Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ý

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 ý No o

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 for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

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 the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (check one):

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act.) Yes o No ý

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter: $18.8 billion.

As of February 4, 2013 there were 453,379,156 shares of common stock outstanding.

Portions of the definitive Proxy Statement for the registrant's 2013 Annual Meeting of Stockholders have been incorporated by reference into Part III of this Report.

All references in this report to "HCP," the "Company," "we," "us" or "our" mean HCP, Inc. together with its consolidated subsidiaries. Unless the context suggests otherwise, references to "HCP, Inc." mean the parent company without its subsidiaries.

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 to qualify as a self-administered real estate investment trust ("REIT"). We are headquartered in Long Beach, California, with offices in Nashville, Tennessee and San Francisco, California. We acquire, develop, lease, manage and dispose of healthcare real estate, and provide financing to healthcare providers. Our portfolio is comprised of investments in the following five healthcare segments: (i) senior housing, (ii) post-acute/skilled nursing, (iii) life science, (iv) medical office and (v) hospital. We make investments within our healthcare segments using the following five investment products: (i) properties under lease, (ii) debt investments, (iii) developments and redevelopments, (iv) investment management and (v) investments in senior housing operations utilizing the structure permitted by the Housing and Economic Recovery Act of 2008, which is commonly referred to as "RIDEA."

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 following:

Our website address is www.hcpi.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") are available on our website, free of charge, as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the United States ("U.S.") Securities and Exchange Commission ("SEC").

Healthcare is the single largest industry in the U.S. based on Gross Domestic Product ("GDP"). According to the National Health Expenditures report by the Centers for Medicare and Medicaid Services ("CMS"): (i) national health expenditures are projected to grow 3.8% in 2013 and 7.4% in 2014; (ii) the average compounded annual growth rate for national health expenditures, over the projection period of 2015 through 2021, is anticipated to be 6.2%; and (iii) the healthcare industry is projected to represent 17.8% of U.S. GDP in 2013.

Senior citizens are the largest consumers of healthcare services. According to CMS, on a per capita basis, the 75-year and older segment of the population spends 76% more on healthcare than the 65 to 74-year-old segment and over 200% more than the population average.

Our primary goal is to increase shareholder value through profitable growth, which allows us to maintain or increase dividends per share to our shareholders. Our investment strategy to achieve this goal is based on three principles: (i) opportunistic investing, (ii) portfolio diversification and (iii) conservative financing.

We make investment decisions that are expected to drive profitable growth and create shareholder value. We attempt to position ourselves to create and take advantage of situations to meet our goals and investment criteria.

We believe in maintaining a portfolio of healthcare investments diversified by segment, geography, operator, tenant and investment product. 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 product, geographic location, the number of properties which we may lease to a single operator or tenant, or loans we may make to a single borrower. With investments in multiple segments and investment products, we can focus on opportunities with the most attractive risk/reward profile for the portfolio as a whole. We may structure transactions as master leases, require operator or tenant insurance and indemnifications, obtain credit enhancements in the form of guarantees, letters of credit or security deposits, and take other measures to mitigate risk.

We believe a conservative balance sheet is important to our ability to execute our opportunistic investing approach. We strive to maintain a conservative balance sheet by actively managing our debt-to-equity levels and maintaining multiple sources of liquidity, such as our revolving line of credit facility, access to capital markets and secured debt lenders, relationships with current and prospective institutional joint venture partners, and our ability to divest of assets. Our debt obligations are primarily fixed rate with staggered maturities, which reduces the impact of rising interest rates on our operations.

We finance our investments based on our evaluation of available sources of funding. For short-term purposes, we may utilize our revolving line of credit facility or arrange for other short-term borrowings from banks or other sources. We arrange for longer-term financing through offerings of

equity and debt securities, placement of mortgage debt and capital from other institutional lenders and equity investors.

We specifically incorporate by reference into this section the information set forth in Item 7, "2012 Transaction Overview," included elsewhere in this report.

Investing in real estate serving the healthcare industry is highly competitive. We face competition from other REITs, investment companies, pension funds, private equity and hedge fund investors, sovereign funds, healthcare operators, lenders, developers and other institutional investors, some of whom may have greater resources and lower costs of capital than we do. Increased competition makes it more challenging for us to identify and successfully capitalize on opportunities that meet our objectives. Our ability to compete may also be impacted by national and local economic trends, availability of investment alternatives, availability and cost of capital, construction and renovation costs, existing laws and regulations, new legislation and population trends.

Income from our facilities is dependent on the ability of our operators and tenants to compete with other companies on a number of different levels, including: the quality of care provided, reputation, the physical appearance of a facility, price and range of services offered, alternatives for healthcare delivery, the supply of competing properties, physicians, staff, referral sources, location, the size and demographics of the population in surrounding areas, and the financial condition of our tenants and operators. Private, federal and state payment programs as well as the effect of laws and regulations may also have a significant influence on the profitability of our tenants and operators. For a discussion of the risks associated with competitive conditions affecting our business, see "Risk Factors" in Item 1A.

Senior housing. At December 31, 2012, we had interests in 441 senior housing facilities, 21 of which are in a RIDEA structure. Excluding RIDEA properties, all of our senior housing facilities are leased to single tenants under triple-net lease structures. Senior housing facilities include assisted living facilities ("ALFs"), independent living facilities ("ILFs") and continuing care retirement communities ("CCRCs"), which cater to different segments of the elderly population based upon their personal needs. Services provided by our operators or tenants in these facilities are primarily paid for by the residents directly or through private insurance and are less reliant on government reimbursement programs such as Medicaid and Medicare. Our senior housing property types are further described below:

During the fourth quarter of 2012, we acquired 129 senior housing communities for $1.7 billion, from a joint venture between Emeritus Corporation and Blackstone Real Estate Partners VI, an affiliate of Blackstone (the "Blackstone JV"). Located in 29 states, the portfolio encompasses 10,077 units representing a diversified care mix of 61% assisted living, 25% independent living, 13% memory care and 1% skilled nursing. Emeritus continues to operate the communities pursuant to a new triple-net, master lease for the 129 properties guaranteed by Emeritus. For a more detailed description of the acquisition see Note 4 to the Consolidated Financial Statements.

Our senior housing segment accounted for approximately 33%, 30% and 30% of total revenues for the years ended December 31, 2012, 2011 and 2010, respectively. The following table provides information about our senior housing operator concentration for the year ended December 31, 2012:

Post-acute/skilled nursing. At December 31, 2012, we had interests in 312 post-acute/skilled nursing facilities ("SNFs"). SNFs offer restorative, rehabilitative and custodial nursing care for people not requiring the more extensive and sophisticated 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 SNFs provide some of the foregoing services on an out-patient basis. Post-acute/skilled nursing services provided by our operators and tenants in these facilities are primarily paid for either by private sources or through the Medicare and Medicaid programs. All of our SNFs are leased to single tenants under triple-net lease structures.

Our post-acute/skilled nursing segment accounted for approximately 29%, 29% and 13% of total revenues for the years ended December 31, 2012, 2011 and 2010, respectively. The following table provides information about our post-acute/skilled nursing operator/tenant concentration for the year ended December 31, 2012:

Life science. At December 31, 2012, we had interests in 113 life science properties, including four facilities owned by our Investment Management Platform. These properties contain laboratory and office space primarily for biotechnology, medical device and pharmaceutical companies, scientific research institutions, government agencies and other organizations involved in the life science industry. While these properties contain similar characteristics to commercial office buildings, they generally contain more advanced electrical, mechanical, and heating, ventilating, and air conditioning ("HVAC") systems. The facilities generally have specialty equipment including emergency generators, fume hoods, lab bench tops and related amenities. In many instances, life science tenants make significant investments to improve their leased space, in addition to landlord improvements, to accommodate biology, chemistry or medical device research initiatives. Life science properties are primarily configured in business park or campus settings and include multiple buildings. The business park and campus settings allow us the opportunity to provide flexible, contiguous/adjacent expansion to accommodate the growth of existing tenants. Our properties are located in well-established geographical markets known for scientific research, including San Francisco, San Diego and Salt Lake City. At December 31, 2012, 96% of our life science leases (based on leased square feet) were under triple-net structures.

Our life science segment accounted for approximately 15%, 17% and 22% of total revenues for the years ended December 31, 2012, 2011 and 2010, respectively. The following table provides information about our life science tenant concentration for the year ended December 31, 2012:

Medical office. At December 31, 2012, we had interests in 273 medical office buildings ("MOBs"), including 66 facilities owned by our Investment Management Platform. These facilities typically contain physicians' offices and examination rooms, and may also include pharmacies, hospital ancillary service space and outpatient services such as diagnostic centers, rehabilitation clinics and day-surgery operating rooms. While these facilities are similar to commercial office buildings, they require additional plumbing, electrical and mechanical systems to accommodate multiple exam rooms that may require sinks in every room, and special equipment such as x-ray machines. In addition, MOBs are often built to accommodate higher structural loads for certain equipment and may contain "vaults" or other specialized construction. Our MOBs are typically multi-tenant properties leased to healthcare providers (hospitals and physician practices), with approximately 77% of our MOBs, based on square feet, located on hospital campuses and 94% are affiliated with hospital systems. At December 31, 2012, 47% of our medical office leases (based on leased square feet) were under triple-net structures.

Our medical office segment accounted for approximately 18%, 19% and 25% of total revenues for the years ended December 31, 2012, 2011 and 2010, respectively. During the year ended December 31, 2012, HCA, Inc. ("HCA"), as our tenant, contributed 14% of our medical office segment revenues.

Our Investment Management Platform represents the following unconsolidated joint ventures: (i) HCP Ventures III, LLC, and HCP Ventures IV, LLC, which consists of MOB portfolios, and (ii) the HCP Life Science ventures. For a more detailed description of these unconsolidated joint ventures, see Note 8 to the Consolidated Financial Statements.

Hospital. At December 31, 2012, we had interests in 21 hospitals, including four facilities owned by our Investment Management Platform. Services provided by our operators and tenants in these facilities are paid for by private sources, third-party payors (e.g., insurance and Health Maintenance Organizations or "HMOs"), or through the Medicare and Medicaid programs. Our hospital property types include acute care, long-term acute care, specialty and rehabilitation hospitals. Our hospitals are generally leased to single tenants or operators under triple-net lease structures.

Our hospital segment accounted for approximately 5%, 5% and 10% of total revenues for the years ended December 31, 2012, 2011 and 2010, respectively. The following table provides information about our hospital operator/tenant concentration for the year ended December 31, 2012:

Properties under lease. We primarily generate revenue by leasing properties under long-term leases. Most of our rents and other earned income from leases are received under triple-net leases or leases that provide for a substantial recovery of operating expenses. However, some of our MOBs and life science facility rents are structured under gross or modified gross leases. Accordingly, for such gross or modified gross leases, we incur certain property operating expenses, such as real estate taxes, repairs and maintenance, property management fees, utilities and insurance.

Our ability to grow income from properties under lease depends, in part, on our ability to (i) increase rental income and other earned income from leases by increasing rental rates and occupancy levels, (ii) maximize tenant recoveries and (iii) control non-recoverable operating expenses. Most of our leases include contractual annual base rent escalation clauses that are either predetermined fixed increases and/or are a function of an inflation index.

Debt investments. Our mezzanine loans are generally secured by a pledge of ownership interests of an entity or entities, which directly or indirectly own properties, and are subordinate to more senior debt, including mortgages and more senior mezzanine loans. Borrowers of our interests in mortgage and construction loans are typically healthcare providers and healthcare real estate generally secures these loans.

Developments and redevelopments. We generally commit to development projects that are at least 50% pre-leased or when we believe that market conditions will support speculative construction. We work closely with our local real estate service providers, including brokerage, property management, project management and construction management companies to assist us in evaluating development proposals and completing developments. Our development and redevelopment investments are primarily in our life science and medical office segments. Redevelopments are properties that require

significant capital expenditures (generally more than 25% of acquisition cost or existing basis) to update, achieve stabilization or to change the primary use of the properties.

Investment management. We co-invest in real estate properties with institutional investors through joint ventures structured as partnerships or limited liability companies. We target institutional investors with long-term investment horizons who seek to benefit from our expertise in healthcare real estate. Predominantly, we retain noncontrolling interests in the joint ventures ranging from 20% to 30% and serve as the managing member. These ventures generally allow us to earn acquisition and asset management fees, and have the potential for promoted interests or incentive distributions based on performance of the joint venture.

Operating properties ("RIDEA"). We may enter into contracts with healthcare operators to manage communities that are placed in a structure permitted by the Housing and Economic Recovery Act of 2008 (commonly referred to as "RIDEA"). Under the provisions of RIDEA, a REIT may lease "qualified healthcare properties" on an arm's length basis to a taxable REIT subsidiary ("TRS") if the property is operated on behalf of such subsidiary by a person who qualifies as an "eligible independent contractor." We view RIDEA as a structure primarily to be used on properties that present attractive valuation entry points and to drive growth by: (i) transitioning the asset to a new operator that can bring scale, operating efficiencies, and/or ancillary services; or (ii) investing capital to reposition the asset.

At December 31, 2012, we managed $21.3 billion of investments in our Owned Portfolio and Investment Management Platform. At December 31, 2012, we also owned $540 million of assets under development, including redevelopment, and land held for future development.

As of December 31, 2012, our leases and operating properties and debt investments in our Owned Portfolio consisted of the following (square feet and dollars in thousands):

											Year Ended December 31, 2012

				Investment⁽³⁾
	Number of Properties⁽¹⁾			Investment⁽³⁾					Total Investment				Interest Income⁽⁵⁾
Segment	Number of Properties⁽¹⁾		Capacity⁽²⁾	Properties⁽¹⁾		Debt			Total Investment		NOI⁽⁴⁾		Interest Income⁽⁵⁾
Senior housing		441	45,669 Units	$	7,543,163	$	123,642		$	7,666,805	$	531,419	$	3,503
Post-acute/skilled		312	41,538 Beds		5,669,469		328,905			5,998,374		538,856		19,993
Life science		109	7,002 Sq. ft.		3,362,298		—			3,362,298		236,491		—
Medical office		207	14,274 Sq. ft.		2,613,254		—			2,613,254		202,547		—
Hospital		17	2,410 Beds		650,937		46,292	⁽⁶⁾		697,229		80,980		1,040

Total		1,086		$	19,839,121	$	498,839		$	20,337,960	$	1,590,293	$	24,536

See Note 14 to the Consolidated Financial Statements for additional information on our business segments.

At December 31, 2012, in addition to our investments in properties under lease and debt investments, we have an aggregate investment of $540 million in assets under development, including redevelopment, and land held for future development, primarily in our life science and medical office segments.

As of December 31, 2012, our Investment Management Platform consisted of the following properties under lease (square feet and dollars in thousands):

At December 31, 2012, we had 149 full-time employees, none of whom are subject to a collective bargaining agreement.

Our tenants and operators are typically subject to extensive and complex federal, state and local healthcare laws and regulations relating to fraud and abuse practices, government reimbursement, licensure and certificate of need and similar laws governing the operation of healthcare facilities, and we expect that the healthcare industry, in general, will continue to face increased regulation and pressure in the areas of fraud, waste and abuse, cost control, healthcare management and provision of services, among others. These regulations are wide-ranging and can subject our tenants and operators to civil, criminal and administrative sanctions. Affected tenants and operators may find it increasingly difficult to comply with this complex and evolving regulatory environment because of a relative lack of guidance in many areas as certain of our healthcare properties are subject to oversight from several government agencies and the laws may vary from one jurisdiction to another. Changes in laws and regulations and reimbursement enforcement activity and regulatory non-compliance by our tenants and

operators can all have a significant effect on their operations and financial condition, which in turn may adversely impact us, as detailed below and set forth under "Risk Factors" in Item 1A.

Based on information primarily provided by our tenants and operators, excluding our medical office segment, at December 31, 2012 we estimate that approximately 18% and 14% of the annualized base rental payments received from our tenants and operators were dependent on Medicare and Medicaid reimbursement, respectively.

The following is a discussion of certain laws and regulations generally applicable to our operators, and in certain cases, to us.

There are various extremely complex federal and state laws and regulations governing healthcare providers' relationships and arrangements and prohibiting fraudulent and abusive practices by such providers. These laws include (i) federal and state false claims acts, which, among other things, prohibit providers from filing false claims or making false statements to receive payment from Medicare, Medicaid or other federal or state healthcare programs, (ii) federal and state anti-kickback and fee-splitting statutes, including the Medicare and Medicaid anti-kickback statute, which prohibit the payment or receipt of remuneration to induce referrals or recommendations of healthcare items or services, (iii) federal and state physician self-referral laws (commonly referred to as the "Stark Law"), which generally prohibit referrals by physicians to entities with which the physician or an immediate family member has a financial relationship, (iv) the federal Civil Monetary Penalties Law, which prohibits, among other things, the knowing presentation of a false or fraudulent claim for certain healthcare services and (v) federal and state privacy laws, including the privacy and security rules contained in the Health Insurance Portability and Accountability Act of 1996, which provide for the privacy and security of personal health information. Violations of healthcare fraud and abuse laws carry civil, criminal and administrative sanctions, including punitive sanctions, monetary penalties, imprisonment, denial of Medicare and Medicaid reimbursement and potential exclusion from Medicare, Medicaid or other federal or state healthcare programs. These laws are enforced by a variety of federal, state and local agencies and can also be enforced by private litigants through, among other things, federal and state false claims acts, which allow private litigants to bring qui tam or "whistleblower" actions. Many of our operators and tenants are subject to these laws, and some of them may in the future become the subject of governmental enforcement actions if they fail to comply with applicable laws.

