Healthpeak Properties (DOC) 10-K risk factor changes: FY2019 vs FY2018

[removed: The] [added: The] section below discusses the most significant risk factors that may materially adversely affect our business, results of operations and financial [removed: condition.][added: condition.]

[removed: Risks] [added: Risks] Related to Our Business and [removed: Operations][added: Operations]

[removed: See, “—We] [added: We] assume operational risks with respect to our SHOP properties managed in RIDEA structures that could have a material adverse effect [added: on] our business, results of operations and financial [removed: condition.”][added: condition.]

[removed: Properties leased by Brookdale] [added: For the year ended December 31, 2019, properties] in our [removed: triple-net] [added: life science] segment accounted for [removed: 6%] [added: approximately 22%] of our total [removed: revenues for the year ended December 31, 2018.][added: revenues.]

[removed: We assume operational] [added: Any of the foregoing] risks [removed: with respect to our SHOP properties managed in RIDEA structures that] could have a material adverse effect on our business, results of operations and financial condition.

[added: As a result, under a RIDEA structure,] we are required to rely on our operator to manage and operate the property, including hiring and training all employees, entering into all third-party contracts for the benefit of the property, including resident/patient agreements, complying with laws, including but not limited to healthcare laws, and providing resident care.

Operational risks include, and our resulting revenues therefore depend on, among other things: [added: (i)] occupancy rates; [added: (ii)] the entrance fees and rental rates charged to residents; [added: (iii)] Medicare and Medicaid reimbursement rates, to the extent applicable; [added: (iv)] our [removed: operator’s reputation] [added: operators’ reputations] and ability to attract and retain residents; [added: (v)] general economic conditions and market factors that impact seniors; [added: (vi)] competition from other senior housing providers; [added: (vii)] compliance with federal, state, local and industry-regulated licensure, certification and inspection laws, regulations and standards; [added: (viii)] litigation involving our properties or residents/patients; [added: (ix)] the availability and cost of general and professional liability insurance coverage; and [added: (x)] the ability to control operating expenses.

When we use a RIDEA structure, our TRS is generally required to be the holder of the applicable healthcare license and is the entity that is enrolled in government healthcare programs [removed: (i.e.,] [added: (e.g.,] Medicare, Medicaid), where applicable.

[removed: Decreases] [added: Decreases] in our tenants’, operators’ or borrowers’ [removed: revenues] [added: revenues,] or increases in their [removed: expenses] [added: expenses,] could affect their ability to meet their financial and other contractual obligations to [removed: us.][added: us.]

Accordingly, our tenants and operators of our SHOP segments depend on attracting seniors with appropriate levels of income and assets, which may be affected by many [removed: factors including] [added: factors, including: (i)] prevailing economic and market [removed: trends,] [added: trends; (ii)] consumer [removed: confidence] [added: confidence; (iii) demographics; (iv) property condition;] and [removed: demographics.][added: (v) social and environmental factors.]

Consequently, if our tenants or operators on our behalf fail to effectively conduct their operations, or to maintain and improve our properties, it could adversely affect our business reputation as the owner of the properties, as well as the business reputation of our tenants or [added: operators and their ability to attract and retain patients and residents in our properties, which could have a materially adverse effect on our and our tenant’s or operator’s business, results of operations and financial condition.]

[removed: operators] [added: In addition, we may incur certain obligations] and [removed: their ability] [added: liabilities, including obligations] to [removed: attract and retain patients and residents in our properties,] [added: indemnify the replacement tenant or operator,] which could have a [removed: materially] [added: material] adverse effect on our [removed: and our tenant’s or operator’s] business, results of operations and financial condition.

For a further discussion of the legislation and regulation that are applicable to us and our tenants, operators and borrowers, see [removed: “—The] [added: “-The] requirements of, or changes to, government 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: Increased competition] [added: Increased competition, operating costs] and market changes have resulted and may further result in lower net revenues for some of our tenants, operators and borrowers and may affect their ability to meet their financial and other contractual obligations to [removed: us.][added: us.]

[removed: The] [added: The] financial deterioration, insolvency or bankruptcy of one or more of our major tenants, operators or borrowers [removed: may materially adversely affect] [added: could have a material adverse effect on] our business, results of operations and financial [removed: condition.][added: condition.]

Evicting [removed: these] operators for failure to pay rent while the property is occupied [removed: may involve] [added: typically involves] specific procedural or regulatory requirements and may not be successful.

[removed: We] [added: We] depend on investments in the healthcare property sector, making our profitability more vulnerable to a downturn or slowdown in that specific sector than if we were investing in multiple [removed: industries.][added: industries.]

Specifically, [added: such] a downturn [removed: in the healthcare property sector] [added: or slowdown] could negatively impact the ability of our tenants, operators and borrowers to meet their obligations to us, as well as the ability to maintain rental and occupancy [removed: rates.][added: rates, which could have a material adverse effect on our business, financial condition and results of operations.]

In addition, a downturn [added: or slowdown] in the healthcare property sector could adversely affect the value of our properties and our ability to sell properties at prices or on terms acceptable [added: or favorable] to us.

[removed: In addition, we are exposed to the risks inherent in concentrating our investments in] [added: Our] real [removed: estate, which] [added: estate] investments are relatively illiquid due to [removed: a number of factors, including] [added: several factors including, but not limited to: (i)] restrictions on our ability to sell properties under applicable REIT tax [removed: laws,] [added: laws; (ii)] other tax-related [removed: considerations,] [added: considerations; (iii)] regulatory [removed: hurdles] [added: hurdles;] and [added: (iv)] market conditions.

Our inability to [added: timely] respond [removed: rapidly] to [removed: changes in the] [added: investment] performance [removed: of our investments] [added: changes] could [removed: adversely affect] [added: have a material adverse effect on] our financial condition and results of operations.

[removed: Tenants] [added: Tenants] and operators that fail to comply with federal, state, local and international laws and regulations, including licensure, certification and inspection requirements, may cease to operate or be unable to meet their financial and other contractual obligations to [removed: us.][added: us.]

These laws and regulations include, among others: [added: (i)] laws protecting consumers against deceptive practices; [added: (ii)] laws relating to the operation of our properties and how our tenants and operators conduct their business, such as fire, health and safety, data security and privacy laws; [added: (iii)] federal and state laws affecting hospitals, clinics and other healthcare communities that participate in both Medicare and Medicaid that specify reimbursement rates, pricing, reimbursement procedures and limitations, quality of services and care, background checks, food service and physical plants, and similar foreign laws regulating the healthcare [added: industry; resident rights laws (including abuse and neglect laws) and fraud laws; (iv) anti-kickback and physician referral laws; (v) the ADA and similar state and local laws; and (vi) safety and health standards set by the Occupational Safety and Health Administration or similar foreign agencies.]

Our tenants’, operators’ or borrowers’ failure to comply with any of these laws, regulations or requirements could result [removed: in] [added: in: (i)] loss of accreditation, denial of [removed: reimbursement,] [added: reimbursement; (ii)] imposition of fines, suspension or decertification from government healthcare [removed: programs,] [added: programs; (iii)] civil [removed: liability,] [added: liability;] and [added: (iv)] in certain [removed: limited] instances, criminal penalties, loss of license or closure of the property and/or the incurrence of considerable costs arising from an investigation or regulatory action, which may have an adverse effect on properties that we own and lease to a third party tenant, that we own and operate through a RIDEA structure or on which we hold a mortgage, and therefore may materially adversely impact us.

See “Item [removed: 1—Business—Government] [added: 1-Business-Government] Regulation, Licensing and [removed: Enforcement—Healthcare] [added: Enforcement-Healthcare] Licensure and Certificate of [removed: Need” above.][added: Need.”]

[removed: If we must replace any of our tenants or operators, we] [added: We] may have difficulty identifying [removed: replacements] and [added: securing replacement tenants or operators, and] we may be required to incur substantial renovation [added: or tenant improvement] costs to make [removed: certain of] our [removed: healthcare] properties suitable for [removed: other tenants and operators.][added: them.]

Our tenants may not renew existing [removed: leases or] [added: leases, and] our operators may not renew their management agreements beyond their current terms.

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

These expenditures or renovations and delays may [removed: materially adversely affect] [added: have a material adverse effect on] our business, results of operations and financial condition.

For example, [added: the] Brookdale properties we intended to sell or transition performed significantly worse during [removed: 2018] [added: the transition period] than our senior housing properties as a whole.

We also may be required to fund certain expenses and [removed: obligations] [added: obligations,] such as real estate taxes, debt costs and maintenance expenses, to preserve the value of, and avoid the imposition of liens on, our properties while they are being repositioned.

[removed: We] [added: We] face additional risks associated with property development and redevelopment that can render a project less profitable or not profitable at all and, under certain circumstances, prevent completion of development [added: or redevelopment] activities once [removed: undertaken.][added: undertaken.]

At December 31, [removed: 2018,] [added: 2019,] our active development and redevelopment pipeline was approximately [removed: $1.5] [added: $1.4] billion with remaining costs to complete of approximately [removed: $913] [added: $758] million.

Large-scale, [removed: ground-up development of] [added: ground-up,] healthcare [removed: properties] [added: property development] presents additional risks for us, including risks that:

| • | the project may not be completed on schedule as a result of a variety of factors that are beyond our control, including natural disasters, labor conditions, material shortages, regulatory hurdles, [added: including the ability to obtain necessary zoning or land use permits,] civil unrest and acts of war or terrorism, which result in [added: increases in construction costs and debt service expenses or provide tenants or operators with the right to terminate pre-construction leases; and] |

| • | [added: demand for the new project may decrease prior to completion, due to competition or other developments, and] occupancy rates and rents at a newly completed property may not meet expected levels and could be insufficient to make the property profitable. |

Any of the foregoing risks could [removed: materially adversely affect] [added: result in not achieving] our [added: expected return on investment and have a material adverse effect on our] business, results of operations and financial condition.

[removed: Changes] [added: Changes] within the life science industry may adversely impact our revenues and results of [removed: operations.][added: operations.]

See [removed: “—If we must replace any of our tenants or operators, we] [added: “-We] may have difficulty identifying [removed: replacements] and [added: securing replacement tenants or operators, and] we may be required to incur substantial renovation [added: or tenant improvement] costs to make [removed: certain of] our [removed: healthcare] properties suitable for [removed: other tenants and operators.”][added: them.”]

[removed: Our] [added: Our] tenants in the life science industry face high levels of regulation, funding requirements, expense and [removed: uncertainty.][added: uncertainty.]

We have limited rights to direct or influence the business or operations of these properties.

The failure by our operators to adequately manage these risks could have a material adverse effect on our business, results of operations and financial condition.

In addition, we are exposed to the risks inherent in concentrating our investments in real estate.

