Segment Disclosures

The Company evaluates its business and allocates resources based on its reportable business segments: (i) senior housing triple-net, (ii) SHOP, (iii) life science and (iv) medical office. Under the medical office and life science segments, the Company invests through the acquisition and development of medical office buildings (“MOBs”) and life science facilities, which generally require a greater level of property management. The Company’s senior housing facilities are managed utilizing triple-net leases and RIDEA structures. The Company has non-reportable segments that are comprised primarily of the Company’s debt investments, hospital properties and care homes in the United Kingdom (“U.K.”). The accounting policies of the segments are the same as those in Note 2 to the Consolidated Financial Statements in the Company’s 2016 Annual Report on Form 10-K filed with the SEC, as updated by Note 2 herein. During the year ended December 31, 2016, 17 senior housing triple-net facilities were transitioned to a RIDEA structure (reported in the Company’s SHOP segment). During the nine months ended September 30, 2017, four senior housing triple-net facilities were transferred to the Company’s SHOP segment, of which one was transitioned to a RIDEA structure. The Company evaluates performance based upon: (i) property net operating income from continuing operations (“NOI”) and (ii) Adjusted NOI of the combined consolidated and unconsolidated investments in each segment. NOI is defined as rental and related revenues, including tenant recoveries, resident fees and services, and income from DFLs, less property level operating expenses. Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL non-cash interest, amortization of market lease intangibles, non-refundable entrance fees, net of entrance fee amortization and lease termination fees and the impact of deferred community fee income and expense. The adjustments to NOI and resulting Adjusted NOI for SHOP have been restated for prior periods presented to conform to the current period presentation for the adjustment to exclude the impact of deferred community fee income and expense, resulting in recognition as cash is received and expenses are paid.

Non-segment assets consist primarily of corporate assets, including cash and cash equivalents, restricted cash, accounts receivable, net, marketable equity securities and, if any, real estate held for sale. Interest expense, depreciation and amortization, and non-property specific revenues and expenses are not allocated to individual segments in evaluating the Company’s segment-level performance. See Note 17 for other information regarding concentrations of credit risk.

The following tables summarize information for the reportable segments (in thousands):

For the three months ended September 30, 2017:



	Senior Housing Triple-Net			SHOP			Life Science			Medical Office			Other Non-reportable			Corporate Non-segment			Total
Rental revenues⁽¹⁾	$	77,220		$	126,040		$	90,174		$	119,847		$	28,968		$	—		$	442,249
HCP share of unconsolidated JV revenues	—			81,936			2,031			496			421			—			84,884
Operating expenses	(934		)	(86,821		)	(19,960		)	(46,486		)	(1,137		)	—			(155,338		)
HCP share of unconsolidated JV operating expenses	—			(65,035		)	(433		)	(143		)	(20		)	—			(65,631		)
NOI	76,286			56,120			71,812			73,714			28,232			—			306,164
Adjustments to NOI⁽²⁾	(600		)	4,551			(751		)	(582		)	(1,283		)	—			1,335
Adjusted NOI	75,686			60,671			71,061			73,132			26,949			—			307,499
Addback adjustments	600			(4,551		)	751			582			1,283			—			(1,335		)
Interest income	—			—			—			—			11,774			—			11,774
Interest expense	(640		)	(933		)	(87		)	(126		)	(618		)	(68,924		)	(71,328		)
Depreciation and amortization	(25,547		)	(24,884		)	(30,851		)	(42,047		)	(7,259		)	—			(130,588		)
General and administrative	—			—			—			—			—			(23,523		)	(23,523		)
Acquisition and pursuit costs	—			—			—			—			—			(580		)	(580		)
Recoveries (impairments), net	—			—			—			—			(25,328		)	—			(25,328		)
Gain (loss) on sales of real estate, net	(6		)	5,180			8			—			—			—			5,182
Loss on debt extinguishments	—			—			—			—			—			(54,227		)	(54,227		)
Other income (expense), net	—			—			—			—			—			(10,556		)	(10,556		)
Income tax benefit (expense)	—			—			—			—			—			5,481			5,481
Less: HCP share of unconsolidated JV NOI	—			(16,901		)	(1,598		)	(353		)	(401		)	—			(19,253		)
Equity income (loss) from unconsolidated JVs	—			(245		)	789			274			244			—			1,062
Net income (loss)	$	50,093		$	18,337		$	40,073		$	31,462		$	6,644		$	(152,329	)	$	(5,720	)

_______________________________________


(1)	Represents rental and related revenues, tenant recoveries, resident fees and services, and income from DFLs.