Sources of revenue for many of our tenants and operators include, among other sources, governmental healthcare programs, such as the federal Medicare program and state Medicaid programs, and non-governmental payors, such as insurance carriers and HMOs. As federal and state governments focus on healthcare reform initiatives, and as the federal government and many states face significant budget deficits, efforts to reduce costs by these payors will likely continue, which may result in reduced or slower growth in reimbursement for certain services provided by some of our tenants and operators.

Certain healthcare facilities in our portfolio are subject to extensive federal, state and local licensure, certification and inspection laws and regulations. In addition, various licenses and permits are required to dispense narcotics, operate pharmacies, handle radioactive materials and operate equipment. Many states require certain healthcare providers to obtain a certificate of need, which requires prior approval for the construction, expansion and closure of certain healthcare facilities. The

approval process related to state certificate of need laws may impact some of our tenants' and operators' abilities to expand or change their businesses.

While certain of our life science tenants include some well-established companies, other such tenants are less established and, in some cases, may not yet have a product approved by the Food and Drug Administration or other regulatory authorities for commercial sale. Creating a new pharmaceutical product or medical device requires substantial investments of time and money, in part, because of the extensive regulation of the healthcare industry; it also entails considerable risk of failure in demonstrating that the product is safe and effective and in gaining regulatory approval and market acceptance.

Certain of the senior housing facilities mortgaged to or owned by us are operated as entrance fee communities. Generally, an entrance fee is an upfront fee or consideration paid by a resident, a portion of which may be refundable, in exchange for some form of long-term benefit. Some of the entrance fee communities are subject to significant state regulatory oversight, including, for example, oversight of each facility's financial condition, establishment and monitoring of reserve requirements and other financial restrictions, the right of residents to cancel their contracts within a specified period of time, lien rights in favor of the residents, restrictions on change of ownership and similar matters.

Our properties must comply with the ADA and any similar state or local laws to the extent that such properties are "public accommodations" as defined in those statutes. The ADA may require removal of barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable. To date, we have not received any notices of noncompliance with the ADA that have caused us to incur substantial capital expenditures to address ADA concerns. Should barriers to access by persons with disabilities be discovered at any of our properties, we may be directly or indirectly responsible for additional costs that may be required to make facilities ADA-compliant. Noncompliance with the ADA could result in the imposition of fines or an award of damages to private litigants. The obligation to make readily achievable accommodations pursuant to the ADA is an ongoing one, and we continue to assess our properties and make modifications as appropriate in this respect.

A wide variety of federal, state and local environmental and occupational health and safety laws and regulations affect healthcare facility operations. These complex federal and state statutes, and their enforcement, involve a myriad of regulations, many of which involve strict liability on the part of the potential offender. Some of these federal and state statutes may directly impact us. Under various federal, state and local environmental laws, ordinances and regulations, an owner of real property or a secured lender, such as us, may be liable for the costs of removal or remediation of hazardous or toxic substances at, under or disposed of in connection with such property, as well as other potential costs relating to hazardous or toxic substances (including government fines and damages for injuries to persons and adjacent property). The cost of any required remediation, removal, fines or personal or property damages and the owner's or secured lender's liability therefore could exceed or impair the value of the property, and/or the assets of the owner or secured lender. In addition, the presence of such substances, or the failure to properly dispose of or remediate such substances, may adversely affect the owner's ability to sell or rent such property or to borrow using such property as collateral which, in turn, could reduce our revenues. For a description of the risks associated with environmental matters, see "Risk Factors" in Item 1A of this report.

The section below discusses the most significant risk factors that may materially adversely affect our business, results of operations and financial condition.

As set forth below, we believe that the risks facing our company generally fall into the following categories:

Volatility or disruption in the financial markets may impair our ability to raise capital, obtain new financing or refinance existing obligations and fund real estate and development activities.

The global financial markets recently have experienced pervasive and fundamental disruptions. While these conditions have stabilized since the first quarter of 2009 and the capital markets generally have shown signs of improvement, the sustainability of an economic recovery is uncertain and additional levels of market disruption and volatility could materially adversely impact our ability to raise capital, obtain new financing or refinance our existing obligations as they mature and fund real estate and development activities.

Market volatility could also lead to significant uncertainty in the valuation of our investments and those of our joint ventures, that may result in a substantial decrease in the value of our properties and those of our joint ventures. As a result, we may not be able to recover the carrying amount of such investments and the associated goodwill, if any, which may require us to recognize impairment charges in earnings.

We rely on external sources of capital to fund future capital needs and limitations on our access to such capital could have a materially adverse effect on our ability to meet commitments as they become due or make future investments necessary to grow our business.

We may not be able to fund all future capital needs from cash retained from operations. If we are unable to obtain enough internal capital, we may need to rely on external sources of capital (including debt and equity financing) to fulfill our capital requirements. If we cannot access these external sources of capital, we may not be able to make the investments needed to grow our business and to meet our obligations and commitments as they mature. Our access to capital depends upon a number of factors, some of which we have little or no control over, including but not limited to:

If our access to capital is limited by these factors or other factors, it could have a material adverse impact on our ability to fund operations, refinance our debt obligations, fund dividend payments, acquire properties and development activities.

Adverse changes in our credit ratings could impair our ability to obtain additional debt and equity financing on favorable terms, if at all, and negatively impact the market price of our securities, including our common stock.

The credit ratings of our senior unsecured debt are based on our operating performance, liquidity and leverage ratios, overall financial position and other factors employed by the credit rating agencies in their rating analyses of us. Our credit ratings can affect the amount and type of capital we can access, as well as the terms of any financings we may obtain. There can be no assurance that we will be able to maintain our current credit ratings and in the event that our current credit ratings deteriorate, we would likely incur higher borrowing costs and it may be more difficult or expensive to obtain additional financing or refinance existing obligations and commitments. Also, a downgrade in our credit ratings would trigger additional costs or other potentially negative consequences under our current and future credit facilities and debt instruments.

Our level of indebtedness may increase and materially adversely affect our future operations.

Our outstanding indebtedness as of December 31, 2012 was approximately $8.7 billion. We may incur additional indebtedness in the future, including in connection with the development or acquisition of assets, which may be substantial. Any significant additional indebtedness could negatively affect the credit ratings of our debt and require us to dedicate a substantial portion of our cash flow to interest and principal payments due on our indebtedness. Greater demands on our cash resources may reduce funds available to us to pay dividends, conduct development activities, make capital expenditures and acquisitions, or carry out other aspects of our business strategy. Increased indebtedness can also limit our ability to adjust rapidly to changing market conditions, make us more vulnerable to general adverse economic and industry conditions and create competitive disadvantages for us compared to other companies with relatively lower debt levels. Increased future debt service obligations may limit our operational flexibility, including our ability to finance or refinance our properties, contribute properties to joint ventures or sell properties as needed.

Covenants related to our indebtedness limit our operational flexibility and breaches of these covenants could materially adversely affect our business, results of operations and financial condition.

Our unsecured credit facilities, unsecured debt securities and secured debt and other indebtedness that we may incur in the future, require or will require us to comply with a number of customary financial and other covenants, such as maintaining certain levels of debt service coverage and leverage ratio, tangible net worth requirements and maintaining REIT status. Our continued ability to incur additional debt and to conduct business in general is subject to compliance with these financial and other covenants, which limit our operational flexibility. For example, mortgages on our properties contain customary covenants such as those that limit or restrict our ability, without the consent of the lender, to further encumber or sell the applicable properties, or to replace the applicable tenant or operator. Breaches of certain covenants may result in defaults under the mortgages on our properties

and cross-defaults under certain of our other indebtedness, even if we satisfy our payment obligations to the respective obligee. Additionally, defaults under the leases or operating agreements related to mortgaged properties, including defaults associated with the bankruptcy of the applicable tenant or operator, may result in a default under the underlying mortgage and cross-defaults under certain of our other indebtedness. Covenants that limit our operational flexibility as well as defaults under our debt instruments could materially adversely affect our business, results of operations and financial condition.

An increase in interest rates could increase interest cost on new debt, and could materially adversely impact our ability to refinance existing debt, sell assets and limit our acquisition, investment and development activities.

If interest rates increase, so could our interest costs for any new debt. This increased cost could make the financing of any acquisition and development activity more costly. Rising interest rates could limit our ability to refinance existing debt when it matures, or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness. In addition, an increase in interest rates could decrease the amount third parties are willing to pay for our assets, thereby limiting our ability to reposition our portfolio promptly in response to changes in economic or other conditions.

We depend on a limited number of operators and tenants that account for a large percentage of our revenues.

During the year ended December 31, 2012, approximately 48% of our revenues were generated by our leasing or financial arrangements with the following four companies: HCR ManorCare (30%); Emeritus (8%); Sunrise (5%); and Brookdale (5%). The failure, inability or unwillingness of these operators or tenants to meet their obligations to us could materially reduce our cash flow as well as our results of operations, which could in turn reduce the amount of dividends we pay, cause our stock price to decline and have other material adverse effects on our business, results of operations and financial condition.

In addition, any failure by these operators or tenants to effectively conduct their operations or to maintain and improve our properties could adversely affect their business reputation and their ability to attract and retain patients and residents in our properties, which could have a material adverse effect on our business, results of operations and financial condition. These operators and tenants generally have also agreed to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with their respective businesses, and we cannot provide any assurance that they will have sufficient assets, income, access to financing and insurance coverage to enable it to satisfy its indemnification obligations.

Economic and other conditions that negatively affect geographic areas to which a greater percentage of our revenue is attributed could materially adversely affect our business, results of operations and financial condition.

For the year ended December 31, 2012, approximately 44% of our revenue was derived from properties located in California (22%), Texas (12%) and Florida (10%). As a result, we are subject to increased exposure to adverse conditions affecting these regions, including downturns in the local economies or changes in local real estate conditions, increased competition or decreased demand, and changes in state-specific legislation, which could adversely affect our business and results of operations.

The bankruptcy, insolvency or financial deterioration of one or more of our major operators or tenants may materially adversely affect our business, results of operations and financial condition.

We lease our properties directly to operators in most cases, and in certain other cases, we lease to third-party tenants who enter into long-term management agreements with operators to manage the

properties. Although our leases, financing arrangements and other agreements with our tenants and operators generally provide us the right under specified circumstances to terminate a lease, evict an operator or tenant, or demand immediate repayment of certain obligations to us, the bankruptcy and insolvency laws afford certain rights to a party that has filed for bankruptcy or reorganization that may render certain of these remedies unenforceable, or at the least, delay our ability to pursue such remedies. For example, we cannot evict a tenant or operator solely because of its bankruptcy filing. A debtor has the right to assume, or to assume and assign to a third party, or to reject its unexpired contracts in a bankruptcy proceeding. If a debtor were to reject its leases with us, our claim against the debtor for unpaid and future rents would be limited by the statutory cap set forth in the U.S. Bankruptcy Code, which may be substantially less than the remaining rent actually owed under the lease. In addition, the inability of our tenants or operators to make payments or comply with certain other lease obligations may affect our compliance with certain covenants contained in our debt securities, credit facilities and the mortgages on the properties leased or managed by such tenants and operators. In addition, under certain conditions, defaults under the underlying mortgages may result in cross-default under our other indebtedness. Although we believe that we would be able to secure amendments under the applicable agreements in those circumstances, the bankruptcy of an applicable operator or tenant may potentially result in less favorable borrowing terms than currently available, delays in the availability of funding or other material adverse consequences. In addition, many of our facilities are leased to healthcare providers who provide long-term custodial care to the elderly; evicting such operators for failure to pay rent while the facility is occupied may be a difficult and slow process and may not be successful.

Our operators and tenants may not procure the necessary insurance to adequately insure against losses.

Our leases generally require our tenants and operators to secure and maintain comprehensive liability and property insurance that covers us, as well as the tenants and operators. Some types of losses may not be adequately insured by our tenants and operators. Should an uninsured loss or a loss in excess of insured limits occur, we could incur liability or lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenues from the property. In such an event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property. We continually review the insurance maintained by our tenants and operators and believe the coverage provided to be customary for similarly situated companies in our industry. However, we cannot assure you that material uninsured losses, or losses in excess of insurance proceeds, will not occur in the future.

Our operators and tenants are faced with litigation and may experience rising liability and insurance costs.

In some states, advocacy groups have been created to monitor the quality of care at healthcare facilities and these groups have brought litigation against the operators and tenants of such facilities. Also, in several instances, private litigation by patients has succeeded in winning large damage awards for alleged abuses. The effect of this litigation and other potential litigation may materially increase the costs incurred by our operators and tenants for monitoring and reporting quality of care compliance. In addition, their cost of liability and medical malpractice insurance can be significant and may increase so long as the present healthcare litigation environment continues. Cost increases could cause our operators to be unable to make their lease or mortgage payments or fail to purchase the appropriate liability and malpractice insurance, potentially decreasing our revenues and increasing our collection and litigation costs. In addition, as a result of our ownership of healthcare facilities, we may be named as a defendant in lawsuits allegedly arising from the actions of our operators or tenants, for which claims such operators and tenants have agreed to indemnify, defend and hold us harmless from and against, but which may require unanticipated expenditures on our part.

Operators and tenants that fail to comply with the requirements of, or changes to, governmental reimbursement programs such as Medicare or Medicaid, may cease to operate or be unable to meet their financial and other contractual obligations to us.

Certain of our operators and tenants are affected by an extremely complex set of federal, state and local laws and regulations that are subject to frequent and substantial changes (sometimes applied retroactively) resulting from legislation, adoption of rules and regulations, and administrative and judicial interpretations of existing law. See "Item 1—Business—Government Regulation, Licensing and Enforcement" above. For example, to the extent that any of our operators or tenants receive a significant portion of their revenues from governmental payors, primarily Medicare and Medicaid, such revenues may be subject to:

In recent years, governmental payors have frozen or reduced payments to healthcare providers due to budgetary pressures. Healthcare reimbursement will likely continue to be of significant importance to federal and state authorities. We cannot make any assessment as to the ultimate timing or the effect that any future legislative reforms may have on our operators' and tenants' costs of doing business and on the amount of reimbursement by government and other third-party payors. The failure of any of our operators or tenants to comply with these laws, requirements and regulations could materially adversely affect their ability to meet their financial and contractual obligations to us.

Legislation to address the federal government's projected operating deficit could have a material adverse effect on our operators' liquidity, financial condition or results of operations.

Congress may consider legislation to address the fiscal condition of the United States that may include entitlement reform, tax reform, reductions in domestic discretionary spending, budget sequestration of certain non-defense discretionary federal programs, and an increase in the national debt limit that could have a material adverse effect on our operators' liquidity, financial condition or results of operations. In particular, Congress may consider legislation affecting the funding of entitlement programs such as Medicare, Medicaid and Medicare Advantage Plans that may result in reductions in funding and reimbursements to providers; tax reform that may impact corporate and individual tax rates and retirement plans; and an increase in the federal debt limit that may have an impact on credit markets. Additionally, the Administration may implement proposals under current law or legislation that may be approved by Congress that could modify the delivery of services and benefits under Medicare, Medicaid or Medicare Advantage Plans. Such changes could have a material adverse effect on our operators' liquidity, financial condition or results of operations, which could adversely affect their ability to satisfy their obligations to us and could have a material adverse effect on us.

Operators and tenants that fail to comply with federal, state and local licensure, certification and inspection laws and regulations may cease to operate or be unable to meet their financial and other contractual obligations to us.

Certain of our operators and tenants are subject to extensive federal, state, local and industry-related licensure, certification and inspection laws, regulations and standards. Our operators' or tenants' failure to comply with any of these laws, regulations or standards could result in loss of accreditation, denial of reimbursement, imposition of fines, suspension or decertification from federal and state healthcare programs, loss of license or closure of the facility. For example, certain of our properties may require a license, registration and/or certificate of need to operate. Failure of any operator or tenant to obtain a license, registration or certificate of need, or loss of a required license, registration or certificate of need, would prevent a facility from operating in the manner intended by such operator or tenant. Additionally, failure of our operators and tenants to generally comply with applicable laws and regulations may have an adverse effect on facilities owned by or mortgaged to us, and therefore may materially adversely impact us. See "Item 1—Business—Government Regulation, Licensing and Enforcement—Healthcare Licensure and Certificate of Need" above.

