Healthpeak Properties (DOC) 10-K risk factor changes: FY2017 vs FY2016

| [removed: | · |] [added: •] | risks related to our business and operations; |

| [removed: | · |] [added: •] | risks related to our capital structure and market conditions; |

| [removed: | · |] [added: •] | risks related to other events; and |

| [removed: | · |] [added: •] | risks related to tax, including REIT-related risks. |

We manage our facilities utilizing RIDEA and triple-net lease [removed: (“lease arrangements”)] structures.

As of December 31, [removed: 2016,] [added: 2017,] Brookdale leased or managed [removed: 212] [added: 78] senior housing facilities that we own and [removed: 16] [added: 62] SHOP facilities owned by our unconsolidated joint venture pursuant to long-term [removed: lease] [added: leases] and management agreements.

Properties managed by Brookdale [removed: under RIDEA structures] [added: in our SHOP segment] as of December 31, [removed: 2016,] [added: 2017,] accounted for [removed: 18%] [added: 13%] of our [removed: gross segment] [added: total] assets.

[removed: In addition to our] RIDEA structures [removed: with Brookdale, our leases with respect to Brookdale as a tenant accounted for 12% of our revenues for] [added: at] the year ended December 31, [removed: 2016.][added: 2017, accounted for 12% of our total assets.]

Brookdale has [removed: experienced significant challenges in integrating its July 2014 acquisition of Emeritus Corp. and has] been adversely affected by increased competition that has negatively impacted occupancy rates and, in certain cases, Brookdale has offered additional discounts and incentives to residents.

Brookdale, as well as our other operators, [removed: has] [added: have] also experienced labor expense pressure and increased labor turnover.

[removed: We] [added: In addition, we] depend on [added: Brookdale’s] adequate maintenance and repair of the properties to remain competitive and attract and retain patients and residents.

If these adverse developments result in prolonged inadequate property maintenance or improvements, or impair Brookdale’s access to capital necessary for maintenance or improvements, it [removed: could] [added: would likely] lead to a significant reduction in occupancy rates and market [removed: rents, which would likely] [added: rents and] have a materially adverse effect on us.

Brookdale’s [removed: operational] [added: operational, legal and financial] challenges and [removed: potential adverse developments in] its [removed: business, affairs and financial results] [added: pursuit of strategic alternatives] could significantly divert management’s attention, increase employee turnover, and impair its ability to manage [removed: the] [added: our] properties or its operations efficiently and effectively.

[removed: This] [added: These challenges and any adverse developments in Brookdale’s business, affairs and financial results] could [removed: ultimately] result in, among other adverse events, [added: declining operational and financial performance of our properties,] acceleration of Brookdale’s indebtedness, impairment of its continued access to capital, the enforcement of default remedies by its counterparties or the commencement of insolvency proceedings by or against it under the U.S. Bankruptcy Code.

Changes in reimbursement policies and other governmental regulation, such as potential changes to, or repeal of, the Patient Protection and Affordable Care Act, along with the Health Care and Education Reconciliation Act of 2010 [removed: (collectively, the] [added: (the] “Affordable Care [removed: Act”)] [added: Act”),] that may result from [removed: the new presidential administration,] [added: actions by Congress or executive orders,] may result in reductions in Brookdale’s revenues, operations and cash flows and affect its ability to meet its obligations to us.

For a further discussion of the legislation and regulation that are applicable to us and our tenants, operators and borrowers, see [removed: “—Legislation and Regulation—The] [added: “The] requirements of, or changes to, governmental reimbursement programs such as Medicare or Medicaid, may adversely affect our tenants’, operators’ and borrowers’ ability to meet their financial and other contractual obligations to us.” While Brookdale generally has also agreed to indemnify us for various claims, litigation and liabilities arising in connection with its business, it may have insufficient assets, income, access to financing and/or insurance coverage to enable them to satisfy its indemnification obligations.

The inability, unwillingness or other failure of Brookdale [removed: under its lease agreements and RIDEA structures] to [added: pursue the optimal performance of our properties or to] meet its obligations to us [added: under its leases and management agreements] could materially reduce our cash flow, net operating income and results of operations and have other materially adverse effects on our business, results of operations and financial condition.

We are also a direct or indirect lender to various tenants and [removed: operators.][added: operators and separately provide loans to certain third parties.]

We have very limited control over the success or failure of our [removed: tenants’ and] [added: tenants’,] operators’ [added: and borrowers’] businesses.

Any of our tenants or operators may experience a downturn in [removed: its] [added: their] business that materially weakens [removed: its] [added: their] financial condition.

Although we generally have arrangements and other agreements that give us the right under specified circumstances to terminate a lease, evict a tenant or operator, or demand immediate repayment of [removed: certain] [added: outstanding loan amounts or other] obligations to us, we may determine not to do so if we believe that enforcement of our rights would be more detrimental to our business than seeking alternative approaches.

A downturn in any of our [removed: tenants’ or] [added: tenants’,] operators’ [added: or borrowers’] businesses could ultimately lead to bankruptcy if it is unable to timely resolve the underlying causes, which may be largely outside of its control.

A lender’s rights and remedies, as compared to a landlord’s, generally are materially [removed: more unfavorable.][added: less favorable, and our rights as a lender may be subordinated to other creditors’ rights.]

This would effectively limit or delay our ability to collect unpaid [removed: rent,] [added: rent or interest payments,] and we may ultimately not receive any payment at all.

Bankruptcy or insolvency proceedings [removed: may] [added: typically] also result in increased costs to the [removed: operator and] [added: operator,] significant management [removed: distraction.][added: distraction and performance declines.]

If we are unable to transition affected properties, they [removed: could] [added: would likely] experience prolonged operational disruption, leading to lower occupancy rates and further depressed revenues.

Additionally, the financial weakness or other inability of our tenants, operators or borrowers to make payments or comply with certain other lease obligations may affect our compliance with certain covenants contained in our debt securities, credit facilities and the mortgages on the properties leased or managed by such borrowers, tenants and operators, or otherwise adversely affect [removed: our results of operations.]

In addition, our operators’ revenues are determined by a number of factors, including licensed bed capacity, occupancy, the healthcare needs of residents, the rate of reimbursement, and [removed: or a decrease] the income [removed: or] [added: and] assets of seniors in the regions in which we operate.

For example, due to generally increased vulnerability to illness, [removed: occupancy at our senior housing facilities could significantly decrease in the event of] a severe flu season, an epidemic or any other widespread [removed: illness.][added: illness could result in early move-outs or delayed move-ins during quarantine periods, which would reduce our operators’ revenues.]

Furthermore, [removed: the new presidential administration] [added: potential executive orders] and [removed: new Congress has] [added: legislation have] introduced uncertainty in the direction of the healthcare regulatory landscape and we cannot predict the impact of any regulatory or legislative changes on the industry or our ability to compete effectively therein.

See the risks described under [removed: “—Legislation] [added: “Legislation] and [removed: Regulation—The] [added: Regulation-The] requirements of, or changes to, governmental reimbursement programs such as Medicare or Medicaid, may adversely affect our tenants’, operators’ and borrowers’ ability to meet their financial and other contractual obligations to us.”

[removed: If we cannot capitalize on our development pipeline, identify and purchase a sufficient] quantity of healthcare facilities at favorable prices, finance acquisitions on commercially favorable terms, or attract and retain profitable tenants and operators, our business, results of operations and financial condition may be materially adversely affected.

In addition, [added: we are exposed to the risks inherent in concentrating our investments in] real [removed: estate] [added: estate, which] investments are relatively illiquid.

Our ability to quickly sell or [removed: exchange] [added: transition] any of our properties in response to changes in the performance of our properties or economic and other conditions is limited.

Our life science investments could be adversely affected if the life science industry is impacted by an economic, financial, or banking crisis or if the life science industry migrates from the U.S. to other countries or to areas outside of primary [added: life science] markets in South San [removed: Francisco and] [added: Francisco,] San [removed: Diego.][added: Diego and greater Boston.]

[removed: Mergers] [added: Future mergers] or consolidations of life science entities [removed: in the future] could reduce the amount of rentable square footage requirements of our client tenants and prospective client tenants, which may adversely impact our revenues from lease payments and results of operations.

The viability of these hospitals, in turn, depends on factors such as the quality and mix of healthcare services provided, competition, demographic trends in the surrounding community, market position and growth potential, as well [added: as the ability of the affiliated healthcare systems to provide economies of scale and access to capital.]

Economic and other conditions that negatively affect geographic areas from which a greater percentage of our [removed: revenues] [added: revenue] is recognized could materially adversely affect our business, results of operations and financial condition.

For the year ended December 31, [removed: 2016,] [added: 2017,] 26% of our revenue was derived from properties located in California, which is also where substantially all of our [removed: life-science] [added: life science] portfolio is located.

As a result, we [removed: may be] [added: are] subject to increased exposure to adverse conditions affecting the state, including downturns in the local economies or changes in local real estate conditions, increased competition or decreased demand, changes in state-specific legislation and local climate events and natural disasters (such as earthquakes, wildfires and hurricanes), which could cause significant disruption in our businesses in the region, harm our ability to compete effectively, result in increased costs and divert more management attention, any or all of which could adversely affect our business and results of operations.

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These properties represent a substantial portion of our portfolio, revenues and operating income.

Properties leased by Brookdale accounted for 8% of our revenues for the year ended December 31, 2017.

Brookdale may not have sufficient assets, income and access to financing to enable it to satisfy its obligations to us, and any failure, inability or unwillingness by Brookdale to do so would have a material adverse effect on us.

Brookdale has experienced significant challenges in recent years, including poor operational performance, ongoing class action litigation, stockholder activism and portfolio restructuring execution, among others.

Additionally, Brookdale has announced that it is considering corporate strategic alternatives.

We are currently in the process of reducing our exposure to Brookdale through asset sales and transitions to other operators (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations--2017 Transaction Overview--Master Transactions and Cooperation Agreement with Brookdale” for more information).

However, we may not be able to sell or transition assets managed or leased by Brookdale according to our plans or within our anticipated timeframe.

In addition, the sale and transition process may divert Brookdale’s attention from the performance of the properties we are selling or transitioning, or from our properties Brookdale will continue to manage or lease from us following the contemplated transactions.

This could result in further operational challenges and/or declining financial performance of our properties during or after the transition period.

For example, one of our borrowers, Tandem Health Care (“Tandem”), has failed to make its required interest payments to us since November 10, 2017, which resulted in an event of default and adversely affected our revenues.

our results of operations.

