10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
	For the quarterly period ended March 31, 2006.
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 1-8895

HEALTH CARE PROPERTY INVESTORS, INC.

(Exact name of registrant as specified in its charter)

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

3760 Kilroy Airport Way, Suite 300
Long Beach, CA 90806
(Address of principal executive offices)

(562) 733-5100
(Registrant’s telephone number, including area code)

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 is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “Accelerated Filer and Large Accelerated Filer” in Rule 12b-2 of the Exchange Act. (check one):    Large Accelerated Filer  ý Accelerated Filer  o   Non-accelerated Filer  o

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

As of April 24, 2006, there were 136,843,121 shares of $ 1.00 par value common stock outstanding.

HEALTH CARE PROPERTY INVESTORS, INC.

INDEX

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets
	Condensed Consolidated Statements of Income
	Condensed Consolidated Statement of Stockholders’ Equity
	Condensed Consolidated Statements of Cash Flows
	Notes to Condensed Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures
PART II. OTHER INFORMATION
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.	Exhibits
Signatures

2

HEALTH CARE PROPERTY INVESTORS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	March 31, 2006			December 31, 2005
	(Unaudited)
ASSETS
Real estate:
Buildings and improvements	$	3,678,006		$	3,489,415
Developments in process	19,580			22,286
Land	344,496			344,240
Less accumulated depreciation and amortization	638,405			614,089
Net real estate	3,403,677			3,241,852
Loans receivable, net:
Joint venture partners	7,006			7,006
Others	145,638			179,825
Investments in and advances to unconsolidated joint ventures	49,058			48,598
Accounts receivable, net of allowance of $550 and $1,205, respectively	13,696			13,313
Cash and cash equivalents	55,957			21,342
Restricted cash	2,694			2,270
Intangibles, net	51,556			38,804
Other assets, net	59,534			44,255
Total assets	$	3,788,816		$	3,597,265
LIABILITIES AND STOCKHOLDERS’ EQUITY
Bank lines of credit	$	375,000		$	258,600
Senior unsecured notes	1,476,215			1,462,250
Mortgage debt	268,654			236,096
Accounts payable and accrued liabilities	72,867			68,718
Deferred revenue	31,781			22,551
Total liabilities	2,224,517			2,048,215
Minority interests:
Joint venture partners	22,584			20,905
Non-managing member unitholders	134,210			128,379
Total minority interests	156,794			149,284
Stockholders’ equity:
Preferred stock, $1.00 par value: 50,000,000 shares authorized; 11,820,000 shares issued and outstanding, liquidation preference of $25 per share	285,173			285,173
Common stock, $1.00 par value: 750,000,000 shares authorized; 136,841,504 and 136,193,764 shares issued and outstanding, respectively	136,842			136,194
Additional paid-in capital	1,457,108			1,446,349
Cumulative net income	1,579,034			1,521,146
Cumulative dividends	(2,052,009		)	(1,988,248		)
Accumulated other comprehensive income (loss)	1,357			(848		)
Total stockholders’ equity	1,407,505			1,399,766
Total liabilities and stockholders’ equity	$	3,788,816		$	3,597,265

See accompanying Notes to Condensed Consolidated Financial Statements.

3

HEALTH CARE PROPERTY INVESTORS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2006			2005
Revenues and other income:
Rental and other revenues	$	122,126		$	101,857
Equity income from unconsolidated joint ventures	3,822			211
Interest and other income	15,747			5,179
	141,695			107,247
Costs and expenses:
Interest	32,093			23,238
Depreciation and amortization	30,679			23,464
Operating	17,564			13,301
General and administrative	8,742			7,319
	89,078			67,322
Income before minority interests	52,617			39,925
Minority interests	(3,777		)	(3,147		)
Income from continuing operations	48,840			36,778
Discontinued operations:
Operating income	457			1,942
Gain on sales of real estate	8,591			4,738
	9,048			6,680
Net income	57,888			43,458
Preferred stock dividends	(5,283		)	(5,283		)
Net income applicable to common shares	$	52,605		$	38,175
Basic earnings per common share:
Continuing operations	$	0.32		$	0.24
Discontinued operations	0.07			0.05
Net income applicable to common shares	$	0.39		$	0.29
Diluted earnings per common share:
Continuing operations	$	0.32		$	0.23
Discontinued operations	0.06			0.05
Net income applicable to common shares	$	0.38		$	0.28
Weighted average shares used to calculate earnings per common share:
Basic	136,040			133,492
Diluted	136,856			134,529

See accompanying Notes to Condensed Consolidated Financial Statements.

4

HEALTH CARE PROPERTY INVESTORS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

														Accumulated
							Additional							Other
	Preferred Stock			Common Stock			Paid-In		Cumulative					Comprehensive
	Shares	Amount		Shares	Amount		Capital		Net Income		Dividends			Income (Loss)			Total
December 31, 2005	11,820	$	285,173	136,194	$	136,194	$	1,446,349	$	1,521,146	$	(1,988,248	)	$	(848	)	$	1,399,766
Exercise of stock options	—	—		287	287		4,175		—		—			—			4,462
Other issuances of common stock, net	—	—		361	361		4,741		—		—			—			5,102
Net income	—	—		—	—		—		57,888		—			—			57,888
Preferred stock dividends	—	—		—	—		—		—		(5,283		)	—			(5,283		)
Common stock dividends	—	—		—	—		—		—		(58,478		)	—			(58,478		)
Amortization of deferred compensation	—	—		—	—		1,843		—		—			—			1,843
Other comprehensive income	—	—		—	—		—		—		—			2,205			2,205
March 31, 2006	11,820	$	285,173	136,842	$	136,842	$	1,457,108	$	1,579,034	$	(2,052,009	)	$	1,357		$	1,407,505

See accompanying Notes to Condensed Consolidated Financial Statements.

5

HEALTH CARE PROPERTY INVESTORS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2006			2005
Cash flows from operating activities:
Net income	$	57,888		$	43,458
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of real estate and in-place lease intangibles:
Continuing operations	30,679			23,464
Discontinued operations	177			520
Amortization of above and below market lease intangibles	(359		)	(22		)
Stock-based compensation	1,843			1,328
Debt issuance costs amortization	896			853
Recovery of loan losses	—			(56		)
Straight-line rents	(2,398		)	(1,629		)
Equity income from unconsolidated joint ventures	(3,822		)	(211		)
Distributions of earnings from unconsolidated joint ventures	3,822			211
Minority interests	3,777			3,147
Net gain on sales of real estate	(8,591		)	(4,738		)
Changes in:
Accounts receivable	(383		)	609
Other assets	1,657			1,039
Accounts payable, accrued liabilities and deferred revenue	7,025			4,513
Net cash provided by operating activities	92,211			72,486
Cash flows from investing activities:
Acquisition and development of real estate	(190,126		)	(6,864		)
Lease commissions and tenant and capital improvements	(3,898		)	(400		)
Net proceeds from sales of real estate	21,395			34,242
Distributions from unconsolidated joint ventures and other	427			3,126
Purchase of securities	(12,895		)	—
Principal repayments on loans receivable	35,757			6,910
Investment in loans receivable	(1,570		)	(4,285		)
Decrease (increase) in restricted cash	(424		)	2,443
Net cash provided by (used in) investing activities	(151,334		)	35,172
Cash flows from financing activities:
Borrowing (repayments) under bank lines of credit	116,400			(52,300		)
Repayment of mortgage debt	(1,470		)	(1,158		)
Issuance of mortgage debt	22,100			—
Repayment of senior unsecured notes	(135,000		)	—
Issuance of senior unsecured notes	148,606			—
Net proceeds from the issuance of common stock and exercise of options	9,564			10,815
Dividends paid on common and preferred stock	(63,761		)	(61,607		)
Distributions to minority interests	(2,701		)	(3,510		)
Net cash provided by (used in) financing activities	93,738			(107,760		)
Net increase (decrease) in cash and cash equivalents	34,615			(102		)
Cash and cash equivalents, beginning of period	21,342			16,962
Cash and cash equivalents, end of period	$	55,957		$	16,860

See accompanying Notes to Condensed Consolidated Financial Statements.

6

HEALTH CARE PROPERTY INVESTORS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Business

Health Care Property Investors, Inc. is a real estate investment trust (“REIT”) that, together with its consolidated entities (collectively, “HCP” or the “Company”), invests directly, or through joint ventures and mortgage loans, in healthcare related properties located throughout the United States.

(2) Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2006, are not necessarily indicative of the results that may be expected for the year ending December 31, 2006. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, filed with the Securities and Exchange Commission (“SEC”).

Use of Estimates

Management is required to make estimates and assumptions in the preparation of financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ.

Principles of Consolidation

The consolidated financial statements include the accounts of HCP, its wholly owned subsidiaries and its controlled, through voting rights or other means, joint ventures. All material intercompany transactions and balances have been eliminated in consolidation.

The Company applies Financial Accounting Standards Board (“FASB”) Interpretation No. 46R, Consolidation of Variable Interest Entities, as revised (“FIN 46R”), for entities in which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and for the determination of which business enterprise is the primary beneficiary of the VIE. A variable interest entity is broadly defined as an entity where either (i) the equity investors as a group, if any, do not have a controlling financial interest or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional financial support. The Company consolidates investments in VIEs when it is determined that the Company is the primary beneficiary of the VIE at either the creation of the variable interest entity or upon the occurrence of a reconsideration event.

The Company applies Emerging Issues Task Force (“EITF”) Issue 04-5, Investor’s Accounting for an Investment in a Limited Partnership When the Investor is the Sole General Partner and the Limited Partners Have Certain Rights (“EITF 04-5”), in determining what rights held by the limited partner(s) preclude consolidation in circumstances in which the sole general partner would otherwise consolidate the limited partnership in accordance with GAAP. The assessment of limited partners’ rights and their impact on the presumption of control of the limited partnership by the sole general partner should be made when an investor becomes the sole general partner and should be reassessed if (i) there is a change to the terms or in the exercisability of the rights of the limited partners, (ii) the sole general partner increases or decreases its ownership of limited partnership interests, or (iii) there is an increase or decrease in the number of outstanding limited partnership interests. This EITF issue also applies to managing members in limited liability companies.

Investments in entities which the Company does not consolidate but for which the Company has the ability to exercise significant influence over operating and financial policies are reported under the equity method of accounting. Generally, under the equity method of accounting, the Company’s share of the investee’s earnings or losses is included in the Company’s operating results.

7

Revenue Recognition

Rental income from tenants is recognized in accordance with GAAP, including SEC Staff Accounting Bulletin No. 104, Revenue Recognition (“SAB 104”). For leases with minimum scheduled rent increases, the Company recognizes income on a straight-line basis over the lease term when collectibility is reasonably assured. Recognizing rental income on a straight-line basis for leases results in recognized revenue exceeding amounts contractually due from tenants. Such cumulative excess amounts are included in other assets and were $22 million and $19 million, net of allowances, at March 31, 2006 and December 31, 2005, respectively. In the event the Company determines that collectibility of straight-line rents is not reasonably assured, the Company limits future recognition to amounts contractually owed, and, where appropriate, the Company establishes an allowance for estimated losses. Certain leases provide for additional rents based upon a percentage of the facility’s revenue in excess of specified base periods or other thresholds. Such revenue is deferred until the related thresholds are achieved.

The Company monitors the liquidity and creditworthiness of its tenants and borrowers on an ongoing basis. The evaluation considers industry and economic conditions, property performance, security deposits and guarantees, and other matters. The Company establishes provisions and maintains an allowance for estimated losses resulting from the possible inability of its tenants and borrowers to make payments sufficient to recover recognized assets. For straight-line rent amounts, the Company’s assessment is based on income recoverable over the term of the lease. At March 31, 2006 and December 31, 2005, respectively, the Company had an allowance of $23 million and $22 million, included in other assets, as a result of the Company’s determination that collectibility is not reasonably assured for certain straight-line rent amounts.

Loans Receivable

Loans receivable are classified as held-to-maturity because the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost. The Company recognizes interest income on loans, including the amortization of discounts and premiums, using the effective interest method.

Real Estate

Real estate, consisting of land, buildings, and improvements, is recorded at cost. The Company allocates acquisition costs to the acquired tangible and identified intangible assets and liabilities, primarily lease intangibles, based on their estimated fair values in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations.

The Company assesses fair value based on estimated cash flow projections that utilize appropriate discount and/or capitalization rates, third party appraisals and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

The Company records acquired above-and-below market leases at their fair value using a discount rate which reflects the risks associated with the leases acquired, equal to the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term for any below-market fixed rate renewal options for below-market leases. Other intangible assets acquired include amounts for in-place lease values that are based on the Company’s evaluation of the specific characteristics of each tenant’s lease. Factors to be considered include estimates of carrying costs during hypothetical expected lease-up periods, market conditions, and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses, and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, the Company considers leasing commissions, legal and other related costs.

Real estate assets and related intangibles are periodically reviewed for potential impairment by comparing the carrying amount to the expected undiscounted future cash flows to be generated from the assets. If the sum of the expected future net undiscounted cash flows is less than the carrying amount of the property, the Company will recognize an impairment loss by adjusting the asset’s carrying amount to its estimated fair value. Fair value for properties to be held and used is based on the present value of the future cash flows expected to be generated from the asset. Properties held for sale are recorded at the lower of their carrying amount or fair value less costs to dispose.

8

Developments in process are carried at cost, which includes pre-construction costs essential to the development of the property, construction costs, capitalized interest, and other costs directly related to the property. Capitalization of interest ceases when the property is ready for service, which generally is near the date that a certificate of occupancy is obtained. Expenditures for tenant improvements and leasing commissions are capitalized and amortized over the terms of the respective leases. Repairs and maintenance costs are expensed as incurred.

The Company computes depreciation on properties using the straight-line method over the assets’ estimated useful lives. Depreciation is discontinued when a property is identified as held for sale. Buildings and improvements are depreciated over useful lives ranging up to 45 years. Above-and-below market rent intangibles are amortized primarily to revenue over the remaining noncancellable lease terms and bargain renewal periods. Other in-place lease intangibles are amortized to expense over the remaining lease terms and bargain renewal periods. At March 31, 2006 and December 31, 2005, lease intangible assets were $51.6 million and $38.8 million, respectively. At March 31, 2006 and December 31, 2005, lease intangible liabilities were $10.8 million and $5.3 million, respectively, and are included in deferred revenue.

Income Taxes

The Company has elected and believes it operates so as to qualify as a REIT under Sections 856 to 860 of the Internal Revenue Code of 1986, as amended (the “Code”). Under the Code, the Company generally is not subject to federal income tax on its taxable income distributed to stockholders if certain distribution, income, asset, and shareholder tests are met. A REIT must distribute at least 90% of annual taxable income to stockholders.

Certain activities the Company undertakes must be conducted by entities which elect to be treated as taxable REIT subsidiaries (“TRSs”). TRSs are subject to both federal and state income taxes. The Company’s income tax expense for the three months ended March 31, 2006 and 2005 was insignificant.

Discontinued Operations

Certain long lived assets are classified as discontinued operations in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”). Long-lived assets to be disposed of are reported at the lower of their carrying amount or their fair value less costs to sell. Further, depreciation of these assets ceases at the time the assets are classified as discontinued operations. Discontinued operations is defined in SFAS No. 144 as a component of an entity that has either been disposed of or is deemed to be held for sale if both the operations and cash flows of the component have been or will be eliminated from ongoing operations as a result of the disposal transaction, and the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction.

The Company periodically sells assets based on market conditions and the exercise of purchase options by tenants. The operating results of properties meeting the criteria established in SFAS No. 144 are reported as discontinued operations in the Company’s consolidated statements of income. Discontinued operations for the three months ended March 31, 2006, include 12 properties with revenues of $0.7 million. The Company had 30 properties classified as discontinued operations for the three months ended March 31, 2005, with revenues of $2.6 million. During the three months ended March 31, 2006 and 2005, six and four properties were sold, respectively, with net gains on real estate dispositions of $8.6 million and $4.7 million, respectively. While SFAS No. 144 provides that the assets and liabilities of discontinued operations be presented separately in the balance sheet, such amounts are immaterial for the Company. Accordingly, such reclassification has not been made. At March 31, 2006 and December 31, 2005, the carrying amounts of assets held for sale were $4.9 million and $5.1 million, respectively, and are included in real estate.

Stock-Based Compensation

On January 1, 2002, the Company adopted the fair value method of accounting for stock-based compensation in accordance with SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”), as amended by SFAS No. 148, Accounting for Stock-Based Compensation—Transaction and Disclosure (“SFAS No. 148”). The fair value provisions of SFAS No. 123 were adopted prospectively with the fair value of all new stock option grants recognized as compensation expense beginning January 1, 2002. Since only new grants are accounted for under the fair value method, stock-based compensation expense is less than that which would have been recognized if the fair value method had been applied to all awards. Compensation expense for awards with graded vesting is generally recognized ratably over the period from the date of grant to the date when the award is no longer contingent on the employee providing additional services.

9

SFAS No. 123R, Share-Based Payments (“SFAS No. 123R”), which is a revision of SFAS No. 123, was issued in December 2004. Generally, the approach in SFAS No. 123R is similar to that in SFAS No. 123. However, SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options, be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative.  On January 1, 2006, the Company adopted SFAS No. 123R using the modified prospective application transition method which provides for only current and future period stock-based awards to be measured and recognized at fair value. The adoption of SFAS No. 123R did not have a significant impact on the Company’s financial position or results of operations since the fair value provisions of SFAS No. 123 were adopted prospectively on January 1, 2002.  

The following table reflects net income and earnings per share, adjusted as if the fair value based method had been applied to all outstanding stock awards (in thousands, except per share amounts):

	Three Months Ended March 31, 2005
Net income, as reported	$	43,458
Add: Stock-based compensation expense included in reported net income	1,328
Deduct: Stock-based employee compensation expense determined under the fair value based method	(1,472		)
Pro forma net income	$	43,314
Earnings per share:
Basic – as reported	$	0.29
Basic – pro forma	$	0.28
Diluted – as reported	$	0.28
Diluted – pro forma	$	0.28

The fair value of the stock options granted during the three months ended March 31, 2006 and 2005 was estimated on the date of grant using a Black-Scholes option valuation model that uses the assumptions noted in the following table. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected life (estimated period of time outstanding) of the stock options granted was estimated using the historical exercise behavior of employees. Expected volatility was based on historical volatility for a period equal to the stock option’s expected life, ending on the day of grant, and calculated on a weekly basis.

	2006		2005
Risk-free rate	4.51	%	3.93	%
Expected life (in years)	6.50		6.50
Expected volatility	20.00	%	20.00	%
Expected dividend yield	7.50	%	7.50	%

Cash and Cash Equivalents

Cash and cash equivalents represent short term investments with original maturities of three months or less when purchased.

Restricted Cash

Restricted cash primarily consists of amounts held by mortgage lenders to provide for future real estate tax expenditures and tenant improvements and security deposits.

10

Derivatives

The Company applies SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 137, SFAS No. 138 and SFAS No. 148 (“SFAS No. 133”), which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and hedging activities. It requires the recognition of all derivative instruments as assets or liabilities in the Company’s condensed consolidated balance sheets at fair value. Changes in the fair value of derivative instruments that are not designated as hedges or that do not meet the hedge accounting criteria of SFAS No. 133 are recognized in earnings. For derivatives designated as hedging instruments in qualifying cash flow hedges, the effective portion of changes in fair value of the derivatives is recognized in accumulated other comprehensive income (loss) whereas the ineffective portion is recognized in earnings.

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as cash flow hedges to specific assets and liabilities in the consolidated balance sheet. The Company also assesses and documents, both at the hedging instrument’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows associated with the hedged items. When it is determined that a derivative ceases to be highly effective as a hedge, the Company discontinues hedge accounting prospectively.

Marketable Securities

The Company classifies its existing marketable equity securities as available-for-sale in accordance with the provisions of SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, (“SFAS No. 115”). These securities are carried at market value, with unrealized gains and losses reported in stockholders’ equity as a component of accumulated other comprehensive income (loss). Gains or losses on securities sold are based on the specific identification method. There were no sales of securities for the three months ended March 31, 2006 and 2005.

All debt securities are classified as held-to-maturity because the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity.

Segment Reporting

The Company reports its consolidated financial statements in accordance with SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information (“SFAS No. 131”). The Company’s segments are based on the Company’s method of internal reporting which classifies its operations by leasing activities. The Company’s segments include: medical office buildings (“MOBs”) and triple-net leased facilities.

