HIGHLIGHTS

-- Diluted FFO per share of $0.55; diluted EPS of $0.35
-- Completed a $440 million public offering of our common stock
-- Completed sale of Los Gatos, California hospital for $45 million
-- Transitioning 15 additional Sunrise-managed communities to new operators
-- Financial leverage reduced to 44%; adjusted fixed charge coverage improved to 2.6x

HCP (the “Company” or “we”) (NYSE:HCP) announced results for the quarter ended June 30, 2009. Funds from operations (“FFO”) applicable to common shares was $146.1 million, or $0.55 per diluted share, for the quarter ended June 30, 2009, compared to FFO applicable to common shares of $119.1 million, or $0.50 per diluted share, in the year-ago period.

FFO applicable to common shares for the quarter ended June 30, 2009 included the offsetting impact of the following: i) impairments of $0.02 per diluted share; and ii) income of $0.02 per diluted share resulting from an adjustment to the cost allocation of certain assets acquired in 2006. FFO applicable to common shares for the quarter ended June 30, 2008 included the negative impact of $0.07 per diluted share of the following: i) impairments and merger-related charges of $0.05 per diluted share; ii) a write down in the carrying value of marketable securities of $0.01 per diluted share; and iii) an ineffectiveness charge of $0.01 per diluted share relating to the settlement of two forward-starting interest-rate swaps. FFO is a supplemental non-GAAP financial measure that the Company believes is helpful in evaluating the operating performance of real estate investment trusts.

Net income applicable to common shares for the quarter ended June 30, 2009 was $91.8 million, or $0.35 per diluted share, compared to net income applicable to common shares of $225.9 million, or $0.96 per diluted share, in the year-ago period. Net income applicable to common shares for the quarter ended June 30, 2009 includes gain on sales of real estate of $30.5 million, compared to gain on sales of real estate of $190.5 million in the year-ago period.

INVESTMENTS

During the quarter ended June 30, 2009, we funded $30 million for construction and other capital projects, primarily in our life science segment.

During the quarter ended June 30, 2009, we sold two hospitals with an aggregate value of $46 million and recognized gains of $30.5 million, which are excluded from FFO. During the quarter ended June 30, 2009, we also sold marketable debt securities of $5 million.

On August 3, 2009, we purchased a $720 million participation in first mortgage debt of HCR ManorCare at a discount for approximately $590 million. The $720 million participation bears interest at LIBOR plus 1.25% and represents 45% of the $1.6 billion most senior tranche of HCR ManorCare’s mortgage debt incurred as part of the financing for The Carlyle Group’s 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. We obtained favorable financing to fund 72% of the purchase price, resulting in a net cash payment by HCP of $165 million.

FINANCING

On May 8, 2009, we completed a $440 million public offering of 20.7 million shares of our common stock at a price per share of $21.25. We received net proceeds of $422 million, which were used to repay all amounts of indebtedness outstanding under our bridge loan credit facility, with the remainder used for general corporate purposes.

On June 12, 2009, the Company entered into an interest rate swap contract (pay float and receive fixed) with a notional amount of $250 million that terminates in September 2011. This interest-rate swap contract reduces our net floating rate asset exposure, which increased as a result of the repayment of our floating rate bridge loan credit facility.

Our financial leverage improved to 44% at June 30, 2009 from 48% at December 31, 2008. Our adjusted fixed charge coverage for the quarter ended June 30, 2009 improved to 2.6x from 2.3x for the quarter ended June 30, 2008.

OTHER EVENTS

On June 18, 2009, we announced that the management agreements on 15 communities operated by Sunrise Senior Living, Inc. or its subsidiaries (“Sunrise”) have been terminated effective October 1, 2009, for Sunrise’s failure to achieve certain performance thresholds. The termination of the agreements does not require the payment of a termination fee by the Company or our tenants. We intend to enter into new arrangements with senior housing operators for the 15 communities, reducing the Sunrise-managed communities in the Company’s portfolio to 75 from the original 101 communities the Company acquired in the 2006 CNL Retirement Properties, Inc. transaction. We expect these arrangements to improve the operating margins of the communities in a manner similar to the Company’s successful transition of 11 former Sunrise communities to Emeritus Corporation in December 2008. On June 30, 2009, we recognized impairments of $6 million, or $0.02 per diluted share, related to intangible assets associated with 12 of the 15 communities.