Increased competition, as well as an inability to grow revenues as originally forecast, have resulted and may further result in lower net revenues for some of our operators and tenants and may affect their ability to meet their financial and other contractual obligations to us.

The healthcare industry is highly competitive and can become more competitive in the future. The occupancy levels at, and rental income from, our facilities is dependent on our ability and the ability of our operators and tenants to maintain and increase such levels and income and to compete with entities that have substantial capital resources. These entities compete with other operators and tenants on a number of different levels, including the quality of care provided, reputation, the physical appearance of a facility, price, the range of services offered, family preference, alternatives for healthcare delivery, the supply of competing properties, physicians, staff, referral sources, location and the size and demographics of the population in the surrounding area. Private, federal and state payment programs and the effect of laws and regulations may also have a significant influence on the profitability of the properties and their tenants. Our operators and tenants also compete with numerous other companies providing similar healthcare services or alternatives such as home health agencies, life care at home, community-based service programs, retirement communities and convalescent centers. Such competition, which has intensified due to overbuilding in some segments in which we invest, has caused the occupancy rate of newly constructed buildings to slow and the monthly rate that many newly built and previously existing facilities were able to obtain for their services to decrease. We cannot be certain that the operators and tenants of all of our facilities will be able to achieve occupancy and rate levels that will enable them to meet all of their obligations to us. Further, many competing companies may have resources and attributes that are superior to those of our operators and tenants. Thus, our operators and tenants may encounter increased competition in the future that could limit their ability to maintain or attract residents or expand their businesses which could materially adversely affect their ability to meet their financial and other contractual obligations to us, potentially decreasing our revenues, impairing our assets, and increasing our collection and dispute costs.

Our tenants in the life science industry face high levels of regulation, expense and uncertainty.

Life science tenants, particularly those involved in developing and marketing pharmaceutical products, are subject to certain unique risks, as follows:

We cannot assure you that our life science tenants will be successful in their businesses. If our tenants' businesses are adversely affected, they may have difficulty making payments to us, which could materially adversely affect our business, results of operations and financial condition.

We may be unable to successfully foreclose on the collateral securing our real estate-related loans, and even if we are successful in our foreclosure efforts, we may be unable to successfully operate, occupy or reposition the underlying real estate, which may adversely affect our ability to recover our investments.

If an operator or tenant defaults under one of our mortgages or mezzanine loans, we may have to foreclose on the loan or protect our interest by acquiring title to the collateral and thereafter making substantial improvements or repairs in order to maximize the property's investment potential. In some cases, as noted above, the collateral consists of the equity interests in an entity that directly or indirectly owns the applicable real property or interests in operating facilities and, accordingly, we may not have full recourse to assets of that entity. Operators, tenants or borrowers may contest enforcement of foreclosure or other remedies, seek bankruptcy protection against our exercise of enforcement or other remedies and/or bring claims for lender liability in response to actions to enforce mortgage obligations. Foreclosure-related costs, high loan-to-value ratios or declines in the value of the facility may prevent us from realizing an amount equal to our mortgage or mezzanine loan upon foreclosure, and we may be required to record valuation allowance for such losses. Even if we are able to successfully foreclose on the collateral securing our real estate-related loans, we may inherit properties for which we may be unable to expeditiously seek tenants or operators, if at all, which would adversely affect our ability to fully recover our investment.

Required regulatory approvals can delay or prohibit transfers of our healthcare facilities.

Transfers of healthcare facilities to successor tenants or operators may be subject to regulatory approvals or ratifications, including, but not limited to, change of ownership approvals under certificate of need laws and Medicare and Medicaid provider arrangements that are not required for transfers of other types of commercial operations and other types of real estate. The replacement of any tenant or operator could be delayed by the regulatory approval process of any federal, state or local government agency necessary for the transfer of the facility or the replacement of the operator licensed to manage the facility. If we are unable to find a suitable replacement tenant or operator upon favorable terms, or at all, we may take possession of a facility, which might expose us to successor liability or require us to indemnify subsequent operators to whom we might transfer the operating rights and licenses, all of which may materially adversely affect our business, results of operations, and financial condition.

Competition may make it difficult to identify and purchase, or develop, suitable healthcare facilities, to grow our investment portfolio.

We face significant competition from other REITs, investment companies, private equity and hedge fund investors, sovereign funds, healthcare operators, lenders, developers and other institutional investors, some of whom may have greater resources and lower costs of capital than we do. Increased competition makes it more challenging for us to identify and successfully capitalize on opportunities that meet our business goals and could improve the bargaining power of property owners seeking to sell, thereby impeding our investment, acquisition and development activities. If we cannot capitalize on our development pipeline, identify and purchase a sufficient quantity of healthcare facilities at favorable prices or if we are unable to finance acquisitions on commercially favorable terms, our business, results of operations and financial condition may be materially adversely affected.

We may be required to incur substantial renovation costs to make certain of our healthcare properties suitable for other operators and tenants.

Healthcare facilities are typically highly customized and may not be easily adapted to non-healthcare-related uses. The improvements generally required to conform a property to healthcare use, such as upgrading electrical, gas and plumbing infrastructure, are costly and at times tenant-specific. A new or replacement operator or tenant may require different features in a property, depending on that operator's or tenant's particular operations. If a current operator or tenant is unable to pay rent and vacates a property, we may incur substantial expenditures to modify a property before we are able to secure another operator or tenant. Also, if the property needs to be renovated to accommodate multiple operators or tenants, we may incur substantial expenditures before we are able to re-lease the space. These expenditures or renovations may materially adversely affect our business, results of operations and financial condition.

We face additional risks associated with property development that can render a project less profitable or not profitable at all and, under certain circumstances, prevent completion of development activities once undertaken.

Large-scale, ground-up development of healthcare properties presents additional risks for us, including risks that:

These risks could result in substantial unanticipated delays or expenses and, under certain circumstances, could prevent completion of development activities once undertaken, any of which could have a material adverse effect on our business, results of operations and financial condition.

Our use of joint ventures may limit our flexibility with jointly owned investments.

We have and may continue in the future to develop and/or acquire properties in joint ventures with other persons or entities when circumstances warrant the use of these structures. Our participation in joint ventures is subject to risks that may not be present with other methods of ownership, including:

From time to time, we acquire other companies and if we are unable to successfully integrate these operations, our business, results of operations and financial condition may be materially adversely affected.

Acquisitions require the integration of companies that have previously operated independently. Successful integration of the operations of these companies depends primarily on our ability to consolidate operations, systems, procedures, properties and personnel and to eliminate redundancies and costs. We may encounter difficulties in these integrations. Potential difficulties associated with

acquisitions include the loss of key employees, the disruption of our ongoing business or that of the acquired entity, possible inconsistencies in standards, controls, procedures and policies and the assumption of unexpected liabilities, including:

In addition, the acquired companies and their properties may fail to perform as expected, including in respect of estimated cost savings. Inaccurate assumptions regarding future rental or occupancy rates could result in overly optimistic estimates of future revenues. Similarly, we may underestimate future operating expenses or the costs necessary to bring properties up to standards established for their intended use. If we have difficulties with any of these areas, or if we later discover additional liabilities or experience unforeseen costs relating to our acquired companies, we might not achieve the economic benefits we expect from our acquisitions, and this may materially adversely affect our business, results of operations and financial condition.

From time to time we have made, and in the future we may seek to make, one or more material acquisitions, which may involve the expenditure of significant funds.

We regularly review potential transactions in order to maximize shareholder value and believe that currently there are available a number of acquisition opportunities that would be complementary to our business, given the recent industry consolidation trend. In connection with our review of such transactions, we regularly engage in discussions with potential acquisition candidates, some of which are material. Any future acquisitions could require the issuance of securities, the incurrence of debt, assumption of contingent liabilities or incurrence of significant expenditures, any of which could materially adversely impact our business, financial condition or results of operations. In addition, the financing required for such acquisitions may not be available on commercially favorable terms or at all.

Loss of our key personnel could temporarily disrupt our operations and adversely affect us.

We are dependent on the efforts of our executive officers, and competition for these individuals is intense. Although our chief executive officer, chief financial officer, chief investment officer and general counsel have employment agreements with us, we cannot assure you that they will remain employed with us. The loss or limited availability of the services of any of our executive officers, or our inability to recruit and retain qualified personnel in the future, could, at least temporarily, have a material adverse effect on our business, results of operations and financial condition and be negatively perceived in the capital markets.

Unfavorable resolution of litigation matters and disputes, could have a material adverse effect on our financial condition.

From time to time, we are involved in legal proceedings, lawsuits and other claims. We may also be named as defendants in lawsuits allegedly arising out of our actions or the actions of our operators and tenants in which such operators and tenants have agreed to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with their respective businesses. An unfavorable resolution of litigation may have a material adverse effect on our

business, results of operations and financial condition. Regardless of its outcome, litigation may result in substantial costs and expenses and significantly divert the attention of management. There can be no assurance that we will be able to prevail in, or achieve a favorable settlement of, litigation. In addition, litigation, government proceedings or environmental matters could lead to increased costs or interruption of our normal business operations.

We may experience uninsured or underinsured losses, which could result in a significant loss of the capital we have invested in a property, decrease anticipated future revenues or cause us to incur unanticipated expense.

We maintain comprehensive insurance coverage on our properties with terms, conditions, limits and deductibles that we believe are adequate and appropriate given the relative risk and costs of such coverage, and we continually review the insurance maintained by us. However, a large number of our properties are located in areas exposed to earthquake, windstorm, flood and other natural disasters and may be subject to other losses. In particular, our life science portfolio is concentrated in areas known to be subject to earthquake activity. While we purchase insurance for earthquake, windstorm, flood and other natural disasters that we believe is adequate in light of current industry practice and analysis prepared by outside consultants, there is no assurance that such insurance will fully cover such losses. These losses can decrease our anticipated revenues from a property and result in the loss of all or a portion of the capital we have invested in a property. The insurance market for such exposures can be very volatile and we may be unable to purchase the limits and terms we desire on a commercially reasonable basis in the future. In addition, there are certain exposures where insurance is not purchased as we do not believe it is economically feasible to do so or where there is no viable insurance market.

Environmental compliance costs and liabilities associated with our real estate related investments may materially impair the value of those investments.

Under various federal, state and local laws, ordinances and regulations, as a current or previous owner of real estate, we may be required to investigate and clean up certain hazardous or toxic substances or petroleum released at a property, and may be held liable to a governmental entity or to third parties for property damage and for investigation and cleanup costs incurred by the third parties in connection with the contamination. In addition, some environmental laws create a lien on the contaminated site in favor of the government for damages and the costs it incurs in connection with the contamination. Although we (i) currently carry environmental insurance on our properties in an amount and subject to deductibles that we believe are commercially reasonable, and (ii) generally require our operators and tenants to undertake to indemnify us for environmental liabilities they cause, such liabilities could exceed the amount of our insurance, the financial ability of the tenant or operator to indemnify us or the value of the contaminated property. The presence of contamination or the failure to remediate contamination may materially adversely affect our ability to sell or lease the real estate or to borrow using the real estate as collateral. As the owner of a site, we may also be held liable under common law to third parties for damages and injuries resulting from environmental contamination emanating from the site. Although we are generally indemnified by the current operators or tenants of our properties for contamination caused by them, these indemnities may not adequately cover all environmental costs. We may also experience environmental liabilities arising from conditions not known to us.

The impact of the comprehensive healthcare regulation enacted in 2010 on us and operators and tenants cannot accurately be predicted.

Legislative proposals are introduced or proposed in Congress and in some state legislatures each year that would affect major changes in the healthcare system, either nationally or at the state level.

Notably, in March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, along with the Health Care and Education Reconciliation Act of 2010 (collectively, the "Affordable Care Act"). The passage of the Affordable Care Act has resulted in comprehensive reform legislation that is expected to expand healthcare coverage to millions of currently uninsured people beginning in 2014 and provide for significant changes to the U.S. healthcare system over the next ten years. To help fund this expansion, the Affordable Care Act outlines certain reductions in Medicare reimbursements for various healthcare providers, including long-term acute care hospitals and skilled nursing facilities, as well as certain other changes to Medicare payment methodologies. This comprehensive healthcare legislation provides for extensive future rulemaking by regulatory authorities, and also may be altered or amended. We cannot accurately predict whether any pending legislative proposals will be adopted or, if adopted, what effect, if any, these proposals would have on our operators and tenants and, thus, our business. Similarly, while we can anticipate that some of the rulemaking that will be promulgated by regulatory authorities will affect our operators and tenants and the manner in which they are reimbursed by the federal healthcare programs, we cannot accurately predict today the impact of those regulations on our operators and tenants and thus on our business.

The Supreme Court's decision upholding the constitutionality of the individual mandate while striking down the provisions linking federal funding of state Medicaid programs with a federally mandated expansion of those programs has not reduced the uncertain impact that the law will have on healthcare delivery systems over the next decade. We can expect that the federal authorities will continue to implement the law, but, because of the Court's mixed ruling, the implementation will take longer than originally expected, with a commensurate increase in the period of uncertainty regarding the law's full long term financial impact on the delivery of and payment for healthcare.

Loss of our tax status as a REIT would substantially reduce our available funds and would have material adverse consequences for us and the value of our common stock.

Qualification as a REIT involves the application of numerous highly technical and complex provisions of the Internal Revenue Code of 1986, as amended (the "Code"), for which there are only limited judicial and administrative interpretations, as well as the determination of various factual matters and circumstances not entirely within our control. We intend to continue to operate in a manner that enables us to qualify as a REIT. However, our qualification and taxation as a REIT depend upon our ability to meet, through actual annual operating results, asset diversification, distribution levels and diversity of stock ownership, the various qualification tests imposed under the Code. For example, to qualify as a REIT, at least 95% of our gross income in any year must be derived from qualifying sources, and we must make distributions to our stockholders aggregating annually at least 90% of our REIT taxable income, excluding net capital gains. In addition, new legislation, regulations, administrative interpretations or court decisions could change the tax laws or interpretations of the tax laws regarding qualification as a REIT, or the federal income tax consequences of that qualification, in a manner that is materially adverse to our stockholders. Accordingly, there is no assurance that we have operated or will continue to operate in a manner so as to qualify or remain qualified as a REIT.

If we lose our REIT status, we will face serious tax consequences that will substantially reduce the funds available to make payments of principal and interest on the debt securities we issue and to make distributions to stockholders. If we fail to qualify as a REIT:

As a result of all these factors, our failure to qualify as a REIT also could impair our ability to expand our business and raise capital and could materially adversely affect the value of our common stock.

We could have potential deferred and contingent tax liabilities from corporate acquisitions that could limit, delay or impede future sales of our properties.

If, during the ten-year period beginning on the date we acquire certain companies, we recognize gain on the disposition of any property acquired, then, to the extent of the excess of (i) the fair market value of such property as of the acquisition date over (ii) our adjusted income tax basis in such property as of that date, we will be required to pay a corporate-level federal income tax on this gain at the highest regular corporate rate. There can be no assurance that these triggering dispositions will not occur, and these requirements could limit, delay or impede future sales of our properties.

In addition, the IRS may assert liabilities against us for corporate income taxes for taxable years prior to the time that we acquire certain companies, in which case we will owe these taxes plus interest and penalties, if any.

There are uncertainties relating to the calculation of non-REIT tax earnings and profits ("E&P") in certain acquisitions, which may require us to distribute E&P.

In order to remain qualified as a REIT, we are required to distribute to our stockholders all of the accumulated non-REIT E&P of certain companies that we acquire, prior to the close of the first taxable year in which the acquisition occurs. Failure to make such E&P distributions would result in our disqualification as a REIT. The determination of the amount to be distributed in such E&P distributions is a complex factual and legal determination. We may have less than complete information at the time we undertake our analysis, or we may interpret the applicable law differently from the IRS. We currently believe that we have satisfied the requirements relating to such E&P distributions. There are, however, substantial uncertainties relating to the determination of E&P, including the possibility that the IRS could successfully assert that the taxable income of the companies acquired should be increased, which would increase our non-REIT E&P. Moreover, an audit of the acquired company following our acquisition could result in an increase in accumulated non-REIT E&P, which could require us to pay an additional taxable distribution to our then-existing stockholders, if we qualify under rules for curing this type of default, or could result in our disqualification as a REIT.

Thus, we might fail to satisfy the requirement that we distribute all of our non-REIT E&P by the close of the first taxable year in which the acquisition occurs. Moreover, although there are procedures available to cure a failure to distribute all of our E&P, we cannot now determine whether we will be able to take advantage of these procedures or the economic impact on us of doing so.

Our charter contains ownership limits with respect to our common stock and other classes of capital stock.