(2)	Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, the deferral of community fees, net of amortization, lease termination fees and non-refundable entrance fees as the fees are collected by the Company’s CCRC JV, net of CCRC JV entrance fee amortization.

For the three months ended September 30, 2016:



	Senior Housing Triple-Net			SHOP			Life Science			Medical Office			Other Non-reportable			Corporate Non-segment			Total
Rental revenues⁽¹⁾	$	104,262		$	170,739		$	90,847		$	113,653		$	30,574		$	—		$	510,075
HCP share of unconsolidated JV revenues	—			50,973			1,929			502			410			—			53,814
Operating expenses	(1,794		)	(121,502		)	(18,487		)	(44,738		)	(1,193		)	—			(187,714		)
HCP share of unconsolidated JV operating expenses	—			(42,463		)	(406		)	(148		)	(20		)	—			(43,037		)
NOI	102,468			57,747			73,883			69,269			29,771			—			333,138
Adjustments to NOI⁽²⁾	(1,003		)	4,081			(314		)	(814		)	(1,140		)	—			810
Adjusted NOI	101,465			61,828			73,569			68,455			28,631			—			333,948
Addback adjustments	1,003			(4,081		)	314			814			1,140			—			(810		)
Interest income	—			—			—			—			20,482			—			20,482
Interest expense	(644		)	(8,130		)	(634		)	(1,608		)	(2,260		)	(104,584		)	(117,860		)
Depreciation and amortization	(34,030		)	(26,837		)	(31,967		)	(41,111		)	(7,462		)	—			(141,407		)
General and administrative	—			—			—			—			—			(34,781		)	(34,781		)
Acquisition and pursuit costs	—			—			—			—			—			(2,763		)	(2,763		)
Gain (loss) on sales of real estate, net	—			—			—			(9		)	—			—			(9		)
Other income (expense), net	—			—			—			—			—			1,432			1,432
Income tax benefit (expense)	—			—			—			—			—			424			424
Less: HCP share of unconsolidated JV NOI	—			(8,510		)	(1,523		)	(354		)	(390		)	—			(10,777		)
Equity income (loss) from unconsolidated JVs	—			(3,517		)	778			462			224			—			(2,053		)
Discontinued operations	—			—			—			—			—			108,213			108,213
Net income (loss)	$	67,794		$	10,753		$	40,537		$	26,649		$	40,365		$	(32,059	)	$	154,039

_______________________________________


(1)	Represents rental and related revenues, tenant recoveries, resident fees and services, and income from DFLs.


(2)	Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, the deferral of community fees, net of amortization, lease termination fees and non-refundable entrance fees as the fees are collected by the Company’s CCRC JV, net of CCRC JV entrance fee amortization.

For the nine months ended September 30, 2017:



	Senior Housing Triple-Net			SHOP			Life Science			Medical Office			Other Non-reportable			Corporate Non-segment			Total
Rental revenues⁽¹⁾	$	255,332		$	391,684		$	262,224		$	357,381		$	87,524		$	—		$	1,354,145
HCP share of unconsolidated JV revenues	—			239,667			5,975			1,481			1,256			—			248,379
Operating expenses	(2,927		)	(267,226		)	(56,024		)	(137,930		)	(3,475		)	—			(467,582		)
HCP share of unconsolidated JV operating expenses	—			(190,049		)	(1,234		)	(431		)	(58		)	—			(191,772		)
NOI	252,405			174,076			210,941			220,501			85,247			—			943,170
Adjustments to NOI⁽²⁾	(2,844		)	12,229			(1,094		)	(2,321		)	(3,164		)	—			2,806
Adjusted NOI	249,561			186,305			209,847			218,180			82,083			—			945,976
Addback adjustments	2,844			(12,229		)	1,094			2,321			3,164			—			(2,806		)
Interest income	—			—			—			—			50,974			—			50,974
Interest expense	(1,898		)	(6,950		)	(288		)	(382		)	(3,541		)	(222,775		)	(235,834		)
Depreciation and amortization	(77,478		)	(75,657		)	(95,648		)	(127,261		)	(21,849		)	—			(397,893		)
General and administrative	—			—			—			—			—			(67,287		)	(67,287		)
Acquisition and pursuit costs	—			—			—			—			—			(2,504		)	(2,504		)
Recoveries (impairments), net	—			—			—			—			(82,010		)	—			(82,010		)
Gain (loss) on sales of real estate, net	268,227			5,313			45,922			(406		)	3,796			—			322,852
Loss on debt extinguishments	—			—			—			—			—			(54,227		)	(54,227		)
Other income (expense), net	—			—			—			—			—			40,723			40,723
Income tax benefit (expense)	—			—			—			—			—			14,630			14,630
Less: HCP share of unconsolidated JV NOI	—			(49,618		)	(4,741		)	(1,050		)	(1,198		)	—			(56,607		)
Equity income (loss) from unconsolidated JVs	—			683			2,322			846			720			—			4,571
Net income (loss)	$	441,256		$	47,847		$	158,508		$	92,248		$	32,139		$	(291,440	)	$	480,558

