; 216,818,780 and
198,599,054 shares issued and outstanding,
respectively 216,819 198,599
Additional paid-in capital 3,724,739 3,108,908
Cumulative dividends in excess of earnings (120,920) (316,369)
Accumulated other comprehensive income
(loss) (2,102) 17,725
----------- -----------

Total stockholders' equity 4,103,709 3,294,036
----------- -----------

Total liabilities and stockholders' equity $12,521,772 $10,012,749
----------- -----------
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HCP, Inc.
Projected Funds From Operations (1)
(Unaudited)

PROJECTED FUTURE OPERATIONS (Full Year 2008): 2008
-----------------
Low High
------- -------

Diluted earnings per common share $ 2.02 $ 2.10
Gains on sales of real estate (1.10) (1.10)
Real estate depreciation and amortization 1.27 1.27
Joint venture adjustments 0.07 0.07
------- -------
Diluted funds from operations per common share (2) 2.26 2.34
Merger-related charges (3) 0.02 0.02
------- -------
Diluted funds from operations per common share
before merger-related charges $ 2.28 $ 2.36
------- -------
*T

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(1) Except as otherwise noted above, the foregoing projections reflect
management's view of current and future market conditions,
including assumptions with respect to rental rates, occupancy
levels and the earnings impact of the events referenced in this
release. These estimates also include the impact on operating
results from potential future development fundings and property
dispositions, but do not reflect the potential impact of future
property acquisitions or impairments, if any. By definition, FFO
does not include real estate-related depreciation and
amortization or gains and losses associated with real estate
disposition activities, but does include impairments. There can
be no assurance that the Company's actual results will not differ
materially from the estimates set forth above. The aforementioned
ranges represent management's best estimate of results based upon
the underlying assumptions as of the date of this press release.

(2) The Company believes that diluted funds from operations per common
share is an important supplemental measure of operating
performance for a real estate investment trust. Because the
historical cost accounting convention used for real estate assets
requires straight-line depreciation (except on land), such
accounting presentation implies that the value of real estate
assets diminishes predictably over time. Since real estate values
instead have historically risen and fallen with market
conditions, presentations of operating results for a real estate
investment trust that uses historical cost accounting for
depreciation could be less informative. The term FFO was designed
by the real estate investment trust industry to address this
issue.

FFO is defined as net income (computed in accordance with U.S.
generally accepted accounting principles), excluding gains or
losses from real estate dispositions, plus real estate
depreciation and amortization, with 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 U.S.
generally accepted accounting principles, is not necessarily
indicative of cash available to fund cash needs and should not be
considered an alternative to net income. The Company's
computation of FFO may not be comparable to FFO reported by other
real estate investment trusts that do not define the term in
accordance with the current NAREIT definition or that have a
different interpretation of the current NAREIT definition from
the Company.

(3) Merger-related charges primarily include amortization of fees
associated with the Company's bridge loan and integration costs.
*T

HCP
Mark A. Wallace
Executive Vice President -
Chief Financial Officer and Treasurer
(562) 733-5100

Copyright Business Wire 2008