HCP (NYSE:HCP) announced that it has purchased a $720 million participation in first mortgage debt of HCR ManorCare at a discount for approximately $590 million. The $720 million participation represents 45% of the $1.6 billion most senior tranche of HCR ManorCare’s mortgage debt which bears interest at LIBOR plus 1.25%. HCP obtained favorable financing to fund 72% of the purchase price, resulting in a net cash payment by HCP of $165 million. HCP expects that the participation will have an effective unlevered internal rate of return of approximately 13%.

HCR ManorCare incurred $3 billion in mortgage debt as part of the financing for The Carlyle Group’s $6.3 billion acquisition of Manor Care, Inc. in December 2007. The mortgage debt matures in January 2012, with a one-year extension available at the borrower’s option subject to certain conditions, and is secured by a first lien on 331 facilities located in 30 states. The $1.6 billion most senior tranche had a debt service coverage ratio of 21 times for the most recently reported quarter and 10 times on a trailing twelve month basis ending that same quarter. HCP previously invested in mezzanine loans of HCR ManorCare having an aggregate face amount of $1.0 billion.

“HCR ManorCare is the premier provider of post-acute care services in the country, and the performance of its portfolio has exceeded our expectations,” said Jay Flaherty, HCP’s Chairman and Chief Executive Officer. “We are excited about our opportunity to accretively invest in this senior debt tranche and enhance the tactical options of our strategic investment in HCR ManorCare. We look forward to expanding our partnership with Chief Executive Officer Paul Ormond, his strong management team and The Carlyle Group.”

ABOUT HCP

HCP, Inc., an S&P 500 company, is a real estate investment trust (REIT) that, together with its consolidated subsidiaries, invests primarily in real estate serving the healthcare industry in the United States. As of June 30, 2009, HCP’s portfolio of properties, excluding assets held for sale but including properties owned by unconsolidated joint ventures, totaled 682 properties among the following segments: 259 senior housing, 100 life science, 253 medical office, 22 hospital and 48 skilled nursing. For more information, visit the Company’s website at www.hcpi.com.

FORWARD-LOOKING STATEMENTS

The statements contained in this release which are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks and uncertainties include HCR ManorCare’s performance, fluctuations in prevailing floating interest rates and other risks and uncertainties detailed from time to time in the Company’s filings with the Securities and Exchange Commission. While the Company anticipates that subsequent events and developments may cause its views to change, it specifically disclaims any obligation to update these statements. These statements should not be relied upon as representing the Company’s views as of any date subsequent to the date of this press release.

HCP
Thomas M. Herzog
Executive Vice President – Chief Financial Officer and Treasurer
562-733-5309