Our charter contains restrictions on the ownership and transfer of our common stock and preferred stock that are intended to assist us in preserving our qualification as a REIT. Under our charter, subject to certain exceptions, no person or entity may own, actually or constructively, more than 9.8% (by value or by number of shares, whichever is more restrictive) of the outstanding shares of our common stock or any class or series of our preferred stock.

Additionally, our charter has a 9.9% ownership limitation on the direct or indirect ownership of our voting shares, which may include common stock or other classes of capital stock. Our Board of Directors, in its sole discretion, may exempt a proposed transferee from either ownership limit. The ownership limits may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or might otherwise be in the best interests of our stockholders.

We are subject to certain provisions of Maryland law and our charter relating to business combinations.

The Maryland Business Combination Act provides that unless exempted, a Maryland corporation may not engage in business combinations, including a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities with an "interested stockholder" or an affiliate of an interested stockholder for five years after the most recent date on which the interested stockholder became an interested stockholder, and thereafter unless specified criteria are met. An interested stockholder is generally a person owning or controlling, directly or indirectly, 10% or more of the voting power of the outstanding voting stock of a Maryland corporation. Unless our Board of Directors takes action to exempt us, generally or with respect to certain transactions, from this statute in the future, the Maryland Business Combination Act will be applicable to business combinations between us and other persons.

In addition to the restrictions on business combinations contained in the Maryland Business Combination Act, our charter also contains restrictions on business combinations. Our charter requires that, except in certain circumstances, "business combinations," including a merger or consolidation, and certain asset transfers and issuances of securities, with a "related person," including a beneficial owner of 10% or more of our outstanding voting stock, be approved by the affirmative vote of the holders of at least 90% of our outstanding voting stock.

The restrictions on business combinations provided under Maryland law and contained in our charter may delay, defer or prevent a change of control or other transaction even if such transaction involves a premium price for our common stock or our stockholders believe that such transaction is otherwise in their best interests.

We are organized to invest in income-producing healthcare-related facilities. In evaluating potential investments, we consider a multitude of factors, including:

The following summarizes our property and direct financing lease ("DFL") investments as of and for the year ended December 31, 2012 (square feet and dollars in thousands).

Facility Location			Gross Asset Value⁽²⁾		Rental Revenues⁽³⁾		Operating Expenses

Senior housing—real estate:		(Units)
Texas	40	6,380	$	776,522	$	84,795	$	22,197
California	36	4,026		694,429		72,675		10,333
Florida	34	4,676		640,196		89,339		30,747
Oregon	27	2,180		322,705		4,695		44
Illinois	14	1,768		316,304		44,849		17,130
Virginia	11	1,403		285,046		20,868		58
Washington	20	1,433		235,802		11,159		1
Colorado	7	1,070		211,732		17,584		—
New Jersey	8	803		176,773		12,818		32
Georgia	19	1,107		160,997		4,162		90
Other (31 States)	132	12,738		1,882,362		142,919		13,778

	348	37,584		5,702,868		505,863		94,410
Senior housing—DFLs⁽⁴⁾:
Maryland	13	1,113		248,606		20,527		—
New Jersey	8	679		186,896		15,214		104
Illinois	10	944		173,889		14,751		—
Florida	14	1,203		157,434		13,072		63
Pennsylvania	10	805		142,846		12,119		—
Ohio	11	980		138,588		11,349		30
Other (12 States)	27	2,361		409,493		33,186		55

	93	8,085		1,457,752		120,218		252

Total senior housing	441	45,669	$	7,160,620	$	626,081	$	94,662

Facility Location			Gross Asset Value⁽²⁾		Rental Revenues⁽³⁾		Operating Expenses

Post-acute/skilled nursing—real estate:		(Beds)
Virginia	9	934	$	58,376	$	6,853	$	—
Indiana	8	892		46,972		7,903		—
Ohio	8	1,047		43,023		7,727		20
Nevada	2	267		13,837		2,778		—
Colorado	2	240		13,800		1,673		—
Other (10 States)	15	1,727		54,409		10,453		(97	)

	44	5,107		230,417		37,387		(77	)
Post-acute/skilled nursing—DFLs⁽⁴⁾:
Pennsylvania	43	6,981		1,206,920		114,510		—
Illinois	26	3,472		700,148		64,133		—
Ohio	44	5,237		638,718		59,666		133
Michigan	27	3,345		577,342		52,093		—
Florida	27	3,557		543,556		50,503		10
Other (24 States)	101	13,839		1,756,957		160,950		320

	268	36,431		5,423,641		501,855		463

Total post-acute/skilled nursing	312	41,538	$	5,654,058	$	539,242	$	386

Life science:		(Sq. Ft.)
California	98	6,256	$	3,031,260	$	273,704	$	51,115
Utah	10	669		114,480		15,479		2,008
North Carolina	1	77		6,023		481		50

Total life science	109	7,002	$	3,151,763	$	289,664	$	53,173

Medical office:		(Sq. Ft.)
Texas	47	4,265	$	666,522	$	98,018	$	44,420
Utah	28	1,292		191,608		21,437		5,997
California	14	788		191,240		26,473		13,330
Colorado	16	1,080		186,376		26,860		10,728
Tennessee	17	1,486		158,156		27,342		10,752
Washington	6	651		154,137		29,110		10,550
Other (21 States and Mexico)	79	4,712		817,991		105,571		36,487

Total medical office	207	14,274	$	2,366,030	$	334,811	$	132,264

Hospital:		(Beds)
Texas	4	959	$	213,506	$	29,806	$	3,511
California	2	185		123,556		16,683		6
Georgia	2	274		77,948		11,644		5
North Carolina	1	355		72,500		7,815		16
Florida	1	199		62,450		7,790		—
Other (6 States)	7	438		81,895		10,755		(25	)

Total hospital	17	2,410	$	631,855	$	84,493	$	3,513

Total properties	1,086		$	18,964,326	$	1,874,291	$	283,998

The following table summarizes occupancy and average annual rent trends for our owned portfolio for the years ended December 31, (square feet in thousands):

	2012			2011			2010			2009			2008

Senior housing⁽¹⁾:
Average annual rent per unit⁽²⁾	$	13,059		$	12,887		$	12,656		$	11,918		$	12,530
Average capacity (units)⁽³⁾		37,089			33,911			24,453			24,209			24,143
Post-acute/skilled nursing⁽¹⁾:
Average annual rent per bed⁽²⁾	$	11,624		$	11,140		$	6,885		$	6,817		$	6,537
Average capacity (beds)⁽³⁾		39,856			30,565			5,063			5,041			5,043
Life science:
Average occupancy percentage		90	%		90	%		89	%		91	%		87	%
Average annual rent per square foot⁽²⁾	$	45		$	44		$	44		$	43		$	37
Average occupied square feet⁽³⁾		6,250			6,076			5,740			5,554			5,362
Medical office:
Average occupancy percentage		91	%		91	%		91	%		91	%		90	%
Average annual rent per square foot⁽²⁾	$	27		$	26		$	26		$	26		$	25
Average occupied square feet⁽³⁾		12,295			11,865			11,583			11,577			11,719
Hospital⁽¹⁾:
Average annual rent per bed⁽²⁾	$	34,236		$	33,499		$	32,710		$	29,825		$	33,357
Average capacity (beds)⁽³⁾		2,410			2,410			2,399			2,376			2,392

The following table sets forth the properties owned by us in our life science, medical office and hospital segments as of December 31, 2012 that are currently under development or redevelopment (dollars in thousands):

Name of Project	Location		Total Investment To Date⁽²⁾		Estimated Total Investment

Life science:
2019 Stierlin Ct	Mountain View, CA	1Q 2013	$	17,860	$	21,298
Durham Research Lab	Durham, NC	3Q 2013		13,068		25,851
Carmichael⁽³⁾	Durham, NC	3Q 2013		3,737		16,397
1030 Massachusetts Avenue	Cambridge, MA	2Q 2014		35,833		39,992
Ridgeview	Poway, CA	2Q 2014		11,430		22,937
Medical office:
Westpark Plaza⁽⁴⁾	Plano, TX	2Q 2013		10,537		13,585
Innovation Drive	San Diego, CA	4Q 2013		29,327		33,689
Alaska⁽⁴⁾	Anchorage, AK	4Q 2013		8,553		11,763
Folsom	Sacramento, CA	2Q 2014		33,360		39,251
Hospital:
Fresno⁽⁵⁾	Fresno, CA	1Q 2013		14,708		21,324

			$	178,413	$	246,087

The following table shows tenant lease expirations, including those related to direct financing leases ("DFLs"), for the next 10 years and thereafter at our leased properties, assuming that none of the tenants exercise any of their renewal options, see "Tenant Purchase Options" section of Note 12 to the Consolidated Financial Statements for additional information on leases subject to purchase options (dollars in thousands):

			Expiration Year

Segment	Total		2013⁽¹⁾		2014		2015		2016		2017		2018		2019		2020		2021		2022		Thereafter
Senior housing⁽²⁾:
Properties		420		—		5		1		15		11		47		10		35		16		3		277
Base rent⁽³⁾	$	525,368	$	—	$	5,091	$	209	$	23,003	$	19,106	$	89,796	$	14,486	$	55,314	$	17,724	$	2,938	$	297,701
% of segment base rent		100		—		1		—		4		4		17		3		10		3		1		57
Post-acute/skilled:
Properties		312		—		9		1		1		9		2		12		5		—		4		269
Base rent⁽³⁾	$	466,770	$	—	$	7,197	$	450	$	320	$	8,607	$	1,111	$	10,403	$	5,352	$	—	$	3,086	$	430,244
% of segment base rent		100		—		2		—		—		2		—		2		1		—		1		92
Life science:
Square feet		6,392		410		355		691		259		819		601		121		936		557		280		1,363
Base rent⁽³⁾	$	232,608	$	10,174	$	10,696	$	23,452	$	6,812	$	27,494	$	25,768	$	4,147	$	42,291	$	31,619	$	8,391	$	41,764
% of segment base rent		100		4		5		10		3		12		11		2		18		13		4		18
Medical office:
Square feet		13,131		2,385		1,783		1,589		1,309		1,568		1,187		851		895		394		538		632
Base rent⁽³⁾	$	287,621	$	50,131	$	40,661	$	35,744	$	27,261	$	34,789	$	24,057	$	18,450	$	20,837	$	9,472	$	12,151	$	14,068
% of segment base rent		100		18		14		13		10		12		8		6		7		3		4		5
Hospital:
Properties		17		1		3		—		—		2		—		5		—		1		1		4
Base rent⁽³⁾	$	67,699	$	2,611	$	16,018	$	—	$	—	$	4,776	$	—	$	7,113	$	—	$	825	$	3,575	$	32,781
% of segment base rent		100		4		24		—		—		7		—		11		—		1		5		48
Total:
Base rent⁽³⁾	$	1,580,066	$	62,916	$	79,663	$	59,855	$	57,396	$	94,772	$	140,732	$	54,599	$	123,794	$	59,640	$	30,141	$	816,558
% of total base rent		100		4		5		4		4		6		9		3		8		4		2		51

The following is a graphical presentation of our total tenant lease expirations (as presented above) for the next 10 years and thereafter at our leased properties, assuming that none of the tenants exercise any of their renewal options (dollars in millions):

We specifically incorporate by reference into this section the information set forth in Schedule III: Real Estate and Accumulated Depreciation, included in this report.

We are involved from time-to-time in legal proceedings that arise in the ordinary course of our business, including, but not limited to commercial disputes, environmental matters, and litigation in connection with transactions including acquisitions and divestitures. We believe that such existing legal proceedings will not have a material adverse impact on our financial position or our results of operations. We record a liability when a loss is considered probable and the amount can be reasonably estimated.

See litigation matter under the heading "Legal Proceedings" of Note 12 to the Consolidated Financial Statements for information regarding legal proceedings, which information is incorporated by reference in this Item 3.

ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is listed on the New York Stock Exchange. Set forth below for the fiscal quarters indicated are the reported high and low sales prices per share of our common stock on the New York Stock Exchange.

At February 1, 2013, we had approximately 11,298 stockholders of record and there were approximately 188,236 beneficial holders of our common stock.

It has been our policy to declare quarterly dividends to the common stockholders so as to comply with applicable provisions of the Code governing REITs. The cash dividends per share paid on common stock are set forth below:

On January 25, 2013, we announced that our Board of Directors declared a quarterly common stock cash dividend of $0.525 per share. The common stock dividend will be paid on February 19, 2013 to stockholders of record as of the close of business on February 4, 2013.

On December 11, 2012, we issued 194,374 shares of our common stock upon the redemption of 194,374 non-managing member units of our subsidiary, HCP DR Alabama, LLC ("HCP Alabama"), to a non-managing member of HCP Alabama. On December 18, 2012, we issued 540 shares of our common stock upon the redemption of 270 non-managing member units of our subsidiary, HCPI/Utah II, LLC ("Utah II"), to four transferees of a non-managing member of Utah II. In each case, the shares of our common stock were issued in a private placement to an accredited investor pursuant to Section 4(2) of the Securities Act of 1933, as amended. We did not receive any cash proceeds from the issuance of shares of our common stock upon redemption of the non-managing member units of HCP Alabama or Utah II, although we did acquire non-managing member units of each subsidiary in exchange for the shares of common stock we issued upon redemption of the units.

The table below sets forth the information with respect to purchases of our common stock made by or on our behalf during the quarter ended December 31, 2012.

The graph below compares the cumulative total return of HCP, the S&P 500 Index and the Equity REIT Index of the National Association of Real Estate Investment Trusts, Inc. ("NAREIT"), from January 1, 2008 to December 31, 2012. Total return assumes quarterly reinvestment of dividends before consideration of income taxes.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN

AMONG S&P 500, EQUITY REITS AND HCP, Inc.

RATE OF RETURN TREND COMPARISON

JANUARY 1, 2008–DECEMBER 31, 2012

(JANUARY 1, 2008 = 100)

Stock Price Performance Graph Total Return

Assumes $100 invested January 1, 2008 in HCP, S&P 500 Index and NAREIT Equity REIT Index.

Set forth below is our selected financial data as of and for each of the years in the five year period ended December 31, 2012.

	Year Ended December 31,⁽¹⁾⁽²⁾

	2012		2011⁽³⁾		2010		2009⁽³⁾		2008
	(Dollars in thousands, except per share data)
Income statement data:
Total revenues	$	1,900,722	$	1,712,096	$	1,240,206	$	1,133,618	$	1,123,977
Income from continuing operations		812,884		547,338		315,346		97,732		223,019
Net income applicable to common shares		812,289		515,302		307,498		109,069		425,368
Income from continuing operations applicable to common shares:
Basic earnings per common share		1.83		1.28		0.91		0.22		0.75
Diluted earnings per common share		1.83		1.28		0.91		0.22		0.75
Net income applicable to common shares:
Basic earnings per common share		1.90		1.29		1.01		0.40		1.79
Diluted earnings per common share		1.90		1.29		1.00		0.40		1.79
Balance sheet data:
Total assets		19,915,555		17,408,475		13,331,923		12,209,735		11,849,826
Debt obligations⁽⁴⁾		8,693,820		7,722,619		4,646,345		5,656,143		5,937,456
Total equity		10,753,777		9,220,622		8,146,047		5,958,609		5,407,840
Other data:
Dividends paid		865,306		787,689		590,735		517,072		457,643
Dividends paid per common share		2.00		1.92		1.86		1.84		1.82

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Statements in this Annual Report on Form 10-K 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 expectations as identified by the use of words such as "may," "will," "project," "expect," "believe," "intend," "anticipate," "seek," "forecast," "plan," "estimate," "could," "would," "should" and other comparable and derivative terms or the negatives thereof. In addition, we, through our officers, from time to time, make forward-looking oral and written public statements concerning our expected future operations, strategies, securities offerings, growth and investment opportunities, dispositions, capital structure changes, budgets and other developments. Readers are cautioned that, 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. Therefore, readers should be mindful that forward-looking statements are not guarantees of future performance and that they are subject to known and unknown risks and uncertainties that are difficult to predict. As more fully set forth in Part I, Item 1A., "Risk Factors" in this report, factors that may cause our actual results to differ materially from the expectations contained in the forward-looking statements include:

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 7 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:

We are a self-administered REIT that, together with our unconsolidated joint ventures, invests primarily in real estate serving the healthcare industry in the U.S. We acquire, develop, lease, manage and dispose of healthcare real estate and provide financing to healthcare providers. At December 31, 2012, our portfolio of investments, including properties owned by our Investment Management Platform, consisted of interests in 1,160 facilities.

Our business strategy is based on three principles: (i) opportunistic investing, (ii) portfolio diversification, and (iii) conservative financing. We actively redeploy capital from investments with lower return potential or shorter investment horizons into assets representing longer term investments with attractive risk adjusted return potential. We make investments where the expected risk-adjusted

return exceeds our cost of capital and strive to capitalize on our operator, tenant and other business relationships to grow our business.