New Accounting Pronouncements

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections (“SFAS No. 154”), which replaces Accounting Principles Board Opinion No. 20, Accounting Changes and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS No. 154 changes the requirements for the accounting for and reporting of a change in accounting principles. It requires retrospective application to prior periods’ financial statements of changes in accounting principles, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of SFAS No. 154 did not have a significant impact on the Company’s financial position or results of operations.

Reclassifications

Certain reclassifications have been made for comparative financial statement presentation.

11

(3) Operator Concentration

Tenet Healthcare Corporation (NYSE: THC) and American Retirement Corporation (NYSE: ARC) accounted for 7.6% and 7.4%, respectively, of the Company’s revenue in the three months ended March 31, 2006, and accounted for 10.4% and 9.8%, respectively, of the Company’s revenue in the three months ended March 31, 2005. The carrying amount of the Company’s real estate assets leased to Tenet and ARC was $340.5 million and $370.3 million, respectively, at March 31, 2006.

These companies are publicly traded and are subject to the informational filing requirements of the Securities and Exchange Act of 1934, as amended. Accordingly, each is required to file periodic reports on Form 10-K and Form 10-Q with the Securities and Exchange Commission.

Certain operators of the Company’s properties are experiencing financial, legal and regulatory difficulties. The loss of a significant operator or a combination of smaller operators could have a material impact on the Company’s financial position or results of operations.

(4) Acquisitions and Dispositions

A summary of acquisitions through March 31, 2006, is as follows (in thousands):

	Consideration						Assets Acquired
Acquisitions (1)	Cash Paid		Debt Assumed		DownREIT Units (2)		Real Estate		Net Intangibles
Medical office buildings	$	141,114	$	11,928	$	5,523	$	149,563	$	9,002
Senior housing facilities	15,211		—		—		14,933		278
Other healthcare facilities	30,299		—		—		30,299		—
	$	186,624	$	11,928	$	5,523	$	194,795	$	9,280

A summary of fiscal year 2005 acquisitions is as follows (in thousands):

	Consideration						Assets Acquired
Acquisitions (1)	Cash Paid		Debt Assumed		DownREIT Units (2)		Real Estate		Net Intangibles
Medical office buildings	$	96,863	$	61,424	$	10,967	$	154,182	$	15,072
Senior housing facilities	313,744		52,060		19,431		379,745		5,490
	$	410,607	$	113,484	$	30,398	$	533,927	$	20,562

(1)Includes transaction costs, if any.

(2)Non-managing member LLC units.

During the three months ended March 31, 2006, the Company acquired properties aggregating $204.1 million, including the following significant acquisitions:

During the three months ended March 31, 2006, the Company acquired 13 medical office buildings for $138 million, including DownREIT units valued at $6 million, in related transactions. The 13 buildings, with 730,000 rentable square feet, have an initial yield of 7.3%. As of March 31, 2006, the purchase price allocation is preliminary and is pending information necessary to complete the valuation of certain intangibles.

On February 8, 2006, the Company acquired four laboratory, office and biotechnology manufacturing buildings located in San Diego, California for $30 million. The initial yield on these buildings is 6.1%, with the stabilized yield expected to be 8.3%. The buildings include approximately 158,000 rentable square feet. As of March 31, 2006, the purchase price allocation is preliminary and is pending information necessary to complete the valuation of certain intangibles.

On February 24, 2006, the Company acquired two medical office buildings for approximately $21 million including assumed debt valued at $12 million. The two buildings, with 157,000 rentable square feet, have an initial yield of 8.0%.

12

During the three months ended March 31, 2006, the Company sold six properties for $21 million and recognized gains of approximately $9 million.

(5) Investments in and Advances to Unconsolidated Joint Ventures

HCP Medical Office Portfolio, LLC

HCP Medical Office Portfolio, LLC (“HCP MOP”) is a joint venture formed in June 2003 between the Company and an affiliate of General Electric Company (“GE”). HCP MOP is engaged in the acquisition, development and operation of MOB properties. The Company has a 33% ownership interest therein and is the managing member. Activities of the joint venture requiring equity capital are generally funded on a transactional basis by the members in proportion to their ownership interests. Cash distributions are made to the members in proportion to their ownership interests until GE’s cumulative return, as defined, exceeds specified thresholds. Thereafter, the Company will be entitled to an additional promoted interest. In addition, the joint venture agreement includes buy/sell provisions and imposes certain restrictions on the transfer of the Company’s joint venture interests by the Company and GE to third parties.

The Company uses the equity method of accounting for its investment in HCP MOP because it exercises significant influence through voting rights and its position as managing member. However, the Company does not consolidate HCP MOP since it does not control, through voting rights or other means, the joint venture as GE has substantive participating decision-making rights and has the majority of the economic interest. The accounting policies of HCP MOP are the same as those described in the summary of significant accounting policies (see Note 2).

Summarized unaudited condensed financial information of HCP MOP is as follows:

Balance Sheets	March 31, 2006		December 31, 2005
	(In thousands)
Real estate, at cost	$	405,334	$	402,845
Less accumulated depreciation and amortization	24,962		22,087
Net real estate	380,372		380,758
Real estate held for sale, net	17,833		67,551
Other assets, net	36,519		36,790
Total assets	$	434,724	$	485,099
Mortgage debt and notes payable	$	260,766	$	272,681
Mortgage debt on assets held for sale	11,585		46,605
Other liabilities	28,437		30,851
GE’s capital	89,737		90,424
HCP’s capital	44,199		44,538
Total liabilities and members’ capital	$	434,724	$	485,099

	Three Months Ended March 31,
Statements of Operations	2006		2005
	(In thousands)
Rental and other income	$	19,919	$	17,790
Net income	$	11,169	$	33
HCP’s equity income	$	3,723	$	11
Fees earned by HCP	$	723	$	775
Distributions received by HCP	$	4,271	$	3,047

13

The Company has not guaranteed any indebtedness or other obligations of HCP MOP. Generally, the Company may only be required to provide additional funding to HCP MOP under limited circumstances as specified in the related agreements. At March 31, 2006, investments in and advances to unconsolidated joint ventures includes outstanding advances to HCP MOP of $3.4 million.

In August and September 2005, ten medical office buildings owned by HCP MOP, principally in Louisiana and the surrounding area, sustained varying degrees of damage due to hurricanes Katrina and Rita. Preliminary estimates indicate that four of the buildings have incurred substantial damage and may be a total loss. For the years ended December 31, 2005 and 2004, the four buildings generated revenues of $0.9 million and $1.4 million, respectively. As of December 31, 2005, the $3.8 million carrying value of these four buildings was written off and an equal amount was recorded as a receivable for the expected insurance proceeds.

At December 31, 2005, the remaining six buildings had resumed operations with repairs completed as of March 31, 2006. Revenues for the six facilities were $1.1 million and $1.5 million for the three months ended March 31, 2006, and 2005, respectively.

Repairs and other related expenditures for damages caused by hurricanes Katrina and Rita during the three months ended March 31, 2006, were approximately $3.0 million. The Company has property, business interruption and other related insurance coverage to mitigate the financial impact of these types of events; such coverage is subject to various limits and deductible provisions based on the terms of the policies. Any excess insurance recovery above the carrying value of the assets is expected to be recognized by HCP MOP as a gain at the time the claims settle with the insurance carrier.

During the three months ended March 31, 2006, HCP MOP sold 22 MOBs with 871,000 of rentable square feet for $61 million, net of estimated transaction costs, and recognized aggregate gains of approximately $10 million. In connection with the sale, approximately $46 million of HCP MOP’s mortgage debt was either repaid or assumed by the purchaser.

Other Unconsolidated Joint Ventures

The Company owns minority interests in the following entities, which are accounted for on the equity method of accounting at March 31, 2006 (dollars in thousands):

Entity	Investment (1)			Ownership (2)
Arborwood Living Center, LLC	$	773		45	%
Edgewood Assisted Living Center, LLC	(330		)	45	%
Greenleaf Living Center, LLC	473			45	%
Seminole Shores Living Center, LLC	(557		)	50	%

(1)Represents the Company’s investment in the identified unconsolidated joint venture. Negative investment amounts are included in accounts payable and accrued liabilities. See Note 2 regarding the Company’s policy for accounting for joint venture interests.

(2)The Company’s ownership interest and economic interest are substantially the same.

Summarized unaudited condensed combined financial information for the other unconsolidated joint ventures follows:

Balance Sheets	March 31, 2006		December 31, 2005
	(In thousands)
Real estate, net	$	14,393	$	14,708
Other assets, net	1,846		1,407
Total assets	$	16,239	$	16,115
Notes payable	$	15,426	$	15,449
Accounts payable	321		55
Other partners’ capital	133		351
HCP’s capital	359		260
Total liabilities and partners’ capital	$	16,239	$	16,115

14

	Three Months Ended March 31,
Statements of Operations	2006		2005
	(In thousands)
Rental and other income	$	550	$	1,407
Net income	$	18	$	192
HCP’s equity income	$	99	$	200
Distributions received	$	—	$	219

As of March 31, 2006, the Company has guaranteed approximately $7.2 million of a total of $15.4 million of notes payable for four of these joint ventures.

(6) Loans Receivable

Loans receivable consist of the following:

	March 31, 2006								December 31, 2005
	Secured		Unsecured			Total			Secured		Unsecured			Total
	(In thousands)
Joint venture partners	$	—	$	7,006		$	7,006		$	—	$	7,006		$	7,006
Other	145,124		2,778			147,902			175,426		6,663			182,089
Loan loss allowance	—		(2,264		)	(2,264		)	—		(2,264		)	(2,264		)
	$	145,124	$	7,520		$	152,644		$	175,426	$	11,405		$	186,831

On February 9, 2006, the Company refinanced two existing loans secured by a hospital in Texas. The loans were combined into a new single loan that bears interest at 8.5% per annum and matures in 2016. The original loans matured in January 2006 and had a weighted average interest rate of 10.35%.

On March 14, 2006, the Company received $38 million in proceeds, including $7.3 million in excess of the carrying value, upon the early repayment of a secured loan receivable due May 1, 2010. The amount received in excess of the carrying value of the secured loan receivable was recorded as interest income and is included in interest and other income in the Company’s Condensed Consolidated Statement of Income for the three months ended March 31, 2006. This loan was secured by nine skilled nursing facilities and carried an interest rate of 11.4% per annum.

(7) Debt

Senior unsecured notes. At March 31, 2006, the Company had $1.5 billion in aggregate principal of senior unsecured notes outstanding. Interest rates on the notes ranged from 4.88% to 7.62% with a weighted average rate of 6.11% at March 31, 2006. Discounts and premiums are amortized to interest expense over the term of the related debt.

On February 27, 2006, the Company issued $150 million of 5.625% senior unsecured notes due 2013. The notes were priced at 99.071% of the principal amount for an effective yield of 5.788%. The Company received net proceeds of $149 million, which were used to repay outstanding indebtedness and for other general corporate purposes.

During the three months ended March 31, 2006, the Company repaid $135 million of maturing senior unsecured notes which accrued interest at a weighted average rate of 6.7%. These notes were repaid with funds available under the Company’s bank lines of credit.

The senior unsecured notes contain certain covenants including limitations on debt and other customary terms.

Mortgage debt. At March 31, 2006, the Company had $269 million in mortgage debt secured by 43 healthcare facilities with a carrying amount of $441 million. Interest rates on the mortgage notes ranged from 2.75% to 9.32% with a weighted average rate of 6.49% at March 31, 2006.

15

The instruments encumbering the properties restrict title transfer of the respective properties subject to the terms of the mortgage, prohibit additional liens, restrict prepayment, require payment of real estate taxes, maintenance of the properties in good condition, maintenance of insurance on the properties and include a requirement to obtain lender consent to enter into material tenant leases.

Bank lines of credit. At March 31, 2006, borrowings under the Company’s $500 million three-year line of credit were $175 million with a weighted average interest rate of 5.37%. Borrowings under the bank line of credit accrue interest at 65 basis points over LIBOR with a 15 basis point facility fee. In addition, a negotiated rate option, whereby the lenders participating in the credit facility bid on the interest to be charged and which may result in a reduced interest rate, is available for up to 50% of borrowings. The credit facility also contains an “accordion” feature allowing borrowings to be increased by $100 million under certain conditions.

The credit agreement contains certain financial restrictions and other customary requirements. The more significant covenants, using terms defined in the agreement, limit (i) Consolidated Total Indebtedness to Consolidated Total Asset Value to 60%, (ii) Secured Debt to Consolidated Total Asset Value to 30% and (iii) Unsecured Debt to Consolidated Unencumbered Asset Value to 60%. The agreement also requires that the Company must maintain (i) a Fixed Charge Coverage ratio, as defined, of 1.75 times and (ii) a formula-determined Minimum Tangible Net Worth. As of March 31, 2006, the Company was in compliance with each of these restrictions and requirements.

On February 14, 2006, the Company entered into a new Term Loan Agreement for $200 million that matures on June 14, 2006. Loans outstanding under the Term Loan Agreement bear interest at a rate per annum equal to LIBOR plus a margin ranging from 0.75% to 1.50%, depending upon the Company’s senior unsecured long term debt ratings. At March 31, 2006, borrowings under the Term Loan Agreement totaled $200 million, with a rate of 5.56%, and are included under bank lines of credit in the Condensed Consolidated Balance Sheet. Borrowings under the Term Loan Agreement were used to fund recent acquisition activity and for other corporate purposes.  On April 18, 2006, the Company repaid all amounts outstanding under the Loan Term Agreement.

(8) Stockholders’ Equity

Common Stock

During the three months ended March 31, 2006 and 2005, the Company issued 210,000 and 229,000 shares, respectively, of common stock under its Dividend Reinvestment and Stock Purchase Plan. The Company issued 287,000 and 379,000 shares, respectively, upon exercise of stock options during the three months ended March 31, 2006 and 2005.

During the three months ended March 31, 2006 and 2005, the Company issued 61,000 and 63,000 shares of restricted stock, respectively, under the Company’s 2000 Stock Incentive Plan (the “Incentive Plan”). The Company also issued 117,000 and 2,800 shares upon the vesting of performance restricted stock units during the three months ended March 31, 2006 and 2005, respectively.

On February 6, 2006, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.425 per share. The common stock cash dividend was paid on February 23, 2006 to stockholders of record as of the close of business on February 13, 2006.

On April 25, 2006, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.425 per share of common stock. The common stock cash dividend will be paid on May 19, 2006 to stockholders of record as of the close of business on May 8, 2006.

Preferred Stock

On February 6, 2006, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.45313 per share on its Series E cumulative redeemable preferred stock and $0.44375 per share on its Series F cumulative redeemable preferred stock. These dividends were paid on March 31, 2006 to stockholders of record as of the close of business on March 15, 2006.

16

On April 25, 2006, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.45313 per share on its Series E cumulative redeemable preferred stock and $0.44375 per share on its Series F cumulative redeemable preferred stock. These dividends will be paid on June 30, 2006 to stockholders of record as of the close of business on June 15, 2006.

Accumulated Other Comprehensive Income  (“AOCI”)

	March 31, 2006			December 31, 2005
	(In thousands)
AOCI-unrealized gains on securities available for sale	$	2,157		$	1,080
AOCI-unrealized gains on cash flow hedges	1,491			388
Supplemental Executive Retirement Plan (“SERP”) minimum liability	(2,291		)	(2,316		)
	$	1,357		$	(848	)

Other comprehensive income and loss amounts are additions to and reductions of net income, respectively, in calculating comprehensive income. Comprehensive income for the three months ended March 31, 2006 and 2005 was $60.1 million and $43.5 million, respectively.

(9) Segment Disclosures

The Company’s business consists of financing and leasing healthcare-related real estate. The Company evaluates its business and makes resource allocations on its two business segments—triple-net leased facilities and medical office buildings. Within the triple-net leased segment, the Company invests in healthcare-related real estate through acquisitions and secured financings of primarily single tenant properties. Properties acquired are generally leased under triple-net leases. Within the medical office building segment, the Company acquires medical office buildings that are primarily leased under gross or modified gross leases and 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). There are no intersegment sales or transfers. The Company evaluates performance based upon the net operating income of the combined properties in each segment.

Non-segment revenue consists mainly of interest on unsecured loans and fee income. Non-segment assets consist of corporate assets including cash, restricted cash, accounts receivable, and deferred financing costs. Interest expense, depreciation and amortization, and other non-property specific revenues and expenses are not allocated to individual segments in measuring each segment’s performance.

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

For the three months ended March 31, 2006:

Segments	Rental Revenues		Equity Income from Unconsolidated Joint Ventures		Interest and Other Income		Total Revenues		NOI(1)
Triple-net leased facilities:
Senior housing facilities	$	34,153	$	99	$	1,026	$	35,278	$	31,074
Hospitals	19,861		—		2,321		22,182		19,861
Skilled nursing facilities	22,430		—		8,501		30,931		22,300
Other healthcare facilities	7,671		—		—		7,671		6,431
Total triple-net leased facilities	$	84,115	$	99	$	11,848	$	96,062	$	79,666
Medical office buildings	38,011		3,723		—		41,734		24,896
Non-segment revenues and other income	—		—		3,899		3,899		—
Total	$	122,126	$	3,822	$	15,747	$	141,695	$	104,562

17

For the three months ended March 31, 2005:

Segments	Rental Revenues		Equity Income from Unconsolidated Joint Ventures		Interest and Other Income		Total Revenues		NOI(1)
Triple-net leased facilities:
Senior housing facilities	$	23,670	$	200	$	778	$	24,648	$	22,064
Hospitals	20,142		—		1,521		21,663		20,142
Skilled nursing facilities	21,536		—		1,518		23,054		21,750
Other healthcare facilities	7,676		—		—		7,676		6,388
Total triple-net leased facilities	$	73,024	$	200	$	3,817	$	77,041	$	70,344
Medical office buildings	28,833		11		—		28,844		18,212
Non-segment revenues and other income	—		—		1,362		1,362		—
Total	$	101,857	$	211	$	5,179	$	107,247	$	88,556

(1)Net Operating Income from Continuing Operations (“NOI”) is a non-GAAP supplemental financial measure used to evaluate the operating performance of real estate properties. The Company defines NOI as rental revenues, including tenant reimbursements, less property-level operating expenses, which exclude depreciation and amortization, general and administrative expenses, impairments, interest expense and discontinued operations. The Company believes NOI provides investors relevant and useful information because it measures the operating performance of the Company’s real estate at the property level on an unleveraged basis. The Company uses NOI to make decisions about resource allocations and assess property-level performance. The Company believes 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 it does not reflect the aforementioned excluded items. Further, NOI may not be comparable to that of other real estate investment trusts, as they may use different methodologies for calculating NOI.

The following is a reconciliation from NOI to reported net income, a financial measure under GAAP (in thousands):

	Three Months ended March 31,
	2006			2005
Net operating income from continuing operations	$	104,562		$	88,556
Equity income from unconsolidated joint ventures	3,822			211
Interest and other income	15,747			5,179
Interest expense	(32,093		)	(23,238		)
Depreciation and amortization	(30,679		)	(23,464		)
General and administrative	(8,742		)	(7,319		)
Minority interests	(3,777		)	(3,147		)
Discontinued operations	9,048			6,680
Net income	$	57,888		$	43,458

The Company’s total assets by segment were:

Segments	March 31, 2006			December 31, 2005
Triple-net leased facilities:
Senior housing facilities	$	1,324,651		$	1,318,245
Hospitals	809,904			809,930
Skilled nursing facilities	670,994			701,687
Other healthcare facilities	270,718			243,166
Total triple-net leased assets	$	3,076,267		$	3,073,028
Medical office building facilities	1,189,503			1,034,651
Gross segment assets	4,265,770			4,107,679
Accumulated depreciation and amortization	(648,900		)	(619,673		)
Net segment assets	3,616,870			3,488,006
Non-segment assets	171,946			109,259
Total assets	$	3,788,816		$	3,597,265

18

(10) Supplemental Cash Flow

Supplemental Cash Flow Information

	Three Months Ended March 31,
	2006			2005
	(In thousands)
Interest paid, net of capitalized interest and other	$	28,718		$	19,997
Taxes paid	—			12
Capitalized interest	178			307
Mortgages assumed with real estate purchases	11,928			—
Non-managing member units issued in connection with acquisitions	5,523			—
Restricted stock issued	61			1,610
Performance restricted stock units vesting	117			—
Restricted stock cancellations	(3		)	(125		)
Conversion of non-managing member units into common stock	—			385

(11) Earnings Per Share of Common Stock

The Company computes earnings per share in accordance with SFAS No. 128, Earnings Per Share. Basic earnings per common share is computed by dividing net income applicable to common shares by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is calculated including the effect of dilutive securities. Approximately 2.2 million and 2.1 million options to purchase shares of common stock during the three months ended March 31, 2006 and 2005, respectively, were not included because they are not dilutive. Additionally, 6.2 million shares issuable upon conversion of 3.6 million non-managing member units during the three months ended March 31, 2006, and 5.0 million shares issuable upon conversion of 2.5 million non-managing member units during the three months ended March 31, 2005, were not included because they are not dilutive.

