NOTE 7. Investments in and Advances to Unconsolidated Joint Ventures

The Company owns interests in the following entities that are accounted for under the equity method at March 31, 2016 (dollars in thousands):


Entity(1)	Segment	Carrying Amount		Ownership%
CCRC JV(2)	Senior housing	$	462,545		49
HCRMC(3)	Senior housing and post-acute/skilled nursing		—		9
MBK JV(4)	Senior housing		43,384		50
HCP Ventures III, LLC	Medical office		9,342		30
HCP Ventures IV, LLC	Medical office and hospital		7,236		20
HCP Life Science(5)	Life science		68,688	50	–	63
Vintage Park Development JV	Senior housing		8,593		85
MBK Development JV(4)	Senior housing		2,470		50
Suburban Properties, LLC	Medical office		4,614		67
K&Y(6)	Post-acute/skilled nursing		1,270		80
Advances to unconsolidated joint ventures, net and other			523
		$	608,665

(1)

These entities are not consolidated because the Company does not control, through voting rights or other means, the joint ventures.

(2)

Includes two unconsolidated joint ventures in a RIDEA structure (CCRC PropCo and CCRC OpCo).

(3)

In December 2014, September 2015 and December 2015, the Company recognized impairment charges of $36 million, $27 million and $19 million, respectively.

(4)

Includes two unconsolidated joint ventures in a RIDEA structure (PropCo and OpCo).

(5)

Includes three unconsolidated joint ventures between the Company and an institutional capital partner. HCP Life Science includes the following partnerships (and the Company’s ownership percentage): (i) Torrey Pines Science Center, LP (50%); (ii) Britannia Biotech Gateway, LP (55%); and (iii) LASDK, LP (63%).

(6)

Includes three unconsolidated joint ventures.

Summarized combined financial information for the Company’s equity method investments (in thousands):


	March 31,		December 31,
	2016		2015
Real estate, net	$	4,471,115	$	4,470,249
Goodwill and other assets, net		4,921,705		4,935,343
Assets held for sale		70,584		94,866
Total assets	$	9,463,404	$	9,500,458

Capital lease obligations and mortgage debt	$	6,526,878	$	6,575,531
Accounts payable		1,147,155		1,111,350
Liabilities and mortgage debt held for sale		4,941		6,318
Other partners’ capital		1,140,381		1,163,501
HCP’s capital(1)		644,049		643,758
Total liabilities and partners’ capital	$	9,463,404	$	9,500,458

(1)

The combined basis difference of the Company’s investments in these joint ventures of $35 million, as of March 31, 2016, is attributable to goodwill, real estate, capital lease obligations, deferred tax assets and lease-related net intangibles.


	Three Months Ended March 31,
	2016		2015
Total revenues	$	1,089,911	$	1,146,468
Income (loss) from discontinued operations		1,997		(2,650)
Net (loss) income		(12,014)		9,783
HCP’s share of earnings(1)		(908)		13,601
Fees earned by HCP		91		460
Distributions received by HCP		6,925		2,181

(1)

The Company’s joint venture interest in HCRMC is accounted for using the equity method and results in an elimination of DFL income proportional to HCP’s ownership in HCRMC. The elimination of the respective proportional lease expense at the HCRMC level in substance resulted in $16 million of DFL income that was recharacterized to the Company’s share of earnings from HCRMC (equity income from unconsolidated joint ventures) for the three months ended March 31, 2015. Beginning in January 2016, income will be recognized only if cash distributions are received from HCRMC; as a result, the Company no longer recharacterizes (eliminates) its proportional ownership share of income from DFLs to equity income (loss) from unconsolidated joint ventures.

HCRMC. The Company concluded that its equity investment in HCRMC was other-than-temporarily impaired as of December 31, 2014, September 30, 2015 and December 31, 2015 and recorded impairment charges of $36 million, $27 million and $19 million, respectively. Beginning in January 2016, equity income will be recognized only if cash distributions are received from HCRMC (see Note 5).

MBK JVs. On March 30, 2015, the Company and MBK Senior Living (“MBK”), a subsidiary of Mitsui & Co. Ltd, formed a new RIDEA joint venture (“MBK JV”) that owns three senior housing facilities with the Company and MBK each owning a 50% equity interest. MBK manages these communities on behalf of the joint venture. The Company contributed $27 million of cash and MBK contributed the three senior housing facilities with a fair value of $126 million, which were encumbered by $78 million of mortgage debt at closing.

On September 25, 2015, the Company and MBK formed a new RIDEA joint venture (“MBK Development JV”), which acquired a $3 million parcel of land for the purpose of developing a 74-unit class A senior housing facility in Santa Rosa, California. The parcel of land is located adjacent to the Oakmont Gardens independent living facility currently owned and operated by the MBK JV.