Our strategy contemplates acquiring and developing properties on terms that are favorable to us. Generally, we prefer larger, more complex private transactions that leverage our management team's experience and our infrastructure. We follow a disciplined approach to enhancing the value of our existing portfolio, including ongoing evaluation of potential disposition of properties that no longer fit our strategy.

We primarily generate revenue by leasing healthcare properties under long-term leases with fixed and/or inflation indexed escalators. Most of our rents and other earned income from leases are received under triple-net leases or leases that provide for substantial recovery of operating expenses; however, some of our medical office and life science leases are structured as gross or modified gross leases. Operating expenses are generally related to MOB and life science leased properties and senior housing properties managed on our behalf ("RIDEA properties"). Accordingly, for such MOBs, life science facilities and RIDEA properties, we incur certain property operating expenses, such as real estate taxes, repairs and maintenance, property management fees, utilities, employee costs for resident care and insurance. Our growth for these assets depends, in part, on our ability to (i) increase rental income and other earned income from leases by increasing rental rates and occupancy levels; (ii) maximize tenant recoveries given underlying lease structures; and (iii) control operating and other expenses. Our operations are impacted by property specific, market specific, general economic and other conditions. At December 31, 2012, the contractual maturities in our portfolio of leased assets were 13% through 2015 (measured in dollars of expiring base rents).

Access to capital markets impacts our cost of capital and ability to refinance maturing indebtedness, as well as to fund future acquisitions and development through the issuance of additional securities or secured debt. Access to external capital on favorable terms is critical to the success of our strategy.

During the year ended December 31, 2012, we completed $2.6 billion of investments as follows:

During the fourth quarter of 2012, we acquired 129 senior housing communities for $1.7 billion, from a joint venture between Emeritus and the Blackstone JV. Located in 29 states, the portfolio encompasses 10,077 units representing a diversified care mix of 61% assisted living, 25% independent living, 13% memory care and 1% skilled nursing. Based on current operating performance, the 129 communities consist of 95 that are stabilized and 34 that are currently in lease—up. The transaction closed in two stages: (i) 127 senior housing facilities on October 31, 2012 for $1.68 billion representing 9,842 units; and (ii) two senior housing facilities on December 4, 2012 for $24 million representing 235 units.

Emeritus continues to operate the communities pursuant to a new triple-net, master lease for the 129 properties (the "Master Lease") guaranteed by Emeritus. The Master Lease provides aggregate contractual rent in the first year of $103.6 million. The contractual rent will increase annually by the greater of the percentage increase in the Consumer Price Index ("CPI") or 3.7% on average over the initial five years, and thereafter by the greater of CPI or 3.0% for the remaining initial lease term. At the beginning of the sixth lease year, rent on the 34 lease-up properties will increase to the greater of the percentage increase in CPI or fair market, subject to a floor of 103% and a cap of 130% of the prior year's rent.

The leased properties are grouped into three pools that share comparable characteristics and these leased pools have initial terms of 14 to 16 years. Emeritus has two extension options, which, if exercised, will provide for lease terms of 30 to 35 years. We are still evaluating the acquisition of up to four additional communities related to this transaction.

Concurrent with the acquisition, Emeritus purchased nine communities from the Blackstone JV, for which we have provided secured debt financing of $52 million with a four-year term. The loan is secured by the underlying real estate and is prepayable at Emeritus' option. The interest rate on the loan mirrors the 6.1% lease yield, including the annual increases through maturity.

On August 7, 2012, we completed the acquisition of eight on-campus MOBs for $80 million from Scottsdale Healthcare. Located in Scottsdale, Arizona, the portfolio represents 398,000 square feet with an occupancy of 89% at closing.

Between July and October 2012, we acquired 12 MOBs from The Boyer Company valued at $188 million, including DownREIT units and debt valued at $43 million and $60 million, respectively; the MOBs are primarily located on the campuses of HCA, Iasis Healthcare and Community Health Systems and comprise 758,000 square feet with an occupancy of 88% at closing. The transaction closed in three stages: (i) six MOBs on July 31, 2012 for $77 million representing 327,000 square feet; (ii) four MOBs on August 15, 2012 for $49 million representing 199,000 square feet and; (iii) two MOBs on October 19, 2012 for $62 million representing 232,000 square feet.

On July 31, 2012, we closed a mezzanine loan facility to lend up to $205 million to Tandem Health Care ("Tandem"), an affiliate of Formation Capital, as part of the recapitalization of a post-acute/skilled nursing portfolio. We funded $100 million (the "First Tranche") at closing and have a commitment to fund an additional $105 million (the "Second Tranche") between February 2013 and August 2013. The Second Tranche will be used to repay debt senior to our loan. At closing, the loan was subordinate to $400 million in senior mortgage debt and $137 million in senior mezzanine debt. The loan bears interest at a fixed rate of 12% and 14% per annum for the First and Second Tranches, respectively. Including fees received at closing, the loan has a blended yield to maturity of approximately 13% assuming both tranches are funded. The facility has a total term of up to 63 months from the initial closing and is prepayable at the borrower's option.

On June 28, 2012, we made an investment in senior unsecured notes with an aggregate par value of £138.5 million at a discount for £136.8 million, as part of the financing for Terra Firma's £825 million acquisition of Four Seasons Health Care ("Four Seasons"), the largest elderly and specialist care provider in the United Kingdom with 445 care homes and 61 specialist care centers. The notes mature in June 2020 and are non-callable until June 2016. The notes bear interest on their par value at a fixed rate of 12.25% per annum, with an original discount resulting in a yield to maturity of 12.5%. Terra Firma, a leading European private equity firm, provided £345 million in equity financing, resulting in a loan-to-capitalization of 62% for the Four Seasons notes. The £136.8 million for this investment is match funded by an equivalent GBP denominated unsecured term loan discussed below.

During the year ended December 31, 2012, we made other investments of $270 million as follows: (i) acquisition of a MOB for $13 million; (ii) acquisition of a life science facility for $8 million; (iii) acquisition of a senior housing facility for $4 million; (iv) acquisition of a parcel of land adjacent to one of our hospitals for $3 million; and (v) funding of development and other capital projects of $242 million, primarily in our life science, senior housing and medical office segments.

During the year ended December 31, 2012, we sold two senior housing facilities for $111 million, a parcel of land in our life science segment for $18 million, a skilled nursing facility for $15 million and a MOB for $7 million.

During the year ended December 31, 2012, we expanded our tenant relationship with General Atomics in Poway, CA to a total of 396,000 square feet, consisting of the following: (i) a lease extension of 281,000 square feet through June 2024, and (ii) a new 10-year lease (expected to commence mid-2014) for a 115,000 square feet build-to-suit development. As part of this transaction, General Atomics purchased a 19-acre land parcel from us for $18 million; in connection with the agreement to sell the land parcel, we incurred a $7.9 million impairment charge.

During the year ended December 31, 2012, we raised $3.5 billion of capital in the equity and credit markets as follows:

In connection with funding the $1.7 billion Senior Housing Portfolio acquisition, we completed the following capital market transactions:

On July 30, 2012, in connection with our Four Seasons senior unsecured notes investment, we entered into a credit agreement with a syndicate of banks for a £137 million four-year unsecured term loan (the "Term Loan") that accrues interest at a rate of GBP London Interbank Offered Rate ("LIBOR") plus 1.20%, based on our current debt ratings. Concurrent with the closing of the Term Loan, we entered into a four-year interest rate swap agreement that fixes the rate of the Term Loan at 1.81%, subject to adjustments based on our credit ratings. The Term Loan contains a one-year committed extension option and similar covenants to those in our unsecured revolving line of credit facility.

On July 23, 2012, we issued $300 million of 3.15% senior unsecured notes due in 2022. The notes were priced at 98.888% of the principal amount with an effective yield to maturity of 3.28%. Net proceeds from this offering were $294 million.

In June 2012, we completed a $376 million offering of 8.97 million shares of common stock at $41.88 per share with the proceeds used primarily to repay $250 million of 6.45% senior unsecured notes at maturity on June 25, 2012.

On March 27, 2012, we completed an amendment to our existing $1.5 billion unsecured revolving line of credit facility. We improved the pricing and extended the maturity of the facility one additional year to March 2016. Based on our current credit ratings, the amended facility bears interest annually at one-month LIBOR plus 1.075% and has a facility fee of 0.175%, which in the aggregate represents a 55 basis point reduction to our funded interest cost.

On March 22, 2012, we announced the redemption of the 4.0 million shares of 7.25% Series E and 7.82 million shares of 7.10% Series F preferred stock at a price of $25.00 per share, or $295.5 million in aggregate, plus all accrued and unpaid dividends to April 23, 2012 (the redemption date). As a result of the redemption, we incurred a charge of $10.4 million related to the original issuance costs of the

preferred stock (this charge is presented as an additional preferred stock dividend in our consolidated statements of income).

On March 22, 2012, we priced a $359 million offering of 9.0 million shares of common stock at $39.93 per share with the proceeds used primarily to redeem all outstanding shares of our preferred stock.

On January 23, 2012, we issued $450 million of 3.75% senior unsecured notes due in 2019; net proceeds from the offering were $444 million.

Quarterly dividends paid during 2012 aggregated $2.00 per share, which represents a 4.2% increase from 2011. On January 25, 2013, we announced that our Board of Directors declared a quarterly common stock cash dividend of $0.525 per share, which represents a 5% increase. The common stock dividend will be paid on February 19, 2013 to stockholders of record as of the close of business on February 4, 2013. Based on the first quarter's dividend, the annualized rate of distribution for 2013 is $2.10, compared with $2.00 in 2012.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires our 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. For a more detailed discussion of our significant accounting policies, see Note 2 to the Consolidated Financial Statements. Below is a discussion of accounting policies that we consider critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain.

The consolidated financial statements include the accounts of HCP, Inc., our wholly owned subsidiaries and joint ventures that we control, through voting rights or other means. We consolidate investments in variable interest entities ("VIEs") when we are the primary beneficiary of the VIE at: (i) the inception of the variable interest entity, (ii) as a result of a change in circumstance identified during our continuous review of our VIE relationships or (iii) upon the occurrence of a qualifying reconsideration event.

We make judgments with respect to our level of influence or control of an entity and whether we are (or are not) the primary beneficiary of a VIE. Consideration of various factors includes, but is not limited to, our ability to direct the activities that most significantly impact the entity's economic performance, our form of ownership interest, our representation on the entity's governing body, the size and seniority of our investment, our ability and the rights of other investors to participate in policy making decisions, replace the manager and/or liquidate the entity, if applicable. Our ability to correctly assess our influence or control over an entity when determining the primary beneficiary of a VIE

affects the presentation of these entities in our consolidated financial statements. If we perform a primary beneficiary analysis at a date other than at inception of the variable interest entity, our assumptions may be different and may result in the identification of a different primary beneficiary.

If we determine that we are the primary beneficiary of a VIE, our consolidated financial statements would include the operating results of the VIE (either tenant or borrower) rather than the results of the variable interest in the VIE. We would depend on the VIE to provide us timely financial information and rely on the internal control of the VIE to provide accurate financial information. If the VIE has deficiencies in its internal control over financial reporting, or does not provide us with timely financial information, this may adversely impact the quality and/or timing of our financial reporting and our internal control over financial reporting.

We recognize rental revenue on a straight-line basis over the lease term when collectibility is reasonably assured and the tenant has taken possession or controls the physical use of the leased asset. For assets acquired subject to leases, we recognize revenue upon acquisition of the asset provided the tenant has taken possession or controls the physical use of the leased asset. If the lease provides for tenant improvements, we determine whether the tenant improvements, for accounting purposes, are owned by the tenant or us. When we are the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. The determination of ownership of the tenant improvements is subject to significant judgment. If our assessment of the owner of the tenant improvements for accounting purposes were to change, the timing and amount of our revenue recognized would be impacted.

Certain leases provide for additional rents contingent upon a percentage of the facility's revenue in excess of specified base amounts or other thresholds. Such revenue is recognized when actual results reported by the tenant, or estimates of tenant results, exceed the base amount or other thresholds. The recognition of additional rents requires us to make estimates of amounts owed and to a certain extent are dependent on the accuracy of the facility results reported to us. Our estimates may differ from actual results, which could be material to our consolidated financial statements.

We maintain an allowance for doubtful accounts, including an allowance for straight-line rent receivables, for estimated losses resulting from tenant defaults or the inability of tenants to make contractual rent and tenant recovery payments. We monitor the liquidity and creditworthiness of our tenants and operators on an ongoing basis. This evaluation considers industry and economic conditions, property performance, credit enhancements and other factors. For straight-line rent amounts, our assessment is based on income recoverable over the term of the lease. We exercise judgment in establishing allowances and consider payment history and current credit status in developing these estimates. These estimates may differ from actual results, which could be material to our consolidated financial statements.

Loans receivable are classified as held-for-investment based on management's intent and ability to hold the loans for the foreseeable future or to maturity. We recognize interest income on loans, including the amortization of discounts and premiums, using the interest method applied on a loan-by-loan basis when collectibility of the future payments is reasonably assured. Premiums, discounts and related costs are recognized as yield adjustments over the life of the related loans.

We use the direct finance method of accounting to record income from DFLs. For leases accounted for as DFLs, future minimum lease payments are recorded as a receivable. The difference between the future minimum lease payments and the estimated residual values less the cost of the

properties is recorded as unearned income. Unearned income is deferred and amortized to income over the lease terms to provide a constant yield when collectibility of the lease payments is reasonably assured. Investments in DFLs are presented net of unamortized unearned income. The determination of estimated useful lives and residual values are subject to significant judgment. If our assessments for accounting purposes were to change, the timing and amount of our revenue recognized would be impacted.

Loans and DFLs are placed on non-accrual status at such time as management determines that collectibility of contractual amounts is not reasonably assured. While on non-accrual status, loans or DFLs are either accounted for on a cash basis, in which income is recognized only upon receipt of cash, or on a cost-recovery basis, in which all cash receipts reduce the carrying value of the loan or DFL, based on management's judgment of collectibility.

Allowances are established for loans and DFLs based upon a probable loss estimate for individual loans and DFLs deemed to be impaired. Loans and DFLs are impaired when it is deemed probable that we will be unable to collect all amounts due on a timely basis in accordance with the contractual terms of the loan or lease. Determining the adequacy of the allowance is complex and requires significant judgment by us about the effect of matters that are inherently uncertain. The allowance is based upon our assessment of the borrower's or lessee's overall financial condition, resources and payment record; the prospects for support from any financially responsible guarantors; and, if appropriate, the realizable value of any collateral. These estimates consider all available evidence including, as appropriate, the present value of the expected future cash flows discounted at the loan's or DFL's effective interest rate, the fair value of collateral, general economic conditions and trends, historical and industry loss experience, and other relevant factors. While our assumptions are based in part upon historical data, our estimates may differ from actual results, which could be material to our consolidated financial statements.

We make estimates as part of our allocation of the purchase price of acquisitions to the various components of the acquisition based upon the relative fair value of each component. The most significant components of our allocations are typically the allocation of fair value to the buildings as-if-vacant, land and in-place leases. In the case of the fair value of buildings and the allocation of value to land and other intangibles, our estimates of the values of these components will affect the amount of depreciation and amortization we record over the estimated useful life of the property acquired or the remaining lease term. In the case of the value of in-place leases, we make our best estimates based on our evaluation of the specific characteristics of each tenant's lease. Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, market conditions and costs to execute similar leases. Our assumptions affect the amount of future revenue that we will recognize over the remaining lease term for the acquired in-place leases.

A variety of costs are incurred in the development and leasing of properties. After determination is made to capitalize a cost, it is allocated to the specific component of a project that is benefited. Determination of when a development project is substantially complete and capitalization must cease involves a degree of judgment. The costs of land and buildings under development include specifically identifiable costs. The capitalized costs include pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes and other costs incurred during the period of development. We consider a construction project as substantially completed and held available for occupancy and cease capitalization of costs upon the completion of the related tenant improvements.

We assess the carrying value of our real estate assets and related intangibles ("real estate assets"), whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of real estate assets is measured by comparison of the carrying amount of the asset or asset group to the respective estimated future undiscounted cash flows. In order to review our real estate assets for recoverability, we consider market conditions, as well as our intent with respect to holding or disposing of the asset. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third party appraisals, where considered necessary. If our analysis indicates that the carrying value of the real estate asset is not recoverable on an undiscounted cash flow basis, we recognize an impairment charge for the amount by which the carrying value exceeds the fair value of the real estate asset.

Goodwill is tested for impairment at least annually. If it is determined, based on certain qualitative factors, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we apply the two-step approach. Certain qualitative factors assessed by us include current macroeconomic conditions, state of the equity and capital markets and the overall financial and operating performance of HCP. If we qualitatively determine that it is more likely than not the fair value of a reporting unit is less than its carrying amount the two-step approach is necessary.