	Three Months Ended March 31,
	2006						2005
	Income		Shares	Per Share			Income		Shares	Per Share
	(In thousands, except per share amounts)
Basic earnings per common share:
Net income applicable to common shares	$	52,605	136,040	$	0.39		$	38,175	133,492	$	0.29
Dilutive options and unvested restricted stock	—		816	(0.01		)	—		1,037	(0.01		)
Diluted earnings per common share	$	52,605	136,856	$	0.38		$	38,175	134,529	$	0.28

(12) Derivative Financial Instruments

In July 2005, the Company entered into three interest-rate swap contracts that are designated as hedging the variability in expected cash flows for variable rate debt assumed in connection with the acquisition of a portfolio of real estate assets in July 2005. The cash flow hedges have a notional principal amount of $45.6 million and expire in July 2020. The fair value of these contracts at March 31, 2006, was $1.5 million and is included in other assets. For the three months ended March 31, 2006, the Company recognized increased interest expense of $0.1 million attributable to the contracts. The Company determined that these swap agreements were highly effective in offsetting future variable-interest cash flows related to the assumed mortgages. The effective portion of gains and losses on these contracts is recognized in accumulated other comprehensive income whereas the ineffective portion is recognized in earnings. During the three months ended March 31, 2006, there was no ineffective portion related to these hedges.

19

(13) Commitments and Contingencies

The Company, from time to time, is party to legal proceedings, lawsuits and other claims in the ordinary course of the Company’s business. These claims, even if not meritorious, could force the Company to spend significant financial resources. Except as described below, the Company is not aware of any legal proceedings or claims that it believes will have, individually or taken together, a material adverse effect on its business, prospects, financial condition or results of operations.

One of the Company’s properties located in Tarzana, California is affected by State of California Senate Bill 1953 (SB 1953), which requires certain seismic safety building standards for acute care hospital facilities. This hospital is operated by Tenet under a lease expiring in February 2009. The Company and Tenet are currently reviewing the SB 1953 compliance of this hospital, multiple plans of action to cause such compliance, the estimated time for completing the same, and the cost of performing necessary remediation of the property. We cannot currently estimate the remediation costs that will need to be incurred prior to 2013 in order to make the facility SB 1953-compliant through 2030 and the final allocation of any remediation costs between the Company and Tenet. Rent on the hospital for the three months ended March 31, 2006 was $2.1 million and for the years ended December 31, 2005 and 2004 was $10.8 million and $10.6 million, respectively, and the carrying amount was $75.6 million at March 31, 2006.

Certain residents of two of the Company’s senior housing facilities have entered into a master trust agreement with the operator of the facilities whereby amounts paid upfront by such residents were deposited into a trust account. These funds were then made available to the senior housing operator in the form of a non-interest bearing loan to provide permanent financing for the related communities. The operator of the senior housing facility is the borrower under these arrangements; however, two of the Company’s properties are collateral under the master trust agreements. As of March 31, 2006, the remaining obligation under the master trust agreements for these two properties is $10.2 million. The Company’s property is released as collateral as the master trust liabilities are extinguished.

Promoted Interests and Other Contractual Obligations. Upon the achievement of certain return thresholds and the occurrence of certain events, the Company may be obligated to make payments to certain joint venture partners pursuant to the terms and provisions of their contractual agreements with the partnership. From time to time in the normal course of the Company’s business, the Company enters into various contracts with third parties that may obligate it to make payments or perform other obligations upon the occurrence of certain events.

Earnout Obligations.  Pursuant to the terms of certain acquisition-related agreements, the Company may be obligated to make additional payments (“Earnouts”) upon the achievement of certain criteria. If it is probable at the time of acquisition of the related properties that the Earnout criteria will be achieved, the Earnout payments are accrued. Otherwise, the additional purchase consideration is recognized when the performance criteria are achieved.

General Uninsured Losses.  The Company obtains various types of insurance to mitigate the impact of property, business interruption, liability, flood, earthquake and terrorism related losses. The Company attempts to obtain appropriate policy terms, conditions, limits and deductibles, considering the relative risk of loss, the cost of such coverage and current industry practice. There are, however, certain types of extraordinary losses, such as those due to acts of war or other events, that may be either uninsurable or not economically insurable. Although the Company has obtained coverage to mitigate the impact of various casualty losses, with policy specifications and insured limits that it believes are commercially reasonable, there can be no assurance that the Company will be able to collect under such policies or that the policies will provide adequate coverage. Should an uninsured loss occur at a property, the Company’s assets may become impaired and the Company may not be able to operate its business at the property for an extended period of time.

20

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

Cautionary Language Regarding Forward-looking Statements

Statements in this Quarterly Report that are not historical factual statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The statements include, among other things, statements regarding the intent, belief or expectations of Health Care Property Investors, Inc. and its officers and can be identified by the use of terminology such as “may,” “will,” “expect,” “believe,” “intend,” “plan,” “estimate,” “should” and other comparable terms or the negative thereof. In addition, we, through our senior management, from time to time make forward-looking oral and written public statements concerning our expected future operations and other developments. Readers are cautioned that, while forward-looking statements reflect our good faith belief and best judgment based upon current information, they are not guarantees of future performance and are subject to known and unknown risks and uncertainties. Actual results may differ materially from the expectations contained in the forward-looking statements as a result of various factors. In addition to the factors set forth under “Risk Factors” in the Company’s Annual Report, readers should consider the following:

a)Legislative, regulatory, or other changes in the healthcare industry at the local, state or federal level which increase the costs of or otherwise affect the operations of, our tenants and borrowers;

b)Changes in the reimbursement available to our tenants and borrowers by governmental or private payors, including changes in Medicare and Medicaid payment levels and the availability and cost of third party insurance coverage;

c)Competition for tenants and borrowers, including with respect to new leases and mortgages and the renewal or rollover of existing leases;

d)Availability of suitable healthcare facilities to acquire at favorable prices and the competition for such acquisition and financing of healthcare facilities;

e)The ability of our tenants and borrowers to operate our properties in a manner sufficient to maintain or increase revenues and to generate sufficient income to make rent and loan payments;

f)The financial weakness of some operators, including potential bankruptcies, which results in uncertainties regarding our ability to continue to realize the full benefit of such operators’ leases;

g)Changes in national or regional economic conditions, including changes in interest rates and the availability and cost of capital;

h)The risk that we will not be able to sell or lease facilities that are currently vacant;

i)The potential costs of SB 1953 compliance with respect to our hospital in Tarzana, California;

j)The financial, legal and regulatory difficulties of two significant operators, Tenet and HealthSouth; and

k)The potential impact of existing and future litigation matters.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Executive Summary

We are a real estate investment trust (“REIT”) that invests in healthcare-related properties located throughout the United States. We develop, acquire, and manage healthcare real estate and provide mortgage financing to healthcare providers. We invest directly, often structuring sale-leaseback transactions, and through joint ventures. At March 31, 2006, our real estate portfolio, excluding assets held for sale but including assets held through joint ventures and mortgage loans, consisted of interests in 534 facilities located in 42 states.

21

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 into assets with higher return potential, and recycle capital from shorter term to longer term investments. We make investments where the expected risk-adjusted return exceeds our cost of capital and strive to leverage our operator and other business relationships.

Our strategy contemplates acquiring and developing properties on favorable terms. We attempt to structure transactions that are tax-advantaged and mitigate risks in our underwriting process. Generally, we prefer larger, more complex private transactions that leverage our management team’s experience and our infrastructure. During the three months ended March 31, 2006, we made gross investments of $214 million. These investments had an average first year yield on cost of just over 7.3%. Our investments for the three months ended March 31, 2006 were allocated among the following healthcare sectors: (i) 8% senior housing facilities; (ii) 78% MOBs; and (iii) 14% other healthcare facilities.

We follow a disciplined approach to enhancing the value of our existing portfolio, including the ongoing evaluation of properties that no longer fit our strategy for potential disposition. We sold six properties during the three months ended March 31, 2006 for $21 million and had six properties with a carrying amount of $4.9 million classified as held for sale at March 31, 2006.

We primarily generate revenue by leasing healthcare-related properties under long-term operating leases. Most of our rents are received under triple-net leases; however, Medical Office Building (“MOB”) rents are typically structured as gross or modified gross leases. Accordingly, for MOBs we incur certain property operating expenses, such as real estate taxes, repairs and maintenance, property management fees, utilities and insurance. Our growth depends, in part, on our ability to (i) increase rental income by increasing occupancy levels and rental rates, (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.

Access to external capital on favorable terms is critical to the success of our strategy. We attempt to match the long-term duration of our leases with long-term fixed rate financing. At March 31, 2006, 19% of our consolidated debt is at variable interest rates. We intend to maintain an investment grade rating on our fixed income securities and manage various capital ratios and amounts within appropriate parameters. As of March 31, 2006, our senior debt is rated BBB+ by both Standard & Poor’s and Fitch Ratings and Baa2 by Moody’s Investors Service.

Capital market access impacts our cost of capital and our ability to refinance existing indebtedness as it matures, as well as to fund future acquisitions and development through the issuance of additional securities. Our ability to access capital on favorable terms is dependent on various factors, including general market conditions, interest rates, credit ratings on our securities, perception of our potential future earnings and cash distributions, and the market price of our capital stock.

2006 Overview

Real Estate Transactions

Year-to-date through May 1, 2006, we have acquired interests in properties aggregating $214 million, including the following:

•During the three months ended March 31, 2006, we acquired 13 medical office buildings for $138 million, including DownREIT units valued at $6 million, in related transactions. These properties were acquired as part of a $163 million acquisition of 15 MOBs, with a total of 882,000 rentable square feet, at an initial yield of 7.3%

•On February 8, 2006, we acquired four laboratory, office and biotechnology manufacturing buildings located in San Diego, California for $30 million. The initial yield on these buildings is 6.1%, with the stabilized yield expected to be 8.3%. The buildings include approximately 158,000 rentable square feet.

•On February 24, 2006, we acquired two medical office buildings for approximately $21 million including assumed debt valued at $12 million. The two buildings, with 157,000 rentable square feet, have an initial yield of 8.0%.

22

During the quarter ended March 31, 2006, we sold six properties for $21 million and recognized a gain of approximately $9 million.

Capital Market Transactions

On February 27, 2006, we issued $150 million of 5.625% senior unsecured notes due 2013. The notes were priced at 99.071% of the principal amount for an effective yield of 5.788%. We received net proceeds of $149 million, which were used to repay outstanding indebtedness and for other general corporate purposes.

Other Events

On April 25, 2006, we announced that our Board of Directors declared a quarterly cash dividend of $0.425 per share of common stock. The common stock cash dividend will be paid on May 19, 2006 to stockholders of record as of the close of business on May 8, 2006.

Critical Accounting Policies

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to use judgment in the application of accounting policies, including making estimates and assumptions. We base estimates on our experience and on various other assumptions believed to be reasonable under the circumstances. These judgments affect the reported amounts of assets and liabilities and 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 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. The critical accounting policies used in the preparation of our financial statements are described in our 2005 Annual Report on Form 10-K.

23

Results of Operations

Three Months Ended March 31, 2006 Compared to Three Months Ended March 31, 2005

Rental and other revenue.  MOB rental revenue increased 32% to $38.0 million for the three months ended March 31, 2006. The increase in MOB rental revenue of $9.2 million primarily relates to the additive effect of our acquisitions in 2006 and 2005, which contributed $8.2 million to rental revenues over the comparable prior year period.

Triple-net lease rental revenues increased 15% to $84.1 million for the three months ended March 31, 2006. The increase in triple-net lease rental revenue of $11.1 million primarily relates to the additive effect of our acquisitions in 2006 and 2005, as detailed below:

	Triple-net lease rental revenue resulting from acquisitions— for the three months ended March 31,
Property Type	2006		2005		Change
	(in thousands)
Senior housing facilities	$	8,612	$	—	$	8,612
Other healthcare facilities	404		—		404
Total	$	9,016	$	—	$	9,016

Additionally, included in triple-net lease rental revenues are facility-level operating revenues for five senior housing properties that were previously leased on a triple-net basis. Periodically tenants default on their leases, which cause us to take temporary possession of the operations of the facility. We contract with third party managers to manage these properties until a replacement tenant can be identified or the property can be sold. The operating revenues and expenses for these properties are included in triple-net lease rental revenues and operating expenses, respectively. The increase in reported revenues for these facilities of $1.2 million to $2.3 million for the three months ended March 31, 2006, was primarily due to an increase in overall occupancy of such properties.

Equity income.  Equity income increased to $3.8 million primarily due to our investment in HCP MOP, for which we recorded equity income of $3.7 million and $11,000 for the three months ended March 31, 2006 and 2005, respectively. During the three months ended March 31, 2006, HCP MOP sold 22 MOBs for $61 million, net of estimated transaction costs, and recognized aggregate gains of approximately $10 million. See Note 5 to the Consolidated Financial Statements for additional information on HCP MOP.

Interest and other income.  Interest and other income increased by $10.6 million to $15.7 million for the three months ended March 31, 2006. The increase in interest and other income is primarily due to a $7.3 million prepayment premium related to the prepayment of a $30 million secured loan with an original maturity of May 1, 2010 and an interest rate of 11.4%. The prepayment premium was received on March 14, 2006, upon the early repayment of a loan receivable which was originally due on May 1, 2010. During the three months ended March 31, 2006 and 2005, we also recognized management and other fees from HCP MOP of $0.7 million and $0.8 million, respectively.

Interest expense.  Interest expense increased 38% to $32.1 million for the three months ended March 31, 2006. The increase was due to increased borrowing levels resulting from the issuance of an aggregate of $600 million of senior notes in April and September of 2005 and February of 2006, increased borrowings under the Company’s bank lines of credit, and the assumption and issuance of $34 million of mortgage notes payable. This higher interest expense was offset by the repayment $135 million of senior notes in February 2006. The table below sets forth information with respect to our debt as of March 31, 2006 and 2005:

24

	As of March 31,
	2006			2005
	(dollars in thousands)
Balance:
Fixed rate	$	1,708,204		$	1,151,611
Variable rate	411,665			284,710
Total	$	2,119,869		$	1,436,321
Percent of total debt:
Fixed rate	81		%	80		%
Variable rate	19		%	20		%
Total	100		%	100		%
Weighted average interest rate at end of period:
Fixed rate	6.20		%	6.67		%
Variable rate	5.42		%	3.49		%
Total weighted average rate	6.05		%	6.04		%

Depreciation and amortization.  Real estate depreciation and amortization increased 31% to $30.7 million for the three months ended March 31, 2006. The increase in depreciation and amortization of $7.2 million primarily relates to the additive effect of our acquisitions in 2006 and 2005, as detailed below:

	Depreciation and amortization resulting from acquisitions— for the three months ended March 31,
Property Type	2006		2005		Change
	(in thousands)
Senior housing facilities	$	2,976	$	—	$	2,976
Medical office buildings	3,215		—		3,215
Other healthcare facilities	182		—		182
Total	$	6,373	$	—	$	6,373

Operating expenses.  Operating costs increased 32% to $17.6 million for the three months ended March 31, 2006. Operating costs are predominantly related to MOB properties that are leased under gross or modified gross lease agreements where we share certain costs with tenants. Additionally, we contract with third party property managers for most of our MOB properties. Accordingly, the number of properties in our MOB portfolio directly impacts operating costs. The increase in operating expenses of $4.3 million primarily relates to the effect of our acquisitions in 2006 and 2005, as detailed below:

	Operating expenses resulting from acquisitions— for the three months ended March 31,
Property Type	2006			2005			Change
	(in thousands)
Medical office buildings	$	2,752	$		—	$		2,752
Other healthcare facilities	48		—			48
Total	$	2,800	$		—	$		2,800

Additionally, included in operating expenses are facility-level operating expenses for five senior housing properties that were previously leased on a triple-net basis. Periodically, tenants default on their leases which cause us to take temporary possession of the operations of the facility. We contract with third party managers to manage these properties until a replacement tenant can be identified or the property can be sold. The revenues and expenses for these properties are included in triple-net lease rental revenues and operating expenses, respectively. The increase in reported operating expenses for these facilities of $1.4 million to $2.7 million for the three months ended March 31, 2006, was primarily due to an increase in the overall occupancy of such properties.

25

The presentation of expenses as general and administrative or operating expenses 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 expense.

General and administrative expenses.  General and administrative expenses increased 19% to $8.7 million for the three months ended March 31, 2006. The increase is primarily due to higher compensation-related expenses resulting from an increase in full-time employees.

Discontinued operations.  Income from discontinued operations for the three months ended March 31, 2006, was $9.0 million compared to $6.7 million for the comparable period in the prior year. The change is due to an increase in gains on real estate dispositions of $3.9 million, net of a decline in operating income from discontinued operations from $1.9 million to $0.5 million. Discontinued operations for the three months ended March 31, 2006, include 12 properties compared to 30 properties classified as discontinued operations for the three months ended March 31, 2005. During the three months ended March 31, 2006 and 2005, six and four properties, respectively, were sold, with net gains of $8.6 million and $4.7 million, respectively.

Liquidity and Capital Resources

Our principal liquidity needs are to (i) fund normal operating expenses, (ii) meet debt service requirements, (iii) fund capital expenditures including tenant improvements and leasing costs, (iv) fund acquisition and development activities, and (v) make minimum distributions required to maintain our REIT qualification under the Internal Revenue Code.

We believe these needs will be satisfied using cash flows generated by operations and provided by financing activities. We intend to repay maturing debt with proceeds from future debt and/or equity offerings and anticipate making future investments dependent on the availability of cost-effective sources of capital. We use the public debt and equity markets as our principal source of financing. As of March 31, 2006, our senior debt is rated BBB+ by both Standard & Poor’s Ratings Group and Fitch Ratings and Baa2 by Moody’s Investors Service.

Net cash provided by operating activities was $92.2 million and $72.5 million for the three months ended March 31, 2006 and 2005, respectively. Cash flow from operations reflects increased revenues partially offset by higher costs and expenses, and changes in receivables, payables, accruals, and deferred revenue. 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.

Net cash used in investing activities was $151.3 million during the three months ended March 31, 2006, and principally reflects the net effect of: (i) $190.1 million used to fund acquisitions and construction of real estate, (ii) $12.9 million used to purchase securities, (iii) $21.4 million received from the sale of several facilities, and (iv) $35.8 million in principal repayments received on loans. During the three months ended March 31, 2006 and 2005, we used $3.9 million and $0.4 million to fund lease commissions and tenant and capital improvements, respectively.

Net cash provided by financing activities was $93.7 million for the three months ended March 31, 2006 and includes proceeds of $9.6 million from common stock issuances, $148.6 million from senior note issuances, $22.1 million from mortgage debt issuances, and $116.4 million from our bank lines of credit. These proceeds were partially offset by: (i) the repayment of $135.0 million of senior notes, and (ii) payment of common and preferred dividends aggregating $63.8 million. In order to qualify as a REIT for federal income tax purposes, we must distribute at least 90% of our taxable income to our shareholders. Accordingly, we intend to continue to make regular quarterly distributions to holders of our common and preferred stock.

At March 31, 2006, we held approximately $12.7 million in deposits and $47.2 million in irrevocable letters of credit from commercial banks securing tenants’ lease obligations and borrowers’ loan obligations. We may draw upon the letters of credit or depository accounts if there are defaults under the related leases or loans. Amounts available under letters of credit could change based upon facility operating conditions and other factors, and such changes may be material.

Debt

Senior unsecured notes. At March 31, 2006, we had $1.5 billion in aggregate principal of senior unsecured notes outstanding. Interest rates on the notes ranged from 4.88% to 7.62% with a weighted average rate of 6.11% at March 31, 2006. Discounts and premiums are amortized to interest expense over the term of the related debt.

26

On February 27, 2006, we issued $150 million of 5.625% senior unsecured notes due 2013. The notes were priced at 99.071% of the principal amount for an effective yield of 5.788%. We received net proceeds of $149 million, which were used to repay outstanding indebtedness and for other general corporate purposes.

