Profile: HCP, Inc. (HCP)

HCP, Inc. (HCP) is a real estate investment trust (REIT), focusing primarily on properties serving the healthcare industry. The Company acquires, develops, leases, disposes and manages healthcare real estate and provide mortgage and financing to healthcare providers. HCP’s portfolio comprises investments in the five healthcare segments: senior housing, life science, medical office, hospital, and skilled nursing. The Company makes investments within five healthcare segments using the five investment products: properties under lease, investment management, developments, mezzanine loans, and non-managing member LLCs (DownREITs).

Senior Housing

As of December 31, 2008, HCP had interests in 264 senior housing facilities, including 25 facilities owned by the Company’s Investment Management Platform. Senior housing facilities include independent living facilities (ILFs), assisted living facilities (ALFs) and continuing care retirement communities (CCRCs), which cater to different segments of the elderly population. ILFs are designed to meet the needs of seniors who choose to live in an environment surrounded by their peers with services, such as housekeeping, meals and activities. These residents generally do not need assistance with activities of daily living (ADL), such as bathing, eating and dressing. However, residents have the option to contract for these services. At December 31, 2008, HCP had interests in 49 ILFs.

ALFs are licensed care facilities that provide personal care services, support and housing for those who need help with ADL yet require limited medical care. The programs and services include transportation, social activities, exercise and fitness programs, beauty or barber shop access, hobby and craft activities, community excursions, meals in a dining room setting and other activities sought by residents. At December 31, 2008, HCP had interests in 200 ALFs. CCRCs provide housing and health-related services under long-term contracts. CCRCs typically require the individual to be in relatively good health and independent upon entry. At December 31, 2008, HCP had interests in 15 CCRCs.

Life science

As of December 31, 2008, HCP had interests in 104 life science properties, including eight facilities owned by Investment Management Platform. These properties contain laboratory and office space primarily for biotechnology and pharmaceutical companies, scientific research institutions, government agencies and other organizations involved in the life science industry. Life science properties are primarily configured in business park or campus settings and include multiple facilities and buildings. HCP’s life science segment accounted for approximately 24% of total revenues for the year ended December 31, 2008.

Medical Office Buildings

At December 31, 2008, HCP had interests in 251 medical office buildings (MOBs), including 63 facilities owned by its Investment Management Platform. These facilities typically contain physicians' offices and examination rooms, and also include pharmacies, hospital ancillary service space and outpatient services, such as diagnostic centers, rehabilitation clinics and day-surgery operating rooms. HCP’s MOBs are typically multi-tenant properties leased to multiple healthcare providers (hospitals and physician practices) and are primarily located on hospital campuses. Approximately 83% of MOBs, based on square feet, are located on hospital campuses. Its medical office segment accounted for approximately 30% of total revenues for 2008. During 2008, HCA, Inc. (HCA) contributed 15 % of its medical office segment revenue.

Hospitals

At December 31, 2008, HCP had interests in 24 hospitals, including four facilities owned by its Investment Management Platform. Services provided by its operators and tenants in these facilities are paid for by private sources, third-party payors (such as insurance and health maintenance organizations (HMOs)), or through the Medicare and Medicaid programs. The Company’s hospital property types include acute care, long-term acute care, specialty and rehabilitation hospitals. Its hospitals are all leased to single tenants or operators under triple-net lease structures. The Company’s hospital segment accounted for approximately 8% of total revenues during 2008.

Skilled Nursing Facilities

At December 31, 2008, HCP had interests in 51 skilled nursing facilities (SNFs). SNFs offer restorative, rehabilitative and custodial nursing care for people not requiring the more extensive and treatment available at hospitals. Ancillary revenues and revenues from sub-acute care services are derived from providing services to residents beyond room and board, and include occupational, physical, speech, respiratory and intravenous therapy, wound care, oncology treatment, brain injury care and orthopedic therapy, as well as sales of pharmaceutical products and other services. Certain skilled nursing facilities provide some of the foregoing services on an out-patient basis. HCP’s skilled nursing segment accounted for approximately 4% of total revenues for 2008.