If the fair value of a reporting unit containing goodwill is less than its carrying value, then the second step of the test is needed to measure the amount of potential goodwill impairment. The second step requires the fair value of a reporting unit to be allocated to all the assets and liabilities of the reporting unit as if the reporting unit had been acquired in a business combination at the date of the impairment test. The excess of the fair value of the reporting unit over the fair value of assets and liabilities is the implied value of goodwill and is used to determine the amount of impairment. We estimate the current fair value of the assets and liabilities in the reporting unit through various valuation techniques, including applying capitalization rates to segment net operating income, quoted market values and third-party appraisals, as necessary. The fair value of the reporting unit may also include an allocation of an enterprise value premium that we estimate a third party would be willing to pay for the company.

The determination of the fair value of real estate assets and goodwill involves significant judgment. This judgment is based on our analysis and estimates of fair value of real estate assets and reporting units, and the future operating results and resulting cash flows of each real estate asset whose carrying amount may not be recoverable. Our ability to accurately predict future operating results and cash flows and estimate and allocate fair values impacts the timing and recognition of impairments. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our financial results.

Investments in entities which we do not consolidate but have the ability to exercise significant influence over operating and financial policies are reported under the equity method of accounting. Under the equity method of accounting, our share of the investee's earnings or losses is included in our consolidated results of operations.

The initial carrying value of investments in unconsolidated joint ventures is based on the amount paid to purchase the joint venture interest or the carrying value of the assets prior to the sale of interests in the joint venture. We evaluate our equity method investments for impairment based upon a comparison of the fair value of the equity method investment to our carrying value. If we determine a decline in the fair value of our investment in an unconsolidated joint venture is below its carrying value is other-than-temporary, an impairment is recorded. The determination of the fair value and as to whether a deficiency in fair value is "other-than-temporary" of investments in unconsolidated joint

ventures involves significant judgment. Our estimates consider all available evidence including, as appropriate, the present value of the expected future cash flows discounted at market rates, general economic conditions and trends, severity and duration of the fair value deficiency, and other relevant factors. Capitalization rates, discount rates and credit spreads utilized in our valuation models are based upon rates that we believe to be within a reasonable range of current market rates for the respective investments. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our financial results.

As part of the process of preparing our consolidated financial statements, significant management judgment is required to evaluate our compliance with REIT requirements. Our determinations are based on interpretation of tax laws, and our conclusions may have an impact on the income tax expense recognized. Adjustments to income tax expense may be required as a result of: (i) audits conducted by federal, state and local tax authorities, (ii) our ability to qualify as a REIT, (iii) the potential for built-in-gain recognized related to prior-tax-free acquisitions of C corporations, and (iv) changes in tax laws. Adjustments required in any given period are included within the income tax provision.

We evaluate our business and allocate resources among our five business segments: (i) senior housing, (ii) post-acute/skilled nursing, (iii) life science, (iv) medical office and (v) hospital. Under the senior housing, life science, post-acute/skilled nursing and hospital segments, we invest or co-invest primarily in single operator or tenant properties, through the acquisition and development of real estate, management of operations and by debt issued by operators in these sectors. Under the medical office segment, we invest or co-invest through the acquisition and development of MOBs that are leased under gross, modified gross or triple-net leases, generally to multiple tenants, and which generally require a greater level of property management. The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 2 to the Consolidated Financial Statements).

We use net operating income ("NOI") and adjusted NOI to assess and compare property level performance, including our same property portfolio ("SPP"), and to make decisions about resource allocations. We believe these measures provide investors relevant and useful information because they reflect only income and operating expense items that are incurred at the property level and present them on an unleveraged basis. We believe that net income is the most directly comparable GAAP measure to NOI. NOI should not be viewed as an alternative measure of operating performance to net income as defined by GAAP since NOI excludes certain components from net income. Further, NOI may not be comparable to that of other REITs, as they may use different methodologies for calculating NOI. See Note 14 to the Consolidated Financial Statements for additional segment information and the relevant reconciliations from net income to NOI and adjusted NOI.

Operating expenses are generally related to MOB and life science leased properties and senior housing properties managed on our behalf (RIDEA properties). We generally recover all or a portion of MOB and life science expenses from the tenants (tenant recoveries). The presentation of expenses as operating or general and administrative is 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.

Our evaluation of results of operations by each business segment includes an analysis of our SPP and our total property portfolio. SPP information allows us to evaluate the performance of our leased 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, including 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 basis.

Comparison of the Year Ended December 31, 2012 to the Year Ended December 31, 2011

During the fourth quarter of 2012, we acquired 129 senior housing communities from the Blackstone JV (see additional information in Note 4 to the Consolidated Financial Statements). The transaction closed in two stages: (i) 127 senior housing facilities on October 31, 2012; and (ii) two senior housing facilities on December 4, 2012. The results of operations from the acquisitions are reflected in our consolidated financial statements from those respective dates.

On April 7, 2011, we completed our acquisition of substantially all of HCR ManorCare's real estate assets; additionally, we purchased a noncontrolling equity interest in the operations of HCR ManorCare. On January 14, 2011, we acquired our partner's 65% interest in HCP Ventures II that resulted in the consolidation of HCP Ventures II. On September 1, 2011, we entered into management contracts with Brookdale with respect to 21 senior living communities (these 21 communities were acquired in January 2011 as part of our purchase of HCP Ventures II). These 21 communities are now in a RIDEA structure are managed by Brookdale, the respective resident level revenues and related operating expenses are reported in our consolidated financial statements. See additional information regarding the HCR ManorCare Acquisition, HCP Ventures II purchase and the Brookdale RIDEA transaction in Notes 3, 8 and 12, respectively, to the Consolidated Financial Statements. The results of operations from our HCR ManorCare, HCP Ventures II and 21 properties managed under a RIDEA structure are reflected in our financial statements from those respective dates.

The tables below provide selected operating information for our SPP and total property portfolio for each of our five business segments. Our consolidated SPP consists of 565 properties representing properties acquired or placed in service and stabilized on or prior to January 1, 2011 and that remained in operations under a consistent reporting structure through December 31, 2012. Our consolidated total property portfolio represents 1,086 and 932 properties at December 31, 2012 and 2011, respectively, and excludes properties classified as discontinued operations.

Results are as of and for the year ended December 31, 2012 and 2011 (dollars in thousands except per unit data):

	SPP									Total Portfolio

	2012			2011			Change			2012			2011			Change
Rental revenues⁽¹⁾	$	380,413		$	378,553		$	1,860		$	482,336		$	470,592		$	11,744
Resident fees and services		1,054			3,542			(2,488	)		143,745			50,619			93,126

Total revenues	$	381,467		$	382,095		$	(628	)	$	626,081		$	521,211		$	104,870
Operating expenses		(613	)		(1,052	)		439			(94,662	)		(34,538	)		(60,124	)

NOI	$	380,854		$	381,043		$	(189	)	$	531,419		$	486,673		$	44,746
Straight-line rents		(24,740	)		(34,579	)		9,839			(30,415	)		(34,911	)		4,496
DFL accretion		(6,863	)		(9,052	)		2,189			(18,812	)		(17,918	)		(894	)
Amortization of above and below market lease intangibles, net		(1,569	)		(1,569	)		—			(1,320	)		(1,466	)		146
Lease termination fees		—			—			—			—			1,350			(1,350	)

Adjusted NOI	$	347,682		$	335,843		$	11,839		$	480,872		$	433,728		$	47,144

Adjusted NOI % change								3.5	%

Property count⁽²⁾		221			221						441			312
Average capacity (units)⁽³⁾		25,081			25,056						37,089			33,911
Average annual rent per unit⁽⁴⁾	$	13,887		$	13,446					$	13,059		$	12,887

SPP Adjusted NOI. SPP adjusted NOI improved primarily as a result of annual rent escalations and an increase in rental revenues from properties that were previously transitioned from Sunrise to other operators, partially offset by a decrease in additional rents.

Total Portfolio NOI and Adjusted NOI. Including the impact of our SPP, our total portfolio NOI and adjusted NOI for the year ended December 31, 2012 primarily increased as a result of 66 senior housing leased properties classified as DFLs that were acquired on April 7, 2011 from HCR ManorCare and 127 senior housing communities acquired on October 31, 2012 and two senior housing communities acquired on December 4, 2012 from the Blackstone JV (see Notes 3, 4 and 6 to the Consolidated Financial Statements for additional information regarding the HCR ManorCare Acquisition, the Blackstone JV acquisition and Net Investments in DFLs, respectively).

Additionally, HCP Ventures II was consolidated on January 14, 2011 (see Note 8 to the Consolidated Financial Statements for additional information), resulting in us recognizing rental and related revenues for the 25 leased properties commencing on that date. On September 1, 2011, for 21 of these 25 properties, we entered into management contracts in a structure permitted by RIDEA (see Note 12 to the Consolidated Financial Statements for additional information), resulting in the termination of the properties' leases. For these 21 properties that are now in a RIDEA structure, the resident-level revenues and related operating expenses are reported in our consolidated financial statements beginning on that date.

Results are as of and for the year ended December 31, 2012 and 2011 (dollars in thousands, except per bed data):

	SPP									Total Portfolio

	2012			2011			Change			2012			2011			Change
Rental revenues⁽¹⁾	$	37,387		$	36,745		$	642		$	539,242		$	397,554		$	141,688
Operating expenses		75			(180	)		255			(386	)		(585	)		199

NOI	$	37,462		$	36,565		$	897		$	538,856		$	396,969		$	141,887
Straight-line rents		(547	)		(967	)		420			(547	)		(968	)		421
DFL accretion		—			—			—			(75,428	)		(56,089	)		(19,339	)
Amortization of above and below market lease intangibles, net		—			—			—			46			34			12

Adjusted NOI	$	36,915		$	35,598		$	1,317		$	462,927		$	339,946		$	122,981

Adjusted NOI % change								3.7	%

Property count⁽²⁾		44			44						312			312
Average capacity (beds)⁽³⁾		5,031			5,061						39,856			30,565
Average annual rent per bed	$	7,323		$	7,069					$	11,624		$	11,140

SPP NOI and Adjusted NOI. SPP NOI and adjusted NOI increased year-over-year primarily as a result of rent escalations.

Total Portfolio NOI and Adjusted NOI. Including the impact of our SPP, our total portfolio NOI and adjusted NOI for the year ended December 31, 2012 primarily increased as a result of 268 post-acute/skilled nursing leased properties classified as DFLs that were acquired on April 7, 2011 from HCR ManorCare (see Notes 3 and 6 to the Consolidated Financial Statements for additional information regarding the HCR ManorCare Acquisition and Net Investments in DFLs, respectively, and discussion regarding our share in the earnings of our 9.4% interest in HCR ManorCare below under the caption "Equity income from unconsolidated joint ventures").

Results are as of and for the year ended December 31, 2012 and 2011 (dollars and square feet in thousands, except per sq. ft. data):

	SPP									Total Portfolio

	2012			2011			Change			2012			2011			Change
Rental and related revenues	$	243,469		$	244,401		$	(932	)	$	246,811		$	245,942		$	869
Tenant recoveries		42,164			41,882			282			42,853			42,209			644

Total revenues	$	285,633		$	286,283		$	(650	)	$	289,664		$	288,151		$	1,513
Operating expenses		(47,913	)		(49,123	)		1,210			(53,173	)		(52,796	)		(377	)

NOI	$	237,720		$	237,160		$	560		$	236,491		$	235,355		$	1,136
Straight-line rents		(8,590	)		(14,685	)		6,095			(9,730	)		(14,971	)		5,241
Amortization of above and below market lease intangibles, net		462			(1,066	)		1,528			411			(1,123	)		1,534
Lease termination fees		(175	)		(7,011	)		6,836			(175	)		(7,011	)		6,836

Adjusted NOI	$	229,417		$	214,398		$	15,019		$	226,997		$	212,250		$	14,747

Adjusted NOI % change								7.0	%

Property count		101			101						109			104
Average occupancy		91.4	%		90.5	%					89.6	%		89.6	%
Average occupied square feet		6,108			6,050						6,250			6,076
Average annual rent per occupied sq. ft.	$	45		$	44					$	45		$	44

SPP and Total Portfolio NOI and Adjusted NOI. NOI increased primarily as a result of lease expansions and extensions and a decline in non-reimbursable operating expenses, partially offset by a decline in lease termination fees. Adjusted NOI increased primarily as a result of a $4 million rent payment in connection with a February 2012 amendment to a lease, annual rent escalations, lease expansions and extensions, and a decline in non-reimbursable operating expenses.

During the year ended December 31, 2012, 978,000 square feet of new and renewal leases commenced at an average annual base rent of $21.71 per square foot compared to 776,000 square feet of expiring and terminated leases with an average annual base rent of $24.23 per square foot. During the year ended December 31, 2012, we acquired 77,000 square feet with an average annual base rent of $9.79 per square foot.

Results are as of and for the year ended December 31, 2012 and 2011 (dollars and square feet in thousands, except per sq. ft. data):

	SPP									Total Portfolio

	2012			2011			Change			2012			2011			Change
Rental and related revenues	$	271,002		$	265,851		$	5,151		$	285,331		$	272,362		$	12,969
Tenant recoveries		45,509			46,186			(677	)		49,480			47,753			1,727

Total revenues	$	316,511		$	312,037		$	4,474		$	334,811		$	320,115		$	14,696
Operating expenses		(119,447	)		(118,894	)		(553	)		(132,264	)		(127,902	)		(4,362	)

NOI	$	197,064		$	193,143		$	3,921		$	202,547		$	192,213		$	10,334
Straight-line rents		(4,069	)		(5,473	)		1,404			(5,121	)		(5,691	)		570
Amortization of above and below market lease intangibles, net		358			384			(26	)		457			(130	)		587
Lease termination fees		(314	)		—			(314	)		(314	)		(212	)		(102	)

Adjusted NOI	$	193,039		$	188,054		$	4,985		$	197,569		$	186,180		$	11,389

Adjusted NOI % change								2.7	%

Property count⁽¹⁾		183			183						207			187
Average occupancy		91.4	%		90.9	%					91.1	%		90.9	%
Average occupied square feet		11,642			11,556						12,295			11,865
Average annual rent per occupied sq. ft.	$	27		$	26					$	27		$	26

SPP NOI and Adjusted NOI. SPP NOI and adjusted NOI increased year-over-year primarily as a result of rent escalations and an increase in medical office occupancy.

Total Portfolio NOI and Adjusted NOI. Including the impact of our SPP, our total portfolio NOI and adjusted NOI increased primarily as a result of the additive effect of our MOB acquisitions during 2012.

During the year ended December 31, 2012, 2.2 million square feet of new and renewal leases commenced at an average annual base rent of $21.94 per square foot compared to 2.1 million square feet of expiring and terminated leases with an average annual base rent of $22.43 per square foot. During the year ended December 31, 2012, we acquired 1.1 million square feet with an average annual base rent of $22.19 per square foot.

Results are as of and for the year ended December 31, 2012 and 2011 (dollars in thousands, except per bed data):

	SPP									Total Portfolio

	2012			2011			Change			2012			2011			Change
Rental and related revenues	$	79,110		$	77,676		$	1,434		$	82,167		$	80,832		$	1,335
Tenant recoveries		2,327			2,297			30			2,326			2,296			30

Total revenues	$	81,437		$	79,973		$	1,464		$	84,493		$	83,128		$	1,365
Operating expenses		(3,506	)		(4,328	)		822			(3,513	)		(4,330	)		817

NOI	$	77,931		$	75,645		$	2,286		$	80,980		$	78,798		$	2,182
Straight-line rents		(534	)		(904	)		370			(1,114	)		(1,525	)		411
Amortization of above and below market lease intangibles, net		(771	)		(771	)		—			(871	)		(871	)		—

Adjusted NOI	$	76,626		$	73,970		$	2,656		$	78,995		$	76,402		$	2,593

Adjusted NOI % change								3.6	%

Property count		16			16						17			17
Average capacity (beds)⁽¹⁾		2,379			2,379						2,410			2,410
Average annual rent per bed	$	33,683		$	32,912					$	34,236		$	33,499

SPP and Total Portfolio NOI and Adjusted NOI. NOI and adjusted NOI increased for the year ended December 31, 2012 primarily as a result of rent escalations and the new leases that commenced in 2012 for two of our hospitals.

Interest income. Interest income decreased $75 million to $25 million for the year ended December 31, 2012. The decrease was primarily the result of the following: (i) a decrease of $54 million in income earned from and due to the settlement of our HCR ManorCare debt investments in 2011 and (ii) a decrease of $43 million in income earned from and as a result of prepayment premiums and unamortized discounts recognized in April 2011 upon the early repayment of our loans to Genesis HealthCare. The decreases in interest income were partially offset by $19 million of interest earned from our loan and senior unsecured notes investments in 2012 (see Notes 7 and 10, respectively, to the Consolidated Financial Statements for additional information).