During the three months ended March 31, 2006, we repaid $135 million of maturing senior unsecured notes which accrued interest at a weighted average rate of 6.7%. These notes were repaid with funds available under our bank lines of credit.

The senior unsecured notes contain certain covenants including limitations on debt and other customary terms.

Mortgage debt. At March 31, 2006, we had $269 million in mortgage debt secured by 43 healthcare facilities with a carrying amount of $441 million. Interest rates on the mortgage notes ranged from 2.75% to 9.32% with a weighted average rate of 6.49% at March 31, 2006.

The instruments encumbering the properties restrict title transfer of the respective properties subject to the terms of the mortgage, prohibit additional liens, restrict prepayment, require payment of real estate taxes, maintenance of the properties in good condition, maintenance of insurance on the properties, and include a requirement to obtain lender consent to enter into material tenant leases.

Bank lines of credit. At March 31, 2006, borrowings under our $500 million three-year line of credit were $175 million with a weighted average interest rate of 5.37%. Borrowings under the bank line of credit accrue interest at 65 basis points over LIBOR with a 15 basis point facility fee. In addition, a negotiated rate option, whereby the lenders participating in the credit facility bid on the interest to be charged and which may result in a reduced interest rate, is available for up to 50% of borrowings. The credit facility also contains an “accordion” feature allowing borrowings to be increased by $100 million under certain conditions.

The credit agreement contains certain financial restrictions and other customary requirements. The more significant covenants, using terms defined in the agreement, limit (i) Consolidated Total Indebtedness to Consolidated Total Asset Value to 60%, (ii) Secured Debt to Consolidated Total Asset Value to 30% and (iii) Unsecured Debt to Consolidated Unencumbered Asset Value to 60%. The agreement also requires that the Company must also maintain (i) a Fixed Charge Coverage ratio, as defined, of 1.75 times and (ii) a formula-determined Minimum Tangible Net Worth. As of March 31, 2006, the Company was in compliance with each of these restrictions and requirements.

On February 14, 2006, we entered into a new Term Loan Agreement for $200 million that matures on June 14, 2006. Loans outstanding under the Term Loan Agreement bear interest at a rate per annum equal to LIBOR plus a margin ranging from 0.75% to 1.50%, depending upon our senior unsecured long term debt ratings. At March 31, 2006, the borrowings under the Term Loan Agreement totaled $200 million with a rate of 5.56%, and are included under bank lines of credit in the Condensed Consolidated Balance Sheet. Borrowings under the Term Loan Agreement were used to fund recent acquisition activity and for other corporate purposes.  On April 18, 2006, we repaid all amounts outstanding under the Loan Term Agreement.

Debt Maturities

The following table summarizes our stated debt maturities and scheduled principal repayments at March 31, 2006 (in thousands):

Year	Amount
2006 (nine months)	$	204,145
2007	325,990
2008	25,944
2009	10,940
2010	271,730
Thereafter	1,283,093
	$	2,121,842

27

Equity

At March 31, 2006, we had 4,000,000 shares of 7.25% Series E cumulative redeemable preferred stock, 7,820,000 shares of 7.10% Series F cumulative redeemable preferred stock, and 136.8 million shares of common stock outstanding.

During the three months ended March 31, 2006, we issued approximately 210,000 shares of our common stock under our Dividend Reinvestment and Stock Purchase Plan at an average price per share of $27.40 for an aggregate amount of $5.8 million. We also received $4.5 million in proceeds from stock option exercises. At March 31, 2006, stockholders’ equity totaled $1.4 billion and our equity securities had a market value of $4.4 billion.

As of March 31, 2006, there were a total of 3.6 million DownREIT units outstanding in six limited liability companies in which we are the managing member (i) HCPI/Tennessee, LLC; (ii) HCPI/Utah, LLC; (iii) HCPI/Utah II, LLC; (iv) HCPI/Indiana, LLC; (v) HCP DR California, LLC; and (vi) HCP DR Alabama, LLC. The DownREIT units are redeemable 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).

As of March 31, 2006, we had $900 million available for future issuances of debt and equity securities under a shelf registration statement filed with the Securities and Exchange Commission. These securities may be issued from time to time in the future based on our needs and the then-existing market conditions. Pursuant to this registration statement, on February 17, 2006, we commenced a medium-term note program for the possible issuance, from time to time, of up to $400 million of medium-term notes, Series G. As of March 31, 2006, we have $250 million available for the possible issuance of medium-term notes.

Off-Balance Sheet Arrangements

We own interests in certain unconsolidated joint ventures, including HCP MOP, as described under Note 5 to the Condensed Consolidated Financial Statements. Except in limited circumstances, our risk of loss is limited to our investment’s carrying amount and any outstanding loans receivable. We have no other off-balance sheet arrangements that we expect to materially affect our liquidity and capital resources except those described under “Contractual Obligations.”

Contractual Obligations

The following schedule summarizes our material contractual payment obligations and commitments at March 31, 2006 (in thousands):

	Less than One Year		2007-2008		2009-2010		More than Five Years		Total
Senior unsecured notes and mortgage debt	$	4,145	$	176,934	$	282,670	$	1,283,093	$	1,746,842
Bank lines of credit	200,000		175,000		—		—		375,000
Ground and other operating leases	1,888		3,872		4,014		156,594		166,368
Acquisition and construction commitments	22,642		—		—		—		22,642
Interest expense	78,460		194,356		184,078		340,348		797,242
Total	$	307,135	$	550,162	$	470,762	$	1,780,035	$	3,108,094

Inflation

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

28

New Accounting Pronouncements

See Note 2 to the Condensed Consolidated Financial Statements for the impact of new accounting standards.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

At March 31, 2006, we are exposed to market risks related to fluctuations in interest rates on $57.3 million of variable rate mortgage notes payable, $375 million of variable rate bank debt and $25 million of variable rate senior unsecured notes. Of the $57.3 million of variable rate mortgage notes payable outstanding, $45.6 million has been hedged through interest rate swap contracts. We do not have, and do not plan to enter into, derivative financial instruments for trading or speculative purposes. Of our consolidated debt of $2.1 billion at March 31, 2006, excluding the $45.6 million of variable rate debt where the rates have been hedged to fixed rate, approximately 19% is at variable interest rates.

Fluctuation in interest rates will not affect our future earnings and cash flows on our fixed rate debt until that debt must be replaced or refinanced. However, interest rate changes will affect the fair value of our fixed rate instruments and our hedge contracts. Conversely, changes in interest rates on variable rate debt would change our future earnings and cash flows, but not affect the fair value of those instruments. Assuming a one percentage point increase in the interest rate related to the variable-rate debt and related swap contracts, and assuming no change in the outstanding balance as of March 31, 2006, interest expense for 2006 would increase by approximately $4.1 million, or $0.03 per common share on a diluted basis.

Item 4. Controls and Procedures

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

Also, we have investments in certain unconsolidated entities. Our disclosure controls and procedures with respect to such entities are substantially more limited than those we maintain with respect to our consolidated subsidiaries.

As required by Rule 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2006. Based on the foregoing, our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934) during the fiscal quarter to which this report relates that have materially affected, or are reasonable likely to materially affect, the Company’s internal control over financial reporting.

29

PART II. OTHER INFORMATION

Item 1A. Risk Factors

Our business is subject to a number of risks and uncertainties which we discussed in detail in Part 1, Item 1A of our 2005 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Eq uity Securities and Use of Proceeds

(a)

HCP DR Alabama. On March 15, 2006, we completed the acquisition of a managing member interest in HCP DR Alabama, LLC, a Delaware limited liability company (“HCP DR Alabama”), in exchange for the contribution of $23.1 million in cash. In connection with the formation of the LLC, several parties contributed a portfolio of certain property interests in two medical office buildings with an aggregate equity value of approximately $5.5 million. In exchange for this capital contribution, the contributors received 194,181 non-managing member units of HCP DR Alabama.

The Amended and Restated Limited Liability Company Agreement of HCP DR Alabama provides that only we are authorized to act on behalf of HCP DR Alabama and that we have responsibility for the management of its business.

Each non-managing member unit of HCP DR Alabama is exchangeable for an amount of cash approximating the then-current market value of one share of our common stock or, at our option, one share of our common stock (subject to certain adjustments, such as stock splits and reclassifications). HCP DR Alabama relied on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended, in connection with the issuance and sale of the non-managing member units. As of March 31, 2006, we have not registered any shares of our common stock for issuance in exchange for non-managing member units of HCP DR Alabama.

(b)

None

(c)

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 March 31, 2006.

Period Covered	Total Number Of Shares Purchased(1)	Average Price Paid Per Share		Total Number Of Shares (Or Units) Purchased As Part Of Publicly Announced Plans Or Programs	Maximum Number (Or Approximate Dollar Value) Of Shares (Or Units) That May Yet Be Purchased Under The Plans Or Programs
January 1-31, 2006	8,117	$	26.88	—	—
February 1-28, 2006	10,005	26.92		—	—
March 1-31, 2006	6,251	28.44		—	—
Total	24,373	$	27.30	—	—

(1)Represents restricted shares withheld under our Amended and Restated 2000 Stock Incentive Plan, as amended, to offset tax withholding obligations that occur upon vesting of restricted shares. Our Amended and Restated 2000 Stock Incentive Plan, as amended, provides that the value of the shares withheld shall be the closing price of our common stock on the date the relevant transaction occurs.

30

Item 6. Exhibits

3.1	Articles of Restatement of HCP (incorporated by reference to exhibit 3.1 to HCP’s report on form 10-Q for the period of September 30, 2004).
3.2	Third Amended and Restated Bylaws of HCP. (incorporated by reference to exhibit 3.2 to HCP’s report on form 10-Q for the period of September 30, 2004).
4.1	Indenture, dated as of September 1, 1993, between HCP and The Bank of New York, as Trustee (incorporated by reference to exhibit 4.1 to HCP’s registration statement on Form S-3 dated September 9, 1993).
4.2	Form of Fixed Rate Note (incorporated by reference to exhibit 4.2 to HCP’s registration statement on Form S-3 dated March 20, 1989).
4.3	Form of Floating Rate Note (incorporated by reference to exhibit 4.3 to HCP’s registration statement on Form S-3 dated March 20, 1989).
4.4	Registration Rights Agreement dated November 20, 1998 between HCP and James D. Bremner (incorporated by reference to exhibit 4.8 to HCP’s annual report on Form 10-K for the year ended December 31, 1999). This exhibit is identical in all material respects to two other documents except the parties thereto. The parties to these other documents, other than HCP, were James P. Revel and Michael F. Wiley.
4.5	Registration Rights Agreement dated January 20, 1999 between HCP and Boyer Castle Dale Medical Clinic, L.L.C. (incorporated by reference to exhibit 4.9 to HCP’s annual report on Form 10-K for the year ended December 31, 1999). This exhibit is identical in all material respects to 13 other documents except the parties thereto. The parties to these other documents, other than HCP, were Boyer Centerville Clinic Company, L.C., Boyer Elko, L.C., Boyer Desert Springs, L.C., Boyer Grantsville Medical, L.C., Boyer-Ogden Medical Associates, LTD., Boyer Ogden Medical Associates No. 2, LTD., Boyer Salt Lake Industrial Clinic Associates, LTD., Boyer-St. Mark’s Medical Associates, LTD., Boyer McKay-Dee Associates, LTD., Boyer St. Mark’s Medical Associates #2, LTD., Boyer Iomega, L.C., Boyer Springville, L.C., and—Boyer Primary Care Clinic Associates, LTD. #2.
4.6	Indenture, dated as of January 15, 1997, between American Health Properties, Inc. and The Bank of New York, as trustee (incorporated herein by reference to exhibit 4.1 to American Health Properties, Inc.’s current report on Form 8-K (file no. 001-09381), dated January 21, 1997).
4.7	First Supplemental Indenture, dated as of November 4, 1999, between HCP and The Bank of New York, as trustee (incorporated by reference to HCP’s quarterly report on Form 10-Q for the period ended September 30, 1999).
4.8	Registration Rights Agreement dated August 17, 2001 between HCP, Boyer Old Mill II, L.C., Boyer-Research Park Associates, LTD., Boyer Research Park Associates VII, L.C., Chimney Ridge, L.C., Boyer-Foothill Associates, LTD., Boyer Research Park Associates VI, L.C., Boyer Stansbury II, L.C., Boyer Rancho Vistoso, L.C., Boyer-Alta View Associates, LTD., Boyer Kaysville Associates, L.C., Boyer Tatum Highlands Dental Clinic, L.C., Amarillo Bell Associates, Boyer Evanston, L.C., Boyer Denver Medical, L.C., Boyer Northwest Medical Center Two, L.C., and Boyer Caldwell Medical, L.C. (incorporated by reference to exhibit 4.12 to HCP’s annual report on Form 10-K for the year ended December 31, 2001).
4.9	Acknowledgment and Consent dated as of March 1, 2005 by and among Merrill Lynch Bank USA, Gardner Property Holdings, L.C., HCPI/Utah, LLC, the unit holders of HCPI/Utah, LLC and HCP (incorporated by reference to exhibit 4.12 to HCP’s annual report on Form 10-K for the year ended December 31, 2004).*
4.10	Acknowledgment and Consent dated as of March 1, 2005 by and among Merrill Lynch Bank USA, The Boyer Company, L.C., HCPI/Utah, LLC, the unit holders of HCPI/Utah, LLC and HCP (incorporated by reference to exhibit 4.13 to HCP’s annual report on Form 10-K for the year ended December 31, 2004).*
4.11	Officers’ Certificate pursuant to Section 301 of the Indenture dated as of September 1, 1993 between the Company and The Bank of New York, as Trustee, establishing a series of securities entitled “6.5% Senior Notes due February 15, 2006” (incorporated by reference to exhibit 4.1 to HCP’s report on form 8-K, dated February 21, 1996).

31

4.12	Officers’ Certificate pursuant to Section 301 of the Indenture dated as of September 1, 1993 between the Company and The Bank of New York, as Trustee, establishing a series of securities entitled “6 7/8% MandatOry Par Put Remarketed Securities due June 8, 2015” (incorporated by reference to exhibit 4.1 to HCP’s report on form 8-K, dated June 3, 1998).
4.13	Officers’ Certificate pursuant to Section 301 of the Indenture dated as of September 1, 1993 between the Company and The Bank of New York, as Trustee, establishing a series of securities entitled “6.45% Senior Notes due June 25, 2012” (incorporated by reference to exhibit 4.1 to HCP’s report on form 8-K, dated June 19, 2002).
4.14	Officers’ Certificate pursuant to Section 301 of the Indenture dated as of September 1, 1993 between HCP and the Bank of New York, as Trustee, establishing a series of securities entitled “6.00% Senior Notes due March 1, 2015” (incorporated by reference to exhibit 3.1 to HCP’s report on form 8-K (file no. 001-08895), dated February 25, 2003).
4.15	Officers’ Certificate pursuant to Section 301 of the Indenture dated as of September 1, 1993 between the Company and The Bank of New York, as Trustee, establishing a series of securities entitled “5 5/8% Senior Notes due May 1, 2017” (incorporated by reference to exhibit 4.2 to HCP’s report on form 8-K, dated April 22, 2005).
4.16	Registration Rights Agreement dated October 1, 2003 between HCP, Charles Crews, Charles A. Elcan, Thomas W. Hulme, Thomas M. Klaritch, R. Wayne Price, Glenn T. Preston, Janet Reynolds, Angela M. Playle, James A. Croy, John Klaritch as Trustee of the 2002 Trust F/B/O Erica Ann Klaritch, John Klaritch as Trustee of the 2002 Trust F/B/O Adam Joseph Klaritch, John Klaritch as Trustee of the 2002 Trust F/B/O Thomas Michael Klaritch, Jr. and John Klaritch as Trustee of the 2002 Trust F/B/O Nicholas James Klaritch (incorporated by reference to exhibit 4.16 to HCP’s quarterly report on Form 10-Q for the period ended September 30, 2003).
4.17	Amended and Restated Dividend Reinvestment and Stock Purchase Plan, dated October 23, 2003 (incorporated by reference to HCP’s registration statement on Form S-3 dated December 5, 2003, registration number 333-110939).
4.18	Specimen of Stock Certificate representing the Series E Cumulative Redeemable Preferred Stock, par value $1.00 per share (incorporated herein by reference to exhibit 4.1 of HCP’s 8-A12B filed on September 12, 2003).
4.19	Specimen of Stock Certificate representing the Series F Cumulative Redeemable Preferred Stock, par value $1.00 per share (incorporated herein by reference to exhibit 4.1 of HCP’s 8-A12B filed on December 2, 2003).
4.20	Form of Floating Rate Note (incorporated by reference to exhibit 4.3 to HCP’s Current Report on Form 8-K dated November 19, 2003).
4.21	Form of Fixed Rate Note (incorporated by reference to exhibit 4.4 to HCP’s Current Report on Form 8-K dated November 19, 2003).
4.22	Acknowledgment and Consent dated as of March 1, 2005 by and among Merrill Lynch Bank USA, Gardner Property Holdings, L.C., HCPI/Utah II, LLC, the unit holders of HCPI/Utah II, LLC and HCP (incorporated by reference to exhibit 4.21 to HCP’s annual report on Form 10-K for the year ended December 31, 2004).*
4.23	Acknowledgment and Consent dated as of March 1, 2005 by and among Merrill Lynch Bank USA, The Boyer Company, L.C., HCPI/Utah II, LLC, the unit holders of HCPI/Utah II, LLC and HCP (incorporated by reference to exhibit 4.22 to HCP’s annual report on Form 10-K for the year ended December 31, 2004).*
4.24	Registration Rights Agreement dated July 22, 2005 between HCP, William P. Gallaher, Trustee for the William P. & Cynthia J. Gallaher Trust; Dwayne J. Clark; Patrick R. Gallaher, Trustee for the Patrick R. & Cynthia M. Gallaher Trust; Jeffrey D. Civian, Trustee for the Jeffrey D. Civian Trust dated August 8, 1986; Jeffrey Meyer; Steven L. Gallaher; Richard Coombs; Larry L. Wasem; Joseph H. Ward, Jr., Trustee for the Joseph H. Ward, Jr. and Pamela K. Ward Trust; Borue H. O’Brien; William R. Mabry; Charles N. Elsbree, Trustee for the Charles N. Elsbree Jr. Living Trust dated February 14, 2002; Gary A. Robinson; Thomas H. Persons, Trustee for the Persons Family Revocable Trust under trust dated February 15, 2005; Glen Hammel; Marilyn E. Montero; Joseph G. Lin, Trustee for the Lin Revocable Living Trust; Ned B. Stein; John Gladstein, Trustee for the John & Andrea

32

	Gladstein Family Trust dated February 11, 2003; John Gladstein, Trustee for the John & Andrea Gladstein Family Trust dated February 11, 2003; Francis Connelly, Trustee for the The Francis J & Shannon A Connelly Trust; Al Coppin, Trustee for the Al Coppin Trust; Stephen B. McCullagh, Trustee for the Stephen B. & Pamela McCullagh Trust dated October 22, 2001; and Larry L. Wasem — SEP IRA (incorporated by reference to exhibit 4.24 to HCP’s quarterly report on Form 10-Q for the period ended June 30, 2005).
10.1	Amendment No. 1, dated as of May 30, 1985, to Partnership Agreement of Health Care Property Partners, a California general partnership, the general partners of which consist of HCP and certain affiliates of Tenet (incorporated by reference to exhibit 10.1 to HCP’s annual report on Form 10-K for the year ended December 31, 1985).
10.2	HCP Second Amended and Restated Directors Stock Incentive Plan (incorporated by reference to exhibit 10.43 to HCP’s quarterly report on Form 10-Q for the period ended March 31, 1997).*
10.2.1	First Amendment to Second Amended and Restated Directors Stock Incentive Plan, effective as of November 3, 1999 (incorporated by reference to exhibit 10.1 to HCP’s quarterly report on Form 10-Q for the period ended September 30, 1999).*
10.2.2	Second Amendment to Second Amended and Restated Directors Stock Incentive Plan, effective as of January 4, 2000 (incorporated by reference to exhibit 10.15 to HCP’s annual report on Form 10-K for the year ended December 31, 1999).*
10.3	HCP Second Amended and Restated Stock Incentive Plan (incorporated by reference to exhibit 10.44 to HCP’s quarterly report on Form 10-Q for the period ended March 31, 1997).*
10.3.1	First Amendment to Second Amended and Restated Stock Incentive Plan effective as of November 3, 1999 (incorporated by reference to exhibit 10.3 to HCP’s quarterly report on Form 10-Q for the period ended September 30, 1999).*
10.4	HCP 2000 Stock Incentive Plan, effective as of May 7, 2003 (incorporated by reference to HCP’s Proxy Statement regarding HCP’s annual meeting of shareholders held May 7, 2003).*
10.4.1	Amendment to the Company’s Amended and Restated 2000 Stock Incentive Plan (effective as of May 7, 2003) (incorporated herein by reference to exhibit 10.1 to HCP’s current report on Form 8-K, dated January 28, 2005).*
10.5	HCP Second Amended and Restated Directors Deferred Compensation Plan (incorporated by reference to exhibit 10.45 to HCP’s quarterly report on Form 10-Q for the period ended September 30, 1997).*
10.5.1	First Amendment to Second Amended and Restated Directors Deferred Compensation Plan, effective as of April 11, 1997 (incorporated by reference to exhibit 10.5.1 to HCP’s quarterly report on Form 10-Q for the period ended March 31, 2005).*
10.5.2	Second Amendment to Second Amended and Restated Directors Deferred Compensation Plan, effective as of July 17, 1997 (incorporated by reference to exhibit 10.5.2 to HCP’s quarterly report on Form 10-Q for the period ended March 31, 2005).*
10.5.3	Third Amendment to Second Amended and Restated Directors Deferred Compensation Plan, effective as of November 3, 1999 (incorporated by reference to exhibit 10.2 to HCP’s quarterly report on Form 10-Q for the period ended September 30, 1999).*
10.5.4	Fourth Amendment to Second Amended and Restated Director Deferred Compensation Plan, effective as of January 4, 2000 (incorporated by reference to exhibit 10.19 to HCP’s annual report on Form 10-K for the year ended December 31, 1999).*
10.6	Various letter agreements, each dated as of October 16, 2000, among HCP and certain key employees of the Company (incorporated by reference to exhibit 10.12 to HCP’s annual report on Form 10-K for the year ended December 31, 2000).*