If we cannot capitalize on our development pipeline, identify and purchase a sufficient

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We may also voluntarily change operators for a variety of reasons.

For example, in November 2017, we announced a plan to transition a significant number of properties managed by Brookdale to other operators as part of our strategic plan to reduce our concentration of assets managed or leased by Brookdale.

Healthcare facilities are typically highly customized.

Furthermore, during transition periods to new tenants or operators, we anticipate that the attention of existing tenants or operators will be diverted from the performance of the properties, which would cause the financial and operational performance at these properties to further decline.

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Services provided by our managers in facilities managed under a RIDEA structure are primarily paid for by the residents directly or through private insurance and are less reliant on government reimbursement programs.

We report the resident level fees and services revenues and corresponding operating expenses in our consolidated financial statements.

In its capacity as a manager in the RIDEA structures, Brookdale does not lease our properties and, therefore, our exposure to its credit risk is in a different manner as compared to a triple-net tenant.

In addition, we are exposed to the risks inherent in concentrating investments in real estate, and in particular, health care industries.

as the ability of the affiliated healthcare systems to provide economies of scale and access to capital.

Healthcare facilities are typically highly customized and may not be easily adapted to non-healthcare-related uses.

For example, in October 2016 we commenced the third phase of The Cove at Oyster Point, our newest life science development in South San Francisco.

Successful integration of

investigation on our tenants or our business or results.

RIDEA structures at the year ended December 31, 2016, accounted for 24% of our gross segment assets.

See “Item 1—Business—Government Regulation, Licensing and Enforcement” above.

Trial commenced on January 17, 2017 and we are unable to assess a likely outcome.

However, a negative outcome could have a materially adverse effect on Consulate, which in turn could have a resulting materially adverse effect on Tandem’s ability to meet its debt service obligations to us.

Since the most recent recession, the U.S. Federal Reserve has taken actions which have resulted in low interest rates prevailing in the marketplace for a historically long period of time.

In December 2016, the U.S. Federal Reserve raised its benchmark interest rate by a quarter of a percentage point.

At this point, it is uncertain what impact the December rate increase might have on us.

Additionally, market interest rates may continue to increase, and the increase may materially and negatively affect us.

The global financial markets have experienced and may continue to undergo periods of significant volatility, disruption and uncertainty.

While economic conditions have improved since the economic downturn in 2008 and 2009, economic growth has at times been slow and uneven and the strength and sustainability of an economic recovery is challenging and uncertain.

We cannot assure you that they, or our president who does have an employment agreement with us, will remain employed with us.

in areas known to be subject to earthquake activity.

of attacks have increased.

The Protecting Americans from Tax Hikes Act of 2015 (the “Act”) contains changes to certain aspects of the U.S. federal income tax rules applicable to us.

The Act is the most recent example of changes to the REIT rules, and additional legislative changes may occur that could adversely affect our current tax positions.

The Act modifies various rules that apply to our ownership of, and business relationship with, our TRSs and reduces the maximum allowable value of our assets attributable to TRSs from 25% to 20% which could impact our ability to enter into future investments.

The Act makes permanent the reduction of the recognition period (from ten years to five years) during which an entity that converted from a corporation to a REIT or was acquired by a REIT is subject to a corporate-level tax on built-in gains recognized during such period, which could influence the types of investments we enter into in the future.

The Act also makes multiple changes related to the Foreign Investment in Real Property Tax Act, or FIRPTA, expands prohibited transaction safe harbors and qualifying hedges, and repeals the preferential dividend rule for public REITs previously applicable to us.

Lastly, the Act adjusts the way we may calculate certain earnings and profits calculations to avoid double taxation at the stockholder level, and expands the types of qualifying assets and income for purposes of the REIT requirements.

The provisions enacted by the Act could result in changes in our tax positions or investments, and future legislative changes related to those rules described above could have a materially adverse impact on our results of operations and financial condition.

| [removed: | · |] [added: •] | [removed: 2016] [added: 2017] Transaction Overview |

| [removed: | · |] [added: •] | Dividends |

| [removed: | · |] [added: •] | Results of Operations |

| [removed: | · |] [added: •] | Liquidity and Capital Resources |

| [removed: | · |] [added: •] | Contractual Obligations |

| [removed: | · |] [added: •] | Off-Balance Sheet Arrangements |

| [removed: | · |] [added: •] | Inflation |

| [removed: | · |] [added: •] | Non-GAAP Financial Measure Reconciliations |

| [removed: | · |] [added: •] | Critical Accounting Policies |

| [removed: | · |] [added: •] | Recent Accounting Pronouncements |

[removed: 2016] [added: 2017] Transaction Overview

See [removed: Notes 1 and 5 to] [added: Note 10 in] the Consolidated Financial Statements for [removed: further] information [removed: on the Spin-Off.][added: about our outstanding debt.]

Disposition [added: and Loan Repayment] Transactions

[added: | • |] In January 2017, we sold four life science facilities in Salt Lake City, Utah for $76 million. [added: |]

In [removed: May 2016,] [added: January 2017,] we [removed: entered into a master] [added: completed the] contribution [removed: agreement with Brookdale to contribute] [added: of] our ownership interest in RIDEA II to an unconsolidated JV owned by HCP and an investor group led by Columbia Pacific Advisors, LLC (“CPA”) [removed: (the] [added: (“HCP/CPA PropCo” and] “HCP/CPA [added: OpCo,” together, the “HCP/CPA] JV”).

[removed: The members agreed to recapitalize] [added: In addition,] RIDEA II [added: was recapitalized] with $602 million of debt, of which $360 million was provided by a third-party and $242 million was provided by HCP.

In [removed: return,] [added: return for both transaction elements,] we received [added: combined proceeds of] $480 million [removed: in cash proceeds] from the HCP/CPA JV and $242 million in [removed: note] [added: loan] receivables and retained an [removed: approximate] [added: approximately] 40% [removed: beneficial] [added: ownership] interest in RIDEA II (the note receivable and 40% [removed: beneficial] [added: ownership] interest are herein referred to as the “RIDEA II Investments”).

During the year ended December 31, 2016, we [removed: sold: (i)] [added: sold] a portfolio of five [removed: post-acute/skilled nursing] [added: facilities in one of our non-reportable segments] and two [removed: SH NNN] [added: senior housing triple-net] facilities for $130 million, [removed: (ii)] five life science facilities for $386 million, [removed: (iii)] seven [removed: SH NNN] [added: senior housing triple-net] facilities for $88 million, [removed: (iv)] three MOBs for $20 million and [removed: (v)] three SHOP facilities for $41 [removed: million and recognized] [added: million, recognizing] total gain on sales of $165 million.

[removed: As a result of] [added: During] the [removed: prepayment] [added: fourth quarter] of [removed: debt] [added: 2016,] using proceeds from the Spin-Off, we [removed: incurred] [added: repaid $1.1 billion of senior unsecured notes that were due to mature in January 2017 and January 2018 and repaid $108 million of mortgage debt, incurring] aggregate loss on debt extinguishments of $46 million, primarily related to prepayment penalties.

Quarterly cash dividends paid during [removed: 2016] [added: 2017] aggregated to [removed: $2.095] [added: $1.48] per share.

On February [removed: 2, 2017,] [added: 1, 2018,] our Board of Directors declared a quarterly cash dividend of $0.37 per common share.

The dividend will be paid on March 2, [removed: 2017] [added: 2018] to stockholders of record as of the close of business on February 15, [removed: 2017.][added: 2018.]

We evaluate our business and allocate resources among our reportable business segments: (i) senior housing [removed: triple-net (SH NNN),] [added: triple-net,] (ii) senior housing operating portfolio (SHOP), (iii) life science and (iv) medical office.

Under the medical office [removed: segment,] [added: and life science segments,] we invest through the acquisition and development of [removed: MOBs,] [added: MOBs and life science facilities,] which generally require a greater level of property management.

We have other non-reportable segments that are comprised primarily of our U.K. care homes, debt [removed: investments] [added: investments, unconsolidated joint ventures] and hospitals.

We evaluate performance based upon: (i) property net operating income from continuing operations (“NOI”) and (ii) adjusted NOI (cash NOI) [removed: of the combined consolidated and unconsolidated investments] in each segment.

Our pro-rata share information is prepared on a basis consistent with the comparable consolidated amounts, is intended to reflect our proportionate [removed: economic interest in the operating results of properties in our portfolio and is calculated by applying our actual ownership percentage for the period.]

We do not control the unconsolidated joint ventures, and the pro-rata presentations of [removed: revenues and expenses] [added: reconciling items] included in [removed: NOI (see below)] [added: FFO] do not represent our legal claim to such items.

The presentation of pro-rata information has limitations, which include, but are not limited to, the [removed: following] [added: following:] (i) the amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage determined when applying the equity method of accounting and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses and (ii) other companies in our industry may calculate their pro-rata interest differently, limiting the usefulness as a comparative measure.

[removed: NOI is defined as rental and related revenues, including tenant recoveries,] resident fees and services, and income from DFLs, less property level operating expenses; NOI excludes all other financial statement amounts included in net income (loss) as presented in Note [removed: 14] [added: 13] to the Consolidated Financial Statements.

Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL non-cash interest, amortization of market lease intangibles, [removed: non-refundable entrance fees and lease] termination fees [removed: (“non-cash adjustments”).][added: and the impact of deferred community fee income and expense.]

[removed: Adjusted NOI is oftentimes referred to as “cash NOI.”] We use NOI and [removed: adjusted] [added: Adjusted] NOI to make decisions about resource allocations, to assess and compare property level performance, and to evaluate our same property portfolio (“SPP”), as described below.

For a reconciliation of NOI and Adjusted NOI to net income (loss) by segment, refer to Note [removed: 14] [added: 13] to the Consolidated Financial Statements.

Operating expenses generally relate to leased medical office and life science properties and [removed: senior housing RIDEA properties.][added: SHOP facilities.]

SPP NOI and [removed: adjusted] [added: Adjusted] NOI information allows us to evaluate the performance of our property portfolio under a consistent population by eliminating changes in the composition of our [added: consolidated] portfolio of properties.

[removed: We include properties from our consolidated portfolio, as well as properties owned by our unconsolidated joint ventures in our SPP NOI and adjusted NOI] [added: ownership percentage for the applicable periods] (see [removed: NOI] [added: FFO] above for further [removed: discussion] [added: disclosure] regarding our use of pro-rata share information and its limitations).

[added: Newly] completed developments and redevelopments are considered stabilized at the earlier of lease-up or 24 months from the date the property is placed in service.