On June 29, 2009, we, together with three of our tenants, filed complaints against Sunrise based on Sunrise’s defaults under management and related agreements covering 64 of the remaining 75 Sunrise-managed communities owned by the Company. The complaints allege, among other things, that Sunrise systematically breached various contractual and fiduciary duties. In addition to equitable relief and monetary damages relating to the defaults, we are seeking judicial confirmation of rights to terminate the agreements on the 64 communities.

DIVIDEND

On July 29, 2009, we announced that our Board of Directors declared a quarterly cash dividend on our common stock of $0.46 per share. The dividend will be paid on August 19, 2009 to stockholders of record as of the close of business on August 6, 2009.

FUTURE OPERATIONS

For the full year 2009, we presently expect net income applicable to common shares to range between $0.98 and $1.04 per diluted share, FFO applicable to common shares to range between $2.13 and $2.19 per diluted share, and FFO applicable to common shares, before giving effect to impairments, to range between $2.15 and $2.21 per diluted common share. The increase to the above guidance amounts was due to our HCR ManorCare investment on August 3, 2009.

COMPANY INFORMATION

HCP has scheduled a conference call and webcast for Tuesday, August 4, 2009 at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) in order to present the Company’s performance and operating results for the quarter ended June 30, 2009. The conference call is accessible by dialing (866) 700-6293 (U.S.) or (617) 213-8835 (International). The participant passcode is 75468985. The webcast is accessible via the Company’s website at www.hcpi.com. The link can be found on the “Event Calendar” page, which is under the “Investor Relations” tab. A webcast replay of the conference call will be available after 11:00 a.m. Pacific Time (2:00 p.m. Eastern Time) on August 4, 2009 through August 18, 2009 on the Company’s website and a telephonic replay can be accessed by calling (888) 286-8010 (U.S.) or (617) 801-6888 (International) and entering passcode 42923966. The Company’s supplemental information package for the current period will also be available on the Company’s website in the “Presentations” section of the “Investor Relations” tab.

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, the Company’s portfolio of properties, excluding assets held for sale but including properties owned by our Investment Management Platform, 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

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: 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 include among other things the expected improvement in operating margins resulting from the transfer of 15 Sunrise-managed communities, net income applicable to common shares on a diluted basis, FFO applicable to common shares on a diluted basis, FFO applicable to common shares on a diluted basis before giving effect to impairments, gain on sales of real estate, real estate depreciation and amortization, and joint venture adjustments for the full year of 2009. These statements are made as of the date hereof and are subject to known and unknown risks, uncertainties, assumptions and other factors — many of which are out of the Company’s control and difficult to forecast—that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks and uncertainties include but are not limited to: national and local economic conditions, including the possibility of a prolonged recession; continued volatility in the capital markets, including changes in interest rates and the availability and cost of capital, which changes and volatility affect opportunities for profitable investment; the Company’s ability to access external sources of capital when desired and on reasonable terms; the Company’s ability to manage its indebtedness levels; changes in the terms of the Company’s indebtedness; the Company’s ability to maintain its credit ratings; the potential impact of existing and future litigation matters, including related developments; the Company’s ability to achieve the expected benefits from acquisitions, including integrating and preserving the goodwill of the acquired companies; the Company’s ability to sell its properties when desired and on profitable terms; competition for lessees and mortgagors (including new leases and mortgages and the renewal or rollover of existing leases); the Company’s ability to reposition its properties on the same or better terms if existing leases are not renewed or the Company exercises its right to replace an existing operator or tenant upon default; continuing reimbursement uncertainty in the skilled nursing segment; competition in the senior housing segment specifically and in the healthcare industry in general; the ability of the Company’s operators and tenants to maintain or increase occupancy levels at, and rental income from, the senior housing segment; the Company’s ability to realize the benefits of its mezzanine investments; the ability of the Company’s lessees and mortgagors to maintain the financial strength and liquidity necessary to satisfy their respective obligations to the Company and other third parties; the bankruptcy, insolvency or financial deterioration of the Company’s operators, lessees, borrowers or other obligors; changes in healthcare laws and regulations, including the impact of future or pending healthcare reform, and other changes in the healthcare industry which affect the operations of the Company’s lessees or obligors; the Company’s ability to recruit and retain key management personnel; costs of compliance with regulations and environmental laws affecting the Company’s properties; changes in tax laws and regulations; the Company’s ability and willingness to maintain its qualification as a REIT; changes in rules governing financial reporting, including new accounting pronouncements; and other risks described from time to time in the Company’s Securities and Exchange Commission filings. The Company assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements as a result of new information or new or future developments, except as otherwise required by law.

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HCP, Inc.