33

10.7	HCP Amended and Restated Executive Retirement Plan (incorporated by reference to exhibit 10.13 to HCP’s annual report on Form 10-K for the year ended December 31, 2001).*
10.8	Amended and Restated Limited Liability Company Agreement dated November 20, 1998 of HCPI/Indiana, LLC (incorporated by reference to exhibit 10.15 to HCP’s annual report on Form 10-K for the year ended December 31, 1998).
10.9	Amended and Restated Limited Liability Company Agreement dated January 20, 1999 of HCPI/Utah, LLC (incorporated by reference to exhibit 10.16 to HCP’s annual report on Form 10-K for the year ended December 31, 1998).
10.10	Cross-Collateralization, Cross-Contribution and Cross-Default Agreement, dated as of July 20, 2000, by HCP Medical Office Buildings II, LLC, and Texas HCP Medical Office Buildings, L.P., for the benefit of First Union National Bank (incorporated by reference to exhibit 10.20 to HCP’s annual report on Form 10-K for the year ended December 31, 2000).
10.11	Cross-Collateralization, Cross-Contribution and Cross-Default Agreement, dated as of August 31, 2000, by HCP Medical Office Buildings I, LLC, and Meadowdome, LLC, for the benefit of First Union National Bank (incorporated by reference to exhibit 10.21 to HCP’s annual report on Form 10-K for the year ended December 31, 2000).
10.12	Amended and Restated Limited Liability Company Agreement dated August 17, 2001 of HCPI/Utah II, LLC (incorporated by reference to exhibit 10.21 to HCP’s annual report on Form 10-K for the year ended December 31, 2001).
10.12.1	First Amendment to Amended and Restated Limited Liability Company Agreement dated October 30, 2001 of HCPI/Utah II, LLC (incorporated by reference to exhibit 10.22 to HCP’s annual report on Form 10-K for the year ended December 31, 2001).
10.13	Employment Agreement dated October 26, 2005 between HCP and James F. Flaherty III (incorporated by reference to exhibit 10.13 to HCP’s quarterly report on Form 10-Q for the period ended September 30, 2005).*
10.14	Amended and Restated Limited Liability Company Agreement dated as of October 2, 2003 of HCPI/Tennessee, LLC (incorporated by reference to exhibit 10.28 to HCP’s quarterly report on Form 10-Q for the period ended September 30, 2003).
10.14.1	Amendment No.1 to Amended and Restated Limited Liability Company Agreement dated September 29, 2004 of HCPI/Tennessee, LLC (incorporated by reference to exhibit 10.37 to HCP’s quarterly report on Form 10-Q for the period ended September 30, 2004).
10.14.2	Amendment No.2 to Amended and Restated Limited Liability Company Agreement dated October 29, 2004 of HCPI/Tennessee, LLC (incorporated by reference to exhibit 10.43 to HCP’s annual report on Form 10-K for the year ended December 31, 2004).
10.14.3	Amendment No.3 to Amended and Restated Limited Liability Company Agreement and New Member Joinder Agreement dated October 19, 2005 of HCPI/Tennessee, LLC (incorporated by reference to exhibit 10.14.3 to HCP’s quarterly report on Form 10-Q for the period ended September 30, 2005).
10.15	Employment Agreement dated October 1, 2003 between HCP and Charles A. Elcan (incorporated by reference to exhibit 10.29 to HCP’s quarterly report on Form 10-Q for the period ended September 30, 2003).*
10.15.1	Amendment No.1 to the Employment Agreement dated October 1, 2003 between HCP and Charles A. Elcan (incorporated herein by reference to exhibit 10.5 to HCP’s current report on Form 8-K, dated January 28, 2005).*
10.16	Form of Restricted Stock Agreement for employees and consultants effective as of May 7, 2003, as approved by the Compensation Committee of the Board of Directors of the Company, relating to the Company’s Amended and Restated 2000 Stock Incentive Plan (incorporated by reference to exhibit 10.30 to HCP’s annual report on Form 10-K for the year ended December 31, 2003).*

34

10.17	Form of Restricted Stock Agreement for directors effective as of May 7, 2003, as approved by the Compensation Committee of the Board of Directors of the Company, relating to the Company’s Amended and Restated 2000 Stock Incentive Plan (incorporated by reference to exhibit 10.31 to HCP’s annual report on Form 10-K for the year ended December 31, 2003).*
10.18	Form of Performance Award Letter for employees effective as of May 7, 2003, as approved by the Compensation Committee of the Board of Directors of the Company, relating to the Company’s Amended and Restated 2000 Stock Incentive Plan (incorporated by reference to exhibit 10.32 to HCP’s annual report on Form 10-K for the year ended December 31, 2003).*
10.19	Form of Stock Option Agreement for eligible participants effective as of May 7, 2003, as approved by the Compensation Committee of the Board of Directors of the Company, relating to the Company’s Amended and Restated 2000 Stock Incentive Plan (incorporated by reference to exhibit 10.33 to HCP’s annual report on Form 10-K for the year ended December 31, 2003).*
10.20	Amended and Restated Executive Retirement Plan effective as of May 7, 2003 (incorporated by reference to exhibit 10.34 to HCP’s annual report on Form 10-K for the year ended December 31, 2003).*
10.21	Revolving Credit Agreement, dated as of October 26, 2004, among HCP, each of the banks identified on the signature pages hereof, Bank of America, N.A., as administrative agent, JPMorgan Chase Bank, as syndicating agent, Barclays Bank PLC, Wachovia Bank , National Association, and Wells Fargo Bank, N.A., as documentation agents, with Calyon New York Branch, Citicorp, USA, and Key National Association as managing agents, and Banc of America Securities LLC and J.P. Morgan Securities, Inc., as joint lead arrangers and joint book managers (incorporated herein by reference to exhibit 10.1 to HCP’s current report on Form 8-K (file no. 001-08895), dated November 1, 2004).
10.22	Form of CEO Performance Restricted Stock Unit Agreement with five year installment vesting effective as of March 15, 2004, as approved by the Compensation Committee of the Board of Directors of the Company, relating to the Company’s Amended and Restated 2000 Stock Incentive Plan (incorporated herein by reference to exhibit 10.34 to HCP’s annual report on Form 10-K, dated March 15, 2005).*
10.23	Form of CEO Performance Restricted Stock Unit Agreement with three year cliff vesting effective as of March 15, 2004, as approved by the Compensation Committee of the Board of Directors of the Company, relating to the Company’s Amended and Restated 2000 Stock Incentive Plan (incorporated herein by reference to exhibit 10.35 to HCP’s annual report on Form 10-K, dated March 15, 2005).*
10.24	Form of employee Performance Restricted Stock Unit Agreement with five year installment vesting effective as of March 15, 2004, as approved by the Compensation Committee of the Board of Directors of the Company, relating to the Company’s Amended and Restated 2000 Stock Incentive Plan (incorporated herein by reference to exhibit 10.36 to HCP’s annual report on Form 10-K, dated March 15, 2005).*
10.25	Form of employee Performance Restricted Stock Unit Agreement with three year cliff vesting effective as of March 15, 2004, as approved by the Compensation Committee of the Board of Directors of the Company, relating to the Company’s Amended and Restated 2000 Stock Incentive Plan (incorporated herein by reference to exhibit 10.37 to HCP’s annual report on Form 10-K, dated March 15, 2005).*
10.26	Form of CEO Performance Restricted Stock Unit Agreement with five year installment vesting effective as of March 15, 2004, as approved by the Compensation Committee of the Board of Directors of the Company, relating to the Company’s Amended and Restated 2000 Stock Incentive Plan (incorporated herein by reference to exhibit 10.4 to HCP’s current report on Form 8-K, dated January 28, 2005).*
10.27	Form of CEO Performance Restricted Stock Unit Agreement with three year cliff vesting, as approved by the Compensation Committee of the Board of Directors of the Company, relating to the Company’s Amended and Restated 2000 Stock Incentive Plan (incorporated herein by reference to exhibit 10.2 to HCP’s current report on Form 8-K, dated January 28, 2005).*

35

10.28	Form of employee Performance Restricted Stock Unit Agreement with five year installment vesting, as approved by the Compensation Committee of the Board of Directors of the Company, relating to the Company’s Amended and Restated 2000 Stock Incentive Plan (incorporated herein by reference to exhibit 10.3 to HCP’s current report on Form 8-K, dated January 28, 2005).*
10.29	CEO Performance Restricted Stock Unit Agreement, as approved by the Compensation Committee of the Board of Directors of the Company, relating to the Company’s Amended and Restated 2000 Stock Incentive Plan (incorporated by reference to exhibit 10.29 to HCP’s quarterly report on Form 10-Q for the period ended September 30, 2005).*
10.30	Form of directors and officers Indemnification Agreement as approved by the Board of Directors of the Company (incorporated by reference to exhibit 10.30 to HCP’s quarterly report on Form 10-Q for the period ended September 30, 2005).*
10.31	Various letter agreements, each dated as of October 16, 2000, among HCP and certain key employees of the Company (incorporated herein by reference to exhibit 10.12 to HCP’s annual report on Form 10-K, dated March 9, 2001).*
10.32	Term Loan Agreement dated as of February 14, 2006 among HCP., as Borrower, UBS AG, Stamford Branch, as Administrative Agent, UBS Securities LLC and Barclays Bank plc, as joint lead arrangers, and the lenders party thereto (incorporated herein by reference to exhibit 10.1 to HCP’s current report on Form 8-K, dated February 21, 2006).
10.33	Form of employee Performance Restricted Stock Unit Agreement with five year installment vesting, as approved by the Compensation Committee of the Board of Directors of the Company, relating to the Company’s Amended and Restated 2000 Stock Incentive Plan.*
10.34	Form of CEO Performance Restricted Stock Unit Agreement with five year installment vesting, as approved by the Compensation Committee of the Board of Directors of the Company, relating to the Company’s Amended and Restated 2000 Stock Incentive Plan.*
10.35	Form of CEO Performance Restricted Stock Unit Agreement with three year cliff vesting, as approved by the Compensation Committee of the Board of Directors of the Company, relating to the Company’s Amended and Restated 2000 Stock Incentive Plan.*
31.1	Certification by James F. Flaherty III, the Company’s Principal Executive Officer, Pursuant to Securities Exchange Act Rule 13a-14(a).
31.2	Certification by Mark A. Wallace, the Company’s Principal Financial Officer, Pursuant to Securities Exchange Act Rule 13a-14(a).
32.1	Certification by James F. Flaherty III, the Company’s Principal Executive Officer, Pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.
32.2	Certification by Mark A. Wallace, the Company’s Principal Financial Officer, Pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.

*Management Contract or Compensatory Plan or Arrangement.

36

For the purposes of complying with the amendments to the rules governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the undersigned registrant hereby undertakes as follows, which undertaking shall be incorporated by reference into registrant’s Registration Statement on Form S-8 Nos. 33-28483 and 333-90353 filed May 11, 1989 and November 5, 1999, respectively, Form S-8 Nos. 333-54786 and 333-54784 each filed February 1, 2001, and Form S-8 No. 333-108838 filed September 16, 2003.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

37

SIGNATURES

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

Date: May 1, 2006	HEALTH CARE PROPERTY INVESTORS, INC.
	(Registrant)
	/s/ Mark A. Wallace
	Mark A. Wallace
	Senior Vice President and
	Chief Financial Officer
	(Principal Financial Officer)
	/s/ George P. Doyle
	George P. Doyle
	Vice President and Chief Accounting Officer
	(Principal Accounting Officer)

38

EX-10.33

Exhibit 10.33

[FIVE YEAR INSTALLMENT VESTING]

PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

[                            ], Grantee:

As of the [            ] day of [               200  ] (the “Grant Date”), Health Care Property Investors, Inc., a Maryland corporation (the “Company”), pursuant to the Health Care Property Investors, Inc. 2000 Stock Incentive Plan, as amended and/or restated from time to time (the “Plan”), has granted to you, the Grantee named above, [              ] performance restricted stock units (the “Units”) with respect to [            ] shares of Common Stock on the terms and conditions set forth in this Performance Restricted Stock Unit Agreement (this “Agreement”) and the Plan. The Units are subject to adjustment as provided in Section 11(a) of the Plan. Capitalized terms not defined herein shall have the meanings assigned to such terms in the Plan. The Compensation Committee (the “Committee”) of the Board of Directors of the Company (the “Board”) is the administrator of the Plan for purposes of your Units.

I.Forfeiture of Units.

(a)Forfeiture Based Upon Company Performance. Your Units will be paid only to the extent your Units are not forfeited pursuant to this Section I and only to the extent such non-forfeited Units vest pursuant to this Section I or Section II below. Your Units are subject to forfeiture if the Company’s Funds From Operations Per Share for the 2006 calendar year (the “Performance Period”) is less than [$      ]. If the Company’s Funds From Operations Per Share for the Performance Period is less than [$      ], the aggregate percentage of Units that you will forfeit will be determined in accordance with Exhibit A hereto. For purposes of this Agreement, “Funds From Operations Per Share” means the Company’s funds from operations per share during the Performance Period, as prescribed by the National Association of Real Estate Investment Trusts (NAREIT) as in effect on the first day of the Performance Period, and shall be calculated on a fully diluted basis using the weighted average of diluted shares of Common Stock outstanding during the Performance Period. Funds From Operations Per Share shall be calculated before taking into account any non-recurring charges incurred by the Company with respect to the Performance Period for (i) material strategic or financing transactions approved by the Board of Directors and (ii) impairments. The determination as to whether the Company has attained the performance goals with respect to the Performance Period shall be made by the Committee acting in good faith. The Committee’s determination regarding whether the Company has attained the performance goals (the “Committee Determination”) shall be made no later than the March 15 following the end of the Performance Period. Your Units shall not be deemed vested pursuant to any other provision of this Agreement earlier than the date that the Committee makes such determination, as required by Section 162(m) of the Code and the regulations promulgated thereunder. Any Units forfeited pursuant to this Section I(a) shall be deemed to have been forfeited as of the last day of the Performance Period.

(b)Termination due to Retirement during the Performance Period. Your Units will remain outstanding during the remainder of the Performance Period and will be subject to forfeiture in the manner set forth in subsection (a) upon completion of the Performance Period if, prior to the completion of the Performance Period, your employment with the Company is terminated as a result of your Retirement. In the event of any such termination

1

during the Performance Period, any Units not forfeited pursuant to subsection (a) shall fully vest as of the date of the Committee Determination.

(c)Change in Control during the Performance Period.

(i)Your Units will remain outstanding during the remainder of the Performance Period and will be subject to forfeiture in the manner set forth in subsection (a) in the event of a Change in Control occurring during the Performance Period. In such event, any Units not forfeited pursuant to subsection (a) shall fully vest as of the date of the Committee Determination; provided, however, that except as otherwise provided in any change in control or other agreement with the Company, your Units shall not be so vested if and to the extent the Units are, in connection with the Change in Control, either to be assumed by the successor or survivor corporation (or parent thereof) or to be replaced with a comparable right with respect to shares of the capital stock of the successor or survivor corporation (or parent thereof), in each case appropriately adjusted. The determination of comparability of rights shall be made by the Committee in good faith. The Committee may adopt provisions to ensure that any such acceleration shall be conditioned upon the consummation of the contemplated Change in Control.

(ii)Notwithstanding the foregoing, the Committee may, in its sole and absolute discretion, take action to fully vest your Units immediately prior to, and subject to the consummation of, a Change in Control occurring during the Performance Period. Any Units that become vested in accordance with this subsection (c)(ii) shall not be subject to forfeiture in the manner set forth in subsection (a).

(d)Forfeiture of Units Upon Certain Terminations of Employment. If at any time during the Performance Period, your employment with the Company is terminated (i) by the Company, or (ii) by you, excluding any termination by reason of your Retirement, death or Disability, all of your Units shall be automatically forfeited and cancelled in full effective as of such termination of employment and this Agreement shall be null and void and of no further force and effect.

II.Vesting.

(a)Vesting of Non-Forfeited Units. You will have no further rights with respect to any Units that are forfeited in accordance with Section I. Subject to the terms and conditions of this Agreement, your Units that (i) are not forfeited in accordance with Section I and (ii) do not otherwise vest in accordance with Section I, if any, shall vest in accordance with the following schedule, subject to your continuous service to the Company until the applicable vesting date. (Vesting amounts pursuant to the following schedule are cumulative.)

Tranche	Percentage of Non Forfeited Units that Vest		Vesting Date
1	20	%	1st Anniversary of Grant Date
2	20	%	2nd Anniversary of Grant Date
3	20	%	3rd Anniversary of Grant Date
4	20	%	4th Anniversary of Grant Date
5	20	%	5th Anniversary of Grant Date

2

The vesting schedule requires continued employment through each applicable Vesting Date as a condition to vesting of the applicable Tranche and the corresponding rights and benefits under this Agreement. Unless otherwise expressly provided herein with respect to accelerated vesting of the Units under certain circumstances, employment for only a portion of a vesting period, even if a substantial portion, will not entitle you to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment as provided in this Agreement.

(b)Termination for Death or Disability. If at any time during the Performance Period or following the completion of the Performance Period, your employment with the Company is terminated as a result of your death or Disability, your Units (to the extent not previously forfeited and otherwise unvested) shall fully vest immediately upon such termination of employment. For the avoidance of doubt, any Units that become vested in accordance with this subsection (b) during the Performance Period shall not be subject to the forfeiture provisions of Section I(a).

(c)Termination by Reason of Retirement Following the Performance Period. If at any time following the completion of the Performance Period, your employment with the Company is terminated as a result of your Retirement, your Units (to the extent not previously forfeited and otherwise unvested) shall fully vest immediately upon such termination of employment.

(d)No Acceleration or Vesting Upon Other Terminations. If at any time following the completion of the Performance Period, your employment with the Company is terminated (i) by the Company, or (ii) by you, excluding any termination by reason of your Retirement, death or Disability, any of your Units that remain outstanding and otherwise unvested at the time of such termination of employment shall be automatically forfeited and cancelled in full effective as of such termination of employment.

III.Change in Control Following the Performance Period.

(a)In the event of a Change in Control at any time following the completion of the Performance Period, your Units ( to the extent not previously forfeited and otherwise unvested) shall vest immediately prior to the effective date of the Change in Control; provided, however, that except as otherwise provided in any change in control or other agreement with the Company, your Units shall not be so vested if and to the extent the Units are, in connection with the Change in Control, either to be assumed by the successor or survivor corporation (or parent thereof) or to be replaced with a comparable right with respect to shares of the capital stock of the successor or survivor corporation (or parent thereof), in each case appropriately adjusted.

3

The determination of comparability of rights shall be made by the Committee in good faith. The Committee may adopt provisions to ensure that any such acceleration shall be conditioned upon the consummation of the contemplated Change in Control.