SPP NOI excludes [removed: (i)] certain non-property specific operating expenses that are allocated to each operating segment on a consolidated [removed: basis and (ii) entrance fees and related activity such as deferred expenses, reserves and management fees related to entrance fees.][added: basis.]

A property is removed from [removed: our] SPP when it is [added: classified as held for sale,] sold, placed into [removed: redevelopment] [added: redevelopment, experiences a casualty event that significantly impacts operations] or changes its reporting [removed: structure.][added: structure (such as triple-net to SHOP).]

[removed: We reflect our share for] [added: For] consolidated joint ventures in which we do not own [removed: 100%] [added: 100%, we reflect our share] of the equity by adjusting our FFO to remove the third party ownership share of the applicable reconciling items based on actual ownership percentage for the applicable periods.

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Master Transactions and Cooperation Agreement with Brookdale

On November 1, 2017, HCP and Brookdale entered into a Master Transactions and Cooperation Agreement (the “MTCA”) to provide us with the ability to significantly reduce our concentration of assets leased to and/or managed by Brookdale (the "Brookdale Transaction").

Through a series of dispositions and transitions of assets currently leased to and/or managed by Brookdale, as contemplated by the MTCA, our exposure to Brookdale is expected to be significantly reduced.

In connection with the overall transaction pursuant to the MTCA, HCP (through certain of its subsidiaries), and Brookdale (through certain of its subsidiaries) (the “Lessee”) entered into an Amended and Restated Master Lease and Security Agreement (the “Amended Master Lease”), which amended and restated the then-existing triple-net leases between the parties for 78 assets (before giving effect to the contemplated sale or transition of 34 assets discussed below), which account for primarily all of the assets subject to triple-net leases between HCP and the Lessee.

Under the Amended Master Lease, we have the benefit of a guaranty from Brookdale of the Lessee’s obligations and, upon a change in control, will have various additional protections under the MTCA and the Amended Master Lease.

The Amended Master Lease preserves the renewal terms and, with certain exceptions, the rents under the previously existing triple-net leases.

In addition, HCP and Brookdale agreed to the following:

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| • | We have the right to sell, or transition to other operators, 32 triple-net assets. If such sale or transition does not occur within one year, the triple-net lease with respect to such assets will convert to a cash flow lease (under which we will bear the risks and rewards of operating the assets) with a term of two years, provided that we have the right to terminate the cash flow lease at any time during the term without penalty; |

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| • | We have provided an aggregate $5 million annual reduction in rent on three assets, effective January 1, 2018; and |

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| • | We will sell two triple-net assets to Brookdale or its affiliates for $35 million, which we anticipate completing during the first half of 2018. |

Also pursuant to the MTCA, HCP and Brookdale agreed to the following:

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| • | HCP, which owned 90% of the interests in its RIDEA I and RIDEA III joint ventures with Brookdale at the time the MTCA was executed, agreed to purchase Brookdale’s 10% noncontrolling interest in each joint venture for an aggregate purchase price of $95 million. These joint ventures collectively own and operate 58 independent living, assisted living, memory care and/or skilled nursing facilities (the “RIDEA Facilities”). We completed our acquisition of the RIDEA III noncontrolling interest in December 2017 and anticipate completing our acquisition of the RIDEA I noncontrolling interest during the first half of 2018; |

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Spin-Off of Real Estate Portfolio

On October 31, 2016, we completed our previously announced Spin-Off of QCP.

QCP’s assets include 338 properties, primarily comprised of the HCRMC DFL investments and an equity investment in HCRMC.

Following the completion of the Spin-Off on October 31, 2016, QCP is an independent, publicly-traded, self-managed and self-administrated REIT.

As a result of the Spin-Off, the operations of QCP are now classified as discontinued operations in all periods presented herein.

We entered into a Separation and Distribution Agreement (the “Separation and Distribution Agreement”) with QCP in connection with the Spin-Off.

The Separation and Distribution Agreement divides and allocates the assets and liabilities of HCP prior to the Spin-Off between QCP and HCP, governs the rights and obligations of the parties regarding the Spin-Off, and contains other key provisions relating to the separation of QCP’s business from HCP.

In connection with the Spin-Off, we entered into a Transition Services Agreement ("TSA") with QCP.

Per the terms of the TSA, we agreed to provide certain administrative and support services to QCP on a transitional basis for established fees, which are expected to approximate the actual cost incurred by us in providing the transition services to QCP for the relevant period.

The TSA will terminate on the expiration of the term of the last service provided under the agreement, which will be on or prior to October 30, 2017.

The TSA provides that QCP generally has the right to terminate a transition service upon thirty days' notice to us.

The TSA contains provisions under which we will, subject to certain limitations, be obligated to indemnify QCP for losses incurred by QCP resulting from our breach of the TSA.

In January 2016, we acquired a portfolio of five private pay senior housing communities with 364 units and a skilled nursing facility with 120 beds for $95 million.

All of the communities were developed within the past two years and are triple-net leased to four regional operators.

In July 2016, we acquired two Class A life science buildings totaling 136,000 square feet and a four-acre parcel of land in San Diego, California for $49 million.

In September 2016, we acquired a portfolio of seven private pay senior housing communities for $186 million, including the assumption of $74 million of debt, at a 4.0% interest rate, maturing in 2044.

Consisting of 526 assisted living and memory care units, the portfolio is managed by Senior Lifestyle Corporation in a 100% owned RIDEA structure.

In November 2016, we entered into agreements with Maria Mallaband Care Group (“Maria Mallaband”) to acquire a portfolio of predominantly private pay prime care homes located in London/South-East England for $131 million (£105 million).

In mid-2017, through the exercise of a call option, subject to certain contingencies, we intend to convert our bridge loan provided to Maria Mallaband in November into fee ownership and enter into a Master Lease with Maria Mallaband.

In December 2016, we acquired a portfolio of 10 MOBs, including nine on-campus MOBs, located throughout the U.S. in a sale-leaseback transaction with Community Health Systems for $163 million.

The MOBs have an initial lease term of 15 years.

Developments

Through February 13, 2017, we have leased 73% of The Cove Phase I, which consists of two Class A buildings totaling 247,000 square feet and was delivered in the third quarter of 2016.

In response to Phase I leasing success and continued strong demand from life science users in South San Francisco, in February 2016, we commenced a $220 million development, The Cove Phase II, which adds two Class A buildings totaling 230,000 square feet and is expected to be delivered by the third quarter of 2017.

Through February 13, 2017, we have leased 100% of The Cove Phase II.

In response to The Cove Phase I and Phase II leasing success, in October 2016, we commenced the $211 million development of The Cove Phase III, which adds two Class A buildings representing up to 336,000 square feet.

In June 2016, we commenced a $62 million multi-building development project encompassing 301,000 square feet at our Ridgeview Business Park in Poway, California, which is 50% leased.

The project includes a $32 million build-to-suit project with an existing tenant for 152,000 square feet and is expected to be completed in 2018 as part of a larger leasing transaction.

This transaction resulted in HCP deconsolidating the net assets of RIDEA II because it will no longer direct the activities that most significantly impact the venture.

The closing of these transactions occurred in January 2017.

In October 2016, we entered into definitive agreements to sell 64 SH NNN assets, currently under triple-net leases with Brookdale, for $1.125 billion to affiliates of Blackstone Real Estate Partners VIII, L.P. The closing of this transaction is expected to occur during 2017 and remains subject to regulatory and third party approvals and other customary closing conditions.

Additionally, in October 2016, we entered into definitive agreements for a multi-element transaction with

Brookdale to: (i) sell or transition 25 assets currently triple-net leased to Brookdale, for which Brookdale will receive a $10.5 million annual rent reduction upon lease termination, (ii) re-allocate annual rent of $9.6 million from those 25 assets to the remaining Brookdale triple-net lease portfolio (occurred on November 1, 2016) and (iii) transition eight triple-net leased assets into RIDEA structures (seven of which closed in December 2016 and one of which closed in January 2017).

The closing of the sale or transition of the 25 assets and corresponding rent reduction is expected to occur throughout 2017 and remain subject to regulatory and third party approvals and other customary closing conditions.

In January 2016, we entered into a definitive agreement for purchase options that were exercised on eight life science facilities in South San Francisco, California, to be sold in two tranches for $311 million (sold in November 2016 and discussed above) and $269 million, respectively.

The second tranche is expected to close in the third quarter of 2018.

In June 2016 and September 2016, we received $51 million and $19 million, respectively, from the monetization of three senior housing development loans, recognizing $15 million and $4 million of incremental interest income, respectively, which represents our participation in the appreciation of the underlying real estate assets.

In January 2017, we paid down $440 million on our revolving line of credit facility, primarily using proceeds from our RIDEA II joint venture disposition.

During 2016, we repaid $2.0 billion of senior unsecured notes, $1.1 billion of which was prepaid using proceeds from the Spin-Off.

Derivatives are recorded on the consolidated balance sheets at fair value (see Note [removed: 24] [added: 23] to the Consolidated Financial Statements).

Assuming a one percentage point change in the underlying interest rate curve and foreign currency exchange rates, the estimated change in fair value of each of the underlying derivative instruments would not exceed [removed: $3] [added: $2] million.

At December 31, [removed: 2016,] [added: 2017,] we are exposed to market risks related to fluctuations in interest rates primarily on variable rate debt.

As of December 31, [removed: 2016, $317] [added: 2017, $44] million of our variable-rate debt was hedged by interest rate swap transactions.

[removed: Assuming a] [added: A] one percentage point [removed: change] [added: increase or decrease] in interest rates would change the fair value of our fixed rate debt [removed: and] investments by approximately [removed: $56] [added: $8] million and [removed: $8] [added: $9] million, respectively, and would not materially impact earnings or cash flows.

Assuming a one percentage point change in the interest rate related to our variable-rate debt and variable-rate investments, and assuming no other changes in the outstanding balance as of December 31, [removed: 2016,] [added: 2017,] our annual interest expense and interest income would change by approximately [removed: $15] [added: $12] million and $1 million, respectively.

At December 31, [removed: 2016,] [added: 2017,] our exposure to foreign currencies primarily relates to U.K. investments in leased real [removed: estate, senior notes] [added: estate] and related GBP denominated cash flows.

Based solely on our operating results for the year ended December 31, [removed: 2016,] [added: 2017,] including the impact of existing hedging arrangements, if the value of the GBP relative to the U.S. dollar were to increase or decrease by 10% compared to the average exchange rate during the year ended December 31, [removed: 2016,] [added: 2017, the increase or decrease to] our cash flows would [removed: have decreased or increased, as applicable, by less than $1 million.][added: not be material.]