_______________________________________


(1)	Represents rental and related revenues, tenant recoveries, resident fees and services, and income from DFLs.


(2)	Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, the deferral of community fees, net of amortization, lease termination fees and non-refundable entrance fees as the fees are collected by the Company’s CCRC JV, net of CCRC JV entrance fee amortization.

For the nine months ended September 30, 2016:



	Senior Housing Triple-Net			SHOP			Life Science			Medical Office			Other Non-reportable			Corporate Non-segment			Total
Rental revenues⁽¹⁾	$	319,989		$	500,704		$	269,994		$	331,881		$	95,483		$	—		$	1,518,051
HCP share of unconsolidated JV revenues	—			152,424			5,628			1,503			1,224			—			160,779
Operating expenses	(5,521		)	(350,949		)	(53,191		)	(129,715		)	(3,375		)	—			(542,751		)
HCP share of unconsolidated JV operating expenses	—			(125,244		)	(1,173		)	(452		)	(30		)	—			(126,899		)
NOI	314,468			176,935			221,258			203,217			93,302			—			1,009,180
Adjustments to NOI⁽²⁾	(8,464		)	14,648			(1,545		)	(2,361		)	(1,926		)	—			352
Adjusted NOI	306,004			191,583			219,713			200,856			91,376			—			1,009,532
Addback adjustments	8,464			(14,648		)	1,545			2,361			1,926			—			(352		)
Interest income	—			—			—			—			71,298			—			71,298
Interest expense	(8,859		)	(23,818		)	(1,904		)	(4,899		)	(7,067		)	(314,708		)	(361,255		)
Depreciation and amortization	(101,737		)	(78,124		)	(97,640		)	(120,432		)	(23,248		)	—			(421,181		)
General and administrative	—			—			—			—			—			(83,011		)	(83,011		)
Acquisition and pursuit costs	—			—			—			—			—			(6,061		)	(6,061		)
Gain (loss) on sales of real estate, net	23,940			—			29,428			8,333			57,904			—			119,605
Other income (expense), net	—			—			—			—			—			5,064			5,064
Income tax benefit (expense)	—			—			—			—			—			(1,101		)	(1,101		)
Less: HCP share of unconsolidated JV NOI	—			(27,180		)	(4,455		)	(1,051		)	(1,194		)	—			(33,880		)
Equity income (loss) from unconsolidated JVs	—			(8,477		)	2,263			1,541			645			—			(4,028		)
Discontinued operations	—			—			—			—			—			283,996			283,996
Net income (loss)	$	227,812		$	39,336		$	148,950		$	86,709		$	191,640		$	(115,821	)	$	578,626

_______________________________________


(1)	Represents rental and related revenues, tenant recoveries, resident fees and services, and income from DFLs.


(2)	Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, the deferral of community fees, net of amortization, lease termination fees and non-refundable entrance fees as the fees are collected by the Company’s CCRC JV, net of CCRC JV entrance fee amortization.

The following table summarizes the Company’s revenues by segment (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
Segment	2017		2016		2017		2016
Senior housing triple-net	$	77,220	$	104,262	$	255,332	$	319,989
SHOP	126,040		170,739		391,684		500,704
Life science	90,174		90,847		262,224		269,994
Medical office	119,847		113,653		357,381		331,881
Other non-reportable segments	40,742		51,056		138,498		166,781
Total revenues	$	454,023	$	530,557	$	1,405,119	$	1,589,349

See Notes 3 and 4 for significant transactions impacting the Company’s segment assets during the periods presented.