(b)Notwithstanding the foregoing, in the event of a pending or threatened takeover bid or tender offer at any time following the completion of the Performance Period and pursuant to which 10% or more of the outstanding securities of the Company is acquired, whether or not deemed a tender offer under applicable state or Federal laws, or in the event that any person makes any filing under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934 with respect to the Company, the Committee may in its sole discretion:

(i)Make the Units fully vested; or

(ii)Make any other reasonable adjustments or amendments to the Units or substitute new units on substantially similar terms.

IV.Timing and Form of Payment.

(a)Distribution Date. Unless you elect otherwise on or before the Grant Date, the distribution date (the “Distribution Date”) for your Units that become vested pursuant to this Agreement will be the date that such Units vest; provided that in no event shall the Distribution Date occur earlier than the date of the Committee Determination. Distribution of your vested Units will be made by the Company in shares of Common Stock (on a one-to-one basis) on or as soon as practicable after the Distribution Date with respect to such vested Units. You will only receive distributions in respect of your vested Units and will have no right to distribution of your unvested Units unless and until such Units vest (and are not otherwise forfeited pursuant to Section I(a)). Once a vested Unit has been paid pursuant to this Agreement, you will have no further rights with respect to that Unit. You may, however, elect (a “Distribution Election”) to (A) defer your Distribution Date with respect to some or all of your vested Units and/or (B) have your vested Units distributed to you in annual installments as provided in Section IV(b), provided that such election complies with this Section IV. You may change your Distribution Election with respect to each Tranche (set forth in Section II(a) above) up to three times without the approval of the Committee, provided such Distribution Election is made in a timely manner. Any Distribution Elections with respect to a Tranche in addition to the three provided in the preceding sentence may only be made with the approval of the Committee, in its sole discretion. In order for a Distribution Election to be valid, it must be made at least one year prior to the then-existing Distribution Date with respect to the Units subject to such Distribution Election, the new Distribution Date must be at least five years after the then-existing Distribution Date with respect to such Units, and the election must otherwise be consistent with the “subsequent election” rules of Section 409A(a)(4)(C) of the Code so as to prevent application of the penalty and interest provisions of Section 409A(a)(1)(B) of the Code. Your Distribution Date with respect to any portion of your Units may not be prior to the earlier of the Vesting Date for such vested Units or the date of the Committee Determination. Distribution Elections may only be made by delivering a written election to the Company care of its General Counsel in the form attached as Exhibit B hereto.

4

(b)Form of Distribution. Unless you elect otherwise on or before the Grant Date, distribution of your vested Units with respect to any Tranche will be made in a lump sum on or as soon as administratively practicable after your Distribution Date. You may, however, elect to have vested Units with respect to any Tranche distributed in the form of two or more annual installments over a fixed number of years, provided that each installment payment must be for a minimum of 1,000 shares of Common Stock. If you elect to have some or all of your vested Units underlying a Tranche distributed in annual installments, the first installment will be paid on or as soon as practicable after the Distribution Date with respect to such Tranche and subsequent installments will be paid on or as soon as practicable after each of the anniversaries of the Distribution Date with respect to such Tranche during your elected installment period. You may change an election you make pursuant to this Section IV(b) (or you may make an initial election in the event that you did not elect a form of payment at the time of your award and, accordingly, your Units were subject to the lump sum default payment rule) by filing a new written election with the Committee; provided that you must also elect a later Distribution Date pursuant to Section IV(a) as to any Units that are subject to such election and in no event may such an election result in an acceleration of distributions within the meaning of Section 409A of the Code so as to prevent application of the penalty and interest provisions of Section 409A(a)(1)(B) of the Code. Distribution Elections may only be made by delivering a written election to the Company care of its General Counsel in the form attached as Exhibit B hereto.

(c)Hardship Distribution. If you experience an Unforeseeable Emergency (as defined below) you may elect to receive immediate distribution of some or all or your vested Units upon such Unforeseeable Emergency. Distribution upon an Unforeseeable Emergency shall be made no later than thirty (30) days following written notice to the Company care of its General Counsel of the Unforeseeable Emergency. For purposes of this Agreement, an “Unforeseeable Emergency” shall mean a severe financial hardship resulting from (i) an illness or accident of you, your spouse, or your dependent (as defined in Section 152(a) of the Code), (ii) loss of your property due to casualty, or (iii) any other similar extraordinary and unforeseeable circumstances arising as a result of events beyond your control, all as reasonably determined by the Committee in good faith. No distribution shall be made in respect of an Unforeseeable Emergency unless such Unforeseeable Emergency is not otherwise relievable by liquidation of your assets (to the extent such liquidation would not itself cause a severe financial hardship) or through reimbursement or compensation by insurance or otherwise. Any distribution of your vested Units as a result of an Unforeseeable Emergency shall be limited to the amount reasonably necessary to relieve the Unforeseeable Emergency (which may include amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution).

V.Dividend Equivalent Rights. During such time as each Unit remains outstanding and prior to the distribution of such Unit in accordance with Section IV, you will have the right to receive, in cash, with respect to such Unit, the amount of any cash dividend paid on a share of Common Stock (a “Dividend Equivalent Right”). You will have a Dividend Equivalent Right with respect to each Unit that is outstanding on the record date of such dividend. Dividend Equivalent Rights will be paid to you at the same time or within 30 days after dividends are paid to stockholders of the Company. Dividend Equivalent Rights will not be paid to you with respect to any Units that are forfeited pursuant to Sections I and II, effective as of the date such Units are forfeited. You will have no Dividend Equivalent Rights as of the record date of any

5

such cash dividend in respect of any Units that have been paid in Common Stock; provided that you are the record holder of such Common Stock on or before such record date.

VI.Transferability. No benefit payable under, or interest in, the Units or this Agreement shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge and any such attempted action shall be void and no such benefit or interest shall be, in any manner, liable for, or subject to, your or your beneficiary’s debts, contracts, liabilities or torts; provided, however, nothing in this Section VI shall prevent transfers of your Units to the Company or by will or by applicable laws of descent and distribution. You may designate a beneficiary to receive distribution of your vested Units upon your death by submitting a written beneficiary designation to the Committee in the form attached hereto as Exhibit B. You may revoke a beneficiary designation by submitting a new beneficiary designation.

VII.Withholding. You will be required to pay in cash or deduction from other compensation payable to you by the Company any sums required by federal, state or local tax law to be withheld with respect to the issuance, vesting or payment of Units and the payment of Dividend Equivalent Rights. At your election and in satisfaction of the foregoing requirement, the Company will withhold shares of Common Stock underlying the Units and otherwise issuable in accordance with this Agreement, in the manner prescribed by, and subject to the limitations of, Section 12 of the Plan, in satisfaction of such withholding obligations.

VIII.No Contract for Employment. This Agreement is not an employment or service contract and nothing in this Agreement shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ or service of the Company, or of the Company to continue your employment or service with the Company.

IX.Notices. Any notices provided for in this Agreement or the Plan, including a Distribution Election, shall be given in writing and shall be deemed effectively given upon receipt if delivered by hand or, in the case of notices delivered by United States mail, five (5) days after deposit in the United States mail, postage prepaid, addressed, as applicable, to the Company or if to you, at such address as is currently maintained in the Company’s records or at such other address as you hereafter designate by written notice to the Company.

X.Plan. This Agreement is subject to all the provisions of the Plan and their provisions are hereby made a part of this Agreement. In the event of any conflict between the provisions of this Agreement and those of the Plan, the provisions of the Plan shall control.

XI.Entire Agreement. This Agreement contains the entire understanding of the parties in respect of the Units and supersedes upon its effectiveness all other prior agreements and understandings between the parties with respect to the Units.

XII.Amendment. This Agreement may be amended by the Committee; provided, however that no such amendment shall, without your consent, alter, terminate, impair or adversely affect your rights under this Agreement.

6

XIII.Governing Law. This Agreement shall be construed and interpreted, and the rights of the parties shall be determined, in accordance with the laws of the State of California, without regard to conflicts of law provisions thereof.

XIV.Tax Consequences. You may be subject to adverse tax consequences as a result of the issuance, vesting and/or distribution of your Units. YOU ARE ENCOURAGED TO CONSULT A TAX ADVISOR AS TO THE TAX CONSEQUENCES OF YOUR UNITS AND SUBSEQUENT DISTRIBUTION OF COMMON STOCK.

XV.Construction. This Agreement shall be construed and interpreted to comply with Section 409A of the Code. The Company reserves the right to amend this Agreement to the extent it reasonably determines is necessary in order to preserve the intended tax consequences of the Units in light of Section 409A of the Code and any regulations or other guidance promulgated thereunder. Notwithstanding anything to the contrary contained in this Agreement or the Plan, in the event that you are to receive a payment hereunder in connection with your termination of employment (other than due to your death) at a time when you are a “specified employee” (within the meaning of Section 409A of the Code), the Company may delay the making of such payment to a date that is not earlier than the first to occur of six months and one day after your “separation from service” (within the meaning of Section 409A of the Code) or the date of your death.

[Remainder of page intentionally left blank]

7

Very truly yours,

HEALTH CARE PROPERTY INVESTORS, INC.

By:

Name:

Title:

Accepted and Agreed,
effective as of the date first written above.

By:

Name: [                            ]

8

[FIVE YEAR INSTALLMENT VESTING]

EXHIBIT A

PERFORMANCE GOALS

Funds From Operations Per Share	Aggregate Percentage Forfeited
[$       ] or greater	0	%
Equal to or greater than [$       ] but less than [$       ]	2	%
Equal to or greater than [$       ] but less than [$       ]	4	%
Equal to or greater than [$       ] but less than [$       ]	6	%
Equal to or greater than [$       ] but less than [$       ]	8	%
Equal to or greater than [$       ] but less than [$       ]	10	%
Equal to or greater than [$       ] but less than [$       ]	12	%
Equal to or greater than [$       ] but less than [$       ]	14	%
Equal to or greater than [$       ] but less than [$       ]	16	%
Equal to or greater than [$       ] but less than [$       ]	18	%
Equal to or greater than [$       ] but less than [$       ]	20	%
Equal to or greater than [$       ] but less than [$       ]	22	%
Equal to or greater than [$       ] but less than [$       ]	24	%
Equal to or greater than [$       ] but less than [$       ]	26	%
Equal to or greater than [$       ] but less than [$       ]	28	%
Equal to or greater than [$       ] but less than [$       ]	30	%
Equal to or greater than [$       ] but less than [$       ]	32	%
Equal to or greater than [$       ] but less than [$       ]	34	%
Equal to or greater than [$       ] but less than [$       ]	36	%
Equal to or greater than [$       ] but less than [$       ]	38	%
Equal to or greater than [$       ] but less than [$       ]	40	%
Equal to or greater than [$       ] but less than [$       ]	50	%
Equal to or greater than [$       ] but less than [$       ]	60	%
Equal to or greater than [$       ] but less than [$       ]	70	%
Equal to or greater than [$       ] but less than [$       ]	80	%
Equal to or greater than [$       ] but less than [$       ]	90	%
Equal to or greater than [$       ] but less than [$       ]	100	%

A-1

EXHIBIT B

HEALTH CARE PROPERTY INVESTORS, INC.
2000 STOCK INCENTIVE PLAN

RESTRICTED STOCK UNITS
DISTRIBUTION ELECTION AND BENEFICIARY DESIGNATION FORM

Name: [                            ] Social Security No.:

In connection with your award of Performance Restricted Stock Units on [                , 2006] under the Health Care Property Investors, Inc. 2000 Stock Incentive Plan, as amended and/or restated from time to time (the “Plan”), you have the option of selecting the timing and form of payment of the shares of Common Stock underlying your vested Units.

Please complete this election form and return it to Edward J. Henning, the Company’s General Counsel and Corporate Secretary.

Deferral of Distribution Date

Unless you elect otherwise, the Distribution Date for your Units that vest will be the vesting date of such Units; provided that in no event shall the Distribution Date occur earlier than the date of the Committee Determination with respect to such Units. You may elect a new Distribution Date with respect to some or all of the Tranches by completing the deferral election grid below. Please note that, subject to the restrictions set forth below and in the Agreement, your new Distribution Date with respect to a Tranche can take any of the following forms:

•You may elect a date certain for your Distribution Date (e.g., January 1, 2010),

•You may elect that your Distribution Date will be the date of your death or termination of employment, or

•You may elect a Distribution Date that is the earlier of two dates/events (e.g., the earlier of January 1, 2010, or termination of your employment).

If you do not elect a Distribution Date on or before the Grant Date, you will be deemed to have elected distribution of your vested Units on or as soon as administratively practical after the applicable vesting date of your Units. If, after the Grant Date, you want to change the Distribution Date with respect to any of your vested Units, your new election must be made at least one year prior to the then-existing Distribution Date, the new Distribution Date you elect must be at least five years after the then-existing Distribution Date, and the change must otherwise satisfy the “subsequent election” rules of Section 409A(a)(4)(C) of the Code. If your election to defer your Distribution Date is not timely, it will not be valid.

You acknowledge and understand that by electing a new Distribution Date with respect to one or more of the Tranches, you are hereby revoking the then-existing Distribution Date with respect to such Tranche(s). You further acknowledge and agree that the distribution

B-1

of the shares of Common Stock underlying your Units may coincide with a period during which you are prohibited from selling, disposing or otherwise transferring such shares pursuant to the Company’s Insider Trading Policy, or by law, and therefore, you may not be able to sell, dispose or otherwise transfer such shares to pay any sums required by federal, state or local tax law to be withheld with respect to the issuance of such shares.

Tranche	Vesting Date	Distribution Date*
1	1st Anniversary ofGrant Date
2	2nd Anniversary of Grant Date
3	3rd Anniversary of Grant Date
4	4th Anniversary of Grant Date
5	5th Anniversary of Grant Date

*  Specify “Vesting Date” if you desire payment of the vested Units on or as soon as administratively practical after the vesting date of the Units. Otherwise, indicate the Distribution Date you elect. In all events your election is subject to the rules stated above (including, without limitation, the 5-year deferral requirement set forth above if you are electing a change after the Grant Date).

Form of Payment

Distribution of all of your vested Units underlying a Tranche will be made in shares of Common Stock in a lump sum on or as soon as practicable after the Distribution Date with respect to such Units. For example, all of your vested Units under Tranche 1 will be distributed to you on or as soon as practicable after the Vesting Date with respect to Tranche 1 (unless you elect a later Distribution Date as provided above). You may, however, elect at the time of your award to have vested Units with respect to any Tranche distributed in the form of two or more annual installments over a fixed number of years. For example, if you elect to have your vested Units underlying Tranche 1 distributed in five installments, your vested Units will be distributed to you in five equal payments on or as soon as practicable after the Distribution Date with respect to Tranche 1 and each of the first four anniversaries of the Distribution Date for Tranche 1.

If you elect to have any or all of your vested Units underlying a Tranche distributed in installments, you must elect a number of equal annual installments which will result in a distribution of at least 1,000 shares of Common Stock per installment with respect to such Tranche (otherwise, the number of installments you elected will be reduced by the Company to produce a distribution of at least 1,000 shares of Common Stock per installment). If you would like to change a form of distribution election you have made (or if you would like to make an initial form of distribution election in the event that you did not make such an election at the time of the award), your election must be made at least one year prior to the then-existing Distribution Date, and you must elect a new Distribution Date that is at least five years after the then-existing Distribution Date. If your election to defer your Distribution Date is not timely, it will not be valid. Furthermore, if you are

B-2

changing an existing form of distribution election, your election change cannot result in an acceleration (within the meaning of Section 409A of the Code) of payments, and the change must otherwise satisfy the “subsequent election” rules of Section 409A(a)(4)(C) of the Code.

Tranche	Vesting Date	Number of Installments (Shares of Common Stock per Installment)
1	1st Anniversary of Grant Date	(     )
2	2nd Anniversary of Grant Date	(     )
3	3rd Anniversary of Grant Date	(     )
4	4th Anniversary of Grant Date	(     )
5	5th Anniversary of Grant Date	(     )

Beneficiary Designation

I hereby designate the following individual as beneficiary to receive distribution of my vested Units, if any, in the event of my death. Distribution of such vested Units will be in the form, and on the Distribution Date(s), in effect with respect to such vested Units as of the date of my death.

Beneficiary Information

Name:                                                                                                                                              & nbsp;                                                          
(Please print)LastFirst                                                           &nb sp;                                                                                                                                                                                                           Middle Initial

Sex:            Relationship to Participant:

Social Security No.:                                                      Date of Birth:

Address:

City:                                                                                              State:                                      Zip Code:                                           

Please retain a copy of this Distribution Election Form for your records.

Signature: [                            ] Date Signed

B-3

EX-10.34

Exhibit 10.34

[CEO FIVE YEAR INSTALLMENT VESTING]

PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

[                            ], Grantee:

As of the [            ] day of [               2006] (the “Grant Date”), Health Care Property Investors, Inc., a Maryland corporation (the “Company”), pursuant to the Health Care Property Investors, Inc. 2000 Stock Incentive Plan, as amended and/or restated from time to time (the “Plan”), has granted to you, the Grantee named above, [              ] performance restricted stock units (the “Units”) with respect to [            ] shares of Common Stock on the terms and conditions set forth in this Performance Restricted Stock Unit Agreement (this “Agreement”) and the Plan. The Units are subject to adjustment as provided in Section 11(a) of the Plan. Capitalized terms not defined herein shall have the meanings assigned to such terms in the Plan. The Compensation Committee (the “Committee”) of the Board of Directors of the Company (the “Board”) is the administrator of the Plan for purposes of your Units.

I.Forfeiture of Units.

(a)Forfeiture Based Upon Company Performance. Your Units will be paid only to the extent your Units are not forfeited pursuant to this Section I and only to the extent such non-forfeited Units vest pursuant to this Section I or Section II below. Your Units are subject to forfeiture if the Company’s Funds From Operations Per Share for the 2006 calendar year (the “Performance Period”) is less than [$      ]. If the Company’s Funds From Operations Per Share for the Performance Period is less than [$      ], the aggregate percentage of Units that you will forfeit will be determined in accordance with Exhibit A hereto. For purposes of this Agreement, “Funds From Operations Per Share” means the Company’s funds from operations per share during the Performance Period, as prescribed by the National Association of Real Estate Investment Trusts (NAREIT) as in effect on the first day of the Performance Period, and shall be calculated on a fully diluted basis using the weighted average of diluted shares of Common Stock outstanding during the Performance Period. Funds From Operations Per Share shall be calculated before taking into account any non-recurring charges incurred by the Company with respect to the Performance Period for (i) material strategic or financing transactions approved by the Board of Directors and (ii) impairments. The determination as to whether the Company has attained the performance goals with respect to the Performance Period shall be made by the Committee acting in good faith. The Committee’s determination regarding whether the Company has attained the performance goals (the “Committee Determination”) shall be made no later than the March 15 following the end of the Performance Period. Your Units shall not be deemed vested pursuant to any other provision of this Agreement earlier than the date that the Committee makes such determination, as required by Section 162(m) of the Code and the regulations promulgated thereunder. Any Units forfeited pursuant to this Section I(a) shall be deemed to have been forfeited as of the last day of the Performance Period.

(b)Forfeiture of Units Upon Termination of Employment. Except as provided in Section I(c), if at any time during the Performance Period your employment with the Company is terminated, all of your Units shall be automatically forfeited and cancelled in full effective as of such termination of employment and this Agreement shall be null and void and of no further force and effect.

1

(c)Certain Terminations during the Performance Period. This Section I(c) applies in the event your employment with the Company is terminated as a result of (i) your death, Disability or Retirement, (ii) a Termination Other Than For Cause, (iii) a Termination For Good Reason, or (iv) a Termination Upon a Change in Control (including a Covered Resignation). In the event of any such termination during the Performance Period, your Units will remain outstanding during the remainder of the Performance Period and will be subject to forfeiture in the manner set forth in subsection (a) upon completion of the Performance Period. In such a case, any Units not so forfeited pursuant to subsection (a) shall fully vest as of the date of the Committee Determination. For purposes of this Agreement, the terms “Covered Resignation,” “Disability,” “Termination Other Than For Cause,” “Termination For Good Reason,” and “Termination Upon a Change in Control” shall have the meanings ascribed to such terms in your Employment Agreement with the Company dated October 26, 2005 (the “Employment Agreement”). Such meanings shall continue to apply for purposes of this Agreement notwithstanding any termination of the “Employment Period” (as such term is defined in the Employment Agreement) in accordance with the Employment Agreement.