At December 31, [removed: 2016,] [added: 2017,] both the fair value and carrying value of marketable debt securities were [removed: $69] [added: $19] million.

A one percentage point increase or decrease in interest rates would change the fair value of our fixed rate debt by approximately $332 million and $358 million, respectively, and would not materially impact earnings or cash flows.

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Our diverse portfolio is comprised of investments in the following reportable healthcare segments: (i) senior housing [removed: triple-net (“SH NNN”),] [added: triple-net,] (ii) senior housing operating portfolio (“SHOP”), (iii) life science and (iv) medical office.

On October 31, 2016, we completed the spin-off (the “Spin-Off”) of Quality Care Properties, Inc. (“QCP”) [removed: (NYSE:QCP).][added: (NYSE: QCP).]

See [removed: Notes 1 and] [added: Note] 5 to the Consolidated Financial Statements for further information on the Spin-Off.

For a description of our significant activities during [removed: 2016,] [added: 2017,] see Item 7 in this report.

The core elements of our strategy are: (i) to acquire, develop, lease, own and manage a diversified portfolio of quality healthcare properties across multiple geographic locations and business segments including senior housing, medical office, and life science, among others; (ii) to align ourselves with leading healthcare companies, operators and service providers which, over the long-term, should result in higher relative rental rates, net operating cash flows and appreciation of property values; [added: and] (iii) to maintain [added: an investment grade balance sheet with] adequate liquidity [removed: with] [added: and] long-term fixed rate debt financing with staggered maturities, which supports the longer-term nature of our investments, while reducing our exposure to interest rate volatility and refinancing risk at any point in the interest rate or credit [removed: cycles; and (iv) to continue to manage our balance sheet with a targeted financial leverage of 40% relative to our assets.][added: cycles.]

We believe our real estate portfolio holds the potential for increased future cash flows as it is well-maintained and in desirable [removed: locations within markets where new supply is generally limited by the lack of available sites and the difficulty of obtaining the necessary licensing, other approvals and/or financing.][added: locations.]

| [removed: | · |] [added: •] | Build and maintain long-term leasing and management relationships with quality tenants and operators. In choosing locations for our properties, we focus on their physical environment, adjacency to established businesses (e.g., hospital systems) and educational centers, proximity to sources of business growth and other local demographic factors. |

| [removed: | · |] [added: •] | Replace tenants and operators at the best available market terms and lowest possible transaction costs. We believe that we are well-positioned to attract new tenants and operators and achieve attractive rental rates and operating cash flow as a result of the location, design and maintenance of our properties, together with our reputation for high-quality building services and responsiveness to tenants, and our ability to offer space alternatives within our portfolio. |

| [removed: | · |] [added: •] | Extend and modify terms of existing leases prior to expiration. We structure lease extensions, early renewals or modifications, which reduce the cost associated with lease downtime or the re-investment risk resulting from the exercise of tenants’ purchase options, while securing the tenancy and relationship of our high quality tenants and operators on a long-term basis. |

| [removed: | · |] [added: •] | our reputation gained through over 30 years of successful operations and the strength of our existing portfolio of properties; |

| [removed: | · |] [added: •] | our relationships with leading healthcare operators and systems, investment banks and other market intermediaries, corporations, private equity firms, non-profits and public institutions seeking to monetize existing assets or develop new facilities; |

| [removed: | · |] [added: •] | our relationships with institutional buyers and sellers of high-quality healthcare real estate; |

| [removed: | · |] [added: •] | our track record and reputation for executing acquisitions responsively and efficiently, which provides confidence to domestic and foreign institutions and private investors who seek to sell healthcare real estate in our market areas; |

| [removed: | · |] [added: •] | our relationships with nationally recognized financial institutions that provide capital to the healthcare and real estate industries; and |

| [removed: | · |] [added: •] | our control of sites (including assets under contract with radius restrictions). |

| [removed: | · |] [added: •] | borrowings under our credit facility; |

| [removed: | · |] [added: •] | issuance or origination of debt, including unsecured notes, term loans and mortgage debt; |

| [removed: | · |] [added: •] | sale of ownership interests in properties or other investments; or |

| [removed: | · |] [added: •] | issuance of common or preferred stock or [added: its] equivalent. |

The following table summarizes our revenues by segment [removed: (in] [added: (dollars in] thousands):

| | | Year Ended December 31, | | | | | | | | | | | | | | [added: | | | | | |]

| Segment | | [removed: 2016] [added: 2017] | | | [added: |] % | | [removed: 2015] | [added: 2016] | | [added: | |] % | | [removed: 2014] | [added: 2015] | | [added: | |] % | [added: |]

| SHOP | | [added: 525,473] | [added: | | | 29 | | |] 686,822 | | [removed: 32] | | [added: 32] | [removed: 518,264] | | [removed: 27] [added: 518,264] | | | [removed: 243,612] | [added: 27] | [removed: 15] |

| Life science | | [added: 358,816] | [added: | | | 19 | | |] 358,537 | | [removed: 17] | | [added: 17] | [removed: 342,984] | | [removed: 18] [added: 342,984] | | | [removed: 314,114] | [added: 18] | [removed: 19] |

| Medical office | | [added: 477,459] | [removed: 446,280] | | [removed: 21] | [added: 26] | | [removed: 415,351] | [added: 446,280] | [added: | | |] 21 | | | [removed: 368,055] [added: 415,351] | | [removed: 22] | [added: | 21 | |]

| Other non-reportable segments | | [added: 173,083] | [added: | | | 9 | | |] 214,537 | | [removed: 10] | | [added: 10] | [removed: 235,621] | | [removed: 12] [added: 235,621] | | | [removed: 172,939] | [added: 12] | [removed: 11] |

| Total revenues | | $ | [removed: 2,129,294] [added: 1,848,378] | | [added: |] 100 | | [added: |] $ | [removed: 1,940,489] [added: 2,129,294] | | [added: |] 100 | | [added: |] $ | [removed: 1,636,833] [added: 1,940,489] | | [added: |] 100 | [added: |]

Senior housing [removed: (SH NNN] [added: (triple-net] and SHOP).

Our senior housing facilities are managed utilizing triple-net leases and RIDEA structures, which are permitted by the Housing and Economic Recovery Act of 2008 (commonly referred to as “RIDEA”), and include independent living facilities (“ILFs”), assisted living facilities (“ALFs”), [added: and] memory care facilities (“MCFs”), [removed: care homes,] and continuing care retirement communities [removed: (“CCRCs”),] [added: ("CCRCs")] which cater to different segments of the elderly population based upon their personal needs.

We have entered into long-term agreements with [removed: operators, including Brookdale Senior Living, Inc. (“Brookdale”)] [added: operators] to [removed: operate and] manage properties [removed: that are operated] under a RIDEA structure.

[removed: Brookdale provides] [added: Our operators provide] comprehensive facility management and accounting services [removed: with respect to] [added: for] a majority of our senior housing RIDEA properties, for which we pay annual management fees pursuant to the aforementioned agreements.

In addition, there are incentive management fees payable to [removed: Brookdale] [added: our operators] if operating results of the RIDEA properties exceed pre-established EBITDAR (defined as earnings before interest, taxes, depreciation and amortization, and rent) thresholds.

| [removed: | · |] [added: •] | Independent Living Facilities. ILFs are designed to meet the needs of seniors who choose to live in an environment surrounded socially by their peers with services such as housekeeping, meals and activities. Additionally, the programs and services may include transportation, social activities, exercise and fitness programs, beauty or barber shop access, hobby and craft activities, community excursions, meals in a dining room setting and other activities sought by residents. These residents generally do not need assistance with activities of daily living (“ADL”). However, in some of our facilities, residents have the option to contract for these services. |

| [removed: | · |] [added: •] | Assisted Living Facilities. ALFs are licensed care facilities that provide personal care services, support and housing for those who need help with ADL, such as bathing, eating, dressing and medication management, yet require limited medical care. These facilities are often in apartment-like buildings with private residences ranging from single rooms to large apartments. Certain ALFs may have a dedicated portion of a facility that offers higher levels of personal assistance for residents requiring memory care as a result of Alzheimer’s disease or other forms of dementia. Levels of personal assistance are based in part on local regulations. |

| [removed: | · |] [added: •] | Memory Care Facilities. MCFs address the unique challenges of our residents with Alzheimer’s disease or other forms of dementia. Residents may live in semi-private apartments or private rooms and have structured activities delivered by staff members trained specifically on how to care for residents with memory impairment. These facilities offer programs that provide comfort and care in a secure environment. |

| [removed: | · |] [added: •] | Continuing Care Retirement Communities. CCRCs offer several levels of [removed: assistance,] [added: service,] including independent living, assisted living and nursing home care. CCRCs are different from other housing and care options for seniors because they usually provide written agreements or long-term contracts between residents and the communities (frequently lasting the term of the [removed: resident’s lifetime), which offer a continuum of housing, services and healthcare on one campus or site. CCRCs are appealing as they allow residents to “age in place.” CCRCs typically require the individual to be in relatively good health and independent upon entry.] |

The following table provides information about our [removed: SH NNN] [added: life science] tenant concentration for the year ended December 31, [removed: 2016:][added: 2017:]

| Tenant | | [added: Percentage of] Segment Revenues | | [added: | Percentage of] Total Revenues | |

As of December 31, [removed: 2016,] [added: 2017,] Brookdale [removed: managed or] operated, in our SHOP segment, approximately [removed: 18%] [added: 13%] of our real estate investments based on [removed: gross] [added: total] assets.

Because [removed: an operator manages] [added: operators manage] our facilities in exchange for the receipt of a management fee, we are not directly exposed to the credit risk of the operators in the same manner or to the same extent as our triple-net tenants.

At December 31, 2017, we had 190 full-time employees.

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| Senior housing triple-net | | $ | 313,547 | | | 17 | | | $ | 423,118 | | | 20 | | | $ | 428,269 | | | 22 | |

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resident’s lifetime), which offer a continuum of housing, services and healthcare on one campus or site.

| --- | --- | --- | --- |

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| SH NNN | | $ | 423,118 | | 20 | | $ | 428,269 | | 22 | | $ | 538,113 | | 33 |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | Percentage of | | Percentage of | |

| Brookdale(1) | | 59 | % | 12 | % |

| | (1) | | Excludes SHOP facilities operated by Brookdale in our SHOP segment, as discussed below. Includes revenues from 64 SH NNN facilities that were classified as held for sale at December 31, 2016. |

| Genentech, Inc.(1) | | 14 | % | 2 | % |

| | (1) | | Pursuant to a purchase and sale agreement in January 2016, the tenant exercised its purchase options under its lease on eight facilities, of which four sold in November 2016, and four are expected to close in the third quarter of 2018. Accordingly, the percentage of segment revenues will decrease below 10% upon completion of these sales. |

of a facility, price and range of services offered, alternatives for healthcare delivery, the supply of competing properties, physicians, staff, referral sources, location, the size and demographics of the population in surrounding areas, and the financial condition of our tenants and operators.