These risks could significantly disrupt our businesses in the region, harm our ability to compete effectively, result in increased costs, and divert management attention, any or all of which could have a material adverse effect on our business, results of operations and financial condition.

In addition, if significant changes in the climate occur in areas where we own property, this could result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions.

If changes in the climate have material effects, such as property destruction, or occur for extended periods, this could have a material adverse effect on business, results of operations and financial condition.

In addition, changes in federal, state and local legislation and regulation on climate change could require increased capital expenditures to improve the energy efficiency of our existing properties and could also cause increased costs for our new developments without a corresponding increase in revenue.

In addition, the federal government periodically makes changes in the statutes and regulations relating to Medicare and Medicaid reimbursement that may impact state reimbursement programs, particularly Medicaid reimbursement.

Medicare no longer reimburses hospitals for care related to certain preventable adverse events and imposes payment reductions on hospitals for preventable readmissions.

These punitive approaches could be expanded to additional types of providers in the future.

The loss or limited availability of our key personnel could disrupt our operations and have a material adverse effect on our business, results of operations, financial condition, and the value of our common stock.

Rents we receive from a TRS in a RIDEA structure are treated as qualifying rents from real property for REIT tax purposes only if (i) they are paid pursuant to a lease of a “qualified healthcare property,” and (ii) the operator qualifies as an “eligible independent contractor,” as defined in the Code.

If either of these requirements are not satisfied, then the rents will not be qualifying rents.

| | |

| --- | --- |

We depend on one tenant and operator, Brookdale, for a significant percentage of our revenues and net operating income.

Continuing adverse developments, including operational challenges, in Brookdale’s business and affairs or financial condition would likely have a materially adverse effect on us.

We own our senior housing properties utilizing triple-net lease and RIDEA structures.

As of December 31, 2018, Brookdale (i) leased 43 properties in our senior housing triple-net segment, (ii) managed on our behalf 35 properties in our SHOP segment, and (iii) managed 15 CCRCs and one additional SHOP property owned by our unconsolidated joint ventures with Brookdale in our Other segment.

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

Properties managed by Brookdale in our SHOP segment as of December 31, 2018, accounted for 7% of our real estate investments based on total assets.

Under RIDEA, we are required to engage a third-party operator, such as Brookdale, that meets the requirements of an “eligible independent contractor” to manage and operate the day-to-day business of the properties.

As required under RIDEA, the operator provides comprehensive property management and accounting services for these properties and we are limited in our ability to control or influence operations.

Accordingly, we rely on the operator’s personnel, expertise, technical resources, regulatory compliance programs, information systems, proprietary information, good faith and judgment to manage and operate these properties efficiently and effectively.

We also must rely on the operator to set appropriate resident fees, manage occupancy, provide accurate and complete property-level financial results for these properties in a timely manner and otherwise operate them in compliance with the terms of our management agreements and all applicable laws and regulations.

However, as the owner of the property under a RIDEA structure, we are ultimately responsible for any operating deficits and other liabilities resulting from the operation of these properties, subject to limited exceptions such as gross negligence or willful misconduct by our operators.

In its capacity as a triple-net tenant, Brookdale is contractually obligated to pay all insurance, tax, utilities, maintenance and repair expenses in connection with the leased properties.

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

In addition, we depend on Brookdale’s maintenance and repair of the properties to remain competitive and attract and retain patients and residents.

Adverse developments in Brookdale’s business and related declining rent coverage ratios have increased its credit risk.

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 could lead to a reduction in occupancy rates and market rents and have a materially adverse effect on us.

Brookdale has experienced challenges in recent years, including with respect to operational performance and stockholder activism, among others.

Brookdale, as well as other operators, have been adversely affected by increased competition that has negatively impacted occupancy rates, as well as by increases in expenses, including increased labor costs.

Brookdale’s challenges could divert management’s attention, increase employee turnover, and impair its ability to operate our properties efficiently and effectively.

These challenges and any adverse developments in Brookdale’s business, affairs and financial results could result in, among other adverse events, declining operational and financial performance of our properties.

We have been 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—2018 Transaction Overview—Brookdale Transactions Update” for more information).

If we determine to sell or transition additional properties currently leased to or managed by Brookdale, we may experience operational challenges and/or significantly declining financial performance for those properties, as we did with Brookdale properties sold or transitioned in 2018.

Any failure of Brookdale to maintain the performance of our properties or to meet its obligations to us 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.

As a result, under a RIDEA structure,

This could adversely affect our business, financial condition and results of operations.

industry; resident rights laws (including abuse and neglect laws) and fraud laws; anti-kickback and physician referral laws; the ADA and similar state and local laws; and safety and health standards set by the Occupational Safety and Health Administration or similar foreign agencies.

In addition, we may incur certain obligations and liabilities, including obligations to indemnify the replacement tenant or operator, which could have a materially adverse effect on our business, results of operations and financial condition.

increases in construction costs and debt service expenses or provide tenants or operators with the right to terminate pre-construction leases; and

For the year ended December 31, 2018, properties in our life science segment accounted for approximately 21% of our total revenues.

to the property.

Furthermore, if strong economic conditions result in significant increases in

Also, in several instances, private litigation by patients,

Our tenants, operators and borrowers could be adversely affected by the resources required to respond to an investigation or other enforcement action.

Healthcare reimbursement will likely continue to be of significant importance to federal and state authorities.

A federal court in Texas recently declared the Affordable Care Act’s individual mandate unconstitutional and the remaining provisions non-severable from the mandate, thus making them invalid (Texas v.

United States, Case 4:18-cv-00167-1, Slip Opinion (N.D. Tex.

Dec.

14, 2018).

| • | [removed: 2018] [added: 2019] Transaction Overview |

[removed: 2018 Transaction Overview][added: 2019 Transaction Overview]

See Note [removed: 3] [added: 10] to the Consolidated Financial Statements for additional [removed: information.][added: information about our outstanding debt.]

[removed: Other] [added: Other] Real Estate and Loan [removed: Transactions][added: Transactions]

| • | [removed: Additionally, during] [added: During] the year ended December 31, [removed: 2018,] [added: 2019,] we [removed: sold: (i) 19] [added: sold 18] SHOP [removed: facilities, (ii) four] [added: assets for $181 million, 2 senior housing triple-net assets for $26 million, 10 MOBs for $23 million, 1] life science [removed: assets, (iii) four MOBs and (iv) an] [added: asset for $7 million, 1] undeveloped [added: life science] land parcel for [removed: a total of $451] [added: $35 million, and 2 facilities from the other non-reportable segment for $20] million. |

| • | In [removed: November 2018,] [added: January 2020,] we entered into definitive agreements to acquire [removed: two] [added: a] life science [removed: buildings] [added: campus] in [removed: South San Francisco, California, adjacent to The Shore at Sierra Point development,] [added: Waltham, Massachusetts,] for [removed: $245] [added: $320] million. We made a [removed: $15] [added: $20] million nonrefundable deposit upon completing due diligence and expect to close the transaction [removed: during] [added: in] the [removed: first half] [added: second quarter] of [removed: 2019.] [added: 2020.] |

[removed: Financing Activities][added: Financing Activities]

[removed: | • |] In December 2018, we [removed: issued two million shares for total net proceeds of $57 million and] entered into a forward equity sales agreement to sell [removed: up to] an aggregate of [removed: 15.25] [added: 15.3] million [removed: additional] shares [removed: on or before December 13, 2019] [added: of our common stock (including shares sold through the exercise of underwriters’ options)] at an initial net price of $28.60 per share, after underwriting discounts and commissions. [removed: |]

[removed: Dividends][added: Dividends]

Quarterly cash dividends paid during [removed: 2018] [added: 2019] aggregated to $1.48 per share.

On January [removed: 31, 2019,] [added: 30, 2020,] our Board of Directors declared a quarterly cash dividend of $0.37 per common share.

The dividend will be paid on February 28, [removed: 2019] [added: 2020] to stockholders of record as of the close of business on February [removed: 19, 2019.][added: 18, 2020.]

[removed: Results] [added: Results] of [removed: Operations][added: Operations]

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

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

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

[removed: Non-GAAP] [added: Non-GAAP] Financial [removed: Measures][added: Measures]

[removed: Net] [added: *Net] Operating [removed: Income][added: Income*]

NOI is defined as real estate revenues (inclusive of rental and related revenues, resident fees and services, and income from direct financing leases), less property level operating expenses (which exclude transition costs); NOI excludes all other financial statement amounts included in net income (loss) as presented in Note [removed: 13] [added: 15] to the Consolidated Financial Statements.

For a reconciliation of NOI and Adjusted NOI to net income (loss) by segment, refer to Note [removed: 13] [added: 15] to the Consolidated Financial Statements.

[removed: Same] [added: *Same] Property [removed: Portfolio][added: Portfolio*]

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

[removed: Funds] [added: *Funds] From Operations [removed: ("FFO")][added: ("FFO")*]

In addition, we present NAREIT FFO on an adjusted basis before the impact of non-comparable items including, but not limited to, transaction-related items, impairments (recoveries) of non-depreciable assets, losses (gains) from the sale of non-depreciable assets, severance and related charges, prepayment costs (benefits) associated with early retirement or payment of debt, litigation costs (recoveries), casualty-related charges (recoveries), foreign currency remeasurement losses [removed: (gains)] [added: (gains),] and changes in tax legislation (“FFO as [removed: adjusted”).][added: Adjusted”).]

[added: Prepayment costs (benefits) associated with] early retirement of debt include the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of debt.

Management believes that FFO as [removed: adjusted] [added: Adjusted] provides a meaningful supplemental measurement of our FFO run-rate and is frequently used by analysts, [removed: investors] [added: investors,] and other interested parties in the evaluation of our performance as a REIT.

At the same time that NAREIT created and defined its FFO measure for the REIT industry, it also recognized that “management of each of its member companies has the responsibility and authority to publish financial information that it regards as useful to the financial community.” We believe stockholders, potential [removed: investors] [added: investors,] and financial analysts who review our operating performance are best served by an FFO run-rate earnings measure that includes certain other adjustments to net income (loss), in addition to adjustments made to arrive at the NAREIT defined measure of FFO.

FFO as [removed: adjusted] [added: Adjusted] is used by management in analyzing our business and the performance of our [removed: properties,] [added: properties] and we believe it is important that stockholders, potential [removed: investors] [added: investors,] and financial analysts understand this measure used by management.

We use FFO as [removed: adjusted] [added: Adjusted] to: (i) evaluate our performance in comparison with expected results and results of previous periods, relative to resource allocation decisions, (ii) evaluate the performance of our management, (iii) budget and forecast future results to assist in the allocation of resources, (iv) assess our performance as compared with similar real estate companies and the industry in [removed: general] [added: general,] and (v) evaluate how a specific potential investment will impact our future results.