II.Vesting.

(a)Vesting of Non-Forfeited Units. You will have no further rights with respect to any Units that are forfeited in accordance with Section I. Subject to the terms and conditions of this Agreement, your Units that (i) are not forfeited in accordance with Section I and (ii) do not otherwise vest in accordance with Section I, if any, shall vest in accordance with the following schedule, subject to your continuous service to the Company until the applicable vesting date. (Vesting amounts pursuant to the following schedule are cumulative.)

Tranche	Percentage of Non Forfeited Units that Vest		Vesting Date
1	20	%	1st Anniversary of Grant Date
2	20	%	2nd Anniversary of Grant Date
3	20	%	3rd Anniversary of Grant Date
4	20	%	4th Anniversary of Grant Date
5	20	%	5th Anniversary of Grant Date

The vesting schedule requires continued employment through each applicable Vesting Date as a condition to vesting of the applicable Tranche and the corresponding rights and benefits under this Agreement. Unless otherwise expressly provided herein with respect to accelerated vesting of the Units under certain circumstances, employment for only a portion of a vesting period, even if a substantial portion, will not entitle you to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment as provided in this Agreement.

2

(b)Acceleration on Certain Terminations Following Performance Period. If at any time following the completion of the Performance Period and prior to the date your Units become fully vested in accordance with Section II(a), your employment with the Company is terminated as a result of (i) your death, Disability or Retirement, (ii) a Termination Other Than For Cause (iii) a Termination For Good Reason, or (iv) a Termination Upon a Change in Control (including a Covered Resignation), your then outstanding Units (to the extent not previously forfeited and otherwise unvested) shall fully vest immediately upon such termination of employment.

(c)No Acceleration or Vesting Upon Other Terminations. Except as otherwise provided in the Plan, if at any time your employment with the Company is terminated (i) by the Company, or (ii) by you, under any circumstances (other than as a result of your death, Disability, Retirement, a Termination Other Than For Cause, a Termination For Good Reason, or a Termination Upon a Change in Control, including a Covered Resignation), any of your Units that remain outstanding and otherwise unvested at the time of such termination of employment shall be automatically forfeited and cancelled in full, effective as of such termination of employment.

(d)Employment Termination Date. If the Employment Period is in effect, the date of your termination of employment for purposes of this Agreement shall be no earlier than the “Date of Termination,” as such term is defined in the Employment Agreement. If the Employment Period is not then in effect, the date of termination of your termination of employment for purposes of this Agreement shall be your actual date of termination of employment.

III.Timing and Form of Payment.

(a)Distribution Date. Unless you elect otherwise on or before the Grant Date, the distribution date (the “Distribution Date”) for your Units that become vested pursuant to this Agreement will be the date that such Units vest; provided that in no event shall the Distribution Date occur earlier than the date of the Committee Determination. Distribution of your vested Units will be made by the Company in shares of Common Stock (on a one-to-one basis) on or as soon as practicable after the Distribution Date with respect to such vested Units. You will only receive distributions in respect of your vested Units and will have no right to distribution of your unvested Units unless and until such Units vest (and are not otherwise forfeited pursuant to Section I(a)). Once a vested Unit has been paid pursuant to this Agreement, you will have no further rights with respect to that Unit. You may, however, elect (a “Distribution Election”) to (A) defer your Distribution Date with respect to some or all of your vested Units and/or (B) have your vested Units distributed to you in annual installments as provided in Section IV(b), provided that such election complies with this Section IV. You may change your Distribution Election with respect to each Tranche (set forth in Section II(a) above) up to three times without the approval of the Committee, provided such Distribution Election is made in a timely manner. Any Distribution Elections with respect to a Tranche in addition to the three provided in the preceding sentence may only be made with the approval of the Committee, in its sole discretion. In order for a Distribution Election to be valid, it must be made at least one year prior to the then-existing Distribution Date with respect to the Units subject to such Distribution Election, the new Distribution Date must be at least five years after the then-existing Distribution Date

3

with respect to such Units, and the election must otherwise be consistent with the “subsequent election” rules of Section 409A(a)(4)(C) of the Code so as to prevent application of the penalty and interest provisions of Section 409A(a)(1)(B) of the Code. Your Distribution Date with respect to any portion of your Units may not be prior to the earlier of the Vesting Date for such vested Units or the date of the Committee Determination. Distribution Elections may only be made by delivering a written election to the Company care of its General Counsel in the form attached as Exhibit B hereto.

(b)Form of Distribution. Unless you elect otherwise on or before the Grant Date, distribution of your vested Units with respect to any Tranche will be made in a lump sum on or as soon as administratively practicable after your Distribution Date. You may, however, elect to have vested Units with respect to any Tranche distributed in the form of two or more annual installments over a fixed number of years, provided that each installment payment must be for a minimum of 1,000 shares of Common Stock. If you elect to have some or all of your vested Units underlying a Tranche distributed in annual installments, the first installment will be paid on or as soon as practicable after the Distribution Date with respect to such Tranche and subsequent installments will be paid on or as soon as practicable after each of the anniversaries of the Distribution Date with respect to such Tranche during your elected installment period. You may change an election you make pursuant to this Section IV(b) (or you may make an initial election in the event that you did not elect a form of payment at the time of your award and, accordingly, your Units were subject to the lump sum default payment rule) by filing a new written election with the Committee; provided that you must also elect a later Distribution Date pursuant to Section IV(a) as to any Units that are subject to such election and in no event may such an election result in an acceleration of distributions within the meaning of Section 409A of the Code so as to prevent application of the penalty and interest provisions of Section 409A(a)(1)(B) of the Code. Distribution Elections may only be made by delivering a written election to the Company care of its General Counsel in the form attached as Exhibit B hereto.

(c)Hardship Distribution. If you experience an Unforeseeable Emergency (as defined below) you may elect to receive immediate distribution of some or all or your vested Units upon such Unforeseeable Emergency. Distribution upon an Unforeseeable Emergency shall be made no later than thirty (30) days following written notice to the Company care of its General Counsel of the Unforeseeable Emergency. For purposes of this Agreement, an “Unforeseeable Emergency” shall mean a severe financial hardship resulting from (i) an illness or accident of you, your spouse, or your dependent (as defined in Section 152(a) of the Code), (ii) loss of your property due to casualty, or (iii) any other similar extraordinary and unforeseeable circumstances arising as a result of events beyond your control, all as reasonably determined by the Committee in good faith. No distribution shall be made in respect of an Unforeseeable Emergency to the extent that such Unforeseeable Emergency is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of your assets (to the extent such liquidation would not itself cause a severe financial hardship). Any distribution of your vested Units as a result of an Unforeseeable Emergency shall be limited to the amount reasonably necessary to relieve the Unforeseeable Emergency (which may include amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution).

4

IV.Dividend Equivalent Rights. During such time as each Unit remains outstanding and prior to the distribution of such Unit in accordance with Section IV, you will have the right to receive, in cash, with respect to such Unit, the amount of any cash dividend paid on a share of Common Stock (a “Dividend Equivalent Right”). You will have a Dividend Equivalent Right with respect to each Unit that is outstanding on the record date of such dividend. Dividend Equivalent Rights will be paid to you at the same time or within 30 days after dividends are paid to stockholders of the Company. Dividend Equivalent Rights will not be paid to you with respect to any Units that are forfeited pursuant to Sections I and II, effective as of the date such Units are forfeited. You will have no Dividend Equivalent Rights as of the record date of any such cash dividend in respect of any Units that have been paid in Common Stock; provided that you are the record holder of such Common Stock on or before such record date.

V.Transferability. No benefit payable under, or interest in, the Units or this Agreement shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge and any such attempted action shall be void and no such benefit or interest shall be, in any manner, liable for, or subject to, your or your beneficiary’s debts, contracts, liabilities or torts; provided, however, nothing in this Section VI shall prevent transfer of your Units by will or by applicable laws of descent and distribution. You may designate a beneficiary to receive distribution of your vested Units upon your death by submitting a written beneficiary designation to the Committee in the form attached hereto as Exhibit B. You may revoke a beneficiary designation by submitting a new beneficiary designation.

VI.Withholding. You will be required to pay in cash or deduction from other compensation payable to you by the Company any sums required by federal, state or local tax law to be withheld with respect to the issuance, vesting or payment of Units and the payment of Dividend Equivalent Rights. At your election and in satisfaction of the foregoing requirement, the Company will withhold shares of Common Stock underlying the Units and otherwise issuable in accordance with this Agreement, in the manner prescribed by, and subject to the limitations of, Section 12 of the Plan, in satisfaction of such withholding obligations.

VII.No Contract for Employment. This Agreement is not an employment or service contract and nothing in this Agreement shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ or service of the Company, or of the Company to continue your employment or service with the Company.

VIII.Notices. Any notices provided for in this Agreement or the Plan, including a Distribution Election, shall be given in writing and shall be deemed effectively given upon receipt if delivered by hand or, in the case of notices delivered by United States mail, five (5) days after deposit in the United States mail, postage prepaid, addressed, as applicable, to the Company or if to you, at such address as is currently maintained in the Company’s records or at such other address as you hereafter designate by written notice to the Company.

IX.Plan. The provisions of the Plan are hereby made a part of this Agreement. In the event of any conflict between the provisions of this Agreement and those of the Plan, the provisions of this Agreement shall control.

5

X.Entire Agreement. This Agreement, together with the Employment Agreement, contains the entire understanding of the parties in respect of the Units and supersedes upon its effectiveness all other prior agreements and understandings between the parties with respect to the Units. In the event of any discrepancy between this Agreement and the Employment Agreement, the Employment Agreement shall control.

XI.Amendment. This Agreement may be amended by the Committee; provided, however that no such amendment shall, without your prior written consent, alter, terminate, impair or adversely affect your rights under this Agreement.

XII.Governing Law. This Agreement shall be construed and interpreted, and the rights of the parties shall be determined, in accordance with the laws of the State of California, without regard to conflicts of law provisions thereof.

XIII.Tax Consequences. You may be subject to adverse tax consequences as a result of the issuance, vesting and/or distribution of your Units. YOU ARE ENCOURAGED TO CONSULT A TAX ADVISOR AS TO THE TAX CONSEQUENCES OF YOUR UNITS AND SUBSEQUENT DISTRIBUTION OF COMMON STOCK.

XIV.Construction. To the extent that this Agreement is subject to Section 409A of the Code, you and the Company agree to cooperate and work together in good faith to timely amend this Agreement to prevent application of the penalty and interest provisions of Section 409A(a)(1)(B) of the Code. In the event that you and the Company do not agree as to the necessity, timing or nature of a particular amendment intended to prevent application of the penalty and interest provisions of Section 409A(a)(1)(B) of the Code, reasonable deference will be given to your reasonable interpretation of such provisions. Notwithstanding anything to the contrary contained in this Agreement or the Plan, in the event that you are to receive a payment hereunder in connection with your termination of employment (other than due to your death) at a time when you are a “specified employee” (within the meaning of Section 409A of the Code), the Company shall delay the making of such payment to a date that is not earlier than the first to occur of six months and one day after your “separation from service” (within the meaning of Section 409A of the Code) or the date of your death.

[Remainder of page intentionally left blank]

6

Very truly yours,

HEALTH CARE PROPERTY INVESTORS, INC.

By:

Name:

Title:

And:

Name:

Title:

Accepted and Agreed,
effective as of the date first written above.

By:

Name:

7

[CEO FIVE YEAR INSTALLMENT VESTING]

EXHIBIT A

PERFORMANCE GOALS

Funds From Operations Per Share	Aggregate Percentage Forfeited
[$       ] or greater	0	%
Equal to or greater than [$       ] but less than [$       ]	2	%
Equal to or greater than [$       ] but less than [$       ]	4	%
Equal to or greater than [$       ] but less than [$       ]	6	%
Equal to or greater than [$       ] but less than [$       ]	8	%
Equal to or greater than [$       ] but less than [$       ]	10	%
Equal to or greater than [$       ] but less than [$       ]	12	%
Equal to or greater than [$       ] but less than [$       ]	14	%
Equal to or greater than [$       ] but less than [$       ]	16	%
Equal to or greater than [$       ] but less than [$       ]	18	%
Equal to or greater than [$       ] but less than [$       ]	20	%
Equal to or greater than [$       ] but less than [$       ]	22	%
Equal to or greater than [$       ] but less than [$       ]	24	%
Equal to or greater than [$       ] but less than [$       ]	26	%
Equal to or greater than [$       ] but less than [$       ]	28	%
Equal to or greater than [$       ] but less than [$       ]	30	%
Equal to or greater than [$       ] but less than [$       ]	32	%
Equal to or greater than [$       ] but less than [$       ]	34	%
Equal to or greater than [$       ] but less than [$       ]	36	%
Equal to or greater than [$       ] but less than [$       ]	38	%
Equal to or greater than [$       ] but less than [$       ]	40	%
Equal to or greater than [$       ] but less than [$       ]	50	%
Equal to or greater than [$       ] but less than [$       ]	60	%
Equal to or greater than [$       ] but less than [$       ]	70	%
Equal to or greater than [$       ] but less than [$       ]	80	%
Equal to or greater than [$       ] but less than [$       ]	90	%
Equal to or greater than [$       ] but less than [$       ]	100	%

A-1

EXHIBIT B

HEALTH CARE PROPERTY INVESTORS, INC.
2000 STOCK INCENTIVE PLAN

RESTRICTED STOCK UNITS
DISTRIBUTION ELECTION AND BENEFICIARY DESIGNATION FORM

Name:

Social Security No.:

In connection with your award of Performance Restricted Stock Units on [                , 2006] under the Health Care Property Investors, Inc. 2000 Stock Incentive Plan, as amended and/or restated from time to time (the “Plan”), you have the option of selecting the timing and form of payment of the shares of Common Stock underlying your vested Units.

Please complete this election form and return it to Edward J. Henning, the Company’s General Counsel and Corporate Secretary.

Deferral of Distribution Date

Unless you elect otherwise, the Distribution Date for your Units that vest will be the vesting date of such Units; provided that in no event shall the Distribution Date occur earlier than the date of the Committee Determination with respect to such Units. You may elect a new Distribution Date with respect to some or all of the Tranches by completing the information request below. Please note that, subject to the restrictions set forth below and in the Agreement, your new Distribution Date with respect to a Tranche can take any of the following forms:

•You may elect a date certain for your Distribution Date (e.g., January 1, 2010),

•You may elect that your Distribution Date will be the date of your death or termination of employment, or

•You may elect a Distribution Date that is the earlier of two dates/events (e.g., the earlier of January 1, 2010, or termination of your employment).

If you do not elect a Distribution Date on or before the Grant Date, you will be deemed to have elected distribution of your vested Units on or as soon as administratively practical after the applicable vesting date of your Units. If, after the Grant Date, you want to change the Distribution Date with respect to any of your vested Units, your new election must be made at least one year prior to the then-existing Distribution Date, the new Distribution Date you elect must be at least five years after the then-existing Distribution Date, and the change must otherwise satisfy the “subsequent election” rules of Section 409A(a)(4)(C) of the Code. If your election to defer your Distribution Date is not timely, it will not be valid.

B-1

You acknowledge and understand that by electing a new Distribution Date with respect to one or more of the Tranches, you are hereby revoking the then-existing Distribution Date with respect to such Tranche(s). You further acknowledge and agree that the distribution of the shares of Common Stock underlying your Units may coincide with a period during which you are prohibited from selling, disposing or otherwise transferring such shares pursuant to the Company’s Insider Trading Policy, or by law, and therefore, you may not be able to sell, dispose or otherwise transfer such shares to pay any sums required by federal, state or local tax law to be withheld with respect to the issuance of such shares.

Tranche	Vesting Date	Distribution Date*
1	1st Anniversary of Grant Date
2	2nd Anniversary of Grant Date
3	3rd Anniversary of Grant Date
4	4th Anniversary of Grant Date
5	5th Anniversary of Grant Date

*  Specify “Vesting Date” if you desire payment of the vested Units on or as soon as administratively practical after the vesting date of the Units. Otherwise, indicate the Distribution Date you elect. In all events your election is subject to the rules stated above (including, without limitation, the 5-year deferral requirement set forth above if you are electing a change after the Grant Date).

Form of Payment

Distribution of all of your vested Units underlying a Tranche will be made in shares of Common Stock in a lump sum on or as soon as practicable after the Distribution Date with respect to such Units. For example, all of your vested Units under Tranche 1 will be distributed to you on or as soon as practicable after the Vesting Date with respect to Tranche 1 (unless you elect a later Distribution Date as provided above). You may, however, elect at the time of your award to have vested Units with respect to any Tranche distributed in the form of two or more annual installments over a fixed number of years. For example, if you elect to have your vested Units underlying Tranche 1 distributed in five installments, your vested Units will be distributed to you in five equal payments on or as soon as practicable after the Distribution Date with respect to Tranche 1 and each of the first four anniversaries of the Distribution Date for Tranche 1.

If you elect to have any or all of your vested Units underlying a Tranche distributed in installments, you must elect a number of equal annual installments which will result in a distribution of at least 1,000 shares of Common Stock per installment with respect to such Tranche (otherwise, the number of installments you elected will be reduced by the Company to produce a distribution of at least 1,000 shares of Common Stock per installment). If you would like to change a form of distribution election you have made (or if you would like to make an initial form of distribution election in the event that you did not make such an election at the time of the award), your election must be made at least

B-2

one year prior to the then-existing Distribution Date, and you must elect a new Distribution Date that is at least five years after the then-existing Distribution Date. If your election to defer your Distribution Date is not timely, it will not be valid. Furthermore, if you are changing an existing form of distribution election, your election change cannot result in an acceleration (within the meaning of Section 409A of the Code) of payments, and the change must otherwise satisfy the “subsequent election” rules of Section 409A(a)(4)(C) of the Code.

Tranche	Vesting Date	Number of Installments (Shares of Common Stock per Installment)
1	1st Anniversary of Grant Date	(       )
2	2nd Anniversary of Grant Date	(       )
3	3rd Anniversary of Grant Date	(       )
4	4th Anniversary of Grant Date	(       )
5	5th Anniversary of Grant Date	(       )

Beneficiary Designation

I hereby designate the following individual as beneficiary to receive distribution of my vested Units, if any, in the event of my death. Distribution of such vested Units will be in the form, and on the Distribution Date(s), in effect with respect to such vested Units as of the date of my death.

Beneficiary Information

Name:                                                                                                                                              & nbsp;                                                          
(Please print)LastFirst                                                           &nb sp;                                                                                                                                                                                                           Middle Initial

Sex:            Relationship to Participant:

Social Security No.:                                                      Date of Birth:

Address:

City:                                                                                                  State:                                    &n bsp;     Zip Code:                                  

Please retain a copy of this Distribution Election Form for your records.

B-3

Signature: Date Signed

B-4

EX-10.35

Exhibit 10.35

[CEO THREE YEAR CLIFF VESTING]

PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

[                            ], Grantee:

As of the [            ] day of [               2006] (the “Grant Date”), Health Care Property Investors, Inc., a Maryland corporation (the “Company”), pursuant to the Health Care Property Investors, Inc. 2000 Stock Incentive Plan, as amended and/or restated from time to time (the “Plan”), has granted to you, the Grantee named above, [              ] performance restricted stock units (the “Units”) with respect to [            ] shares of Common Stock on the terms and conditions set forth in this Performance Restricted Stock Unit Agreement (this “Agreement”) and the Plan. The Units are subject to adjustment as provided in Section 11(a) of the Plan. Capitalized terms not defined herein shall have the meanings assigned to such terms in the Plan. The Compensation Committee (the “Committee”) of the Board of Directors of the Company (the “Board”) is the administrator of the Plan for purposes of your Units.

I.Forfeiture of Units.

(a)Forfeiture Based Upon Company Performance. Your Units will be paid only to the extent your Units are not forfeited pursuant to this Section I and only to the extent such non-forfeited Units vest pursuant to this Section I or Section II below. Your Units are subject to forfeiture if the Company’s Funds From Operations Per Share for the 2006 calendar year (the “Performance Period”) is less than [$      ]. If the Company’s Funds From Operations Per Share for the Performance Period is less than [$      ], the aggregate percentage of Units that you will forfeit will be determined in accordance with Exhibit A hereto. For purposes of this Agreement, “Funds From Operations Per Share” means the Company’s funds from operations per share during the Performance Period, as prescribed by the National Association of Real Estate Investment Trusts (NAREIT) as in effect on the first day of the Performance Period, and shall be calculated on a fully diluted basis using the weighted average of diluted shares of Common Stock outstanding during the Performance Period. Funds From Operations Per Share shall be calculated before taking into account any non-recurring charges incurred by the Company with respect to the Performance Period for (i) material strategic or financing transactions approved by the Board of Directors and (ii) impairments. The determination as to whether the Company has attained the performance goals with respect to the Performance Period shall be made by the Committee acting in good faith. The Committee’s determination regarding whether the Company has attained the performance goals (the “Committee Determination”) shall be made no later than the March 15 following the end of the Performance Period. Your Units shall not be deemed vested pursuant to any other provision of this Agreement earlier than the date that the Committee makes such determination, as required by Section 162(m) of the Code and the regulations promulgated thereunder. Any Units forfeited pursuant to this Section I(a) shall be deemed to have been forfeited as of the last day of the Performance Period.