Based on information primarily provided by our tenants and operators, including our medical office segment, at December 31, 2016, we estimate that approximately 13% and 12% (15% and 14%, excluding our medical office segment) of the annualized base rental payments received from our tenants and operators were dependent on Medicare and Medicaid reimbursement, respectively.

Under various federal, state and local environmental laws, ordinances and regulations, an

Employees of HCP

At December 31, 2016, we had 188 full-time employees, none of whom were subject to a collective bargaining agreement.

Accordingly, HCP was included in The Sustainability Yearbook, a listing of the world’s most sustainable companies which includes only those companies in the top 15% of their industry, as scored by the DJSI assessment.

Current copies of our Code of Business Conduct and Ethics and Vendor Code of Business Conduct and Ethics are posted on our website at www.hcpi.com/codeofconduct.

In addition, waivers from, and amendments to, our Code of Business Conduct and Ethics that apply to our directors and executive officers, including our principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions, will be timely posted on our website at www.hcpi.com/codeofconduct.

[removed: We believe that our existing] [added: Except as described below, we are not aware of any] legal proceedings [removed: will not have] [added: or claims that we believe could have, individually or taken together,] a material adverse [removed: impact] [added: effect] on our [removed: business or] financial [removed: position,] [added: condition,] results of operations or cash flows.

See “Legal Proceedings” section of Note [removed: 12] [added: 11] to the Consolidated Financial Statements for information regarding legal proceedings, which information is incorporated by reference in this Item 3.

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| --- | --- |

We record a liability when a loss is considered probable and the amount can be reasonably estimated.

[removed: |] (Mark One) [removed: | |]

| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934.] |

[removed: |] For the fiscal year ended December 31, [removed: 2016 | |][added: 2017]

[removed: |] For the transition period from to [removed: | |]

[removed: |] Commission file number [removed: 1-08895 | |][added: 001-08895]

| Maryland | [added: |] 33-0091377 |

| (State or other jurisdiction of incorporation or organization) | [added: |] (I.R.S. Employer Identification No.) |

| 1920 Main Street, Suite 1200 Irvine, California | [added: |] 92614 (Zip Code) |

| (Address of principal executive offices) | | [added: |]

[removed: |] Registrant’s telephone number, including area code (949) 407-0700 [removed: | |]

[removed: |] Securities registered pursuant to Section 12(b) of the Act: [removed: | |]

| Title of each class | [added: |] Name of each exchange on which registered |

| Common Stock | [added: |] New York Stock Exchange |

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company or an emerging growth] company.

See the definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer”,] “smaller reporting company” [added: and "emerging growth company"] in Rule 12b-2 of the Exchange Act.

| Large accelerated filer ☒ | Accelerated filer ☐ | Non-accelerated filer ☐ (Do not check if a smaller reporting company) | Smaller reporting company ☐ | [added: Emerging growth company ☐ |]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: [removed: $15.1] [added: $12.8] billion.

As of January 31, [removed: 2017] [added: 2018] there were [removed: 468,178,740] [added: 469,443,487] shares of common stock outstanding.

Portions of the definitive Proxy Statement for the registrant’s [removed: 2017] [added: 2018] Annual Meeting of Stockholders have been incorporated by reference into Part III of this Report.

For the Fiscal Year Ended December 31, [removed: 2016][added: 2017]

| [Cautionary Language Regarding Forward-Looking [removed: Statements](#CautionaryLanguageRegardingForwardLookin) | | |] [added: Statements](#s9B9DC1484E445ECF942CAE7A3052527E)] | [removed: 1] | [added: [1](#s9B9DC1484E445ECF942CAE7A3052527E)] |

| [Item [removed: 1.](#ITEM1_394065) | | [Business](#ITEM1_394065) |] [added: 1.](#s5F5AB44065375F8F9EB35EBFE9448F33)] | [removed: 3] [added: [Business](#s5F5AB44065375F8F9EB35EBFE9448F33)] | [added: [3](#s5F5AB44065375F8F9EB35EBFE9448F33)] |

| [Item [removed: 1A.](#ITEM1A_792744) |] [added: 1A.](#s3B03974C6D1E5EC0BE545F936ADF6D52)] | [Risk [removed: Factors](#ITEM1A_792744) | | 11] [added: Factors](#s3B03974C6D1E5EC0BE545F936ADF6D52)] | [added: [10](#s3B03974C6D1E5EC0BE545F936ADF6D52)] |

| [Item [removed: 1B.](#ITEM1B_132290) |] [added: 1B.](#s7D693BFDAC0E57C1BACEB50B8911CF38)] | [Unresolved Staff [removed: Comments](#ITEM1B_132290) | | 29] [added: Comments](#s7D693BFDAC0E57C1BACEB50B8911CF38)] | [added: [27](#s7D693BFDAC0E57C1BACEB50B8911CF38)] |

| [Item [removed: 2.](#ITEM2_682593) | | [Properties](#ITEM2_682593) |] [added: 2.](#sFE52D095ED8D5A97A22B472D57229DCB)] | [removed: 29] [added: [Properties](#sFE52D095ED8D5A97A22B472D57229DCB)] | [added: [27](#sFE52D095ED8D5A97A22B472D57229DCB)] |

| [Item [removed: 3.](#ITEM3_779073) |] [added: 3.](#sA26DF8B4047D51868477DB3F777ED341)] | [Legal [removed: Proceedings](#ITEM3_779073) | | 34] [added: Proceedings](#sA26DF8B4047D51868477DB3F777ED341)] | [added: [31](#sA26DF8B4047D51868477DB3F777ED341)] |

| [Item [removed: 4.](#ITEM4_202814) |] [added: 4.](#sE72DA855B76D5F47ADDB44BDC7FEE037)] | [Mine Safety [removed: Disclosures](#ITEM4_202814) | | 34] [added: Disclosures](#sE72DA855B76D5F47ADDB44BDC7FEE037)] | [added: [31](#sE72DA855B76D5F47ADDB44BDC7FEE037)] |

| [Item [removed: 5.](#ITEM5_857992) |] [added: 5.](#sF744AA1380BC57DFA9EBA86F497507F2)] | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#ITEM5_857992) | | 35] [added: Securities](#sF744AA1380BC57DFA9EBA86F497507F2)] | [added: [32](#sF744AA1380BC57DFA9EBA86F497507F2)] |

| [Item [removed: 6.](#ITEM6_23903) |] [added: 6.](#s8A9DCC4D79425FA3A92CD7D02435DB08)] | [Selected Financial [removed: Data](#ITEM6_23903) | | 38] [added: Data](#s8A9DCC4D79425FA3A92CD7D02435DB08)] | [added: [35](#s8A9DCC4D79425FA3A92CD7D02435DB08)] |

| [Item [removed: 7.](#ITEM7ManagementsDiscussionandAnalysisofF) |] [added: 7.](#sFA234C0CE06E5228875410140389AA45)] | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#ITEM7ManagementsDiscussionandAnalysisofF) | | 39] [added: Operations](#sFA234C0CE06E5228875410140389AA45)] | [added: [36](#sFA234C0CE06E5228875410140389AA45)] |

| [Item [removed: 7A.](#ITEM7A_600815) |] [added: 7A.](#sBF866D62A98F59C9895A3AC79C53DE01)] | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#ITEM7A_600815) | | 67] [added: Risk](#sBF866D62A98F59C9895A3AC79C53DE01)] | [added: [64](#sBF866D62A98F59C9895A3AC79C53DE01)] |

| [Item [removed: 8.](#ITEM8_541973) |] [added: 8.](#sC7819F814BB25929BD615977727599DA)] | [Financial Statements and Supplementary [removed: Data](#FinancialStatementsandSupplementaryData_) | | 69] [added: Data](#sC7819F814BB25929BD615977727599DA)] | [added: [66](#sC7819F814BB25929BD615977727599DA)] |

| [Item [removed: 9.](#ITEM9_130672) |] [added: 9.](#sF5749D33B2C65A9CB0BEAF528C945E12)] | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#ChangesinandDisagreementswithAccountants) | | 125] [added: Disclosure](#sF5749D33B2C65A9CB0BEAF528C945E12)] | [added: [133](#sF5749D33B2C65A9CB0BEAF528C945E12)] |

| [Item [removed: 9A.](#ITEM9A_681601) |] [added: 9A.](#s720D55792A195CE6AA0BC2AE4056659A)] | [Controls and [removed: Procedures](#ControlsandProcedures_304119) | | 125] [added: Procedures](#s720D55792A195CE6AA0BC2AE4056659A)] | [added: [133](#s720D55792A195CE6AA0BC2AE4056659A)] |

| [Item [removed: 10.](#ITEM10_921268) |] [added: 10.](#sF05FCC99D7A85E84A5F5432F3D07DBD3)] | [Directors, Executive Officers and Corporate [removed: Governance](#DirectorsExecutiveOfficersandCorporate_6) | | 127] [added: Governance](#sF05FCC99D7A85E84A5F5432F3D07DBD3)] | [added: [137](#sF05FCC99D7A85E84A5F5432F3D07DBD3)] |

| [Item [removed: 12.](#ITEM12_228623) |] [added: 12.](#sC5A0FC2CDC3A5B43A154AD57092D9C04)] | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#SecurityOwnershipofCertainBeneficialOwne) | | 127] [added: Matters](#sC5A0FC2CDC3A5B43A154AD57092D9C04)] | [added: [137](#sC5A0FC2CDC3A5B43A154AD57092D9C04)] |

| [Item [removed: 13.](#ITEM13_215760) |] [added: 13.](#s1BC0D6826BB75F5AA3D7D2DD77445DBF)] | [Certain Relationships and Related Transactions, and Director [removed: Independence](#CertainRelationshipsandRelatedTransactio) | | 127] [added: Independence](#s1BC0D6826BB75F5AA3D7D2DD77445DBF)] | [added: [137](#s1BC0D6826BB75F5AA3D7D2DD77445DBF)] |

| [Item [removed: 14.](#ITEM14_848619) |] [added: 14.](#sA94581F23F905FBA9FDF071CF9D0501E)] | [Principal Accounting Fees and [removed: Services](#PrincipalAccountantFeesand_484013) | | 127] [added: Services](#sA94581F23F905FBA9FDF071CF9D0501E)] | [added: [137](#sA94581F23F905FBA9FDF071CF9D0501E)] |

| [Item [removed: 15.](#ITEM15_736853) |] [added: 15.](#sF886A0D147E653AEBF870C75846FCE97)] | [Exhibits, Financial Statement [removed: Schedules](#ExhibitsandFinancialStatement_927177) | | 128] [added: Schedules](#sF886A0D147E653AEBF870C75846FCE97)] | [added: [138](#sF886A0D147E653AEBF870C75846FCE97)] |

| [removed: | · |] [added: •] | our reliance on a concentration of a small number of tenants and operators for a significant percentage of our [removed: revenues, with our concentration in Brookdale increasing as a result of the consummation of the spin-off of Quality Care Properties, Inc. on October 31, 2016;] [added: revenues;] |