[removed: Funds] [added: *Funds] Available for Distribution [added: ("FAD")*]

Also, FAD: (i) is computed after deducting recurring capital expenditures, including second generation leasing costs and second generation tenant and capital [removed: improvements,] [added: improvements] and (ii) includes lease restructure payments and adjustments to compute our share of FAD from our unconsolidated joint ventures and those related to CCRC non-refundable entrance fees.

We believe FAD is an alternative run-rate earnings measure that improves the understanding of our operating results among investors and makes comparisons with: (i) expected results, (ii) results of previous [removed: periods] [added: periods,] and (iii) results among REITs more meaningful.

FAD does not represent cash generated from operating activities determined in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs as it excludes the following items which generally flow through our cash flows from operating activities: (i) adjustments for changes in working capital or the actual timing of the payment of income or expense items that are accrued in the period, (ii) transaction-related costs, (iii) litigation settlement expenses, (iv) severance-related [removed: expenses] [added: expenses,] and (v) actual cash receipts from interest income recognized on loans receivable (in contrast to our FAD adjustment to exclude non-cash interest and depreciation related to our investments in direct financing leases).

[removed: Comparison] [added: Comparison] of the Year [removed: Ended December] [added: Ended December] 31, [removed: 2018 to] [added: 2019 to] the Year [removed: Ended December] [added: Ended December] 31, [removed: 2017 and] [added: 2018 and] the Year [removed: Ended December] [added: Ended December] 31, [removed: 2017 to] [added: 2018 to] the Year [removed: Ended December] [added: Ended December] 31, [removed: 2016][added: 2017]

[removed: Overview(1)][added: Overview(1)]

[removed: 2018 and 2017][added: *2018* *and* *2017*]

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

| | | [removed: 2018] [added: 2018] | | | | [removed: 2017] [added: 2017] | | | | [removed: Change] [added: Change] | | |

| [removed: Net] [added: Net] income (loss) applicable to common [removed: shares] [added: shares] | | $ | 1,058,424 | | | $ | 413,013 | | | $ | 645,411 | |

| [removed: NAREIT FFO] [added: NAREIT FFO] | | 780,189 | | | | 661,113 | | | | 119,076 | | |

Master Transaction and Cooperation Agreement with Brookdale

In October 2019, Healthpeak and Brookdale Senior Living Inc. (“Brookdale”) entered into a Master Transactions and Cooperation Agreement (the “2019 MTCA”), which includes a series of transactions related to its jointly owned 15\-campus continuing care retirement community (“CCRC”) portfolio (the “CCRC JV”) and the portfolio of 43 senior housing properties that Brookdale triple-net leases from us.

In connection with the 2019 MTCA, Healthpeak and Brookdale, and certain of their respective subsidiaries, agreed to the following related to the CCRC JV:

| • | Healthpeak, which owns a 49% interest in the CCRC JV, agreed to purchase Brookdale’s 51% interest in 13 of the 15 communities in the CCRC JV based on a valuation of $1.06 billion (the “CCRC Acquisition”); |

| • | The management agreements related to the CCRC Acquisition communities will be terminated, with management transitioned (under new management agreements) from Brookdale to Life Care Services LLC (“LCS”) simultaneous with closing the CCRC Acquisition; |

| • | We will pay a $100 million management termination fee to Brookdale upon closing the CCRC Acquisition; and |

| • | The remaining two CCRCs will be jointly marketed for sale to third parties. |

In addition, pursuant to the 2019 MTCA, Healthpeak and Brookdale agreed to the following transactions related to properties that Brookdale triple-net leases from us:

| • | Brookdale will acquire 18 of the properties (the “Brookdale Acquisition Assets”) from us for cash proceeds of $385 million; |

| • | We will terminate the triple-net lease related to one property and transition it to a RIDEA structure with LCS as the manager; |

| • | The remaining 24 properties will be restructured into a single master lease with 2.4% annual rent escalators and a maturity date of December 31, 2027 (the “2019 Amended Master Lease”); |

| • | A portion of annual rent (amount in excess of 6.5% of sales proceeds) related to 14 of the 18 Brookdale Acquisition Assets will be reallocated to the remaining properties under the 2019 Amended Master Lease; |

| • | Upon sale of the Brookdale Acquisition Assets, Brookdale will pay down $20 million of future rent under the 2019 Amended Master Lease; and |

| • | We will provide up to $35 million of capital investment in the 2019 Amended Master Lease properties over a five-year term, which will increase rent by 7% of the amount spent, per annum. |

With the exception of the capital investment to be made over the next five years and the sale of the two CCRCs to be marketed to third parties, each of the above transactions, including payment of the $100 million management termination fee, closed on January 31, 2020.

Discovery Portfolio Acquisition

| • | In April 2019, we acquired a portfolio of nine senior housing properties, with a total of 1,242 units, for $445 million. The properties are located across Florida, Georgia, and Texas and are operated by Discovery Senior Living, LLC. |

Oakmont Portfolio Acquisitions

| • | In May 2019, we acquired three newly-built, senior housing communities in California for $113 million. The portfolio is operated by Oakmont Senior Living LLC (“Oakmont”) and includes 132 assisted living units and 68 memory care units with an average occupancy of 96% at closing. |

| • | In July 2019, we acquired five additional senior housing communities in California for $284 million. The portfolio is operated by Oakmont and includes 430 units. The properties are located in the Los Angeles, San Jose, and San Francisco markets. |

Sierra Point Towers Acquisition

| • | In June 2019, we completed the acquisition of two life science buildings in South San Francisco, California adjacent to our The Shore at Sierra Point development, for $245 million. |

Hartwell Innovation Campus Acquisition

| • | In July 2019, we acquired a life science campus in the suburban Boston submarket of Lexington, Massachusetts, for $228 million. The 277,000 square foot campus, comprised of four buildings, is 100% leased to seven biopharmaceutical and medical diagnostics tenants. |

Cambridge Acquisitions

| • | In December 2019, we acquired one life science building, adjacent to our existing properties in Cambridge, Massachusetts, for $333 million. |

Sovereign Wealth Fund Senior Housing Joint Venture

| • | In December 2019, we formed a new joint venture with a sovereign wealth fund ("SWF SH JV") that owns 19 SHOP assets operated by Brookdale. We own 53.5% of the joint venture and contributed all 19 assets with a fair value of $790 million. The joint venture partner owns the other 46.5% and purchased its interest for cash of $367 million. |

United Kingdom Joint Venture

| • | In December 2019, we sold our remaining 49% interest in our United Kingdom investments (the “U.K. JV”) for proceeds of £70 million ($91 million), net of debt assumed. We no longer own any real estate in the United Kingdom. |

| • | In May 2019, we acquired one medical office building (“MOB”) in Kansas for $15 million. |

| • | In June 2019, we acquired the outstanding equity interests of, and began consolidating, a senior housing joint venture structure (which owned one senior housing facility), in which we previously held an unconsolidated equity investment, for $24 million. |

| • | In July 2019, we acquired a $16 million, Class A two-story building in the Sorrento Mesa submarket of San Diego. The 56,000 square foot property is located on our Directors Place life science campus and is adjacent to our future development site. |

| • | In September 2019, we sold 13 senior housing facilities under DFLs for $274 million. |

| • | During the year ended December 31, 2019, we transitioned 35 senior housing triple-net assets, including a 14\-property DFL portfolio, to a RIDEA structure, with Sunrise Senior Living, LLC (“Sunrise”) as the operator. Those 35 assets generated revenue of $67 million during the year ended 2018. We expect to transition two additional senior housing triple-net assets to a RIDEA structure with Sunrise in 2020. |

| • | In January 2020, we sold six SHOP assets for $36 million. |

| • | During the year ended December 31, 2019, we directly issued or settled previous forward sales agreements for 26.7 million shares, resulting in net proceeds of $782 million. Total net proceeds were comprised of: (i) $422 million of net proceeds from the settlement of 15.3 million shares under a 2018 forward sales agreement at a weighted average net price of $27.66 per share, after commissions, (ii) $171 million of net proceeds from the settlement of 5.5 million shares under ATM forward sales agreements at a weighted average net price of $30.91 per share, after commissions, and (iii) $189 million of net proceeds from the direct issuance of 5.9 million shares on the ATM at a weighted average net price of $31.84 per share, after commissions. |

| • | An aggregate of 30.4 million shares of our common stock, sold at an initial weighted average net price of $33.05 per share, after commissions, remain available for issuance under forward sales agreements as of December 31, 2019. |

| • | In May 2019, we entered into a new $2.5 billion unsecured revolving line of credit facility (the “Revolving Facility”) maturing on May 23, 2023. The Revolving Facility contains two, six\-month extension options, subject to certain customary conditions. Borrowings under the Revolving Facility accrue interest at LIBOR plus a margin that depends on our credit ratings (0.825% as of December 31, 2019). We pay a facility fee on the entire revolving commitment that depends on our credit ratings (0.15% as of December 31, 2019). |

| • | In May 2019, we entered into a new $250 million unsecured term loan facility (the “2019 Term Loan” and, together with the Revolving Facility, the “Facilities”), and borrowed the full $250 million capacity in June 2019. The 2019 Term Loan matures on May 23, 2024 and accrues interest at LIBOR plus a margin that depends on our credit ratings (0.90% as of December 31, 2019). The Facilities include a feature that allows us to increase the borrowing capacity by an aggregate amount of up to $750 million, subject to securing additional commitments. |

Mountain View Campus Sale

| • | In November 2018, we sold our Shoreline Technology Center life science campus located in Mountain View, California for $1.0 billion and recognized a gain on sale of $726 million. |

MSREI MOB JV

| • | In August 2018, HCP and Morgan Stanley Real Estate Investment (“MSREI”) formed a joint venture (the “MSREI JV”) to own a portfolio of MOBs, which HCP owns 51% of and consolidates. To form the MSREI JV, MSREI contributed cash of $298 million and HCP contributed nine wholly-owned MOBs (the “Contributed Assets”). The Contributed Assets are primarily located in Texas and Florida and were valued at approximately $320 million at the time of contribution. The MSREI JV used substantially all of the cash contributed by MSREI to acquire an additional portfolio of 16 MOBs in Greenville, South Carolina (the “Greenville Portfolio”) for $285 million. Concurrent with acquiring the additional MOBs, the MSREI JV entered into 10-year leases with an anchor tenant on each MOB in the Greenville Portfolio, which accounts for approximately 93% of the total leasable space in the portfolio. |

Brookdale Transactions Update

| • | In 2018, we sold six agreed upon facilities to Brookdale for $275 million. |

| • | In March 2018, we completed the acquisition of Brookdale’s noncontrolling interest in RIDEA I for $63 million. |

| • | During the fourth quarter of 2018, we completed the sale of 11 senior housing triple-net and eight SHOP facilities previously leased to Brookdale for $377 million. |

| • | As of December 31, 2018, we had completed the transition of 38 assets previously operated by Brookdale to other operators. |