Interest expense. For the year ended December 31, 2012, interest expense increased $734,000 to $417 million. The increase was primarily due to an increase of $13 million resulting from our senior unsecured notes offerings, net of related maturities of certain senior unsecured notes during 2011 and 2012. The increase was offset by the $11 million write-off of unamortized loan fees related to a terminated bridge loan commitment in 2011 and a decrease resulting from the payoff of certain mortgage debt during 2011.

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 7A.

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

	As of December 31,⁽¹⁾

	2012			2011
Balance:
Fixed rate	$	8,606,075		$	7,166,349
Variable rate		40,385			502,919

Total	$	8,646,460		$	7,669,268

Percent of total debt:
Fixed rate		99.5	%		93.4	%
Variable rate		0.5			6.6

Total		100	%		100	%

Weighted average interest rate at end of period:
Fixed rate		5.23	%		5.83	%
Variable rate		1.49	%		2.19	%
Total weighted average rate		5.22	%		5.59	%

Depreciation and amortization expense. Depreciation and amortization expenses increased $8 million to $358 million for the year ended December 31, 2012. The increase was primarily the result of additive effects of our acquisitions during 2011 and 2012.

General and administrative expenses. General and administrative expenses decreased $17 million to $79 million for the year ended December 31, 2012. The decrease was primarily due to an insurance recovery of $7 million during 2012 for previously incurred legal expenses and a decrease of $8 million in acquisition costs incurred during 2012 compared to similar costs incurred during 2011.

Litigation settlement and provision. On November 9, 2011, we entered into an agreement with Ventas to settle all remaining claims relating to Ventas's litigation against us arising out of Ventas's 2007 acquisition of Sunrise Senior Living REIT. As part of the settlement, we paid $125 million to Ventas, which resulted in a charge for the same amount (see the information set forth under the heading "Legal Proceedings" of Note 12 to the Consolidated Financial Statements). No similar charges were recognized during the year ended December 31, 2012.

Impairments (recoveries). During the year ended December 31, 2012, we recognized an impairment of $8 million as a result of the disposition of a life science land parcel (see Note 17 to the Consolidated Financial Statements for additional information). During the year ended December 31, 2011, we recognized an impairment of $15 million related to a senior secured term loan as a result of concluding that the carrying value of the loan was in excess of the fair value of the related collateral supporting the loan (see Note 7 to the Consolidated Financial Statements for additional information).

Other income, net. For the year ended December 31, 2012, other income, net decreased $10 million to $3 million. The decrease was primarily the result of a gain of $8 million resulting from our acquisition of our partner's 65% interest in and consolidation of HCP Ventures II in January 2011

(see Note 8 to the Consolidated Financial Statements for additional information) and $6 million received in connection with a litigation settlement in June 2011 that represents proceeds owed to us from a prior sale of assets. No similar gain upon consolidation was recognized or settlements were received during the year ended December 31, 2012. The decreases were partially offset by a $5 million charge during the year ended December 31, 2011 for an other-than-temporary impairment of marketable equity securities.

Income taxes. For the year ended December 31, 2012, income taxes decreased $3 million to a benefit of $2 million. The decrease in income taxes was primarily due to the tax benefit resulting from declines in taxable income of our TRS entities during the year ended December 31, 2012.

Equity income from unconsolidated joint ventures. Equity income from unconsolidated joint ventures is primarily the result of our 9.4% equity interest in HCR ManorCare. The October 2011 CMS reduction of skilled nursing reimbursements under Resource Utilization Group-Version 4 ("RUGs-IV"), together with changes in requirements for the delivery of group therapy services, reduced HCR ManorCare's revenues and increased its therapy costs in 2012. HCR ManorCare partially mitigated these adverse impacts through a cost reduction program. Further, HCR ManorCare experienced increased exposure to general and professional liability claims resulting in higher charges in 2012, which, together with the circumstances discussed above, reduced our share in the earnings from our equity interest in HCR ManorCare.

During the year ended December 31, 2012, equity income from unconsolidated joint ventures increased $8 million to $54 million. This increase primarily was the result of the full-year share of earnings from our interest in HCR ManorCare, Inc. compared to a partial-year in 2011 (see Notes 3 and 8 to the Consolidated Financial Statements for additional information). The Company's share of earnings from HCR ManorCare (equity income) increases for the corresponding reduction of related lease expense recognized at the HCR ManorCare level.

Discontinued operations. Income from discontinued operations for the year ended December 31, 2012 was $34 million, compared to $7 million for the comparable period in 2011. The increase is primarily due to an increase in gains on real estate dispositions of $28 million, partially offset by a decline in operating income from discontinued operations of $2 million. During the year ended December 31, 2012, we sold real estate investments for $151 million, compared to $19 million for the year ended December 31, 2011.

Comparison of the Year Ended December 31, 2011 to the Year Ended December 31, 2010

The tables below provide selected operating information for our SPP and total property portfolio for each of our five business segments. Our consolidated SPP consists of 550 properties representing properties acquired or placed in service and stabilized on or prior to January 1, 2010 and that remained in operations under a consistent reporting structure through December 31, 2011. Our consolidated total property portfolio represents 932 and 566 properties at December 31, 2011 and 2010, respectively, and excludes properties classified as discontinued operations.

Results are as of and for the year ended December 31, 2011 and 2010 (dollars in thousands except per unit data):

	SPP									Total Portfolio

	2011			2010			Change			2011			2010			Change
Rental revenues⁽¹⁾	$	364,029		$	329,926		$	34,103		$	470,592		$	337,220		$	133,372
Resident fees and services		3,542			32,596			(29,054	)		50,619			32,596			18,023

Total revenues	$	367,571		$	362,522		$	5,049		$	521,211		$	369,816		$	151,395
Operating expenses		(991	)		(26,474	)		25,483			(34,538	)		(28,773	)		(5,765	)

NOI	$	366,580		$	336,048		$	30,532		$	486,673		$	341,043		$	145,630
Straight-line rents		(32,612	)		(20,416	)		(12,196	)		(34,911	)		(21,746	)		(13,165	)
DFL accretion		(9,052	)		(10,641	)		1,589			(17,918	)		(10,641	)		(7,277	)
Amortization of above and below market lease intangibles, net		(1,569	)		(1,974	)		405			(1,466	)		(1,974	)		508
Lease termination fees		—			—			—			1,350			—			1,350

Adjusted NOI	$	323,347		$	303,017		$	20,330		$	433,728		$	306,682		$	127,046

Adjusted NOI % change								6.7	%

Property count⁽²⁾		214			214						312			221
Average capacity (units)⁽³⁾		24,246			24,219						33,911			24,453
Average annual rent per unit⁽⁴⁾	$	13,377		$	13,605					$	12,887		$	12,656

SPP NOI and Adjusted NOI. SPP NOI increased primarily as a result of rent escalations related to new leases or leases not subject to straight-line rents. SPP NOI includes a decline in resident fees and services and operating expenses as a result of the consolidation of 27 properties in four variable interest entities from August 31, 2010 to November 1, 2010 (see Notes 12 and 18 to the Consolidated Financial Statement s for additional information regarding these VIEs). SPP adjusted NOI improved primarily as a result of annual rent escalations and an increase in rental revenues from properties transitioned from Sunrise to other operators.

Total Portfolio NOI and Adjusted NOI. Including the impact of our SPP, our total portfolio NOI and adjusted NOI for the year ended December 31, 2011 primarily increased as a result of 66 senior housing leased properties classified as DFLs that were acquired on April 7, 2011 from HCR ManorCare.

resident-level revenues and related operating expenses are reported in our consolidated financial statements beginning on that date.

Results are as of and for the year ended December 31, 2011 and 2010 (dollars in thousands, except per bed data):

	SPP									Total Portfolio

	2011			2010			Change			2011			2010			Change
Rental revenues⁽¹⁾	$	36,745		$	36,023		$	722		$	397,554		$	36,023		$	361,531
Operating expenses		(180	)		(135	)		(45	)		(585	)		(176	)		(409	)

NOI	$	36,565		$	35,888		$	677		$	396,969		$	35,847		$	361,122
Straight-line rents		(967	)		(1,162	)		195			(968	)		(1,162	)		194
DFL accretion		—			—			—			(56,089	)		—			(56,089	)
Amortization of above and below market lease intangibles, net		—			—			—			34			—			34

Adjusted NOI	$	35,598		$	34,726		$	872		$	339,946		$	34,685		$	305,261

Adjusted NOI % change								2.5	%

Property count⁽²⁾		44			44						312			44
Average capacity (beds)⁽³⁾		5,061			5,063						30,565			5,063
Average annual rent per bed	$	7,069		$	6,885					$	11,140		$	6,885

Total Portfolio NOI and Adjusted NOI. Our total portfolio NOI and adjusted NOI for the year ended December 31, 2011 primarily increased as a result of 268 post-acute/skilled nursing leased properties classified as DFLs that were acquired on April 7, 2011 from HCR ManorCare.

Results are as of and for the year ended December 31, 2011 and 2010 (dollars and square feet in thousands, except per sq. ft. data):

	SPP									Total Portfolio

	2011			2010			Change			2011			2010			Change
Rental and related revenues	$	236,996		$	235,675		$	1,321		$	245,942		$	237,160		$	8,782
Tenant recoveries		39,671			39,375			296			42,209			39,602			2,607

Total revenues	$	276,667		$	275,050		$	1,617		$	288,151		$	276,762		$	11,389
Operating expenses		(45,570	)		(45,613	)		43			(52,796	)		(48,492	)		(4,304	)

NOI	$	231,097		$	229,437		$	1,660		$	235,355		$	228,270		$	7,085
Straight-line rents		(14,430	)		(15,395	)		965			(14,971	)		(15,673	)		702
Amortization of above and below market lease intangibles, net		(1,053	)		(394	)		(659	)		(1,123	)		(392	)		(731	)
Lease termination fees		(7,011	)		(7,267	)		256			(7,011	)		(7,267	)		256

Adjusted NOI	$	208,603		$	206,381		$	2,222		$	212,250		$	204,938		$	7,312

Adjusted NOI % change								1.1	%

Property count		95			95						104			98
Average occupancy		92.2	%		90.0	%					89.6	%		89.0	%
Average occupied square feet		5,825			5,687						6,076			5,740
Average annual rent per occupied sq. ft.	$	44		$	44					$	44		$	44

SPP NOI and Adjusted NOI. SPP NOI increased primarily as a result of annual rent escalations on leases not subject to straight-line rents. SPP adjusted NOI primarily increased as a result of annual rent escalations, partially offset by a decline due to deferred rent payments in 2010 that did not reoccur in 2011.

Total Portfolio NOI and Adjusted NOI. Including the impact from our SPP, our total portfolio NOI increased primarily as a result of the additive effect of our life science acquisitions during 2010 and 2011.

During the year ended December 31, 2011, 949,000 square feet of new and renewal leases commenced at an average annual base rent of $24.32 per square foot compared to 852,000 square feet of expiring and terminated leases with an average annual base rent of $24.62 per square foot. During the year ended December 31, 2011, we acquired 140,000 square feet with an average annual base rent of $33.30 per square foot.

Results are as of and for the year ended December 31, 2011 and 2010 (dollars and square feet in thousands, except per sq. ft. data):

	SPP									Total Portfolio

	2011			2010			Change			2011			2010			Change
Rental and related revenues	$	263,743		$	260,083		$	3,660		$	272,362		$	262,276		$	10,086
Tenant recoveries		45,191			46,631			(1,440	)		47,753			47,009			744

Total revenues	$	308,934		$	306,714		$	2,220		$	320,115		$	309,285		$	10,830
Operating expenses		(118,909	)		(121,576	)		2,667			(127,902	)		(127,887	)		(15	)

NOI	$	190,025		$	185,138		$	4,887		$	192,213		$	181,398		$	10,815
Straight-line rents		(5,065	)		(3,162	)		(1,903	)		(5,691	)		(3,159	)		(2,532	)
Amortization of above and below market lease intangibles, net		(130	)		(2,179	)		2,049			(130	)		(2,187	)		2,057
Lease termination fees		—			(3	)		3			(212	)		(398	)		186

Adjusted NOI	$	184,830		$	179,794		$	5,036		$	186,180		$	175,654		$	10,526

Adjusted NOI % change								2.8	%

Property count⁽¹⁾		181			181						187			186
Average occupancy		90.7	%		90.6	%					90.9	%		90.6	%
Average occupied square feet		11,483			11,467						11,865			11,583
Average annual rent per occupied sq. ft.	$	26		$	26					$	26		$	26

SPP Portfolio NOI and Adjusted NOI. SPP NOI and adjusted NOI increased year-over-year primarily as a result of rent escalations and an increase in medical office occupancy.

Total Portfolio NOI and Adjusted NOI. In addition to the impact from SPP, total portfolio NOI and adjusted NOI increased year-over-year as a result of the additive effect of our MOB acquisitions during 2010 and 2011.

During the year ended December 31, 2011, 1.9 million square feet of new and renewal leases commenced at an average annual base rent of $22.01 per square foot compared to 1.8 million square feet of expiring and terminated leases with an average annual base rent of $22.92 per square foot. During the year ended December 31, 2011, we acquired 132,000 square feet with an average annual base rent of $18.74 per square foot.

Results are as of and for the year ended December 31, 2011 and 2010 (dollars in thousands, except per bed data):

	SPP									Total Portfolio

	2011			2010			Change			2011			2010			Change
Rental and related revenues	$	77,676		$	77,613		$	63		$	80,832		$	81,091		$	(259	)
Tenant recoveries		2,297			2,400			(103	)		2,296			2,400			(104	)

Total revenues	$	79,973		$	80,013		$	(40	)	$	83,128		$	83,491		$	(363	)
Operating expenses		(4,328	)		(4,831	)		503			(4,330	)		(4,830	)		500

NOI	$	75,645		$	75,182		$	463		$	78,798		$	78,661		$	137
Straight-line rents		(904	)		(3,683	)		2,779			(1,525	)		(4,148	)		2,623
Amortization of above and below market lease intangibles, net		(771	)		(771	)		—			(871	)		(871	)		—

Adjusted NOI	$	73,970		$	70,728		$	3,242		$	76,402		$	73,642		$	2,760

Adjusted NOI % change								4.6	%

Property count⁽¹⁾		16			16						17			17
Average capacity (beds)⁽²⁾		2,379			2,368						2,410			2,399
Average annual rent per bed	$	32,912		$	31,908					$	33,499		$	32,710

SPP and Total Portfolio NOI and Adjusted NOI. NOI increased for the year ended December 31, 2011 primarily as a result of rent escalations. Adjusted NOI increased primarily as a result of rent escalations and the expiration of rent abatements on our Irvine hospital.

Interest income. For the year ended December 31, 2011, interest income decreased $60 million to $100 million as a result of decreases of income earned from and due to the settlement of our HCR ManorCare debt investments in 2011 of $58 million, a decrease of $12 million due to interest earned from marketable debt securities that were sold in 2010 and a decline of $12 million of interest earned from our Delphis loan as it was placed on non-accrual status in 2011; these decreases were partially offset by an increase of $35 million in interest earned and prepayment premiums and unamortized discounts recognized in April 2011 upon the early repayment of our loans to Genesis HealthCare. For a more detailed description of our loan investments and marketable debt securities, see Notes 7 and 10, respectively, to the Consolidated Financial Statements.

Investment management fee income. Investment management fee income decreased $3 million to $2 million for the year ended December 31, 2011 primarily as a result of acquiring our partner's 65% interest in HCP Ventures II on January 14, 2011, which resulted in the termination of the partnerships' related management contracts.

Interest expense. For the year ended December 31, 2011, interest expense increased $131 million to $416 million. The increase in interest expense was primarily due to a $111 million increase from our $2.4 billion senior unsecured notes offering in January 2011 as a result of prefunding activities from our

HCR ManorCare Acquisition, the $11 million write-off of unamortized loan fees related to an expired bridge loan commitment and the consolidation of HCP Ventures II on January 14, 2011 that included the consolidation of $635 million of mortgage debt, which increases were partially offset by the impact of repayments of mortgage debt related to contractual maturities and senior unsecured notes during 2010 and 2011 and lower interest rates during 2011 as compared to 2010.

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

	As of December 31,⁽¹⁾

	2011			2010
Balance:
Fixed rate	$	7,166,349		$	4,260,027
Variable rate		502,919			306,290

Total	$	7,669,268		$	4,566,317

Percent of total debt:
Fixed rate		93	%		93	%
Variable rate		7			7

Total		100	%		100	%

Weighted average interest rate at end of period:
Fixed rate		5.83	%		6.35	%
Variable rate		2.19	%		4.03	%
Total weighted average rate		5.59	%		6.19	%

Depreciation and amortization expense. Depreciation and amortization expenses increased $43 million to $350 million for the year ended December 31, 2011. The increase in depreciation and amortization expense was primarily related to: (i) a $37 million increase as a result of the consolidation of HCP Ventures II on January 14, 2011 and (ii) a $12 million increase from the additive effect of our other property acquisitions during 2010 and 2011.