10-K 1 hcp10-k12312017.htm 10-K

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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| [Part I](#s301C3270397655F2AAA9A0AEAAA88C31) | | [3](#s301C3270397655F2AAA9A0AEAAA88C31) |

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| [Part II](#sC2055B5EF9C55B2892C8D560CF6B094B) | | [32](#sC2055B5EF9C55B2892C8D560CF6B094B) |

| [Item 9B.](#s51A430E8E132557091AEF054AFA6D70A) | [Other Information](#s51A430E8E132557091AEF054AFA6D70A) | [136](#s51A430E8E132557091AEF054AFA6D70A) |

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| [Part III](#s413C820921CA5AF099061506AE9761C7) | | [137](#s413C820921CA5AF099061506AE9761C7) |

| [Item 11.](#sCA22DBC0370056359AB799E8E2EDF1C9) | [Executive Compensation](#sCA22DBC0370056359AB799E8E2EDF1C9) | [137](#sCA22DBC0370056359AB799E8E2EDF1C9) |

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| [Part IV](#s8102865D5BF65D61823CC2E0ADD35A3D) | | [138](#s8102865D5BF65D61823CC2E0ADD35A3D) |

| [Item 16.](#s74c34c72c13d4080b9ae256a97b21fef) | [Form 10-K Summary](#s74c34c72c13d4080b9ae256a97b21fef) | [141](#s74c34c72c13d4080b9ae256a97b21fef) |

Statements in this Annual Report on Form 10-K that are not historical factual statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

As more fully set forth under “Item 1A, Risk Factors” in this report, these risks and uncertainties include, but are not limited to:

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10-K 1 hcp-20161231x10k.htm 10-K

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| [Part I](#PARTI_451503) | | | | 3 | |

| [Part II](#PARTII_488583) | | | | 35 | |

| [Item 9B.](#ITEM9B_934865) | | [Other Information](#OtherInformation_36722) | | 127 | |

| [Part III](#PARTIII_11421) | | | | 127 | |

| [Item 11.](#ITEM11_646707) | | [Executive Compensation](#ExecutiveCompensation_661558) | | 127 | |

| [Part IV](#PARTIV_377987) | | | | 128 | |

Statements in this Annual Report on Form 10-K that are not historical factual statements are “forward-looking statements.” We intend to have our forward-looking statements covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with those provisions.

As more fully set forth under “Item 1A, Risk Factors” in this report, risks and uncertainties that may cause our actual results to differ materially from the expectations contained in the forward-looking statements include, among other things:

| | · | | availability of suitable properties to acquire at favorable prices, the competition for the acquisition and financing of those properties, and the costs of associated property development; |

| | · | | our ability to negotiate the same or better terms with new tenants or operators if existing leases are not renewed or we exercise our right to foreclose on loan collateral or replace an existing tenant or operator upon default; |

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| [removed: | · |] [added: •] | location, construction quality, age, condition and design of the property; |

| [removed: | · |] [added: •] | geographic area, proximity to other healthcare facilities, type of property and demographic profile, including new competitive supply; |

| [removed: | · |] [added: •] | whether the expected risk-adjusted return exceeds the incremental cost of capital; |

| [removed: | · |] [added: •] | whether the rent or operating income provides a competitive market return to our investors; |

| [removed: | · |] [added: •] | duration, rental rates, tenant and operator quality and other attributes of in-place leases, including master lease structures and coverage; |

| [removed: | · |] [added: •] | current and anticipated cash flow and its adequacy to meet our operational needs; |

| [removed: | · |] [added: •] | availability of security such as letters of credit, security deposits and guarantees; |

| [removed: | · |] [added: •] | potential for capital appreciation; |

| [removed: | · |] [added: •] | expertise and reputation of the tenant or operator; |

| [removed: | · |] [added: •] | occupancy and demand for similar healthcare facilities in the same or nearby communities; |

| [removed: | · |] [added: •] | the mix of revenues generated at healthcare facilities between privately paid and government reimbursed; |

| [removed: | · |] [added: •] | availability of qualified operators or property managers and whether we can manage the property; |

| [removed: | · |] [added: •] | potential alternative uses of the facilities; |

| [removed: | · |] [added: •] | the regulatory and reimbursement environment in which the properties operate; |

| [removed: | · |] [added: •] | tax laws related to REITs; |

| [removed: | · |] [added: •] | prospects for liquidity through financing or refinancing; and |

| [removed: | · |] [added: •] | our access to and cost of capital. |

The following table summarizes our consolidated property and [removed: DFL] [added: direct financing leases ("DFL")] investments as of and for the year ended December 31, [removed: 2016] [added: 2017] (square feet and dollars in thousands):

| [added: Facility Location] | | Number of [added: Facilities] | | | [added: Capacity] | [added: | |] Gross Asset [added: Value(1)] | | | [added: |] Rental [added: Revenues(2)] | | | [added: |] Operating [added: Expenses] | | |

| Facility Location | | [added: Number of] Facilities | | [added: |] Capacity | | [added: | Gross Asset] Value(1) | | | [added: | Rental] Revenues(2) | | | [added: | Operating] Expenses | | |

| Senior housing—DFLs(3): | | | | | | | | | | | | | | | [added: | | | |]

| SHOP: | | | | [added: |] (Units) | | | | | | | | | | | [added: | | |]

| Life science: | | | | [added: |] (Sq. Ft.) | | | | | | | | | | | [added: | | |]

| Medical office: | | | | [added: |] (Sq. Ft.) | | | | | | | | | | | [added: | | |]

| Other(4): | | | | [added: |] (Beds) | | | | | | | | | | | [added: | | |]

| California | | 2 | | [added: |] 111 | | | 143,500 | | | [removed: 19,360] | [added: 19,350] | | [removed: (15)] | | [added: (172 | | ) |]

| Other—U.K.: | | | | [added: |] (Units) | | | | | | | | | | | [added: | | |]

| [removed: Total other] [added: Other] non-reportable [removed: segments] [added: segments:] | | [removed: 77] | | | | [removed: $] | [removed: 889,759] | | [removed: $] | [removed: 125,729] | | [removed: $] | [removed: (4,654)] | | [added: | | | | |]

| [removed: |] (1) | [removed: |] Represents gross real estate and the carrying value of [removed: DFLs, excluding development properties and assets held for sale.] [added: DFLs.] Gross real estate represents the carrying amount of real estate after adding back accumulated depreciation and amortization. [added: Includes real estate held for sale with an aggregate gross asset value of $485 million.] |

| [removed: |] (2) | [removed: |] Represent the combined amount of rental and related revenues, tenant recoveries, resident fees and services and income from DFLs. |

| [removed: |] (3) | [removed: |] Represents leased properties that are classified as DFLs. |

| [removed: |] (4) | [removed: | Represents hospitals and skilled nursing facilities, and includes] [added: Includes] leased properties that are classified as DFLs. |

The following table summarizes occupancy and average annual rent trends for our consolidated property and DFL investments for the years ended December 31, [removed: (square] [added: (average occupied square] feet in [removed: thousands):][added: thousands).]

| | [added: 2017] | [added: | | |] 2016 | | | [removed: 2015] | [added: 2015] | | [removed: 2014] | | [added: 2014] | [removed: 2013] | | | [removed: 2012] [added: 2013] | | |

| Average annual rent per [removed: unit(1)] [added: unit] | [added: $] | [added: 15,352 | | |] $ | 14,604 | | [added: |] $ | 14,544 | | [added: |] $ | 13,907 | | [removed: $] | [removed: 13,361 | |] $ | [removed: 13,593] [added: 13,361] | |

| Average capacity (available units) | [added: 21,536] | | [added: | |] 28,455 | | | [added: |] 28,777 | | | [removed: 33,917] | [added: 33,917] | | [removed: 35,932] | | [added: 35,932] | [removed: 27,235] | |

| SHOP: | | | | | | | | | | | | | | | | | [added: | | |]

| Average annual rent per [removed: unit(1)] [added: unit] | [added: $] | [added: 41,133 | | |] $ | 42,851 | | [added: |] $ | 41,435 | | [added: |] $ | 38,017 | | [removed: $] | [removed: 32,070 | |] $ | [removed: 30,294] [added: 32,070] | |

| Average capacity (available units) | [added: 12,758] | | [added: | |] 16,028 | | | [added: |] 12,704 | | | [removed: 6,408] | [added: 6,408] | | [removed: 4,620] | | [added: 4,620] | [removed: 4,626] | |

| Life science: | | | | | | | | | | | | | | | | | [added: | | |]