U.K. Investment Update

| • | In June 2018, we entered into a joint venture with an institutional investor (the “U.K. JV”) through which we sold a 51% interest in U.K. assets previously owned by us (the "U.K. Portfolio”) based on a total value of £382 million ($507 million). We retained a 49% noncontrolling interest in the joint venture and received gross proceeds of $402 million, including proceeds from the refinancing of our previously held intercompany loans. Upon closing the U.K. JV, we deconsolidated the U.K. Portfolio, recognized our retained noncontrolling interest investment at fair value ($105 million) and recognized a gain on sale of $11 million. We expect to sell our remaining 49% interest by no later than 2020. |

| • | In March 2018, we sold our Tandem Health Care mezzanine loan (“Tandem Mezzanine Loan”) to a third party for approximately $112 million, resulting in an impairment recovery, net of transaction costs and fees, of $3 million. |

| • | In June 2018, we sold our remaining 40% ownership interest in RIDEA II for $91 million and caused Columbia Pacific Advisors, LLC to refinance our $242 million of loans receivable from RIDEA II, which resulted in total proceeds of $332 million. |

| • | In 2016, we provided a £105 million ($131 million at closing) bridge loan (the “U.K. Bridge Loan”) to Maria Mallaband Care Group Ltd. ("MMCG") to fund the acquisition of a portfolio of seven care homes in the U.K. Under the bridge loan, we retained a call option to acquire those seven care homes at a future date for £105 million. In March 2018, in conjunction with MMCG and HCP satisfying the conditions necessary to exercise our call option to acquire the seven care homes, we began consolidating the real estate. In June 2018, we completed the process of exercising the call option. The seven care homes acquired through the call option were included in the U.K. JV transaction (see U.K. Investment Update above). See Notes 5, 7 and 19 to the Consolidated Financial Statements for additional information. |

| • | In November 2018, we acquired the outstanding equity interests in three life science joint ventures (which owned four buildings) for $92 million, bringing our equity ownership to 100% for all three joint ventures. As a result, we recognized a gain on consolidation of $50 million. |

| • | On July 3, 2018, we exercised our right to repay the outstanding £169 million balance under our term loan and re-borrow $224 million with all other key terms unchanged. We repaid the full balance of our term loan in November 2018. |

| • | On July 16, 2018, we repaid all $700 million outstanding of our 5.375% senior unsecured notes due 2021 and recorded a loss on debt extinguishment of approximately $44 million. |

| • | On November 8, 2018, we repaid all $450 million outstanding of our 3.75% senior unsecured notes due in 2019 at par. |

| • | During the fourth quarter of 2018, we issued 5.4 million shares of common stock under our at-the-market equity offering program for total net proceeds of $154 million. |

| • | During 2018, we used proceeds from dispositions primarily to repay $933 million of outstanding net borrowings under our revolving line of credit facility. |

Developments and Redevelopments

| • | In March 2018, we acquired the rights to develop a new 214,000 square foot life science facility on our existing Hayden Research Campus in Lexington, Massachusetts for $21 million. The development, 75 Hayden, will be a four-story, purpose-built Class A life science facility and parking garage. |

| • | In September and October 2018, we signed two leases totaling 222,000 square feet at The Shore at Sierra Point in South San Francisco, bringing the $224 million first phase of the development to 100% pre-leased. The Shore at Sierra Point is a 23-acre waterfront life science development offering state-of-the-art laboratory and office space along with premier amenities. |

| • | During the third quarter of 2018, we commenced a program with HCA Healthcare to develop primarily on-campus MOBs. As of December 31, 2018, we had begun construction on one MOB with an estimated cost of $26 million. |

NAREIT FFO.

FFO as adjusted.

Prepayment costs (benefits) associated with

_______________________________________

On October 31, 2016, we completed the Spin-Off of QCP.

The Spin-Off included 338 properties, primarily comprised of the HCR ManorCare, Inc. (“HCRMC”) DFL investments and an equity investment in HCRMC.

| FFO as adjusted | | 918,402 | | | | 1,282,390 | | | | (363,988 | | ) |

| FAD | | 803,720 | | | | 1,215,696 | | | | (411,976 | | ) |

| • | a reduction in net income from discontinued operations due to the Spin-Off of QCP on October 31, 2016; |

| • | a loss on debt extinguishment in July 2017, representing a premium for early payment on the repurchase of our senior notes; |

| • | a reduction in rental and related revenues primarily as a result of assets sold during 2017, including the sale of 64 senior housing triple-net assets in the first quarter of 2017; |

| • | a reduction in NOI primarily related to the net impact of the 2017 Brookdale Transactions; |

| • | a reduction in earnings due to the partial sale and deconsolidation of RIDEA II during the first quarter of 2017; |

| • | impairments related to: (i) the Tandem Mezzanine Loan and (ii) 11 underperforming senior housing triple-net facilities in the third quarter of 2017; |

| • | increased litigation-related costs, including costs from securities class action litigation, and a one-time legal settlement in 2017; |

| • | casualty-related charges due to hurricanes in the third quarter of 2017; and |

We are exposed to various market risks, including the potential loss arising from adverse changes in interest [removed: rates and foreign currency exchange rates, specifically GBP.][added: rates.]

We use derivative and other financial instruments in the normal course of business to mitigate interest [removed: rate and foreign currency risk.][added: rate.]

Derivatives are recorded on the consolidated balance sheets at fair value (see Note [removed: 22] [added: 21] to the Consolidated Financial Statements).

We applied various basis point spreads to the underlying interest rate curves of the [removed: hedging] [added: derivative] portfolio in order to determine the change in fair value.

Assuming a one percentage point change in the underlying interest rate curve, the estimated change in fair value of each of the underlying [removed: hedging] [added: derivative] instruments would not [removed: exceed $1 million.][added: be material.]

[removed: Interest] [added: Interest] Rate [removed: Risk][added: Risk]

[removed: As of] [added: At] December 31, [removed: 2018, $43] [added: 2019, $42] million of our variable-rate debt was hedged by interest rate swap transactions.

At December 31, [removed: 2018,] [added: 2019,] a one percentage point increase or decrease in interest rates would change the fair value of our fixed rate debt by approximately [removed: $252] [added: $365] million and [removed: $272] [added: $401] million, respectively, and would not materially impact earnings or cash flows.

Additionally, a one percentage point increase or decrease in interest rates would change the fair value of our fixed rate debt investments by approximately [removed: $3] [added: $2] million and less than [removed: $1] [added: $7] 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 [removed: as of] [added: at] December 31, [removed: 2018,] [added: 2019,] our annual interest expense and interest income would [removed: change] [added: increase] by approximately [removed: $1] [added: $3] million and $1 million, respectively.

[removed: Market Risk][added: Market Risk]

At December 31, [removed: 2018,] [added: 2019,] both the fair value and carrying value of marketable debt securities [removed: were $19] [added: was $20] million.

At December 31, 2019, our exposure to interest rate risk is primarily on our variable rate debt.

At December 31, 2018, we are exposed to market risks related to fluctuations in interest rates primarily on variable rate debt.

Foreign Currency Exchange Rate Risk

At December 31, 2018, our exposure to foreign currencies primarily relates to U.K. investments in leased real estate, loans receivable and related GBP denominated cash flows.

Our foreign currency exposure is partially mitigated through the use of GBP-denominated borrowings.

Based solely on our operating results for the year ended December 31, 2018, 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, 2018, the increase or decrease to our cash flows would not be material.

[removed: General Overview][added: General Overview]

We are a Maryland corporation [removed: organized in 1985] and qualify as a self-administered [removed: real estate investment trust.][added: REIT.]

We are headquartered in Irvine, California, with [added: additional] offices in Nashville and San Francisco.

At December 31, [removed: 2018,] [added: 2019,] we had [removed: 201] [added: 204] full-time employees.

For a description of our significant activities during [removed: 2018,] [added: 2019,] see “Item 7, Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations—2018] [added: Operations—2019] Transaction Overview” in this report.

[removed: Business Strategy][added: Business Strategy]

We invest [added: in] and manage our real estate portfolio for the long-term to maximize [removed: the] benefit to our stockholders and support the growth of our dividends.

[removed: The core elements of our] [added: Our] strategy [removed: are to:][added: consists of four core elements:]

| [removed: •] [added: (ii)] | [removed: Maintain an investment grade] [added: Our *financials*: We maintain a strong investment-grade] balance sheet with [removed: adequate] [added: ample] liquidity [removed: and] [added: as well as] long-term [removed: fixed rate] [added: fixed-rate] debt financing with staggered maturities [removed: in order] to [removed: support the longer-term nature of our investments, while reducing] [added: reduce] our exposure to [removed: interest rate] [added: interest-rate] volatility and refinancing [removed: risk at any point in the interest rate or credit cycles;] [added: risk.] |

[removed: Internal] [added: *Internal] Growth [removed: Strategies][added: Strategies*]

Our strategy for maximizing the benefits from these opportunities is to: (i) work with new or existing tenants and operators to address their space and capital [removed: needs;] [added: needs] and (ii) provide high-quality property management services in order to motivate tenants to renew, [removed: expand] [added: expand,] or relocate into our properties.

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

| • | Replace tenants and operators at the best available market terms and lowest possible transaction costs. We believe [removed: 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, [removed: design] [added: 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. |

| • | Extend and modify terms of existing leases prior to expiration. We structure lease extensions, early [removed: renewals] [added: 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: Investment Strategies][added: *Investment Strategies*]

We believe [removed: that] the healthcare real estate market provides investment opportunities due to the: (i) compelling long-term demographics driving the demand for healthcare services; (ii) specialized nature of healthcare real estate investing; and (iii) ongoing consolidation of the fragmented healthcare real estate sector.

We may also acquire all or substantially all of the securities or assets of other REITs, operating [removed: companies] [added: companies,] or similar entities where such investments would be consistent with our investment strategies.

We monitor, but do not limit, our investments based on the percentage of our total assets that may be invested in any one property type, investment [removed: vehicle] [added: vehicle,] or geographic location, the number of properties that may be leased to a single tenant or operator, or loans that may be made to a single borrower.

We may take additional measures to mitigate risk, including diversifying our investments (by sector, geography, [removed: tenant] [added: tenant,] or operator), structuring transactions as master leases, requiring tenant or operator insurance and indemnifications, [removed: and] [added: and/or] obtaining credit enhancements in the form of guarantees, letters of [removed: credit] [added: credit,] or security deposits.