Reporting Definitions

Adjusted Fixed Charge Coverage. Adjusted EBITDA divided by Fixed Charges. The Company uses Adjusted Fixed Charge Coverage, a non-GAAP financial measure, as a measure of liquidity. The Company believes Adjusted Fixed Charge Coverage provides investors, particularly fixed income investors, relevant and useful information because it measures the Company’s ability to meet its interest payments on outstanding debt and pay dividends to its preferred stockholders. The Company’s various debt agreements contain covenants that require the Company to maintain ratios similar to Adjusted Fixed Charge Coverage and credit rating agencies utilize similar ratios in evaluating and determining the credit rating on certain debt instruments of the Company. However, since this ratio is derived from Adjusted EBITDA and Fixed Charges, its usefulness is limited by the same factors that limit the usefulness of Adjusted EBITDA and Fixed Charges. Further, the Company’s computation of Adjusted Fixed Charge Coverage may not be comparable to similar fixed charge coverage ratios reported by other companies.

Consolidated Debt represents the carrying amount of bank line of credit, bridge and term loans, senior unsecured notes, mortgage debt and other debt as reported in the Company’s consolidated financial statements.

Consolidated Gross Assets represents the carrying amount of total assets, excluding investments in and advances to unconsolidated joint ventures, after adding back accumulated depreciation and amortization, as reported in the Company’s consolidated financial statements.

Consolidated Secured Debt represents mortgage debt secured by real estate as reported in the Company’s consolidated financial statements.

EBITDA and Adjusted EBITDA represents the real estate industry’s earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP financial measure, as a measure of both operating performance and liquidity. Adjusted EBITDA is calculated as EBITDA excluding impairments and gains or losses from real estate dispositions. The Company uses EBITDA and Adjusted EBITDA to measure both its operating performance and liquidity. The Company considers Adjusted EBITDA to provide investors relevant and useful information because it permits investors to view income from its operations on an unleveraged basis before the effects of taxes, non-cash depreciation and amortization, impairments and gains or losses from real estate dispositions. By excluding interest expense, Adjusted EBITDA allows investors to measure the Company’s operating performance independent of its capital structure and indebtedness and, therefore, allows for a more meaningful comparison of its operating performance between quarters as well as annual periods and to compare its operating performance to that of other companies, both in the real estate industry and in other industries. As a liquidity measure, the Company believes that EBITDA and Adjusted EBITDA help investors analyze the Company’s ability to meet its interest payments on outstanding debt and to make preferred dividend payments. The Company believes investors should consider EBITDA and Adjusted EBITDA, in conjunction with net income (the primary measure of the Company’s performance) and the other required GAAP measures of its performance and liquidity, to improve their understanding of the Company’s operating results and liquidity, and to make more meaningful comparisons of its performance between periods and as against other companies. EBITDA and Adjusted EBITDA have limitations as analytical tools and should be used in conjunction with the Company’s required GAAP presentations. EBITDA and Adjusted EBITDA do not reflect the Company’s historical cash expenditures or future cash requirements for capital expenditures or contractual commitments. While Adjusted EBITDA is a relevant and widely used measure of operating performance and liquidity, it does not represent net income or cash flow from operations as defined by GAAP and it should not be considered as an alternative to those indicators in evaluating operating performance or liquidity. Further, the Company’s computation of EBITDA and Adjusted EBITDA may not be comparable to similar measures reported by other companies.

Financial Leverage represents Total Debt divided by Total Gross Assets. The Company believes that its Financial Leverage is a meaningful supplemental measure of its financial position, which enables both management and investors to analyze its leverage and to compare its leverage to that of other companies. The Company believes that the ratio of consolidated debt to consolidated gross assets is the most directly comparable U.S. generally accepted accounting principles (“GAAP”) measure to Financial Leverage. The Company’s computation of its financial leverage may not be identical to the computations of financial leverage reported by other companies. The Company’s share of total debt is not intended to reflect its actual liability or ability to access assets should there be a default under any or all of such loans or a liquidation of the joint ventures.

Investment Management Platform (“IMP”) includes the following unconsolidated joint ventures: (i) HCP Life Science, (ii) HCP Ventures II, (iii) HCP Ventures III, LLC and (iv) HCP Ventures IV, LLC.

Total Debt represents Consolidated Debt plus the Company’s pro rata share of debt from the Investment Management Platform.

Total Gross Assets represents the Consolidated Gross Assets plus the Company’s pro rata share of total assets from the Investment Management Platform, after adding back accumulated depreciation and amortization.

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