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| Senior housing triple-net—real estate: | | | | | (Units) | | | | | | | | | | | | | |

| California | | 17 | | | 1,727 | | | $ | 416,949 | | | $ | 53,589 | | | $ | (3,139 | ) |

| Virginia | | 10 | | | 1,227 | | | 273,045 | | | | 20,409 | | | | — | | |

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| SH NNN—real estate: | | | | (Units) | | | | | | | | | | |

| California | | 22 | | 2,022 | | $ | 453,094 | | $ | 51,312 | | $ | (5,494) | |

| Texas | | 16 | | 1,761 | | | 216,536 | | | 46,071 | | | (5) | |

| Florida | | 14 | | 1,776 | | | 275,825 | | | 38,041 | | | — | |

| Oregon | | 16 | | 1,357 | | | 188,626 | | | 26,858 | | | (317) | |

| Virginia | | 10 | | 1,228 | | | 270,132 | | | 21,705 | | | — | |

| Washington | | 17 | | 1,199 | | | 212,047 | | | 17,178 | | | — | |

| Colorado | | 2 | | 414 | | | 89,791 | | | 18,043 | | | — | |

| Other (28 States) | | 86 | | 7,776 | | | 1,361,661 | | | 167,855 | | | (948) | |

| | | 183 | | 17,533 | | | 3,067,712 | | | 387,063 | | | (6,764) | |

| Other (12 States) | | 27 | | 3,123 | | | 628,698 | | | 36,055 | | | 54 | |

| Total SH NNN | | 210 | | 20,656 | | $ | 3,696,410 | | $ | 423,118 | | $ | (6,710) | |

| Texas | | 27 | | 4,385 | | $ | 623,258 | | $ | 137,818 | | $ | (91,514) | |

| Florida | | 23 | | 3,241 | | | 498,329 | | | 128,805 | | | (85,267) | |

| Colorado | | 7 | | 1,123 | | | 342,301 | | | 54,052 | | | (33,174) | |

| Illinois | | 8 | | 1,434 | | | 275,079 | | | 53,472 | | | (42,337) | |

| California | | 11 | | 1,632 | | | 264,306 | | | 93,579 | | | (72,231) | |

| Other (21 States) | | 53 | | 5,483 | | | 949,248 | | | 219,096 | | | (156,347) | |

| Total SHOP | | 129 | | 17,298 | | $ | 2,952,521 | | $ | 686,822 | | $ | (480,870) | |

| California | | 108 | | 6,432 | | $ | 3,176,224 | | $ | 331,525 | | $ | (67,940) | |

| Other (2 States) | | 8 | | 512 | | | 143,255 | | | 27,012 | | | (4,538) | |

| Total life science | | 116 | | 6,944 | | $ | 3,319,479 | | $ | 358,537 | | $ | (72,478) | |

| Texas | | 60 | | 5,606 | | $ | 917,195 | | $ | 123,677 | | $ | (51,484) | |

| California | | 17 | | 993 | | | 308,853 | | | 30,958 | | | (16,305) | |

| Pennsylvania | | 4 | | 1,282 | | | 285,232 | | | 33,166 | | | (12,714) | |

| Florida | | 24 | | 1,328 | | | 235,819 | | | 26,203 | | | (11,944) | |

| Other (26 States) | | 133 | | 8,901 | | | 1,601,306 | | | 232,276 | | | (81,240) | |

| Total medical office | | 238 | | 18,110 | | $ | 3,348,405 | | $ | 446,280 | | $ | (173,687) | |

| Texas | | 4 | | 1,035 | | $ | 231,512 | | $ | 34,138 | | $ | (4,592) | |

| Other (9 States) | | 10 | | 1,105 | | | 206,798 | | | 39,421 | | | (47) | |

| | | 16 | | 2,251 | | $ | 581,810 | | $ | 92,919 | | $ | (4,654) | |

| Other (U.K.) | | 61 | | 3,198 | | | 307,949 | | | 32,810 | | | \- | |

| Total properties | | 770 | | | | $ | 14,206,574 | | $ | 2,040,486 | | $ | (738,399) | |

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The following table sets forth the properties in our consolidated property portfolio at December 31, 2016 that were under development or redevelopment (in thousands):

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Our common stock is listed on the New York Stock [removed: Exchange.][added: Exchange ("NYSE").]

For the fiscal quarters indicated below are the reported high and low sales prices per share of our common stock on the [removed: New York Stock Exchange] [added: NYSE] and the cash dividends paid per common share:

| | [removed: |] High | | | [added: |] Low | | | [added: |] Per Share Distribution | | |

| 2016(1) | | | | | | | | | | | [added: |]

| Fourth Quarter | [removed: |] $ | 38.09 | | [added: |] $ | 27.61 | | [added: |] $ | 0.370 | |

| Third Quarter | [removed: | |] 40.43 | | | [added: |] 34.56 | | | [added: |] 0.575 | | [added: |]

| Second Quarter | [removed: | |] 36.90 | | | [added: |] 31.91 | | | [added: |] 0.575 | | [added: |]

| First Quarter | [removed: | |] 39.25 | | | [added: |] 25.11 | | | [added: |] 0.575 | | [added: |]

| [removed: |] (1) | [removed: |] Price as originally traded. Does not give effect to the stock dividend of $6.17 per common share related to the Spin-Off (discussed below). |

At January 31, [removed: 2017,] [added: 2018,] we had [removed: 9,894] [added: 9,384] stockholders of record, and there were [removed: 218,367] [added: 192,786] beneficial holders of our common stock.

| | [removed: |] Year Ended December 31, | | | | | | | | | [added: | |]

| | [added: 2013] | [removed: 2016] | | | [added: 2014 | | | |] 2015 | | | [removed: 2014] | [added: 2016] | | [added: | | 2017 | | |]

| Ordinary dividends | [removed: |] $ | [removed: 1.5561] [added: 1.4800] | | [added: |] $ | [removed: 2.1184] [added: 1.5561] | | [added: |] $ | [removed: 1.9992] [added: 2.1184] | |

| Capital gain dividends | [added: —] | | [removed: —] | | [added: —] | [removed: 0.0316] | | | [removed: 0.0890] [added: 0.0316] | | [added: |]

| Nondividend distributions | [added: —] | | [removed: 6.7089] | | [added: 6.7089] | [removed: 0.1100] | | | [removed: 0.0918] [added: 0.1100] | | [added: |]

| | [removed: |] $ | [removed: 8.2650] [added: 1.4800] | [removed: (1)] | [added: |] $ | [removed: 2.2600] [added: 8.2650] | | [added: (1) |] $ | [removed: 2.1800] [added: 2.2600] | |

| [removed: |] (1) | [removed: |] Consists of $2.095 per common share of quarterly cash dividends and $6.17 per common share of stock dividends related to the Spin-Off (discussed below). |

On February [removed: 2, 2017,] [added: 1, 2018,] we announced that our Board of Directors declared a quarterly common stock cash dividend of $0.37 per share.

The common stock dividend will be paid on March 2, [removed: 2017] [added: 2018] to stockholders of record as of the close of business on February 15, [removed: 2017.][added: 2018.]

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 December 31, [removed: 2016.][added: 2017.]

| [removed: |] (1) | [removed: |] Represents restricted shares withheld under our equity incentive plans to offset tax withholding obligations that occur upon vesting of restricted shares. The value of the shares withheld is based on the closing price of our common stock on the last trading day prior to the date the relevant transaction occurred. |

The graph [added: and table] below [removed: compares] [added: compare] the cumulative total return of HCP, the S&P 500 Index and the Equity REIT Index of NAREIT, from January 1, [removed: 2012] [added: 2013] to December 31, [removed: 2016.][added: 2017.]

Total cumulative return is based on a $100 investment in HCP common stock and in each of the indices [added: at the close of trading] on [removed: January 1,] [added: December 31,] 2012 and assumes quarterly reinvestment of dividends before consideration of income taxes.

(JANUARY 1, [removed: 2012] [added: 2013] = $100)

[removed: ][added: ]

| | [removed: |] December 31, | | | | | | | | | | | | | | | [added: | | | |]

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| 2017 | | | | | | | | | | | |

| Fourth Quarter | $ | 27.62 | | | $ | 25.09 | | | $ | 0.370 | |

| Third Quarter | 32.65 | | | | 27.47 | | | | 0.370 | | |

| Second Quarter | 33.67 | | | | 29.55 | | | | 0.370 | | |

| First Quarter | 32.97 | | | | 29.36 | | | | 0.370 | | |

_______________________________________

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| | 2017 | | | | 2016 | | | | 2015 | | |

_______________________________________

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Recent Sales of Unregistered Securities

On January 6, 2017, we issued 12,143 shares of our common stock upon the redemption of 5,283 non-managing member units of our subsidiary, HCPI/Utah, LLC.

The shares of our common stock were issued in a private placement to an accredited investor pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

We did not receive any cash proceeds from the issuance of shares of our common stock upon redemption of the non-managing member units of HCPI/Utah, LLC, although we did acquire non-managing member units of the subsidiary in exchange for the shares of common stock we issued upon redemption of the units.

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| Period Covered | | Total Number of Shares Purchased(1) | | | Average Price Paid per Share | | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | | Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs | |

| October 1-31, 2017 | | 12,220 | | | $ | 25.37 | | | — | | | — | |

| November 1-30, 2017 | | — | | | — | | | | — | | | — | |

| December 1-31, 2017 | | 590 | | | 26.10 | | | | — | | | — | |

| Total | | 12,810 | | | $ | 25.41 | | | — | | | — | |

_______________________________________

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JANUARY 1, 2013–DECEMBER 31, 2017

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| FTSE NAREIT Equity REIT Index | $ | 102.88 | | | $ | 131.68 | | | $ | 135.42 | | | $ | 147.35 | | | $ | 160.11 | |

| S&P 500 | 132.36 | | | | 150.43 | | | | 152.51 | | | | 170.70 | | | | 207.92 | | |

| HCP, Inc. | 84.35 | | | | 107.66 | | | | 99.15 | | | | 90.20 | | | | 83.15 | | |