We believe we are well-positioned to achieve external growth through acquisitions, [removed: financing] [added: financing,] and development.

| • | our relationships with leading healthcare operators and systems, investment banks and other market intermediaries, corporations, private equity firms, [removed: non-profits] [added: not-for-profit organizations,] and public institutions seeking to monetize existing assets or develop new facilities; |

[removed: Financing Strategies][added: *Financing Strategies*]

| • | borrowings under our credit [removed: facility;] [added: facility or commercial paper program;] |

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

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

For short-term purposes, we may utilize our revolving line of credit [removed: facility,] [added: facility or commercial paper program,] arrange for other short-term borrowings from banks or other sources, or issue equity securities pursuant to our at-the-market equity offering program.

We arrange for longer-term financing by offering debt and equity securities, placing mortgage [removed: debt] [added: debt,] and obtaining capital from institutional lenders and joint venture partners.

[removed: Segments][added: Segments]

[removed: Senior] [added: *Senior] housing (triple-net and senior housing operating portfolio, or [removed: SHOP)][added: SHOP)*]

Under triple-net leases, our tenant-operators are typically responsible for the ongoing expenses of the property, including real estate taxes, insurance, and maintenance, in addition to paying [removed: the] rent and utilities.

Additionally, operational risks and liabilities are the responsibility of our tenant-operator, including with respect to any employment matters, compliance with healthcare and other laws and liabilities relating to personal injury-tort matters, resident-patient quality of care [removed: claims] [added: claims,] and governmental reimbursement matters.

As a result, under a RIDEA structure, we are required to rely on a third-party operator to hire and train all facility employees, enter into [removed: all] [added: many] third-party contracts for the benefit of the facility, including resident/patient agreements, comply with laws, including but not limited to healthcare laws, and provide resident care.

Many of the management agreements we have in RIDEA [removed: structured transactions] [added: structures] have terms ranging from 5 to 15 years, with mutual renewal options.

The base management fees are typically 4.5% to 5.0% of gross revenues (as [removed: defined)] [added: defined in the respective management agreements)] generated by the RIDEA properties.

| [removed: •] [added: *•*] | [removed: Independent] [added: *Independent] Living [removed: Facilities.] [added: 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, [removed: meals] [added: 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 [removed: setting] [added: 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: *•*] | [removed: Assisted] [added: *Assisted] Living [removed: Facilities.] [added: 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: *•*] | [removed: Memory] [added: *Memory] Care [removed: Facilities.] [added: Facilities.*] MCFs address the unique challenges of 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: *•*] | [removed: Continuing] [added: *Continuing] Care Retirement [removed: Communities.] [added: Communities.*] CCRCs offer several levels of service, including independent living, assisted [removed: living] [added: living,] and skilled 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 [added: of the 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 senior housing triple-net tenant concentration for the year ended December 31, [removed: 2018:][added: 2019:]

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

Healthpeak Properties, Inc. is a Standard & Poor's ("S&P") 500 company that acquires, develops, owns, leases, and manages healthcare real estate across the United States ("U.S.").

On October 30, 2019, we changed our name from HCP, Inc. to Healthpeak Properties, Inc. Our common shares began trading on the New York Stock Exchange under the new name and ticker symbol, "PEAK", on November 5, 2019.

We invest in a diversified portfolio of high-quality healthcare properties across our three core asset classes of senior housing, life science, and medical office real estate.

Our senior housing properties are either operated under triple-net leases in our senior housing triple-net segment or through RIDEA structures in our senior housing operating portfolio (“SHOP”) segment.

Under the life science and medical office segments, we invest through the acquisition, development, and management of life science buildings and medical office buildings.

We have other non-reportable segments that are comprised primarily of our unconsolidated joint ventures, hospital properties, and debt investments.

At December 31, 2019, our consolidated portfolio of investments consisted of interests in 617 properties.

We also owned interests in 48 properties owned by our unconsolidated joint ventures at December 31, 2019.

The following table summarizes information for our reportable segments for the year ended December 31, 2019 (dollars in thousands):

| | | | | | | | | | | |

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

| | | | | | | | | | | |

| Segment | | Total Portfolio Adjusted NOI(1) | | | | Percentage of Total Portfolio Adjusted NOI(1) | | | Number of Properties | |

| Senior housing triple-net | | $ | 197,601 | | | 18 | % | | 90 | |

| SHOP | | 162,330 | | | | 15 | % | | 115 | |

| Life science | | 311,192 | | | | 29 | % | | 134 | |

| Medical office | | 364,115 | | | | 33 | % | | 267 | |

| Other non-reportable(2) | | 51,873 | | | | 5 | % | | 11 | |

| Totals | | $ | 1,087,111 | | | 100 | % | | 617 | |

_______________________________________

(1) Total Portfolio metrics include results of operations from disposed properties and properties that transitioned segments through the disposition or transition date.

Adjusted NOI excludes our share of income (loss) from unconsolidated joint ventures.

See "Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Non-GAAP Financial Measures" for additional information regarding Adjusted NOI and see Note 15 to the Consolidated Financial Statements for a reconciliation of Adjusted NOI by segment to net income (loss).

(2) Adjusted NOI for Other non-reportable segments excludes our share of earnings from unconsolidated joint ventures, which is recorded in equity income (loss) from unconsolidated joint ventures in our consolidated statements of operations.

| (i) | Our *real estate*: Our portfolio is grounded in high-quality properties in desirable locations. We focus on three purposely selected private pay asset classes, senior housing, life science, and medical office, to provide stability through inevitable market cycles. |

| (iii) | Our *partnerships*: We work with leading healthcare companies, operators, and service providers and are responsive to their space and capital needs. We provide high-quality management services to encourage tenants to renew, expand, and relocate into our properties, which drives increased occupancy, rental rates, and property values. |

| (iv) | Our *platform*: We have a people-first culture that we believe attracts, develops, and retains top talent. We continually strive to create and maintain an industry-leading platform with systems and tools that allow us to effectively and efficiently manage our assets and investment activity. |

| • | cash flow from operations; |

_______________________________________

| Tenant | | Percentage of Segment Revenues | | | Percentage of Total Revenues | |

| HCA Healthcare, Inc. (HCA) | | 23 | % | | 6 | % |

Consistent with RIDEA, such responsibilities are delegated to our operating partners and we have developed a program to periodically monitor compliance with such obligations.

In most cases, we are dependent on our tenants and management companies to fulfill our compliance obligations, and we have developed a program to periodically monitor compliance with such obligations.

It also entails considerable risk of failure in demonstrating that the product is safe and effective and in gaining regulatory approval and market acceptance.

In addition, we were named to the Bloomberg Gender-Equality Index, Investors’ Business Daily’s Top 50 ESG Companies list, and *Corporate Responsibility Magazine’s* 100 Best Corporate Citizens list.

We also won Ethical Boardroom’s Corporate Governance Award for North American REITs and NAREIT’s Diversity and Inclusion Recognition Award.

References to our website throughout this Annual Report on Form 10-K are provided for convenience only and the content on our website does not constitute a part of this Annual Report on Form 10-K.

HCP, an S&P 500 company, invests primarily in real estate serving the healthcare industry in the United States (“U.S.”).

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

| • | Acquire, develop, lease, own and manage a diversified portfolio of quality healthcare properties across multiple geographic locations and business segments, including senior housing, life science, and medical office, among others; |

| • | 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; and |

| • | Pursue operational excellence to maximize the value of our investments. |

of the 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.

_______________________________________

As of December 31, 2018, Brookdale operated, in our SHOP segment, approximately 7% of our real estate investments based on total assets.

| Hospital Corporation of America ("HCA")(1) | | 16 | % | | 6 | % |

| (1) | Percentage of total revenues from HCA includes revenues earned from both our medical office and other non-reportable segments. |

Care homes offer personal care services, such as lodging, meal services, housekeeping and laundry services, medication management and assistance with ADL.

Care homes are registered to provide different levels of services, ranging from personal care to nursing care.

Some homes can be further registered for a specific care need, such as dementia or terminal illness.

We have begun the process of developing and implementing such programs.

In most cases, we are dependent on our tenants and management companies to fulfill our compliance obligations, and we are in the process of developing programs to comply with aspects of these laws that cannot be delegated to third parties.

Similarly, in the U.K., the NHS and the local authorities are undertaking efforts to reduce costs, which may result in reduced or slower growth in reimbursement for certain services provided by our U.K. tenants and operators.

There are, however, certain

We were named a constituent in the North America Dow Jones Sustainability Index (“DJSI”) for the sixth consecutive year.

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

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

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

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

[removed: For] [added: For] the fiscal year [removed: ended December] [added: ended December] 31, [removed: 2018][added: 2019]

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

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

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

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

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

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

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

| [removed: Title] [added: Title] of each [removed: class] [added: class] | [added: Trading symbol(s)] | [removed: Name] [added: Name] of each [removed: exchange on] [added: exchange on] which [removed: registered] [added: registered] |

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

| [removed: Large accelerated filer ☒ | Accelerated filer ☐ |] Non-accelerated filer [added: |] ☐ | Smaller reporting company [removed: ☐] | [removed: 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: $8.7] [added: $13.2] billion.

As of February [removed: 11, 2019] [added: 10, 2020] there were [removed: 477,771,756] [added: 505,411,840] shares of common stock outstanding.

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Portions of the definitive Proxy Statement for the registrant’s [removed: 2019] [added: 2020] Annual Meeting of Stockholders have been incorporated by reference into Part III of this Report.