(b)Forfeiture of Units Upon Termination of Employment. Except as provided in Section I(c), if at any time during the Performance Period your employment with the Company is terminated, all of your Units shall be automatically forfeited and cancelled in full effective as of such termination of employment and this Agreement shall be null and void and of no further force and effect.

1

(c)Certain Terminations during the Performance Period. This Section I(c) applies in the event your employment with the Company is terminated as a result of (i) your death, Disability or Retirement, (ii) a Termination Other Than For Cause, (iii) a Termination For Good Reason, or (iv) a Termination Upon a Change in Control (including a Covered Resignation). In the event of any such termination during the Performance Period, your Units will remain outstanding during the remainder of the Performance Period and will be subject to forfeiture in the manner set forth in subsection (a) upon completion of the Performance Period. In such a case, any Units not so forfeited pursuant to subsection (a) shall fully vest as of the date of the Committee Determination. For purposes of this Agreement, the terms “Covered Resignation,” “Disability,” “Termination Other Than For Cause,” “Termination For Good Reason,” and “Termination Upon a Change in Control” shall have the meanings ascribed to such terms in your Employment Agreement with the Company dated October 26, 2005 (the “Employment Agreement”). Such meanings shall continue to apply for purposes of this Agreement notwithstanding any termination of the “Employment Period” (as such term is defined in the Employment Agreement) in accordance with the Employment Agreement.

II.Vesting.

(a)Vesting of Non-Forfeited Units. You will have no further rights with respect to any Units that are forfeited in accordance with Section I. Subject to the terms and conditions of this Agreement, your Units that (i) are not forfeited in accordance with Section I and (ii) do not otherwise vest in accordance with Section I, if any, shall vest upon the third anniversary of the Grant Date (the “Vesting Date”), subject to your continuous service to the Company until the Vesting Date.

The vesting schedule requires continued employment through the Vesting Date as a condition to vesting of the Units and the rights and benefits under this Agreement. Unless otherwise expressly provided herein with respect to accelerated vesting of the Units under certain circumstances, employment for only a portion of the vesting period, even if a substantial portion, will not entitle you to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment as provided in this Agreement.

(b)Acceleration on Certain Terminations Following Performance Period. If at any time following the completion of the Performance Period and prior to the Vesting Date, your employment with the Company is terminated as a result of (i) your death, Disability or Retirement, (ii) a Termination Other Than For Cause (iii) a Termination For Good Reason, or (iv) a Termination Upon a Change in Control (including a Covered Resignation), your then outstanding Units (to the extent not previously forfeited and otherwise unvested) shall fully vest immediately upon such termination of employment.

(c)No Acceleration or Vesting Upon Other Terminations. Except as otherwise provided in the Plan, if at any time your employment with the Company is terminated (i) by the Company, or (ii) by you, under any circumstances (other than as a result of your death, Disability or Retirement, a Termination Other Than For Cause, a Termination For Good Reason, or a Termination Upon a Change in Control, including a Covered Resignation), any of your Units that remain outstanding and otherwise unvested at the time of such termination of

2

employment shall be automatically forfeited and cancelled in full, effective as of such termination of employment.

(d)Employment Termination Date. If the Employment Period is in effect, the date of your termination of employment for purposes of this Agreement shall be no earlier than the “Date of Termination,” as such term is defined in the Employment Agreement. If the Employment Period is not then in effect, the date of termination of your termination of employment for purposes of this Agreement shall be your actual date of termination of employment.

III.Timing and Form of Payment.

(a)Distribution Date. Unless you elect otherwise on or before the Grant Date, the distribution date (the “Distribution Date”) for your Units that become vested pursuant to this Agreement will be the date that such Units vest; provided that in no event shall the Distribution Date occur earlier than the date of the Committee Determination. Distribution of your vested Units will be made by the Company in shares of Common Stock (on a one-to-one basis) on or as soon as practicable after the Distribution Date with respect to such vested Units. You will only receive distributions in respect of your vested Units and will have no right to distribution of your unvested Units unless and until such Units vest (and are not otherwise forfeited pursuant to Section I(a)). Once a vested Unit has been paid pursuant to this Agreement, you will have no further rights with respect to that Unit. You may, however, elect (a “Distribution Election”) to (A) defer your Distribution Date with respect to some or all of your vested Units and/or (B) have your vested Units distributed to you in annual installments as provided in Section IV(b), provided that such election complies with this Section IV. You may change your Distribution Election up to three times without the approval of the Committee, provided such Distribution Election is made in a timely manner. Any Distribution Elections with respect to your vested Units in addition to the three provided in the preceding sentence may only be made with the approval of the Committee, in its sole discretion. In order for a Distribution Election to be valid, it must be made at least one year prior to the then-existing Distribution Date, the new Distribution Date must be at least five years after the then-existing Distribution Date, and the election must otherwise be consistent with the “subsequent election” rules of Section 409A(a)(4)(C) of the Code so as to prevent application of the penalty and interest provisions of Section 409A(a)(1)(B) of the Code. Your Distribution Date with respect to any portion of your Units may not be prior to the earlier of the Vesting Date for such vested Units or the date of the Committee Determination. Distribution Elections may only be made by delivering a written election to the Company care of its General Counsel in the form attached as Exhibit B hereto.

(b)Form of Distribution. Unless you elect otherwise on or before the Grant Date, distribution of your vested Units will be made in a lump sum on or as soon as practicable after your Distribution Date. You may, however, elect to have vested Units distributed in the form of two or more annual installments over a fixed number of years, provided that each installment payment must be for a minimum of 1,000 shares of Common Stock. If you elect to have your vested Units distributed in annual installments, the first installment will be paid on or as soon as practicable after the Distribution Date and subsequent installments will be paid on or as soon as administratively practicable after each of the anniversaries of the Distribution Date during your elected installment period. You may change an election you make pursuant to this

3

Section IV(b) (or you may make an initial election in the event that you did not elect a form of payment at the time of your award and, accordingly, your Units were subject to the lump sum default payment rule) by filing a new written election with the Committee; provided that you must also elect a later Distribution Date pursuant to Section IV(a) as to any Units that are subject to such election and in no event may such an election result in an acceleration of distributions within the meaning of Section 409A of the Code so as to prevent application of the penalty and interest provisions of Section 409A(a)(1)(B) of the Code. Distribution Elections may only be made by delivering a written election to the Company care of its General Counsel in the form attached as Exhibit B hereto.

(c)Hardship Distribution. If you experience an Unforeseeable Emergency (as defined below) you may elect to receive immediate distribution of some or all or your vested Units upon such Unforeseeable Emergency. Distribution upon an Unforeseeable Emergency shall be made no later than thirty (30) days following written notice to the Company care of its General Counsel of the Unforeseeable Emergency. For purposes of this Agreement, an “Unforeseeable Emergency” shall mean a severe financial hardship resulting from (i) an illness or accident of you, your spouse, or your dependent (as defined in Section 152(a) of the Code), (ii) loss of your property due to casualty, or (iii) any other similar extraordinary and unforeseeable circumstances arising as a result of events beyond your control, all as reasonably determined by the Committee in good faith. No distribution shall be made in respect of an Unforeseeable Emergency to the extent that such Unforeseeable Emergency is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of your assets (to the extent such liquidation would not itself cause a severe financial hardship). Any distribution of your vested Units as a result of an Unforeseeable Emergency shall be limited to the amount reasonably necessary to relieve the Unforeseeable Emergency (which may include amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution).

IV.Dividend Equivalent Rights. During such time as each Unit remains outstanding and prior to the distribution of such Unit in accordance with Section IV, you will have the right to receive, in cash, with respect to such Unit, the amount of any cash dividend paid on a share of Common Stock (a “Dividend Equivalent Right”). You will have a Dividend Equivalent Right with respect to each Unit that is outstanding on the record date of such dividend. Dividend Equivalent Rights will be paid to you at the same time or within 30 days after dividends are paid to stockholders of the Company. Dividend Equivalent Rights will not be paid to you with respect to any Units that are forfeited pursuant to Sections I and II, effective as of the date such Units are forfeited. You will have no Dividend Equivalent Rights as of the record date of any such cash dividend in respect of any Units that have been paid in Common Stock; provided that you are the record holder of such Common Stock on or before such record date.

V.Transferability. No benefit payable under, or interest in, the Units or this Agreement shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge and any such attempted action shall be void and no such benefit or interest shall be, in any manner, liable for, or subject to, your or your beneficiary’s debts, contracts, liabilities or torts; provided, however, nothing in this Section VI shall prevent transfer of your Units by will or by applicable laws of descent and distribution. You may designate a beneficiary to receive distribution of your vested Units upon your death by submitting a written

4

beneficiary designation to the Committee in the form attached hereto as Exhibit B. You may revoke a beneficiary designation by submitting a new beneficiary designation.

VI.Withholding. You will be required to pay in cash or deduction from other compensation payable to you by the Company any sums required by federal, state or local tax law to be withheld with respect to the issuance, vesting or payment of Units and the payment of Dividend Equivalent Rights. At your election and in satisfaction of the foregoing requirement, the Company will withhold shares of Common Stock underlying the Units and otherwise issuable in accordance with this Agreement, in the manner prescribed by, and subject to the limitations of, Section 12 of the Plan, in satisfaction of such withholding obligations.

VII.No Contract for Employment. This Agreement is not an employment or service contract and nothing in this Agreement shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ or service of the Company, or of the Company to continue your employment or service with the Company.

VIII.Notices. Any notices provided for in this Agreement or the Plan, including a Distribution Election, shall be given in writing and shall be deemed effectively given upon receipt if delivered by hand or, in the case of notices delivered by United States mail, five (5) days after deposit in the United States mail, postage prepaid, addressed, as applicable, to the Company or if to you, at such address as is currently maintained in the Company’s records or at such other address as you hereafter designate by written notice to the Company.

IX.Plan. The provisions of the Plan are hereby made a part of this Agreement. In the event of any conflict between the provisions of this Agreement and those of the Plan, the provisions of this Agreement shall control.

X.Entire Agreement. This Agreement, together with the Employment Agreement, contains the entire understanding of the parties in respect of the Units and supersedes upon its effectiveness all other prior agreements and understandings between the parties with respect to the Units. In the event of any discrepancy between this Agreement and the Employment Agreement, the Employment Agreement shall control.

XI.Amendment. This Agreement may be amended by the Committee; provided, however that no such amendment shall, without your prior written consent, alter, terminate, impair or adversely affect your rights under this Agreement.

XII.Governing Law. This Agreement shall be construed and interpreted, and the rights of the parties shall be determined, in accordance with the laws of the State of California, without regard to conflicts of law provisions thereof.

XIII.Tax Consequences. You may be subject to adverse tax consequences as a result of the issuance, vesting and/or distribution of your Units. YOU ARE ENCOURAGED TO CONSULT A TAX ADVISOR AS TO THE TAX CONSEQUENCES OF YOUR UNITS AND SUBSEQUENT DISTRIBUTION OF COMMON STOCK.

XIV.Construction. To the extent that this Agreement is subject to Section 409A of the Code, you and the Company agree to cooperate and work together in good faith to timely amend

5

this Agreement to prevent application of the penalty and interest provisions of Section 409A(a)(1)(B) of the Code. In the event that you and the Company do not agree as to the necessity, timing or nature of a particular amendment intended to prevent application of the penalty and interest provisions of Section 409A(a)(1)(B) of the Code, reasonable deference will be given to your reasonable interpretation of such provisions. Notwithstanding anything to the contrary contained in this Agreement or the Plan, in the event that you are to receive a payment hereunder in connection with your termination of employment (other than due to your death) at a time when you are a “specified employee” (within the meaning of Section 409A of the Code), the Company shall delay the making of such payment to a date that is not earlier than the first to occur of six months and one day after your “separation from service” (within the meaning of Section 409A of the Code) or the date of your death.

[Remainder of page intentionally left blank]

6

Very truly yours,

HEALTH CARE PROPERTY INVESTORS, INC.

By:

Name:

Title:

And:

Name:

Title:

Accepted and Agreed,
effective as of the date first written above.

By:

Name:

7

[CEO THREE YEAR CLIFF VESTING]

EXHIBIT A

PERFORMANCE GOALS

Funds From Operations Per Share	Aggregate Percentage Forfeited
[$       ] or greater	0	%
Equal to or greater than [$       ] but less than [$       ]	2	%
Equal to or greater than [$       ] but less than [$       ]	4	%
Equal to or greater than [$       ] but less than [$       ]	6	%
Equal to or greater than [$       ] but less than [$       ]	8	%
Equal to or greater than [$       ] but less than [$       ]	10	%
Equal to or greater than [$       ] but less than [$       ]	12	%
Equal to or greater than [$       ] but less than [$       ]	14	%
Equal to or greater than [$       ] but less than [$       ]	16	%
Equal to or greater than [$       ] but less than [$       ]	18	%
Equal to or greater than [$       ] but less than [$       ]	20	%
Equal to or greater than [$       ] but less than [$       ]	22	%
Equal to or greater than [$       ] but less than [$       ]	24	%
Equal to or greater than [$       ] but less than [$       ]	26	%
Equal to or greater than [$       ] but less than [$       ]	28	%
Equal to or greater than [$       ] but less than [$       ]	30	%
Equal to or greater than [$       ] but less than [$       ]	32	%
Equal to or greater than [$       ] but less than [$       ]	34	%
Equal to or greater than [$       ] but less than [$       ]	36	%
Equal to or greater than [$       ] but less than [$       ]	38	%
Equal to or greater than [$       ] but less than [$       ]	40	%
Equal to or greater than [$       ] but less than [$       ]	50	%
Equal to or greater than [$       ] but less than [$       ]	60	%
Equal to or greater than [$       ] but less than [$       ]	70	%
Equal to or greater than [$       ] but less than [$       ]	80	%
Equal to or greater than [$       ] but less than [$       ]	90	%
Equal to or greater than [$       ] but less than [$       ]	100	%

A-1

EXHIBIT B

HEALTH CARE PROPERTY INVESTORS, INC.
2000 STOCK INCENTIVE PLAN

RESTRICTED STOCK UNITS
DISTRIBUTION ELECTION AND BENEFICIARY DESIGNATION FORM

Name:

Social Security No.:

In connection with your award of Performance Restricted Stock Units on [                , 2006] under the Health Care Property Investors, Inc. 2000 Stock Incentive Plan, as amended and/or restated from time to time (the “Plan”), you have the option of selecting the timing and form of payment of the shares of Common Stock underlying your vested Units.

Please complete this election form and return it to Edward J. Henning, the Company’s General Counsel and Corporate Secretary.

Deferral of Distribution Date

Unless you elect otherwise, the Distribution Date for your Units that vest will be the vesting date of such Units; provided that in no event shall the Distribution Date occur earlier than the date of the Committee Determination with respect to such Units. You may elect a new Distribution Date with respect to your Units that vest by completing the information request below. Please note that, subject to the restrictions set forth below and in the Agreement, your new Distribution Date can take any of the following forms:

•You may elect a date certain for your Distribution Date (e.g., January 1, 2010),

•You may elect that your Distribution Date will be the date of your death or termination of employment, or

•You may elect a Distribution Date that is the earlier of two dates/events (e.g., the earlier of January 1, 2010, or termination of your employment).

If you do not elect a Distribution Date on or before the Grant Date, you will be deemed to have elected distribution of your vested Units on or as soon as administratively practical after the vesting date of your Units. If, after the Grant Date, you want to change the Distribution Date with respect to any of your vested Units, your new election must be made at least one year prior to the then-existing Distribution Date, the new Distribution Date you elect must be at least five years after the then-existing Distribution Date, and the change must otherwise satisfy the “subsequent election” rules of Section 409A(a)(4)(C) of the Code. If your election to defer your Distribution Date is not timely, it will not be valid.

B-1

You acknowledge and understand that by electing a new Distribution Date, you are hereby revoking the then-existing Distribution Date. You further acknowledge and agree that the distribution of the shares of Common Stock underlying your Units may coincide with a period during which you are prohibited from selling, disposing or otherwise transferring such shares pursuant to the Company’s Insider Trading Policy, or by law, and therefore, you may not be able to sell, dispose or otherwise transfer such shares to pay any sums required by federal, state or local tax law to be withheld with respect to the issuance of such shares.

I elect the following Distribution Date with respect to the shares of Common Stock underlying my Units:                               
                        (Specify “Vesting Date” if you desire payment of the vested Units on or as soon as administratively practical after the vesting date of the Units. Otherwise, indicate the Distribution Date you elect. In all events your election is subject to the rules stated above (including, without limitation, the 5-year deferral requirement set forth above if you are electing a change after the Grant Date).

Form of Payment

Distribution of all of your vested Units will be made in shares of Common Stock in a lump sum on or as soon as practicable after the Distribution Date with respect to such Units. You may, however, elect at the time of your award to have vested Units distributed in the form of two or more annual installments over a fixed number of years. For example, if you elect to have your vested Units distributed in five installments, your vested Units will be distributed to you in five equal payments on or as soon as practicable after the Distribution Date and each of the first four anniversaries of the Distribution Date.

If you elect to have your vested Units distributed in installments, you must elect a number of equal annual installments which will result in a distribution of at least 1,000 shares of Common Stock per installment (otherwise, the number of installments you elected will be reduced by the Company to produce a distribution of at least 1,000 shares of Common Stock per installment). If you would like to change a form of distribution election you have made (or if you would like to make an initial form of distribution election in the event that you did not make such an election at the time of the award), your election must be made at least one year prior to the then-existing Distribution Date, and you must elect a new Distribution Date that is at least five years after the then-existing Distribution Date. If your election to defer your Distribution Date is not timely, it will not be valid. Furthermore, if you are changing an existing form of distribution election, your election change cannot result in an acceleration (within the meaning of Section 409A of the Code) of payments, and the change must otherwise satisfy the “subsequent election” rules of Section 409A(a)(4)(C) of the Code.

I elect the following number of annual installments with respect to the distribution of the shares of Common Stock underlying my Units:                                       .

B-2

Beneficiary Designation

I hereby designate the following individual as beneficiary to receive distribution of my vested Units, if any, in the event of my death. Distribution of such vested Units will be in the form, and on the Distribution Date(s), in effect with respect to such vested Units as of the date of my death.

Beneficiary Information

Name:                                                                                                                                              & nbsp;                                                          
(Please print)LastFirst                                                           &nb sp;                                                                                                                                                                                                           Middle Initial

Sex:            Relationship to Participant:

Social Security No.:                                                      Date of Birth:

Address:

City:                                                                            State:                                       Zip Code:                                                              

Please retain a copy of this Distribution Election Form for your records.

Signature: Date Signed

B-3

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, James F. Flaherty III, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Health Care Property Investors, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 1, 2006	/s/ JAMES F. FLAHERTY III
	James F. Flaherty III
	Chairman and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Mark A. Wallace, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Health Care Property Investors, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 1, 2006	/s/ MARK A. WALLACE
	Mark A. Wallace
	Senior Vice President and Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Health Care Property Investors, Inc., a Maryland corporation (the “Company”), hereby certifies, to his knowledge, that:

(i) the accompanying quarterly report on Form 10-Q of the Company for the period ended March 31, 2006 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 1, 2006	/s/ JAMES F. FLAHERTY III
	James F. Flaherty III
	Chairman and Chief Executive Officer
	(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to Health Care Property Investors, Inc. and will be retained by Health Care Property Investors, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Health Care Property Investors, Inc., a Maryland corporation (the “Company”), hereby certifies, to his knowledge, that:

(i) the accompanying quarterly report on Form 10-Q of the Company for the period ended March 31, 2006 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 1, 2006	/s/ MARK A. WALLACE
	Mark A. Wallace
	Senior Vice President and Chief Financial Officer
	(Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to Health Care Property Investors, Inc. and will be retained by Health Care Property Investors, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.