NOTE 4. Other Real Estate Property Investments

Senior Housing Portfolio Acquisition

During the fourth quarter of 2012 and first quarter of 2013, the Company acquired 133 senior housing communities for $1.74 billion from a joint venture between Emeritus and Blackstone Real Estate Partners VI, an affiliate of the Blackstone Group (the “Blackstone JV”). Located in 29 states, the portfolio encompasses a diversified care mix of 61% assisted living, 25% independent living, 13% memory care and 1% skilled nursing based on units. Based on operating performance at closing, the 133 communities consisted of 99 that were stabilized and 34 that were in lease-up. The transaction closed in two stages: (i) 129 senior housing facilities during the fourth quarter of 2012 for $1.7 billion; and (ii) four senior housing facilities during the first quarter of 2013 for $38 million. The Company paid $1.73 billion in cash consideration and assumed $13 million of mortgage debt to acquire: (i) real estate with a fair value of $1.57 billion, (ii) intangible assets with a fair value of $174 million; and (iii) assumed intangible liabilities with a fair value of $4 million. The lease-up intangibles assets recognized were attributable to the value of the acquired underlying operating resident leases of the senior housing communities that were stabilized or nearly stabilized (e.g., resident occupancy above 80%).

Emeritus operated the 133 communities pursuant to triple-net master leases, which as part of the Brookdale Transaction were either amended or terminated under the NNN Lease Restructuring or the RIDEA Subsidiaries lease termination (see Note 3). From the 2012 acquisition dates to December 31, 2012, the Company recognized revenues and income of $22 million and $14 million, respectively, related to its acquisition of the 129 senior housing communities.

Pro Forma Results of Operations

The following unaudited pro forma consolidated results of operations assume that the Blackstone JV acquisition was completed as of January 1, 2012 (in thousands, except per share amounts):


	December 31, 2012
Revenues	$	1,966,303
Net income		870,802
Net income applicable to HCP, Inc.		856,500
Basic earnings per common share	$	1.88
Diluted earnings per common share		1.88

Other Real Estate Acquisitions

A summary of other real estate acquisitions for the year ended December 31, 2014 follows (in thousands):


	Consideration							Assets Acquired
			Debt and Other
			Liabilities		Noncontrolling					Net
Acquisitions	Cash Paid		Assumed		Interest			Real Estate		Intangibles
Senior housing(1)	$	233,797	$	3,351	$	6,321	(2)	$	215,255		28,214
Life science		43,500		250		—			41,281		2,469
Medical office		226,173		33,677		—			226,510		33,340
	$	503,470	$	37,278	$	6,321		$	483,046	$	64,023

(1)

Includes the acquisition of a $147 million (£88 million) portfolio of 23 care homes in the United Kingdom (“U.K.”).

(2)

Includes $5 million of non-managing member limited liability company units.

In addition to the Blackstone JV acquisition (discussed above), during the year ended December 31, 2013, the Company acquired a senior housing facility for $18 million, exercised its purchase option for a senior housing facility it previously leased for $16 million and acquired 38 acres of land to be developed for use in the post-acute/skilled nursing segment for $400,000.

During the years ended December 31, 2014 and 2013, the Company funded an aggregate of $273 million and $173 million, respectively, for construction, tenant and other capital improvement projects, primarily in its life science, medical office and senior housing segments.