[removed: Table] [added: Table] of [removed: Contents][added: Contents]

[removed: | [Cautionary] [added: Cautionary] Language Regarding Forward-Looking [removed: Statements](#s7542A063A2025432B5F0BF3A9C50A1B1) | | [1](#s7542A063A2025432B5F0BF3A9C50A1B1) |][added: Statements]

[removed: | [Part I](#s27EACA70D05E54DC962F933289D10C15) | | [3](#s27EACA70D05E54DC962F933289D10C15) |][added: PART I]

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| [Item [removed: 2.](#s591059DE636D53C8A346B986341917D4)] [added: 2.](#s656173FE5B325D25B558D6FEDEDF61D8)] | [removed: [Properties](#s591059DE636D53C8A346B986341917D4)] [added: [Properties](#s656173FE5B325D25B558D6FEDEDF61D8)] | [removed: [28](#s591059DE636D53C8A346B986341917D4)] [added: [29](#s656173FE5B325D25B558D6FEDEDF61D8)] |

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| [Item [removed: 4.](#sDD93B428D8115DC69709FBE70E84ED70)] [added: 4.](#s0ADDB10C9D9C570B9173F5661B5C460C)] | [Mine Safety [removed: Disclosures](#sDD93B428D8115DC69709FBE70E84ED70)] [added: Disclosures](#s0ADDB10C9D9C570B9173F5661B5C460C)] | [removed: [33](#sDD93B428D8115DC69709FBE70E84ED70)] [added: [33](#s0ADDB10C9D9C570B9173F5661B5C460C)] |

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| [Item [removed: 6.](#sE971204C450559FDBCCBE21ABD4482FB)] [added: 6.](#s82F6E5F0FEDE582287788A08A537C660)] | [Selected Financial [removed: Data](#sE971204C450559FDBCCBE21ABD4482FB)] [added: Data](#s82F6E5F0FEDE582287788A08A537C660)] | [removed: [36](#sE971204C450559FDBCCBE21ABD4482FB)] [added: [36](#s82F6E5F0FEDE582287788A08A537C660)] |

| [Item [removed: 7.](#s36E7A8DF5CA151EAAEC22ABA3A6D4401)] [added: 7.](#s9DDD0241A5F65F9BAE777FF23C79E1C6)] | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s36E7A8DF5CA151EAAEC22ABA3A6D4401)] [added: Operations](#s9DDD0241A5F65F9BAE777FF23C79E1C6)] | [removed: [37](#s36E7A8DF5CA151EAAEC22ABA3A6D4401)] [added: [37](#s9DDD0241A5F65F9BAE777FF23C79E1C6)] |

| [Item [removed: 7A.](#s8E8BC07D0AF65C7A8E80E6F8230E3E4A)] [added: 7A.](#sE22B9676E7755249B2FFA67E14D0F2B4)] | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s8E8BC07D0AF65C7A8E80E6F8230E3E4A)] [added: Risk](#sE22B9676E7755249B2FFA67E14D0F2B4)] | [removed: [65](#s8E8BC07D0AF65C7A8E80E6F8230E3E4A)] [added: [67](#sE22B9676E7755249B2FFA67E14D0F2B4)] |

| [Item [removed: 8.](#s53E3515169AE56EBBA97EAAA7889DBD7)] [added: 8.](#s0F242D5AE0DF5CF8B6960E697E316568)] | [Financial Statements and Supplementary [removed: Data](#s53E3515169AE56EBBA97EAAA7889DBD7)] [added: Data](#s0F242D5AE0DF5CF8B6960E697E316568)] | [removed: [66](#s53E3515169AE56EBBA97EAAA7889DBD7)] [added: [68](#s0F242D5AE0DF5CF8B6960E697E316568)] |

| [Item [removed: 9.](#s7CA2FEF52F8E59588611733A9A5902A9)] [added: 9.](#s0FD0E9BF6A3954A8BADB6A65125E8FB9)] | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s7CA2FEF52F8E59588611733A9A5902A9)] [added: Disclosure](#s0FD0E9BF6A3954A8BADB6A65125E8FB9)] | [removed: [128](#s7CA2FEF52F8E59588611733A9A5902A9)] [added: [136](#s0FD0E9BF6A3954A8BADB6A65125E8FB9)] |

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| [Item [removed: 10.](#s0A7EC426AF2F593D9EDF40459BC6666E)] [added: 10.](#sFD346380228A5BD3B4C6F5063943320D)] | [Directors, Executive Officers and Corporate [removed: Governance](#s0A7EC426AF2F593D9EDF40459BC6666E)] [added: Governance](#sFD346380228A5BD3B4C6F5063943320D)] | [removed: [132](#s0A7EC426AF2F593D9EDF40459BC6666E)] [added: [140](#sFD346380228A5BD3B4C6F5063943320D)] |

| [Item [removed: 11.](#s095F48F4791B555BB564B061053FA988)] [added: 11.](#s01C1482A7A9C5073B51D2B746B29A7EB)] | [Executive [removed: Compensation](#s095F48F4791B555BB564B061053FA988)] [added: Compensation](#s01C1482A7A9C5073B51D2B746B29A7EB)] | [removed: [132](#s095F48F4791B555BB564B061053FA988)] [added: [140](#s01C1482A7A9C5073B51D2B746B29A7EB)] |

or

Healthpeak Properties, Inc.

Irvine, CA 92614

| | | | |

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

| | | | |

| Large accelerated filer | ☒ | Accelerated filer | ☐ |

| | | Emerging growth company | ☐ |

Healthpeak Properties, Inc.

For the Fiscal Year Ended December 31, 2019

| [Part II](#s7C6BECCAEB69569F98A1203267A2F2A5) | | [34](#s7C6BECCAEB69569F98A1203267A2F2A5) |

| [Part III](#sAEC4517D3B73551B847A7F8B1D5A674B) | | [140](#sAEC4517D3B73551B847A7F8B1D5A674B) |

| [Part IV](#s158424F6D93850C2AC28A064D52C0CDE) | | [141](#s158424F6D93850C2AC28A064D52C0CDE) |

| • | our, or our counterparties', ability to fulfill obligations, such as financing conditions and/or regulatory approval requirements, required to successfully consummate acquisitions, dispositions, transitions, developments, redevelopments, joint venture transactions, or other transactions; |

10-K 1 hcp10-k12312018.htm 10-K

or

HCP, Inc.

| | | |

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

| | | | | |

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

| [Part II](#s06157CB8FE8055B8B9D0ACC15255C976) | | [34](#s06157CB8FE8055B8B9D0ACC15255C976) |

| [Part III](#s61E59C6CD4AC5182BE7F6771AC083DFB) | | [132](#s61E59C6CD4AC5182BE7F6771AC083DFB) |

| [Part IV](#sCE7DD4901AEB51198F7A6E6B21791AA1) | | [133](#sCE7DD4901AEB51198F7A6E6B21791AA1) |

| • | our reliance on a concentration of a small number of tenants and operators for a significant percentage of our revenues and net operating income; |

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

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

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

[removed: Property] [added: Property] and Direct Financing Lease [removed: Investments][added: Investments]

The following table summarizes our consolidated property and direct financing lease ("DFL") investments as of and for the year ended December 31, [removed: 2018] [added: 2019] (square feet and dollars in thousands):

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

| [removed: Senior] [added: *Senior] housing triple-net—real [removed: estate:] [added: estate:*] | | | | | [removed: (Units)] [added: *(Units)*] | | | | | | | | | | | | | |

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

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

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

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

| [removed: Other—Hospital(4):] [added: *Other—Hospital(4):*] | | | | | [removed: (Beds)] [added: *(Beds)*] | | | | | | | | | | | | | |

| [removed: Other—SNF:] [added: *Other—SNF(5):*] | | | | | [removed: (Beds)] [added: *(Beds)*] | | | | | | | | | | | | | |

| [removed: Total other] [added: *Other] non-reportable [removed: segments] [added: segments:*] | | [removed: 15] | | | | | | [removed: $] | [removed: 543,960] | | | [removed: $] | [removed: 108,133] | | | [removed: $] | [removed: (5,507] | [removed: )] | [added: |]

| (1) | Represents gross real estate and the carrying value of DFLs. Gross real estate represents the carrying amount of real estate after adding back accumulated depreciation and amortization. Excludes real estate held for sale with an aggregate gross asset value of [removed: $131] [added: $719] million. |

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

[removed: Occupancy] [added: Occupancy] and Annual Rent [removed: Trends][added: Trends]

| | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| [removed: Senior] [added: *Senior] housing [removed: triple-net:] [added: triple-net:*] | | | | | | | | | | | | | | | | | | | |

| Average annual rent per unit(1) | $ | [removed: 16,449] [added: 17,373] | | | $ | [removed: 15,352] [added: 16,449] | | | $ | [removed: 14,604] [added: 15,352] | | | $ | [removed: 14,544] [added: 14,604] | | | $ | [removed: 13,907] [added: 14,544] | |

| Average capacity (available units) | [removed: 16,914] [added: 11,565] | | | | [removed: 21,536] [added: 16,914] | | | | [removed: 28,455] [added: 21,536] | | | | [removed: 28,777] [added: 28,455] | | | | [removed: 33,917] [added: 28,777] | | |

| [removed: SHOP:] [added: *SHOP:*] | | | | | | | | | | | | | | | | | | | |

| Average annual rent per unit(1) | $ | [removed: 48,433] [added: 49,784] | | | $ | [removed: 41,133] [added: 48,433] | | | $ | [removed: 42,851] [added: 41,133] | | | $ | [removed: 41,435] [added: 42,851] | | | $ | [removed: 38,017] [added: 41,435] | |

| Average capacity (available units) | [removed: 11,248] [added: 14,633] | | | | [removed: 12,758] [added: 11,248] | | | | [removed: 16,028] [added: 12,758] | | | | [removed: 12,704] [added: 16,028] | | | | [removed: 6,408] [added: 12,704] | | |

| [removed: Life science:] [added: *Life science:*] | | | | | | | | | | | | | | | | | | | |

| Average occupancy percentage | [removed: 95] [added: 83] | | % | | [removed: 96] [added: 85] | | % | | [removed: 98] [added: 87] | | % | | [removed: 97] [added: 88] | | % | | [removed: 93] [added: 87] | | % |

| Average annual rent per square foot(1) | $ | [removed: 54] [added: 57] | | | $ | [removed: 52] [added: 54] | | | $ | [removed: 48] [added: 52] | | | $ | [removed: 46] [added: 48] | | | $ | 46 | |

| Average occupied square feet | [removed: 7,078] [added: 7,288] | | | | [removed: 6,841] [added: 7,078] | | | | [removed: 7,332] [added: 6,841] | | | | [removed: 7,179] [added: 7,332] | | | | [removed: 6,637] [added: 7,179] | | |

| [removed: Medical office:] [added: *Medical office:*] | | | | | | | | | | | | | | | | | | | |

| Average occupancy percentage | [removed: 92] [added: 97] | | % | | [removed: 92] [added: 95] | | % | | [removed: 91] [added: 96] | | % | | [removed: 91] [added: 98] | | % | | [removed: 91] [added: 97] | | % |

| Average annual rent per square foot(1) | $ | 29 | | | $ | [removed: 28] [added: 29] | | | $ | 28 | | | $ | 28 | | | $ | 28 | |

| [removed: Other] [added: *Other] non-reportable [removed: segments:] [added: segments:*] | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Average annual rent per bed - Hospital(1) | $ | [removed: 39,246] [added: 39,113] | | | $ | [removed: 38,017] [added: 39,246] | | | $ | [removed: 39,076] [added: 38,017] | | | $ | [removed: 39,834] [added: 39,076] | | | $ | [removed: 38,756] [added: 39,834] | |

| Average annual rent per unit - U.K.(1)(2) | — | | | | [removed: 9,097] [added: —] | | | | [removed: 9,200] [added: 9,097] | | | | [removed: 10,048] [added: 9,200] | | | | [removed: 11,240] [added: 10,048] | | |

| Average capacity (available units) - U.K.(2) | — | | | | [removed: 3,188] [added: —] | | | | [removed: 3,190] [added: 3,188] | | | | [removed: 2,515] [added: 3,190] | | | | [removed: 501] [added: 2,515] | | |

| Average annual rent per bed - SNF(1) | [removed: 10,504] [added: —] | | | | [removed: 10,298] [added: 10,504] | | | | [removed: 10,803] [added: 10,298] | | | | [removed: 8,292] [added: 10,803] | | | | [removed: 8,062] [added: 8,292] | | |

| Average capacity (available beds) - SNF | [removed: 120] [added: —] | | | | 120 | | | | [removed: 426] [added: 120] | | | | [removed: 1,047] [added: 426] | | | | [removed: 1,022] [added: 1,047] | | |

| (1) | Average annual rent is presented as a ratio of [added: real estate] revenues [removed: comprised] [added: (comprised] of rental and related [removed: revenues] [added: revenues, resident fees] and [added: services, and] income from [removed: DFLs] [added: DFLs)] divided by the average capacity or average occupied square feet of the facilities. Average annual rent for leased properties (including DFLs) excludes termination fees and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, DFL non-cash [removed: interest] [added: interest,] and the impact of deferred community fee income). |

| (2) | Our [added: previous] investments in the U.K. were deconsolidated in June [removed: 2018] [added: 2018. We then sold our remaining unconsolidated investments in the U.K. in December 2019] (see Note [removed: 5] [added: 4] to the Consolidated Financial Statements). |