General and administrative expenses. General and administrative expenses increased $13 million to $96 million for the year ended December 31, 2011. The increase in general and administrative expenses was a result of increases in acquisition costs, primarily attributable to our HCR ManorCare Acquisition and compensation related expenses. These increases were partially offset by a decrease in legal fees associated with litigation matters (see the information set forth under the heading "Legal Proceedings" of Note 12 to the Consolidated Financial Statements).

Ventas, which resulted in a charge for the same amount (see the information set forth under the heading "Legal Proceedings" of Note 12 to the Consolidated Financial Statements). No similar charges were recognized during the year ended December 31, 2010.

Impairments (recoveries). During the year ended December 31, 2011, we recognized an impairment of $15 million related to our Delphis senior secured term loan as a result of concluding that the carrying value of this loan was in excess of the fair value of the related collateral supporting this loan (see Note 7 to the Consolidated Financial Statements).

During the year ended December 31, 2010, we recognized aggregate income of $12 million, which represents impairment recoveries of portions of impairment charges recognized in 2009 of investments related to Erickson Retirement Communities and its affiliate entities ("Erickson"). Erickson was the tenant at three of our senior housing CCRC DFLs and the borrower of a senior construction loan in which we had a participation interest (see Note 6 to the Consolidated Financial Statements).

Other income, net. For the year ended December 31, 2011, other income, net decreased $3 million to $13 million. The year ended December 31, 2011, included the net impact of the following: (i) a gain of $8 million resulting from our January 2011 acquisition of our partner's 65% interest in and consolidation of HCP Ventures II, (ii) income of $6 million in connection with a litigation settlement in June 2011 for proceeds owed to the Company from a sale of assets, and (iii) a charge of $5 million for an other-than-temporary impairment of marketable equity securities. The year ended December 31, 2010 included gains on marketable securities of $15 million.

Equity income from unconsolidated joint ventures. During the year ended December 31, 2011, equity income from unconsolidated joint ventures increased $42 million to $47 million. This increase was primarily a result of equity income from our 9.4% interest in HCR ManorCare (see Notes 3 and 8 to the Consolidated Financial Statements for additional information), partially offset by the impact of our consolidation of HCP Ventures II on January 14, 2011, which was previously accounted for as an equity method investment.

Impairments of investments in unconsolidated joint ventures. During the year ended December 31, 2010, we recognized impairments of $72 million related to our 35% interest in HCP Ventures II, an unconsolidated joint venture that owned 25 senior housing properties previously leased by Horizon Bay (see Note 8 to the Consolidated Financial Statements). No similar impairments were recognized during the year ended December 31, 2011.

Discontinued operations. Income from discontinued operations for the year ended December 31, 2011 was $7 million, compared to $29 million for the comparable period in 2010. The decrease is primarily due to a decrease in gains on real estate dispositions of $17 million and a decline in operating income from discontinued operations of $5 million. During the year ended December 31, 2011, we sold properties for $19 million, compared to $56 million for the year ended December 31, 2010.

Our principal liquidity needs are to: (i) fund recurring operating expenses, (ii) meet debt service requirements, including $550 million of senior unsecured notes and $292 million of mortgage debt principal payments and maturities in 2013, (iii) fund capital expenditures, including tenant improvements and leasing costs, (iv) fund acquisition and development activities, and (v) make dividend distributions. We anticipate that cash flow from continuing operations over the next 12 months will be adequate to fund our business operations, debt service payments, recurring capital expenditures and cash dividends to shareholders. Capital requirements relating to maturing indebtedness, acquisitions and development activities may require funding from borrowings and/or equity and debt offerings.

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 debt ratings. We also pay a facility fee on the entire revolving commitment that depends upon our debt ratings. As of February 11, 2013, we had a credit rating of BBB+ from Fitch, Baa1 from Moody's and BBB+ from S&P on our senior unsecured debt securities.

Net cash provided by operating activities was $1 billion and $724 million for the years ended December 31, 2012 and 2011, respectively. The increase in operating cash flows is primarily the result of the following: (i) the additive impact of our acquisitions in 2011 and 2012, (ii) assets placed in service in 2011 and 2012 and (iii) rent escalations and resets in 2011 and 2012, which increases were partially offset by increased debt interest payments. Our cash flows from operations are dependent upon the occupancy level of multi-tenant 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 year ended December 31, 2012:

Bank line of credit and Term Loan. On March 27, 2012, we executed an amendment to our existing $1.5 billion unsecured revolving line of credit facility (the "Facility"). This amendment reduces the cost of the Facility (lower borrowing rate and facility fee) and extends the Facility's maturity by one additional year to March 2016. The Facility contains a one-year extension option. Borrowings under this 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 our debt ratings. Based on our debt ratings at February 11, 2013, the margin on the Facility was 1.075%, and the facility fee was 0.175%. 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.

On July 30, 2012, we entered into a credit agreement with a syndicate of banks for a £137 million ($223 million at December 31, 2012) four-year unsecured Term Loan (the "Term Loan") that accrues interest at a rate of GBP LIBOR plus 1.20%, based on our current debt ratings. Concurrent with the closing of the Term Loan, we entered into a four-year interest rate swap agreement that fixed the rate of the Term Loan at 1.81%, subject to adjustments based on our credit ratings. The Term Loan contains a one-year committed extension option.

Our Facility and Term Loan 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%, (iii) limit the ratio of Unsecured Debt to Consolidated Unencumbered Asset Value to 60%, (iv) require a minimum Fixed Charge Coverage ratio of 1.5 times and (v) require a formula-determined Minimum Consolidated Tangible Net Worth of $9.2 billion at December 31, 2012. At December 31, 2012, we were in compliance with each of these restrictions and requirements of the Facility and Term Loan.

Our Facility also contains cross-default provisions to other indebtedness of ours, including in some instances, certain mortgages on our properties. Certain mortgages contain default provisions relating to defaults under the leases or operating agreements on the applicable properties by our operators or tenants, including default provisions relating to the bankruptcy filings of such operator or tenant. Although we believe that we would be able to secure amendments under the applicable agreements if a default as described above occurs, such a default may result in significantly less favorable borrowing terms than currently available, material delays in the availability of funding or other material adverse consequences.

Senior unsecured notes. At December 31, 2012, we had senior unsecured notes outstanding with an aggregate principal balance of $6.7 billion. Interest rates on the notes ranged from 1.21% to 7.07% with a weighted average effective interest rate of 5.10% and a weighted average maturity of six years at December 31, 2012. The senior unsecured notes contain certain covenants including limitations on debt, maintenance of unencumbered assets, cross-acceleration provisions and other customary terms. At December 31, 2012, we believe we were in compliance with these covenants.

Mortgage debt. At December 31, 2012, we had $1.7 billion in aggregate principal amount of mortgage debt outstanding that is secured by 135 healthcare facilities (including redevelopment properties) with a carrying value of $2.1 billion. Interest rates on the mortgage debt ranged from 1.54% to 8.69% with a weighted average effective interest rate of 6.13% and a weighted average maturity of four years at December 31, 2012.

Mortgage debt generally requires monthly principal and interest payments, is collateralized by certain properties and is generally non-recourse. Mortgage debt typically restricts transfer of the encumbered properties, 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 properties and may require tenants or operators to maintain compliance with the applicable leases or operating agreements of such real estate assets.

Other debt. At December 31, 2012, we had $82 million of non-interest bearing life care bonds at two of our continuing care retirement communities and non-interest bearing occupancy fee deposits at two of our senior housing facilities, all of which were payable to certain residents of the facilities (collectively, "Life Care Bonds"). The Life Care Bonds are refundable to the residents upon the termination of the contract or upon the successful resale of the unit.

The following table summarizes our stated debt maturities and scheduled principal repayments at December 31, 2012 (in thousands):

Year	Term Loan⁽¹⁾		Senior Unsecured Notes			Mortgage			Total⁽²⁾

2013	$	—	$	550,000		$	291,747		$	841,747
2014		—		487,000			179,695			666,695
2015		—		400,000			308,048			708,048
2016		222,694		900,000			291,338			1,414,032
2017		—		750,000			550,052			1,300,052
Thereafter		—		3,650,000			65,886			3,715,886

		222,694		6,737,000			1,686,766			8,646,460
(Discounts) and premiums, net		—		(24,376	)		(10,222	)		(34,598	)

	$	222,694	$	6,712,624		$	1,676,544		$	8,611,862

Derivative Financial Instruments. We use derivative instruments to mitigate the effects of interest rate and foreign exchange fluctuations on specific forecasted transactions as well as recognized financial obligations or assets. We do not use derivative instruments for speculative or trading purposes.

The following table summarizes our outstanding interest rate and foreign exchange swap contracts as of December 31, 2012 (dollars and GBP in thousands):

Date Entered		Hedge Designation	Fixed Rate/Buy Amount			Floating/Exchange Rate Index	Notional/Sell Amount		Fair Value

July 2005	July 2020	Cash Flow		3.82	%	BMA Swap Index	$	45,600	$	(8,666	)
November 2008	October 2016	Cash Flow		5.95	%	1 Month LIBOR+1.50%		27,000		(3,878	)
July 2009	July 2013	Cash Flow		6.13	%	1 Month LIBOR+3.65%		13,700		(155	)
July 2012	June 2016	Cash Flow		1.81	%	1 Month GBP LIBOR+1.20%		£137,000		89
July 2012	June 2016	Cash Flow	$	79,600		Buy USD/Sell GBP		£ 50,700		(2,641	)

For a more detailed description of our derivative financial instruments, see Note 24 to the Consolidated Financial Statements and "Quantitative and Qualitative Disclosures About Market Risk" in Item 7A.

At December 31, 2012, we had 453 million shares of common stock outstanding. At December 31, 2012, equity totaled $10.8 billion, and our equity securities had a market value of $20.7 billion.

As of December 31, 2012, there were a total of four million DownREIT units outstanding in four limited liability companies in 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).

We have a prospectus that we filed with 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 in one or more offerings. The securities described in the prospectus include common stock, preferred stock, depositary shares, debt securities and warrants.

The prospectus only provides a general description of the securities we may offer. The prospectus may not be used to sell securities unless accompanied by a prospectus supplement or a free writing prospectus. Each time we sell securities under the shelf registration, we will provide a prospectus supplement that will contain specific information about the terms of the securities being offered and of the offering. The prospectus supplement may also add, update or change information contained in the prospectus.

We may offer and sell the securities pursuant to the prospectus through underwriters, dealers or agents or directly to purchasers, on a continuous or delayed basis. The securities may also be resold by selling security holders. The prospectus supplement for each offering will describe in detail the plan of distribution for that offering and will set forth the names of any underwriters, dealers or agents involved in the offering and any applicable fees, commissions or discount arrangements. We intend to use the net proceeds from the sales of the securities as set forth in the applicable prospectus supplement, and unless otherwise set forth in a therein, we will not receive any proceeds if the securities are sold by a selling security holder.

We believe FFO applicable to common shares, diluted FFO applicable to common shares, and basic 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 uses historical cost accounting for depreciation could be less informative. The term FFO was designed by the REIT industry to address this issue.

FFO is defined as net income applicable to common shares (computed in accordance with GAAP), excluding gains or losses from acquisition and dispositions of depreciable real estate or related interests, impairments of, or related to, depreciable real estate, plus real estate and DFL 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 GAAP, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income. We compute FFO in accordance with the current National Association of Real Estate Investment Trusts' ("NAREIT") definition; however, other REITs may report FFO differently or have a different interpretation of the current NAREIT definition from us. In addition, we present FFO before the impact of litigation settlement charges, preferred stock redemption charges, impairments (recoveries) of non-depreciable assets and merger-related items (defined below) ("FFO as adjusted"). Management believes FFO as adjusted is a useful alternative measurement. This measure is a modification of the NAREIT definition of FFO and should not be used as an alternative to net income (determined in accordance with GAAP).

Details of certain items that affect comparability are discussed under Results of Operations above. The following is a reconciliation from net income applicable to common shares, the most direct

comparable financial measure calculated and presented in accordance with GAAP, to FFO and FFO as adjusted (in thousands, except per share data):

	Year Ended December 31,

	2012			2011			2010
Net income applicable to common shares	$	812,289		$	515,302		$	307,498
Depreciation and amortization of real estate, in-place lease and other intangibles:
Continuing operations		358,245			349,922			306,934
Discontinued operations		8,267			7,473			6,513
DFL depreciation		12,756			8,840			—
Gain on sales of real estate		(31,454	)		(3,107	)		(19,925	)
Gain upon consolidation of joint venture		—			(7,769	)		—
Impairments of interests in unconsolidated joint venture		—			—			71,693
Equity income from unconsolidated joint ventures		(54,455	)		(46,750	)		(4,770	)
FFO from unconsolidated joint ventures		64,933			56,887			25,288
Noncontrolling interests' and participating securities' share in earnings		17,547			18,062			15,767
Noncontrolling interests' and participating securities' share in FFO		(21,620	)		(20,953	)		(18,361	)

FFO applicable to common shares	$	1,166,508		$	877,907		$	690,637
Distributions on dilutive convertible units		13,028			6,916			11,847

Diluted FFO applicable to common shares	$	1,179,536		$	884,823		$	702,484

Diluted FFO per common share	$	2.72		$	2.19		$	2.25

Weighted average shares used to calculate diluted FFO per common share		434,328			403,864			312,797

Diluted earnings per common share	$	1.90		$	1.29		$	1.00
Depreciation and amortization of real estate, in-place lease and other intangibles		0.85			0.89			1.02
DFL depreciation		0.03			0.02			—
Gain on sales of real estate and upon consolidation of joint venture		(0.07	)		(0.03	)		(0.06	)
Impairments of interests in unconsolidated joint ventures		—			—			0.23
Joint venture and participating securities FFO adjustments		0.01			0.02			0.06

Diluted FFO per common share	$	2.72		$	2.19		$	2.25

Impact of adjustments to FFO:
Preferred stock redemption charge⁽¹⁾	$	10,432		$	—		$	—
Litigation settlement and provision charges⁽²⁾		—			125,000			—
Other impairments (recoveries)⁽³⁾		7,878			15,400			(11,900	)
Merger-related items⁽⁴⁾		5,642			26,596			4,339

	$	23,952		$	166,996		$	(7,561	)


(Mark One)
ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2012
or
o		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 1-08895


Maryland		33-0091377
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
3760 Kilroy Airport Way, Suite 300 Long Beach, California		90806 (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (562) 733-5100
Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered

Common Stock		New York Stock Exchange


Large accelerated filer ý		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o



PART I
Item 1.	Business	3
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	26
Item 2.	Properties	26
Item 3.	Legal Proceedings	32
Item 4.	Mine Safety Disclosures	32
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	33
Item 6.	Selected Financial Data	35
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	36
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	67
Item 8.	Financial Statements and Supplementary Data	69
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	69
Item 9A.	Controls and Procedures	69
Item 9B.	Other Information	72
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	72
Item 11.	Executive Compensation	72
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	72
Item 13.	Certain Relationships and Related Transactions, and Director Independence	73
Item 14.	Principal Accountant Fees and Services	73
PART IV
Item 15.	Exhibits, Financial Statements and Financial Statement Schedules	73

Operators

HCR ManorCare, Inc. ("HCR ManorCare")⁽¹⁾	11	30
Emeritus Corporation ("Emeritus")⁽²⁾	23	8
Sunrise Senior Living Inc. ("Sunrise")⁽³⁾	15	5
Brookdale Senior Living, Inc. ("Brookdale")⁽⁴⁾	14	5

Segment		Capacity⁽¹⁾	HCP's Ownership Interest	Joint Venture Investment⁽²⁾		Total Revenues		Total Operating Expenses

Medical office⁽³⁾	66	3,389 Sq. ft.	20 - 30%	$	729,831	$	72,421	$	30,870
Life science	4	278 Sq. ft.	50 - 63%		144,489		10,881		1,513
Hospital	4	149 Beds	20%		81,383		4,001		963

Total	74			$	955,703	$	87,303	$	33,346

	2012				2011				2010

	High		Low		High		Low		High		Low
First Quarter	$	42.75	$	38.72	$	38.29	$	35.81	$	34.37	$	26.70
Second Quarter		44.15		37.81		40.75		35.00		34.50		28.53
Third Quarter		47.75		43.59		38.23		28.76		38.05		31.08
Fourth Quarter		46.15		43.31		41.98		32.66		37.65		31.87

	2012		2011		2010

First Quarter	$	0.50	$	0.48	$	0.465
Second Quarter		0.50		0.48		0.465
Third Quarter		0.50		0.48		0.465
Fourth Quarter		0.50		0.48		0.465

Total	$	2.00	$	1.92	$	1.86

Period Covered		Average Price Paid Per Share

November 1-30, 2012	233	$	44.01	—	—
December 1-31, 2012	165,038		45.16	—	—

Total	165,271		45.16	—	—