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| 2015(1) | | | | | | | | | | |

| Fourth Quarter | | | 39.83 | | | 32.71 | | | 0.565 | |

| Third Quarter | | | 40.90 | | | 35.37 | | | 0.565 | |

| Second Quarter | | | 44.79 | | | 36.20 | | | 0.565 | |

| First Quarter | | | 49.61 | | | 39.88 | | | 0.565 | |

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| | | | | | | | Total Number of Shares | | Maximum Number (or | |

| | | | | | | | Purchased as | | Approximate Dollar Value) | |

| | | Total Number | | | | | Part of Publicly | | of Shares that May Yet | |

| | | of Shares | | Average Price | | | Announced Plans | | be Purchased Under | |

| Period Covered | | Purchased(1) | | Paid per Share | | | or Programs | | the Plans or Programs | |

| October 1-31, 2016 | | 30 | | $ | 35.91 | | — | | — | |

| November 1-30, 2016 | | — | | | — | | — | | — | |

| December 1-31, 2016 | | 590 | | | 30.30 | | — | | — | |

| Total | | 620 | | | 30.57 | | — | | — | |

JANUARY 1, 2012–DECEMBER 31, 2016

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | |

| FTSE NAREIT Equity REIT Index | | $ | 119.70 | | $ | 123.12 | | $ | 157.63 | | $ | 162.08 | | $ | 176.07 | |

| S&P 500 | | | 115.98 | | | 153.51 | | | 174.47 | | | 176.88 | | | 197.98 | |

| HCP, Inc. | | | 114.21 | | | 96.33 | | | 122.96 | | | 113.24 | | | 103.02 | |

| | [removed: |] Year Ended December 31, | | | | | | | | | | | | | | | [added: | | | |]

| | [added: 2017] | [added: | | |] 2016 | | | [removed: 2015] | [added: 2015] | | [removed: 2014] | | [added: 2014] | [removed: 2013] | | | [removed: 2012] [added: 2013] | | |

| Statement of operations data: | | | | | | | | | | | | | | | | | [added: | | |]

| Total revenues | [added: $] | [added: 1,848,378 | | |] $ | 2,129,294 | | [added: |] $ | 1,940,489 | | [added: |] $ | 1,636,833 | | [removed: $] | [removed: 1,488,786 | |] $ | [removed: 1,281,861] [added: 1,488,786] | |

| Income [added: (loss)] from continuing operations | [added: 422,634] | | [added: | |] 374,171 | | | [added: |] 152,668 | | | [removed: 271,315] | [added: 271,315] | | [removed: 253,526] | | [added: 253,526] | [removed: 156,213] | |

| Net income (loss) applicable to common shares | [added: 413,013] | | [added: | |] 626,549 | | | [removed: (560,552)] | [added: (560,552] | | [removed: 919,796] [added: )] | | [added: 919,796] | [removed: 969,103] | | | [removed: 812,289] [added: 969,103] | | [added: |]

| Basic earnings per common share | | | | | | | | | | | | | | | | | [added: | | |]

| Continuing operations | [added: 0.88] | | [added: | |] 0.77 | | | [added: |] 0.30 | | | [removed: 0.56] | [added: 0.56] | | [removed: 0.52] | | [added: 0.52] | [removed: 0.29] | |

| Discontinued operations | [added: —] | | [added: | |] 0.57 | | | [removed: (1.51)] | [added: (1.51] | | [removed: 1.45] [added: )] | | [added: 1.45] | [removed: 1.61] | | | 1.61 | | [added: |]

| Net income (loss) attributable to common stockholders | [added: 0.88] | | [added: | |] 1.34 | | | [removed: (1.21)] | [added: (1.21] | | [removed: 2.01] [added: )] | | [added: 2.01] | [removed: 2.13] | | | [removed: 1.90] [added: 2.13] | | [added: |]

| Diluted earnings per common share | | | | | | | | | | | | | | | | | [added: | | |]

| Discontinued operations | [added: —] | | [added: | |] 0.57 | | | [removed: (1.51)] | [added: (1.51] | | [removed: 1.44] [added: )] | | [added: 1.44] | [removed: 1.61] | | | 1.61 | | [added: |]

| Net income (loss) attributable to common stockholders | [added: 0.88] | | [added: | |] 1.34 | | | [removed: (1.21)] | [added: (1.21] | | [removed: 2.00] [added: )] | | [added: 2.00] | [removed: 2.13] | | | [removed: 1.90] [added: 2.13] | | [added: |]

| Balance sheet data: | | | | | | | | | | | | | | | | | [added: | | |]

| Total assets | [added: 14,088,461] | | [added: | |] 15,759,265 | | | [added: |] 21,449,849 | | | [removed: 21,331,436] | [added: 21,331,436] | | [removed: 20,040,310] | | [added: 20,040,310] | [removed: 19,879,697] | |

| Debt obligations(1) | [added: 7,880,466] | | [added: | |] 9,189,495 | | | [added: |] 11,069,003 | | | [removed: 9,721,269] | [added: 9,721,269] | | [removed: 8,626,067] | | [added: 8,626,067] | [removed: 8,659,691] | |

| Total equity | [added: 5,594,938] | | [added: | |] 5,941,308 | | | [added: |] 9,746,317 | | | [removed: 10,997,099] | [added: 10,997,099] | | [removed: 10,931,134] | | [added: 10,931,134] | [removed: 10,753,777] | |

| Other data: | | | | | | | | | | | | | | | | | [added: | | |]

| Dividends paid | [added: 694,955] | | [added: | |] 979,542 | | | [added: |] 1,046,638 | | | [removed: 1,001,559] | [added: 1,001,559] | | [removed: 956,685] | | [added: 956,685] | [removed: 865,306] | |

| Dividends paid per common share(2) | [added: 1.480] | | [added: | |] 2.095 | | | [added: |] 2.260 | | | [removed: 2.180] | [added: 2.180] | | [removed: 2.100] | | [added: 2.100] | [removed: 2.000] | |

| Funds from operations (“FFO”)(3) | [added: 661,113] | | [added: | |] 1,119,153 | | | [removed: (10,841)] | [added: (10,841] | | [removed: 1,381,634] [added: )] | | [added: 1,381,634] | [removed: 1,349,264] | | | [removed: 1,166,508] [added: 1,349,264] | | [added: |]

| Diluted FFO per common share(3) | [added: 1.41] | | [added: | |] 2.39 | | | [removed: (0.02)] | [added: (0.02] | | [removed: 3.00] [added: )] | | [added: 3.00] | [removed: 2.95] | | | [removed: 2.72] [added: 2.95] | | [added: |]

| FFO as adjusted(3) | [added: 918,402] | | [added: | |] 1,282,390 | | | [added: |] 1,470,167 | | | [removed: 1,398,691] | [added: 1,398,691] | | [removed: 1,382,699] | | [added: 1,382,699] | [removed: 1,195,799] | |

| Diluted FFO as adjusted per common share(3) | [added: 1.95] | | [added: | |] 2.74 | | | [added: |] 3.16 | | | [removed: 3.04] | [added: 3.04] | | [removed: 3.02] | | [added: 3.02] | [removed: 2.79] | |

| Funds available for distribution (“FAD”)(3) | [added: 803,720] | | [added: | |] 1,215,696 | | | [added: |] 1,261,849 | | | [removed: 1,178,822] | [added: 1,178,822] | | [removed: 1,158,082] | | [added: 1,158,082] | [removed: 954,645] | |

| [removed: |] (1) | [removed: |] Includes bank line of credit, [removed: bridge and] term loans, senior unsecured notes, mortgage and other secured debt, and other debt. |

| [removed: |] (2) | [removed: |] Represents cash dividends. Additionally, in October 2016 we issued $6.17 of stock dividends related to the Spin-Off. |

| [removed: |] (3) | [removed: |] For a more detailed discussion and reconciliation of FFO, FFO as adjusted and FAD, see [added: "Results of Operations" and] “Non-GAAP Financial Measure Reconciliations” in Item 7. |

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| Continuing operations | 0.88 | | | | 0.77 | | | | 0.30 | | | | 0.56 | | | | 0.52 | | |

_______________________________________

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| [Report of Independent Registered Public Accounting [removed: Firm](#REPORTOFINDEPENDENTREGISTEREDPUBLICACCOU) | | 70] [added: Firm](#s34B7FF2D02415340968E86B1A0A892C4)] | [added: [67](#s34B7FF2D02415340968E86B1A0A892C4)] |

| [Consolidated Balance Sheets—December 31, [removed: 2016] [added: 2017] and [removed: 2015](#CONSOLIDATEDBALANCESHEETS_586730) | | 71] [added: 2016](#s5786DF89877951CB9F46B0E9752145A3)] | [added: [68](#s5786DF89877951CB9F46B0E9752145A3)] |

| [Consolidated Statements of Operations—for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#CONSOLIDATEDSTATEMENTSOFINCOME_544994) | | 72] [added: 2015](#sAD606C1F84B95ADE8BDC406E2928462D)] | [added: [69](#sAD606C1F84B95ADE8BDC406E2928462D)] |

| [Consolidated Statements of Comprehensive Income (Loss)—for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#CONSOLIDATEDSTATEMENTSOFCOMPREHENSIVEINC) | | 73] [added: 2015](#s95D1E7FA96E55506A156E0E7F7899F3D)] | [added: [70](#s95D1E7FA96E55506A156E0E7F7899F3D)] |

| [Consolidated Statements of Equity—for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#CONSOLIDATEDSTATEMENTSOFEQUITY_507824) | | 74] [added: 2015](#s87CBBC32D8545175B878861AA597A14F)] | [added: [71](#s87CBBC32D8545175B878861AA597A14F)] |

| [Consolidated Statements of Cash Flows—for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#CONSOLIDATEDSTATEMENTSOFCASHFLOWS_897210) | | 75] [added: 2015](#s0C6522856A455960B94ECF36510E24DA)] | [added: [72](#s0C6522856A455960B94ECF36510E24DA)] |

| [Notes to Consolidated Financial [removed: Statements](#NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS_1) | | 76] [added: Statements](#sC602F00DDCAF59DE847611CC706139C3)] | [added: [73](#sC602F00DDCAF59DE847611CC706139C3)] |

[removed: The] [added: To the stockholders and the] Board of Directors [removed: and Stockholders] of HCP, Inc.

[removed: Irvine,] [added: |] California [added: | | 31 | | 29 | | 26 | | 26 | | 27 |]

We have audited the accompanying consolidated balance sheets of HCP, Inc. and subsidiaries (the [removed: “Company”)] [added: "Company")] as of December 31, [removed: 2016 and 2015,] [added: 2017] and [added: 2016,] the related consolidated statements of operations, comprehensive income (loss), equity, and cash [removed: flows] [added: flows,] for each of the three years in the period ended December 31, [removed: 2016.][added: 2017, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements").]

These financial statements [removed: and financial statement schedules] are the responsibility of the [removed: Company’s] [added: Company's] management.

Our responsibility is to express an opinion on [removed: these] [added: the Company's] financial statements [removed: and financial statement schedules] based on our audits.

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material [removed: misstatement.][added: misstatement, whether due to error or fraud.]

[removed: An audit includes] [added: Such procedures included] examining, on a test basis, evidence [removed: supporting] [added: regarding] the amounts and disclosures in the financial statements.

[removed: An audit] [added: Our audits] also [removed: includes assessing] [added: included evaluating] the accounting principles used and significant estimates made by management, as well as evaluating the overall [added: presentation of the] financial [removed: statement presentation.][added: statements.]

In our opinion, [removed: such consolidated] [added: the] financial statements present fairly, in all material respects, the financial position of [removed: HCP, Inc. and subsidiaries] [added: the Company] as of December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] and the results of [removed: their] [added: its] operations and [removed: their] [added: its] cash flows for each of the three years in the period ended December 31, [removed: 2016,] [added: 2017,] in conformity with accounting principles generally accepted in the United States of America.