[removed: Tenant] [added: Tenant] Lease [removed: Expirations][added: Expirations]

| Florida | | 11 | | | 1,418 | | | $ | 209,109 | | | $ | 24,594 | | | $ | — | |

| Texas | | 13 | | | 1,323 | | | 181,729 | | | | 19,610 | | | | — | | |

| California | | 11 | | | 1,023 | | | 161,785 | | | | 21,481 | | | | (3,183 | | ) |

| Oregon | | 10 | | | 954 | | | 73,488 | | | | 12,542 | | | | (121 | | ) |

| Washington | | 8 | | | 562 | | | 98,167 | | | | 11,336 | | | | (95 | | ) |

| Other (17 States) | | 37 | | | 3,343 | | | 244,049 | | | | 87,918 | | | | (1,123 | | ) |

| | | 90 | | | 8,623 | | | 968,327 | | | | 177,481 | | | | (4,522 | | ) |

| Other (12 States) | | — | | | — | | | — | | | | 21,960 | | | | (43 | | ) |

| *Total senior housing triple-net* | | 90 | | | 8,623 | | | $ | 968,327 | | | $ | 199,441 | | | $ | (4,565 | ) |

| California | | 17 | | | 1,781 | | | $ | 701,938 | | | $ | 90,339 | | | $ | (67,559 | ) |

| Florida | | 22 | | | 2,696 | | | 554,188 | | | | 117,753 | | | | (100,904 | | ) |

| Virginia | | 10 | | | 1,319 | | | 290,313 | | | | 34,901 | | | | (26,324 | | ) |

| New Jersey | | 8 | | | 825 | | | 216,576 | | | | 50,672 | | | | (37,249 | | ) |

| Maryland | | 9 | | | 853 | | | 155,345 | | | | 53,097 | | | | (42,842 | | ) |

| Texas | | 8 | | | 1,132 | | | 159,755 | | | | 130,773 | | | | (92,266 | | ) |

| Other (19 States) | | 41 | | | 4,570 | | | 648,990 | | | | 247,636 | | | | (198,569 | | ) |

| *Total SHOP* | | 115 | | | 13,176 | | | $ | 2,727,105 | | | $ | 725,171 | | | $ | (565,713 | ) |

| Facility Location | | Number of Facilities | | | Capacity | | | Gross Asset Value(1) | | | | Real Estate Revenues(2) | | | | Operating Expenses | | |

| California | | 118 | | | 6,836 | | | $ | 4,439,853 | | | $ | 382,986 | | | $ | (90,496 | ) |

| Other (3 States) | | 16 | | | 1,439 | | | 1,086,917 | | | | 57,798 | | | | (16,976 | | ) |

| *Total life science* | | 134 | | | 8,275 | | | $ | 5,526,770 | | | $ | 440,784 | | | $ | (107,472 | ) |

| Texas | | 66 | | | 7,123 | | | $ | 1,278,337 | | | $ | 182,228 | | | $ | (65,412 | ) |

| California | | 18 | | | 1,011 | | | 357,815 | | | | 41,295 | | | | (12,881 | | ) |

| South Carolina | | 17 | | | 1,046 | | | 336,193 | | | | 24,269 | | | | (4,648 | | ) |

| Pennsylvania | | 4 | | | 1,058 | | | 336,121 | | | | 28,159 | | | | (13,325 | | ) |

| Colorado | | 17 | | | 1,231 | | | 269,429 | | | | 40,780 | | | | (16,138 | | ) |

| Other (28 States) | | 145 | | | 9,243 | | | 1,802,855 | | | | 254,799 | | | | (89,134 | | ) |

| *Total medical office* | | 267 | | | 20,712 | | | $ | 4,380,750 | | | $ | 571,530 | | | $ | (201,538 | ) |

| California | | 1 | | | 84 | | | $ | 88,800 | | | $ | 13,845 | | | $ | (1 | ) |

| Texas | | 3 | | | 212 | | | 55,719 | | | | 6,790 | | | | (73 | | ) |

| Other (6 States) | | 7 | | | 946 | | | 142,110 | | | | 29,006 | | | | (8 | | ) |

| | | 11 | | | 1,242 | | | $ | 286,629 | | | $ | 49,641 | | | $ | (82 | ) |

| Virginia | | — | | | — | | | — | | | | 972 | | | | — | | |

| Total properties | | 617 | | | | | | $ | 13,889,581 | | | $ | 1,987,539 | | | $ | (879,370 | ) |

_______________________________________

| (3) | Represents income from DFLs that were transitioned or sold in 2019. |

| (5) | Represents revenues generated from a real estate asset that was sold in October 2019. |

| Average occupancy percentage | 92 | | % | | 93 | | % | | 92 | | % | | 92 | | % | | 92 | | % |

| Average occupied square feet | 19,069 | | | | 18,655 | | | | 17,950 | | | | 16,973 | | | | 15,844 | | |

| Average capacity (available beds) - Hospital | 1,304 | | | | 1,300 | | | | 1,337 | | | | 1,478 | | | | 1,487 | | |

| California | | 16 | | | 1,572 | | | $ | 389,349 | | | $ | 36,979 | | | $ | (3,219 | ) |

| Virginia | | 9 | | | 1,157 | | | 257,298 | | | | 25,041 | | | | — | | |

| Florida | | 11 | | | 1,418 | | | 228,047 | | | | 25,453 | | | | (8 | | ) |

| Texas | | 13 | | | 1,323 | | | 189,144 | | | | 21,535 | | | | — | | |

| Pennsylvania | | 2 | | | 623 | | | 144,645 | | | | 13,832 | | | | — | | |

| Washington | | 10 | | | 670 | | | 137,713 | | | | 14,552 | | | | (1 | | ) |

| Oregon | | 10 | | | 955 | | | 137,180 | | | | 13,821 | | | | (123 | | ) |

| Other (18 States) | | 48 | | | 4,157 | | | 772,101 | | | | 86,953 | | | | (197 | | ) |

| | | 119 | | | 11,875 | | | 2,255,477 | | | | 238,166 | | | | (3,548 | | ) |

| Other (12 States) | | 27 | | | 3,126 | | | 629,214 | | | | 37,925 | | | | (70 | | ) |

| Total senior housing triple-net | | 146 | | | 15,001 | | | $ | 2,884,691 | | | $ | 276,091 | | | $ | (3,618 | ) |

| Texas | | 19 | | | 3,171 | | | $ | 479,786 | | | $ | 136,560 | | | $ | (94,433 | ) |

| Florida | | 17 | | | 2,090 | | | 338,843 | | | | 109,289 | | | | (86,380 | | ) |

| Colorado | | 5 | | | 687 | | | 206,592 | | | | 35,414 | | | | (20,849 | | ) |

| Maryland | | 7 | | | 644 | | | 185,982 | | | | 34,768 | | | | (26,261 | | ) |

| Illinois | | 4 | | | 771 | | | 143,924 | | | | 38,960 | | | | (28,447 | | ) |

| Other (18 States) | | 41 | | | 4,345 | | | 707,302 | | | | 192,985 | | | | (157,942 | | ) |

| Total SHOP | | 93 | | | 11,708 | | | $ | 2,062,429 | | | $ | 547,976 | | | $ | (414,312 | ) |

| California | | 113 | | | 5,805 | | | $ | 3,765,565 | | | $ | 357,868 | | | $ | (79,714 | ) |

| Other (3 States) | | 11 | | | 910 | | | 417,629 | | | | 37,196 | | | | (12,028 | | ) |

| Total life science | | 124 | | | 6,715 | | | $ | 4,183,194 | | | $ | 395,064 | | | $ | (91,742 | ) |

| Texas | | 67 | | | 5,910 | | | $ | 1,103,777 | | | $ | 143,567 | | | $ | (59,163 | ) |

| Pennsylvania | | 4 | | | 1,054 | | | 329,054 | | | | 28,875 | | | | (12,364 | | ) |

| South Carolina | | 20 | | | 1,028 | | | 314,304 | | | | 10,758 | | | | (1,601 | | ) |

| California | | 17 | | | 955 | | | 302,725 | | | | 35,862 | | | | (16,234 | | ) |

| Other (29 States) | | 159 | | | 10,301 | | | 2,042,081 | | | | 289,957 | | | | (100,497 | | ) |

| Total medical office | | 267 | | | 19,248 | | | $ | 4,091,941 | | | $ | 509,019 | | | $ | (189,859 | ) |

| Texas | | 4 | | | 1,077 | | | $ | 232,715 | | | $ | 39,196 | | | $ | (5,240 | ) |

| California | | 2 | | | 111 | | | 143,500 | | | | 19,406 | | | | (127 | | ) |

| Other (7 States) | | 8 | | | 988 | | | 150,965 | | | | 28,778 | | | | (140 | | ) |

| | | 14 | | | 2,176 | | | $ | 527,180 | | | $ | 87,380 | | | $ | (5,507 | ) |

| Other—U.K.: | | | | | (Units) | | | | | | | | | | | | | |

| Other (U.K.)(5) | | — | | | — | | | — | | | | 19,492 | | | | — | | |

| Virginia | | 1 | | | 120 | | | 16,780 | | | | 1,261 | | | | — | | |

| Total properties | | 645 | | | | | | $ | 13,766,215 | | | $ | 1,836,283 | | | $ | (705,038 | ) |

_______________________________________

| (3) | Represents leased properties that are classified as DFLs. |

| (5) | Represents real estate revenues generated from real estate assets that were deconsolidated in June 2018 (see Note 5 to the Consolidated Financial Statements). |

| Average occupied square feet | 17,280 | | | | 16,674 | | | | 15,697 | | | | 14,677 | | | | 13,136 | | |

| Average capacity (available beds) - Hospital | 2,147 | | | | 2,161 | | | | 2,271 | | | | 2,187 | | | | 2,184 | | |

[removed: PART II][added: PART II]

Our common stock is listed on the New York Stock Exchange [removed: (“NYSE”)] under the symbol [removed: “HCP.”][added: “PEAK.”]

At January 31, [removed: 2019,] [added: 2020,] we had [removed: 8,945] [added: 8,504] stockholders of record, and there were [removed: 184,033] [added: 200,205] beneficial holders of our common stock.

[removed: Dividends (Distributions)][added: *Dividends (Distributions)*]

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

| | [removed: 2018] [added: 2015] | | | | [removed: 2017] [added: 2016] | | | | [removed: 2016] [added: 2017] | | | | [added: 2018 | | | | 2019 | | |]

| Ordinary dividends(1) | $ | [removed: 0.9578] [added: 0.7633] | | | $ | [removed: 1.4800] [added: 0.9578] | | | $ | [removed: 1.5561 |] [added: 1.4800] | |

| Capital gains | [removed: 0.5222] [added: 0.2714] | | | | [removed: —] [added: 0.5222] | | | | — | | | [removed: |]

| Nondividend distributions | [removed: —] [added: 0.4453] | | | | — | | | | [removed: 6.7089 |] [added: —] | | |

| | $ | 1.4800 | | | $ | 1.4800 | | | $ | [removed: 8.2650 |] [added: 1.4800] | [removed: (2)] |

| (1) | [removed: The] [added: For the year ended December 31, 2019 all $0.7633 of ordinary dividends qualified as business income for purposes of Code Section 199A. For the year ended December 31,] 2018 [added: the] amount includes [removed: $0.0164] [added: $0.9414] of qualified [removed: dividend] [added: business] income for purposes of Code Section [removed: 1(h)(11),] [added: 199A] and [removed: $0.9414] [added: $0.0164] of qualified [removed: business] [added: dividend] income for purposes of Code Section [removed: 199A.] [added: 1(h)(11).] |

On January [removed: 31, 2019,] [added: 30, 2020,] 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 February 28, [removed: 2019] [added: 2020] to stockholders of record as of the close of business on February [removed: 19, 2019.][added: 18, 2020.]

[removed: Issuer] [added: Issuer] Purchases of Equity [removed: Securities][added: Securities]

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: 2018.][added: 2019.]

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

[removed: Performance Graph][added: Performance Graph]

The graph and table below compare the cumulative total return of [removed: HCP,] [added: Healthpeak,] the S&P 500 Index and the Equity REIT Index of NAREIT, from January 1, [removed: 2014] [added: 2015] to December 31, [removed: 2018.][added: 2019.]

Total cumulative return is based on a $100 investment in [removed: HCP] [added: Healthpeak] common stock and in each of the indices at the close of trading on December 31, [removed: 2013] [added: 2014] and assumes quarterly reinvestment of dividends before consideration of income taxes.

[removed: COMPARISON] [added: COMPARISON] OF FIVE-YEAR CUMULATIVE TOTAL [removed: RETURN][added: RETURN]

[removed: AMONG] [added: AMONG] S&P 500, EQUITY REITS AND [removed: HCP, INC.][added: HEALTHPEAK PROPERTIES, INC.]

[removed: RATE] [added: RATE] OF RETURN TREND [removed: COMPARISON][added: COMPARISON]

[removed: (JANUARY] [added: (JANUARY] 1, [removed: 2014] [added: 2015] = [removed: $100)][added: $100)]

[removed: Performance] [added: Performance] Graph Total Stockholder [removed: Return][added: Return]

[removed: ][added: ]

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

| | | | | | | | | | | | |

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

| | | | | | | | | | | | |

| | 2019 | | | | 2018 | | | | 2017 | | |

_______________________________________

| October 1-31, 2019 | | 682 | | | $ | 35.88 | | | — | | | — | |

| November 1-30, 2019 | | 2,452 | | | 35.78 | | | | — | | | — | |

| December 1-31, 2019 | | — | | | — | | | | — | | | — | |

| Total | | 3,134 | | | $ | 35.80 | | | — | | | — | |

_______________________________________

JANUARY 1, 2015–DECEMBER 31, 2019

| FTSE NAREIT Equity REIT Index | $ | 102.83 | | | $ | 111.70 | | | $ | 121.39 | | | $ | 116.48 | | | $ | 149.86 | |

| S&P 500 | 101.37 | | | | 113.49 | | | | 138.26 | | | | 132.19 | | | | 173.80 | | |

| Healthpeak Properties, Inc. | 91.96 | | | | 83.34 | | | | 76.89 | | | | 87.41 | | | | 112.85 | | |

| | | | | | | | | | | | | |

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

_______________________________________

| | |

| --- | --- |

| (2) | 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 (the “Spin-Off”) of Quality Care Properties, Inc. (“QCP”) (discussed below). |

HCP common stockholders on October 24, 2016, the record date for the Spin-Off (the “Record Date”), received upon the Spin-Off on October 31, 2016 one share of QCP common stock for every five shares of HCP common stock they held as of the Record Date (the “Distributed Shares”) and cash in lieu of fractional shares of QCP.

For U.S. federal income tax purposes, HCP reported the fair market value of the QCP common stock distributed per each share of HCP common stock outstanding on the Record Date was $6.17, or $30.85 for each share of QCP common stock.

Accordingly, every HCP common stockholder who received a Distributed Share has a tax cost basis of $30.85 per Distributed Share.

| October 1-31, 2018 | | 448 | | | $ | 27.35 | | | — | | | — | |

| November 1-30, 2018 | | — | | | — | | | | — | | | — | |

| December 1-31, 2018 | | 2,798 | | | 27.88 | | | | — | | | — | |

| Total | | 3,246 | | | $ | 27.81 | | | — | | | — | |

JANUARY 1, 2014–DECEMBER 31, 2018

| | 2014 | | | | 2015 | | | | 2016 | | | | 2017 | | | | 2018 | | |

| FTSE NAREIT Equity REIT Index | $ | 128.03 | | | $ | 131.65 | | | $ | 143.32 | | | $ | 155.75 | | | $ | 149.42 | |

| S&P 500 | 113.68 | | | | 115.24 | | | | 129.02 | | | | 157.17 | | | | 150.27 | | |

| HCP, Inc. | 127.80 | | | | 117.53 | | | | 106.52 | | | | 98.26 | | | | 111.71 | | |

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

| | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

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

| Total revenues | $ | [removed: 1,846,689] [added: 1,997,383] | | | $ | [removed: 1,848,378] [added: 1,846,689] | | | $ | [removed: 2,129,294] [added: 1,848,378] | | | $ | [removed: 1,940,489] [added: 2,129,294] | | | $ | [removed: 1,636,833] [added: 1,940,489] | |

| Income (loss) from continuing operations | [removed: 1,073,474] [added: 60,061] | | | | [removed: 422,634] [added: 1,073,474] | | | | [removed: 374,171] [added: 422,634] | | | | [removed: 152,668] [added: 374,171] | | | | [removed: 271,315] [added: 152,668] | | |

| Net income (loss) applicable to common shares | [added: 43,987 | | | |] 1,058,424 | | | | 413,013 | | | | 626,549 | | | | (560,552 | | ) | [removed: | 919,796 | | |]

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

| Continuing operations | [removed: 2.25] [added: 0.09] | | | | [removed: 0.88] [added: 2.25] | | | | [removed: 0.77] [added: 0.88] | | | | [removed: 0.30] [added: 0.77] | | | | [removed: 0.56] [added: 0.30] | | |

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

| Net income (loss) applicable to common shares | [added: 0.09 | | | |] 2.25 | | | | 0.88 | | | | 1.34 | | | | (1.21 | | ) | [removed: | 2.01 | | |]

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

| Continuing operations | [removed: 2.24] [added: 0.09] | | | | [removed: 0.88] [added: 2.24] | | | | [removed: 0.77] [added: 0.88] | | | | [removed: 0.30] [added: 0.77] | | | | [removed: 0.56] [added: 0.30] | | |

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

| Net income (loss) applicable to common shares | [added: 0.09 | | | |] 2.24 | | | | 0.88 | | | | 1.34 | | | | (1.21 | | ) | [removed: | 2.00 | | |]

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

| Total assets | [removed: 12,718,553] [added: 14,032,891] | | | | [removed: 14,088,461] [added: 12,718,553] | | | | [removed: 15,759,265] [added: 14,088,461] | | | | [removed: 21,449,849] [added: 15,759,265] | | | | [removed: 21,331,436] [added: 21,449,849] | | |

| Debt obligations(1) | [removed: 5,567,908] [added: 6,351,613] | | | | [removed: 7,880,466] [added: 5,567,908] | | | | [removed: 9,189,495] [added: 7,880,466] | | | | [removed: 11,069,003] [added: 9,189,495] | | | | [removed: 9,721,269] [added: 11,069,003] | | |

| Total equity | [removed: 6,512,591] [added: 6,667,474] | | | | [removed: 5,594,938] [added: 6,512,591] | | | | [removed: 5,941,308] [added: 5,594,938] | | | | [removed: 9,746,317] [added: 5,941,308] | | | | [removed: 10,997,099] [added: 9,746,317] | | |

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

| Dividends paid | [removed: 696,913] [added: 720,123] | | | | [removed: 694,955] [added: 696,913] | | | | [removed: 979,542] [added: 694,955] | | | | [removed: 1,046,638] [added: 979,542] | | | | [removed: 1,001,559] [added: 1,046,638] | | |

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

| Funds from operations (“NAREIT FFO”)(3) | [added: 780,307 | | | |] 780,189 | | | | 661,113 | | | | 1,119,153 | | | | (10,841 | | ) | [removed: | 1,381,634 | | |]

| Diluted NAREIT FFO per common share(3) | [added: 1.59 | | | |] 1.66 | | | | 1.41 | | | | 2.39 | | | | (0.02 | | ) | [removed: | 3.00 | | |]

| FFO as [removed: adjusted(3)] [added: Adjusted(3)] | [removed: 857,233] [added: 864,352] | | | | [removed: 918,402] [added: 857,233] | | | | [removed: 1,282,390] [added: 918,402] | | | | [removed: 1,470,167] [added: 1,282,390] | | | | [removed: 1,398,691] [added: 1,470,167] | | |

| Diluted FFO as [removed: adjusted] [added: Adjusted] per common share(3) | [removed: 1.82] [added: 1.76] | | | | [removed: 1.95] [added: 1.82] | | | | [removed: 2.74] [added: 1.95] | | | | [removed: 3.16] [added: 2.74] | | | | [removed: 3.04] [added: 3.16] | | |